[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
EPA'S PROPOSED 111(d) RULE FOR EXISTING
POWER PLANTS AND H.R. ___, THE RATE-
PAYER PROTECTION ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
APRIL 14, 2015
__________
Serial No. 114-29
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
____________
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
7_____
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania PAUL TONKO, New York
ROBERT E. LATTA, Ohio ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia LOIS CAPPS, California
MIKE POMPEO, Kansas MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio PETER WELCH, Vermont
BILLY LONG, Missouri JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina DAVID LOEBSACK, Iowa
BILL FLORES, Texas FRANK PALLONE, Jr., New Jersey (ex
MARKWAYNE MULLIN, Oklahoma officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 2
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Prepared statement........................................... 9
Witnesses
Hon. Janet McCabe, Acting Assistant Administrator, Office of Air
and Radiation, Environmental Protection Agency................. 10
Prepared statement........................................... 12
Answers to submitted questions............................... 234
Eugene M. Trisko, Energy Economist and Attorney, on Behalf of the
American Coalition for Clean Coal Electricity.................. 53
Prepared statement........................................... 55
Lisa D. Johnson, Chief Executive Officer and General Manager,
Seminole Electric Cooperative, Inc., on Behalf of the National
Rural Electric Cooperative Association......................... 63
Prepared statement........................................... 65
Susan F. Tierney, Senior Advisor, Analysis Grop.................. 100
Prepared statement........................................... 102
Additional material submitted for the record \1\............. 112
Melissa A. Hoffer, Chief, Energy and Environmental Bureau, Office
of the Attorney General, Commonwealth of Massachusetts......... 113
Prepared statement........................................... 115
Additional material submitted for the record \2\............. 123
Kevin Sunday, Manager, Government Affairs, Pennsylvania Chamber
of Business and Industry....................................... 124
Prepared statement........................................... 126
Additional material submitted for the record................. 142
Paul N. Cicio, President, Industrial Energy Consumers of America. 152
Prepared statement........................................... 154
Submitted Material
Analysis of Legal Basis for EPA's Proposed Rule on Carbon
Pollution Emission Guidelines for Existing Stationary Sources,
\3\ submitted by Mr. Whitfield................................. 199
Discussion draft, H.R. ___, the Ratepayer Protection Act,
submitted by Mr. Whitfield..................................... 200
----------
\1\ The information has been retained in committee files and also is
available at http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103312.
\2\ The information has been retained in committee files and also is
available at http://docs.house.gov/meetings/IF/IF03/20150414/103312/
HHRG-114-IF03-Wstate-HofferM-20150414-SD001.pdf.
\3\ The information has been retained in committee files and also is
available at http://docs.house.gov/meetings/IF/IF03/20150414/103312/
HHRG-114-IF03-20150414-SD004.pdf.
Letter of April 13, 2015, from Center for Biological Diversity,
et al., to Members of Congress, submitted by Mr. Rush.......... 205
Letter of April 13, 2015, from David Arkush, Managing Director,
Public Citizen's Climate Program, and Shannon Baker-
Branstetter, Policy Counsel, Energy and Environment, Consumers
Union, to Members of Congress, submitted by Mr. Rush........... 207
Letter of April 13, 2015, from Allergy & Asthma Network, et al.,
to Members of Congress, submitted by Mr. Rush.................. 211
Statement of the National Association of Home Builders, April 14,
2015, submitted by Mr. Whitfield............................... 212
Letter of September 9, 2014, from Robert J. Bentley, Governor of
Alabama, et al., to President Barack Obama, submitted by Mr.
Whitfield...................................................... 214
Letter of April 20, 2015, from R. Bruce Josten, Executive Vice
President, Government Affairs, U.S. Chamber of Commerce, to Mr.
Whitfield and Mr. Rush, submitted by Mr. Whitfield............. 218
Letter of December 1, 2014, from Clifford D. Wilson, III, Interim
Secretary, Florida Department of Environmental Protection, to
Hon. Gina McCarthy, Administrator, Environmental Protection
Agency, submitted by Mr. Whitfield............................. 220
Comments of December 1, 2014, from Chris Polychron, 2015
President, National Association of Realtors, to Environmental
Protection Agency, submitted by Mr. Whitfield.................. 229
Comments of December 1, 2014, from Harry Alford, President and
CEO, National Black Chamber of Commerce, to Hon. Gina McCarthy,
Administrator, Environmental Protection Agency, submitted by
Mr. Whitfield.................................................. 231
Comments of December 1, 2014, from Javier Palomarez, President
and CEO, U.S. Hispanic Chamber of Commerce, to Hon. Gina
McCarthy, Administrator, Environmental Protection Agency,
submitted by Mr. Whitfield..................................... 233
EPA'S PROPOSED 111(d) RULE FOR EXISTING POWER PLANTS AND H.R. ___, THE
RATEPAYER PROTECTION ACT
----------
TUESDAY, APRIL 14, 2015
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Olson, Barton,
Shimkus, Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger,
Griffith, Johnson, Long, Ellmers, Flores, Mullin, Hudson, Upton
(ex officio), Rush, McNerney, Engel, Green, Capps, Doyle,
Castor, Sarbanes, Yarmuth, Loebsack, and Pallone (ex officio).
Staff present: Nick Abraham, Legislative Clerk; Gary
Andres, Staff Director; Charlotte Baker, Deputy Communications
Director; Leighton Brown, Press Assistant; Allison Busbee,
Policy Coordinator, Energy and Power; Tom Hassenboehler, Chief
Counsel, Energy and Power; Alexa Marrero, Deputy Staff
Director; Mary Neumayr, Senior Energy Counsel; Peter Spencer,
Professional Staff Member, Oversight; Christine Brennan,
Democratic Press Secretary; Jeff Carroll, Democratic Staff
Director; Michael Goo, Democratic Chief Counsel, Energy and the
Environment; Caitlin Haberman, Democratic Professional Staff
Member; Rick Kessler, Democratic Senior Advisor and Staff
Director, Energy and the Environment; and John Marshall,
Democratic Policy Coordinator.
Mr. Whitfield. Good morning. I would like to call this
hearing to order. And this morning's hearing is going to begin
with a discussion of the Ratepayer Protection Act, a draft bill
that would add several commonsense safeguards to the EPA's
proposed 111(d) rule for existing power plants, and which is
referred to by the agency as the Clean Power Plan.
I want to welcome Acting Assistant Administrator McCabe, as
well as a diverse group on the second panel representing those
impacted by the proposed rule. And I just want to make the
comment that we appreciate your being here, Ms. McCabe, very
much. As you know, we have fundamental, divisive, really
different views on this particular rule, but we do look forward
to your testimony. We will have a lot of questions, and
appreciate you being here with us.
And now I would like to recognize myself for a 5-minute
opening statement.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
I would like to say that in reading Ms. McCabe's testimony,
I was struck by the comment that she was not aware of any
instance in the last 25 years when Congress has enacted
legislation to stop implementation or stay implementation of an
air rule during a judicial review. To do so here she said would
be an unprecedented interference with EPA's effort to fulfill
its duties under the Clean Air Act. Now, I believe the key word
in her statement is ``unprecedented.'' Anyone familiar with the
Clean Air Act should not in any way be surprised that Congress
would try to stop, slow down or, as Ms. McCabe said, interfere
with efforts to rush implementation of the rule for existing
source performance for electric generating units. Why? We think
you are overstepping your authority. We think you are now
legislating. Experts in the Clean Air Act have described this
proposed rule as extreme, radical, a power grab. One of the
best characterizations of the rule was stated by Professor
Laurence Tribe, the highly regarded liberal scholar of
constitutional law at Harvard University. Since this rule is
more about changing energy policy than anything else, he said
burning the Constitution should not be a part of our national
energy policy.
Whoever thought EPA would be attempting to become the
energy czar for America? Professor Tribe said, at bottom, the
proposed rule hides political choice and frustrates
accountability. It forces States--forces States--to adopt
policies that will raise energy costs and proved deeply
unpopular once the people realized what is happening, while
cloaking these policies in the garb of State choice, even
though, in fact, the policies are set and compelled by EPA.
The EPA thumbs its nose at democratic principles by
confusing the chain of decisionmaking between Federal and State
regulators to avoid transparency and accountability.
Now, when EPA Administrator Gina McCarthy testified before
the Senate Environment and Public Works Committee on July 23,
2014, she said, the great thing about the power plan is that it
is an investment opportunity. This is not about pollution
control. And the regulatory impact analysis of the proposed
rule states that the impact of reduced climate effects has not
been quantified. In other words, EPA does not claim that the
proposed rule would affect the climate in a significant way.
However, Ms. McCabe, in her testimony today, says we must
address climate change. It is common mantra in the
administration, from the President through every political
appointee, and yet this unprecedented rule, which will increase
electricity rates, affect reliability, cost millions of
dollars, make EPA the energy czar for America, will not have a
significant impact on climate change. Everyone acknowledges
that fact. So that raises the question, Why is EPA, at the
direction of the President, rushing it through? EPA obviously
wants this completed before the 2016 elections. Is it being
done to create a legacy in the international arena for
President Obama? Perhaps someone has decided it is urgent that
the electricity business in America be radically changed.
Experts familiar with this process have been taken aback by the
convoluted arguments that have been developed to legitimize
this proposed rule. As far as we know, it is the first time in
the history of EPA where the agency lawyers felt compelled to
include a separate legal justification for the rule--104 pages,
to be exact.
So we find ourselves in a situation where EPA, not
Congress, is writing a new law, State Attorneys General are
filing suit to stop EPA, State regulators are pleading for
help, electric generating companies are facing uncertainty,
consumers are finding electricity rates going up, and no one
knows for sure what the impact will be on reliability or, for
that matter, the real reason this regulation is being rushed to
market.
In the history of the Clean Air Act, EPA has never been
this bold. So if actions are not delayed by Congress, or if
they are affirmed by the courts, EPA will fundamentally
redefine and reshape its regulatory reach for the next
generation of rule makers in a way typically reserved for
legislative bodies.
So with the very utmost respect, people are asking Congress
for help in reining in this agency, and that is why we have
introduced this legislation, and we look forward to comments
about it.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
This morning's hearing will begin our discussion of the
Ratepayer Protection Act, a draft bill that would add several
commonsense safeguards to EPA's proposed 111(d) rule for
existing power plants, which is referred to by the agency as
the Clean Power Plan. I welcome Acting Assistant Administrator
McCabe as well as a diverse group representing those impacted
by the proposed rule.
At our hearing on the Clean Power Plan last month, we
learned about the legal concerns with this unprecedented
attempt to expand EPA's Clean Air Act authority over the highly
complex U.S. electricity sector. We also heard from State
officials about the substantial challenges they would face in
developing State plans and seeking to bring their electricity
systems into compliance with this highly complicated and
expensive proposal. As a result of that hearing, I am convinced
that this proposed rule is on very shaky legal ground and may
end up being remanded or even vacated by the Federal courts.
And in addition to the legal issues, I am also concerned that
implementation of this rule risks serious economic harm that
States would be prohibited from addressing. The Ratepayer
Protection Act provides solutions to both these legal and
implementation problems.
The legal infirmities in this rule have already sparked
litigation from States and other parties, and additional
lawsuits are sure to follow. However, the proposed rule's tight
deadlines would force many States to initiate costly and
potentially irreversible compliance steps before these legal
challenges are concluded. For example, in developing State
plans, decisions may have to be made to shut down coalfired
power plants, begin the process for constructing new energy
facilities and transmission, change how electricity is
dispatched within their State and establish expensive new
energy efficiency programs, all before we know whether this
regulation is legal.
The Ratepayer Protection Act ensures that Federal
environmental regulators do not get ahead of the law and impose
burdens on States that may later prove to be outside their
legal authority. It does this simply by suspending EPA's highly
accelerated compliance requirements until judicial review is
completed.
Aside from the legal issues, the proposed rule also raises
serious implementation concerns. In prior hearings relating to
EPA's 111(d) rule, numerous State officials have raised
concerns about the costly compliance challenges for their
electricity systems. A NERA study estimates electric rate
increases averaging 12 percent or more nationwide, and
considerably higher in some States. Indeed, the Chairman of the
Florida Public Service Commission testified that electric rate
hikes could reach 25 to 50 percent in his State.
Ratepayers ranging from homeowners to small business owners
to major manufacturers will be impacted by the Clean Power
Plan. Higher electric bills pose a burden on consumers, and
disproportionately so for low-income households and those on
fixed incomes. And every additional dollar a business has to
spend on electricity is money that can't be spent for new
hiring. In some cases, higher electricity costs could spell the
difference between staying in business and having to shut down,
especially in a globally competitive economy where countries
like China can still rely heavily on coal to power their
factories affordably.
At today's hearing, we will get a better sense of the Clean
Power Plan from the perspectives of those who will have to pay
for it. As we hear these concerns, we need to be mindful that,
despite EPA's insistence that its proposed rule gives States
considerable flexibility, in reality there is little recourse
should compliance prove costlier than anticipated by the
agency. The Ratepayer Protection Act ensures that if the
Governor of a State finds that a specific State or Federal plan
will cause significant adverse effects on ratepayers, the State
will not have to comply. It also has a similar provision if a
Governor finds a significant adverse impact on electric
reliability. In making these determinations, Governors are
required to consult the State energy, environmental, health,
economic development, and electric reliability officials.
Keep in mind this bill does not repeal the Clean Power
Plan, nor does it in any way stop States that choose to go
along with EPA's regulatory agenda from doing so. It simply
protects ratepayers from measures that may prove to be illegal
or excessively expensive, and restores a measure of State
control over electricity decisionmaking.
[The text of H.R. --------, the Ratepayer Protection Act,
appears at the conclusion of the hearing.]
Mr. Whitfield. At this time, I would like to recognize the
distinguished gentleman from Illinois, Mr. Rush, for his
opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. Well, thank you, Mr. Chairman. And I also want to
extend my compliments to Acting Assistant Administrator, Ms.
McCabe. I want to welcome your appearance at this committee--
subcommittee hearing.
Mr. Chairman, I want to also thank you for holding this
hearing today on what you have called the Ratepayer Protection
Act for 2015. Mr. Chairman, a more appropriate and fitting
title for this legislation before us would be the Just Say No
to the Clean Power Plan Act, which is a fitting description of
what this legislation attempts to do. The bill seeks to delay
and ultimately get rid of the Clean Power Plan by extending all
compliance deadlines to all legal challenges decided by the
court. Here we go again.
Under this legislation, the time period for all Clean Power
Plan compliance and submission deadlines would be extended
until 60 days after the final rule appears in the Federal
Register, and only after, and I quote, ``judgment becomes final
and no longer subject to further appeal or review.'' When is
that supposed to happen, Mr. Chairman? That is the question.
Again, to delay is to deny, and this certainly is the Just Say
No bill. Just Say No to the Clean Power Plan Act.
Mr. Chairman, at first glance, the purpose of this bill's
language may seem innocuous. In effect, what this bill will
actually do is unnecessarily stall and delay implementation of
the Clean Power Plan, and also it will spur countless and, in
most cases, frivolous and meritless challenges to the plan in
order to extend the ultimate compliance time. Just say no. To
delay is to deny.
Another problem with this legislation is that it will
effectively give Governors veto power over the Federal
requirements of the Clean Power Plan if they decide that their
States don't want to do this, don't want to cooperate, don't
want to comply with the plan, and the plan would have an
adverse effect on even the State's ratepayers or the
reliability of its electricity system. Unfortunately, Mr.
Chairman, allowing Governors to join in this attempt to just
say no to the Clean Power Plan will fly in the face of decades
of the Clean Air Act's use of cooperative federalism which has
been so successful in moving our Nation forward, and protecting
our air and protecting our environment. Additionally, Mr.
Chairman, there is no need to provide a safe harbor for States
who cannot or will not form plans to bring their States into
compliance with the Clean Power Plan, as this bill attempts to
do because already under current law, the EPA sets the emission
reduction goals under Section 111(d), and it is up to the
States themselves to decide how to best achieve these
reductions. However, Section 111(d) states that if States
refuse to present a plan that will reduce carbon emissions from
existing power plants, then the EPA will step in with a Federal
111(d) plan to ensure that these environmental risks are
addressed to the benefit of this Nation as a whole.
Mr. Chairman, it would indeed set a dangerous precedent to
most Clean Air Act and to the overall public health if Congress
were to enact a law that would allow 50 Governors to simply
veto Federal environmental policy that they did not like or
that they do not agree with. The Clean Air Act use of
cooperative federalism has been a cornerstone in moving our
Nation forward in its environmental protection policy, and this
bill has the potential to be star potential to undo decades
worth of progress that we have seen and witnessed in this area.
The provisions in this bill will make it too easy for a
Governor to just say no to reducing harmful emissions from
power plants, the number one emitters of carbon dioxide, if
they found that these regulations would be too burdensome to
enact.
Mr. Chairman, I think we should think long and hard,
consider what we are doing before we go down this slippery
slope to give individual States the power to turn back the
clocks to the dark days on what we have been so very successful
so far in terms of our environmental protection policy.
Mr. Chairman, this is a bill that, frankly, doesn't really
deserve our time, because this bill is so inappropriate on its
face.
Thank you, and I yield back the balance of my time.
Mr. Whitfield. Gentleman doesn't have any time, but thank
you for your comments.
And at this time, I would like to recognize the chairman of
the full committee, Mr. Upton, for 5 minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman. I want to thank the
witnesses, and appreciate their input regarding the
administration's controversial Clean Power Plan. No less an
expert than Laurence Tribe has testified that this proposed
rule exceeds EPA's statutory authority, and raises numerous
constitutional issues. In addition, more than half the States
have questioned the legality and feasibility of EPA's attempt
to micromanage each State's electricity generation,
transmission, distribution, and use. So if you think of the
Clean Power Plan as the Obamacare approach applied to State
electricity systems, you would not be very far off the track.
Like the health law, the costs of the Clean Power Plan
ultimately fall on consumers and job creators who are certain
to see their electric bills go up, and for many States the rate
increases will be, indeed, significant.
As highlighted in Mr. Trisko's testimony, Michigan
residents can expect rate increases up to 15 percent. This
would come at the worst possible time as folks are starting to
get back on their feet. Rate hikes will impose unwelcome
hardships on family budgets, inflict damages to businesses both
large and small, hamper job growth, and impact certainly the
most vulnerable.
The Ratepayer Protection Act's reasonable and targeted
provisions will greatly reduce the major risks to ratepayers
from the administration's plan. First, the bill extends the
compliance deadlines until after judicial review is completed.
Given that so many States have raised serious concerns about
the legality of EPA's proposed rule and a dozen have already
sued, it makes sense to clear things up legally before the
rule's costly and complex requirements take effect.
The Ratepayer Protection Act also provides each State
Governor with the authority to protect its ratepayers to the
extent a State or Federal plan under the rule would have a
significant adverse effect by contributing to higher
electricity costs or threatening reliability. States, not the
EPA, should have the last word with respect to the
affordability and reliability of their electricity systems. On
the other hand, those State Governors who are supportive of
EPA's proposed rulemaking and anticipate no problems with it
are free to comply with the agency's demands. Go right ahead.
In northern States like Michigan, affordable and reliable
electricity is absolutely essential to making it through the
winter months. And America's manufacturing sector could not
survive without electricity rates that allow it to be globally
competitive. In fact, the National Association of Manufacturers
has warned that higher costs as a result of the Clean Power
Plan and other recent EPA rules could place domestic
manufacturers at a global disadvantage. That is real. The
commonsense protections in the Ratepayer Protection Act are
critical to preserving both our standard of living and our
economic future. In making these decisions, Governors must
consult with their State's energy, economic, health, and
environmental authorities. States can and should be a necessary
check on EPA's otherwise one-sided authority to change a
State's electricity system, and to do so without regard to the
consequences.
This bill, the Ratepayer Protection Act, is a sensible
approach to addressing the very serious problems with the
administration's plan. Washington certainly does not always
know best, and I would urge my colleagues to join the effort on
behalf of jobs and affordable energy.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
I thank the witnesses and appreciate their input regarding
the administration's controversial Clean Power Plan. No less an
expert than Laurence Tribe has testified that this proposed
rule exceeds EPA's statutory authority and raises numerous
Constitutional issues. In addition, more than half the States
have questioned the legality and feasibility of EPA's attempt
to micromanage each State's electricity generation,
transmission, distribution, and use. If you think of the Clean
Power Plan as the Obamacare approach applied to State
electricity systems, you would not be very far off the mark.
Like the health law, the costs of the Clean Power Plan
ultimately fall on consumers and job creators who are certain
to see their electric bills go up, and for many States the rate
increases will be very significant. As highlighted in Mr.
Trisko's testimony, Michigan residents can expect rate
increases up to 15 percent. This would come at the worst
possible time as folks are starting to get back on their feet--
rate hikes will impose unwelcome hardships on family budgets,
inflict damage to businesses both large and small, and hamper
job growth.
The Ratepayer Protection Act's reasonable and targeted
provisions will greatly reduce the major risks to ratepayers
from the administration's plan. First, the bill extends the
compliance deadlines until after judicial review is completed.
Given that so many States have raised serious concerns about
the legality of EPA's proposed rule and a dozen have already
sued, it makes sense to clear things up legally before the
rule's costly and complex requirements take effect.
The Ratepayer Protection Act also provides each State
Governor with authority to protect its ratepayers to the extent
a State or Federal plan under the rule would have a significant
adverse effect by contributing to higher electricity costs or
threatening reliability. States, not EPA, should have the last
word with respect to the affordability and reliability of their
electricity systems. On the other hand, those State Governors
who are supportive of EPA's proposed rulemaking and anticipate
no problems with it are free to comply with the agency's
demands.
In northern States like Michigan, affordable and reliable
electricity is absolutely essential to making it through the
winter months. And America's manufacturing sector could not
survive without electricity rates that allow it to be globally
competitive. In fact, the National Association of Manufacturers
has warned that higher costs as a result of the Clean Power
Plan and other recent EPA rules could place domestic
manufacturers at a global disadvantage. The commonsense
protections in the Ratepayer Protection Act are critical to
preserving both our standard of living and our economic future.
In making these decisions, Governors must consult with
their State's energy, economic, health, and environmental
authorities. States can and should be a necessary check on
EPA's otherwise one-sided authority to change a State's
electricity system and do so without regard to the
consequences.
The Ratepayer Protection Act is a sensible approach to
addressing the very serious problems with the administration's
plan. Washington does not always know best, and I urge all of
my colleagues to join this effort on behalf of jobs and
affordable energy.
Mr. Upton. And I yield back the balance of my time.
Mr. Whitfield. Gentleman yields back.
At this time, I would like to recognize the gentleman from
New Jersey, the ranking member of the full committee, Mr.
Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman. Today's hearing on a
bill to gut the President's Clean Power Plan is misguided and
unfortunate. I do not support this legislation, and urge
members to closely examine its harmful effects on our country's
progress to combat damaging pollution and catastrophic climate
change.
First, let me thank the Assistant Administrator McCabe for
being here today. I understand that EPA received over 4 million
comments on the proposed Clean Power Plan, and that you,
Administrator McCarthy and the agency's staff are working day
and night to review and consider those comments.
EPA did an unprecedented amount of outreach to States,
industry, and stakeholders when developing the proposal, and
the agency has continued its outreach. This includes an ongoing
series of listening sessions with the Federal Energy Regulatory
Commission, and EPA is also actively working with the States,
grid operators, public utility commissions and electricity
suppliers of all kinds to finalize a rule that works for
everyone, especially ratepayers.
Like all proposed rules, the agency is considering the
justness of the Clean Power Plan based on comments and
stakeholder feedback. For example, the draft bill's
implementation timeline won't begin until 2020, but because of
feedback EPA is considering modifications to allow additional
flexibility to States to help address questions of timing,
reliability, and other implementation issues. And for that
reason, I believe the Clean Power Plan is amenably reasonable
and achievable, and EPA is clearly committed to an open
dialogue to ensure its success.
Meanwhile, the bill before us seeks to undermine all that
work. Under the current Clean Air Act and the proposed Clean
Power Plan, no State has to submit a State plan, so giving
Governors the option to opt out of developing a State plan
doesn't change anything. However, and this is important, this
bill would give Governors the option to opt out of a Federal
plan which EPA must implement if a State fails to act. In that
respect, we should view this bill for what it really is; an
amendment to the Clean Air Act, which would overturn the
principle of cooperative federalism that has been in place for
more than 40 years. This cooperation is essential to ensure all
Americans are protected from environmental harm, even if the
actions of their home State fall short. Under this bill, large
sources of carbon pollution could be exempt from any meaningful
restrictions and, therefore, bad States get a free ride to
pollute without any consequences, while every other State foots
the bill.
Finally, this bill would automatically delay implementation
of the Clean Power Plan by extending all deadlines by the
amount of time it takes litigation to conclude. That blanket
extension would be given to all polluters regardless of whether
their legal arguments turn out to have any merit.
As we heard at our last hearing, EPA does, in fact, have
authority for the Clean Power Plan that will ultimately be
upheld by the courts, but this bill would provide an incentive
for polluters to run the clock on litigation so all deadlines
will be extended as long as possible, no matter how frivolous
the challenge and regardless of the outcome. And this is an
incredibly reckless and dangerous precedent to set with regard
to any law, in my opinion.
I think the Republicans refuse to accept the fact that
climate change is real, and that Congress should be taking
action to address it. The effort by Republicans on this
committee to push States to say no and refuse to cooperate with
EPA is reckless and dangerous. The New York Times referred to
it as, and I quote, ``a travesty of responsible leadership.''
Meanwhile, former Bush EPA Administrator and New Jersey
Republican--and I stress Republican--Governor Christine Todd
Whitman characterized this effort as having both the
possibility to undermine our Nation's entire rule of law.
States should begin the careful process of moving to
cleaner, cheaper, and more reliable electric power systems. The
Clean Power Plan is a modest and flexible proposal. If my
Republican colleagues have a better idea for protecting against
the changing climate then please speak up. Just saying no and
condemning future generations is not an option.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Mr. Chairman, today's hearing on a bill to gut the
President's Clean Power Plan is misguided and unfortunate. I do
not support this legislation and urge Members to closely
examine its harmful effects on our country's progress to combat
damaging pollution and catastrophic climate change.
First, let me thank Assistant Administrator McCabe for
being here today. I understand that EPA received over four
million comments on the proposed Clean Power Plan, and that
you, Administrator McCarthy and the Agency staff are working
day and night to review and consider those comments.
EPA did an unprecedented amount of outreach to States,
industry, and stakeholders when developing the proposal. And
the Agency has continued its outreach. This includes an ongoing
series of listening sessions with the Federal Energy Regulatory
Commission. EPA is also actively working with States, grid
operators, public utility commissions and electricity suppliers
of all kinds to finalize a rule that works for everyone,
especially ratepayers.
Like all proposed rules, the Agency is considering
adjustments to the Clean Power Plan based on comments and
stakeholder feedback. For example, the draft rule's
implementation timeline won't begin until 2020, but because of
feedback, EPA is considering modifications to allow additional
flexibility for States to help address questions of timing,
reliability and other implementation issues. And for that
reason I believe the Clean Power Plan is eminently reasonable
and achievable. EPA is clearly committed to an open dialogue to
ensure its success.
Meanwhile, the bill before us seeks to undermine all of
that work. Under the current Clean Air Act and the proposed
Clean Power Plan, no State is required to submit a State plan.
So giving Governors the option to opt out of developing a State
plan doesn't change anything. However--and this is important--
this bill would give Governors the option to opt out of a
Federal plan, which EPA must implement if a State fails to act.
In that respect we should view this bill for what it really
is, an amendment to the Clean Air Act, which would overturn the
principle of cooperative federalism that has been in place for
more than 40 years. This cooperation is essential to ensure all
Americans are protected from environmental harm, even if the
actions of their home State fall short. Under this bill, large
sources of carbon pollution could be exempt from any meaningful
restrictions. Therefore, scofflaw States get a free ride to
pollute without any consequences while every other State foots
the bill.
Finally, this bill would automatically delay implementation
of the Clean Power Plan by extending all deadlines by the
amount of time it takes litigation to conclude. That blanket
extension would be given to all polluters regardless of whether
their legal arguments turn out to have any merit.
As we heard at our last hearing, EPA does, in fact, have
authority for the Clean Power Plan and I believe it will
ultimately be upheld by the Courts. But this bill would provide
an incentive for polluters to ``run the clock'' on litigation
so all deadlines in the rule would be extended as long as
possible, no matter how frivolous the challenge and regardless
of the outcome. This is an incredibly reckless and dangerous
precedent to set with regard to any law.
Climate change is real and Congress should be taking action
to address it. The effort by Republicans on this committee to
push States to ``say no'' and refuse to cooperate with EPA is
both reckless and dangerous. The New York Times referred to it
as ``a travesty of responsible leadership.'' Meanwhile, former
Bush EPA Administrator and New Jersey Republican Governor
Christine Todd Whitman characterized this effort as having
``the possibility to undermine our Nation's entire rule of
law.''
States should begin the careful process of moving to
cleaner, cheaper, and more reliable electric power systems. The
Clean Power Plan is a modest and flexible proposal. If my
Republican colleagues have a better idea for protecting against
a changing climate, then please speak up. Just saying no and
condemning future generations is not an option. Thank you.
Mr. Pallone. And I don't know if anybody else wanted to
have a minute left on our side. If not, Mr. Chairman, I yield
back.
Mr. Whitfield. Gentleman yields back, and that concludes
the opening statements.
So at this time, I would like to formally introduce Ms.
Janet McCabe, who is the Acting Assistant Administrator for the
Office of Air and Radiation at the EPA. And once again,
welcome, Ms. McCabe. And I would like to recognize you for 5
minutes for your statement.
STATEMENT OF THE HONORABLE JANET MCCABE, ACTING ASSISTANT
ADMINISTRATOR, OFFICE OF AIR AND RADIATION, ENVIRONMENTAL
PROTECTION AGENCY
Ms. McCabe. Thank you, Chairman Whitfield, Ranking Member
Rush, and members of the subcommittee. I appreciate the
opportunity to testify before you today on EPA's proposed
111(d) rule for existing power plants, also known as the Clean
Power Plan, and the discussion draft of the Ratepayer
Protection Act of 2015.
The discussion draft and EPA's proposed carbon pollution
plan reflect a shared concern: maintaining the reliability of
the electricity grid. Clean Air Act regulations have not caused
the lights to go out in the past, and the proposed Clean Power
Plan will not cause them to go out in the future.
This morning, I will talk about EPA's proposal and how the
final rule will address many of our shared concerns, and my
written testimony provides additional feedback regarding the
discussion draft.
To summarize, EPA views the draft as premature, because EPA
has not yet finalized the Clean Power Plan; unnecessary,
because EPA has the tools and, indeed, the obligation to
address cost and reliability issues in our final rule; and
ultimately harmful, because the bill, if enacted, would delay
or prevent the climate and air quality benefits of the Clean
Power Plan.
This summer, EPA will be finalizing a flexible, commonsense
program to reduce carbon pollution from the power sector; the
largest stationary source of CO2 emissions in the
country, while continuing to ensure that all Americans have
access to affordable, reliable energy, and a clean and healthy
environment. However, EPA's long history developing Clean Air
Act pollution standards for the electric power sector,
including the proposed Clean Power Plan, the agency has
consistently treated electricity system reliability as
absolutely essential. We have devoted significant attention to
this issue ourselves, and have also made sure that we were
working with stakeholders and energy regulators at the Federal,
State and regional levels to ensure that the important public
health and environmental protections Congress has called for
are achieved without interfering with the country's reliable
and affordable supply of electricity.
In crafting the Clean Power Plan proposal, EPA sought to
provide a range of flexibilities and a timeline for States,
tribes and territories, and affected generators that would
reduce carbon emissions while maintaining affordable electric
power and safeguarding system reliability. EPA's proposed plan
gives States the opportunity to choose and allows electric
generators to choose from a wide variety of approaches to
cutting emissions, and is intended to provide States,
generators, and other entities charged with ensuring electric
reliability with the time they need to plan for and address any
reliability issues they believe may arise. This same wide range
of approaches also provides States and utilities with the
latitude they need to minimize cost.
Thanks to both our extended engagement process and the many
substantive comments we received, we know that many States and
power companies are urging us to consider changes in order to
ensure that the final rule delivers on the significant
flexibilities we intend to create to protect the system's
reliability and affordability. This public process has provided
a tremendous amount of information and ideas, and I assure you
the EPA is taking all of that information and those
suggestions, the comments I have provided very seriously, and
we expect to make changes to the proposal to address many of
the suggestions and concerns we have received. Ideas offered by
stakeholders range from ensuring that initial compliance
expectations and compliance flexibilities provide the States
the latitude they need to establish workable glide paths that
do not put reliability at risk, to addressing concerns
regarding stranded assets, to facilitating workable, regional
approaches that are not too formal or too complicated to
implement easily, and to crafting what many are calling a
reliability safety valve as a backstop in case a reliability
issue does arise.
EPA has taken unprecedented steps to reach out to and
engage with all of the States and our stakeholders. One of the
key inputs EPA heard before proposal and during the comment
period is the need to design the rule in a way that respects
both the urgency of dealing with climate change, and the time
it takes to plan and invest in the electricity sector in ways
that ensure both reliability and affordability going forward.
We have paid close attention to those comments, and will
finalize a rule that takes them all into account.
I look forward to your questions, Mr. Chairman. Thank you
very much.
[The prepared statement of Ms. McCabe follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Well, thank you very much, and we appreciate
that statement.
And at this time, I would like to recognize myself for 5
minutes of questions.
Ms. McCabe, I think even you would agree that this is a
bold move on the EPA's part, but we all understand 111(d) and
the controversy surrounding it in that such a ubiquitous
substance as CO2, you all never tried to regulate
anything like that under 111(d) before. And I will tell you, as
I said in my statement, half of State regulators have been in
touch with us, and they are very much concerned. And you know
that lawsuits have been filed, so I think you would acknowledge
that this is a very bold move on EPA's part. And one of the
things that I am concerned about, and I would like to make very
clear, I am certainly not an expert in the Clean Air Act but I
have read more than I want to, to be truthful about it, but
there is a definition in the Clean Air Act about the source,
and I don't think that a State has ever been considered a
source before. And every time I hear Ms. McCarthy or anyone
from the EPA or from the administration talk about this rule,
they go to great lengths talking about all the flexibility they
are giving to the States, but the States have no flexibility in
determining what the cap will be on the CO2
emission. Isn't that correct? Do they have any option on what
the cap will be?
Ms. McCabe. EPA will set the target.
Mr. Whitfield. Yes, EPA sets the target.
Ms. McCabe. Um-hum.
Mr. Whitfield. And how did EPA set the target for each
State?
Ms. McCabe. We looked at a wealth of data about power
generation across the country, looking at the kinds of
technologies that are already in use to----
Mr. Whitfield. And how did you decide what the number would
be for each State?
Ms. McCabe. We looked at four particular types of
approaches that are widely in use across the country, and we
applied those in a uniform manner to each State's power
inventory.
Mr. Whitfield. And did you assume that every coal plant,
for example, would be able to become more efficient?
Ms. McCabe. We used information from across the country to
apply an average expectation about efficiency improvement.
Mr. Whitfield. And what is that average expectation?
Ms. McCabe. In the proposal, we assumed a 6 percent
efficiency----
Mr. Whitfield. And you know what, we are hearing from
everyone that, many of these coal plants, there is no way they
can get a 6 percent more efficient rating. So--and people are
questioning that--this assumption, how you came up with this 6
percent assumption. But let me just ask you, this legislation
has been characterized as unreasonable. When you consider the
unique and radical approach that is being utilized with this
rule, why would anyone object when we already know many
lawsuits have already been filed, once that rule becomes final,
there are going to be more lawsuits filed, why would anyone,
when it has already been said that this is not going to
significantly affect the climate anyway, why would anyone
object to giving States an opportunity to do their State
implementation plan after the judicial remedies have been
exhausted?
Ms. McCabe. Well, I have a couple of responses to that, Mr.
Chairman, and I--you won't be surprised to hear that I don't
exactly agree with some of the words that you have used to
characterize the plan. It is not radical. It follows the
process laid out at----
Mr. Whitfield. Has 111(d) ever been used in this way
before?
Ms. McCabe. 111(d) has been used to establish expectations
that States----
Mr. Whitfield. But you have only utilized it four or five
times in the history of the Clean Air Act. It has always been
very focused, small type of arrangements. But anyway, why would
you object to giving States an opportunity to exhaust legal
remedies before they have to give a State implementation plan?
Ms. McCabe. Well, there is a system in place for legal
concerns, if there are any, about a rule that EPA adopts under
the Clean Air Act to test out those legal concerns, and that is
the----
Mr. Whitfield. Well, OK, but why would you object? I mean
why do you object to giving States this additional time?
Ms. McCabe. The discussion draft basically allows an
unlimited time, this could lead to an unlimited delay in the
amount of time that would go by before steps would be taken to
implement----
Mr. Whitfield. But we--you know, we have been told that
normally--that it is not unusual for States to be given 3 years
for implementation plans, but in this instance they are getting
like 13 months or even less.
Ms. McCabe. No, that is not correct, Mr. Chairman. The
implementation period for this rule goes out to 2030.
Mr. Whitfield. I am not talking about implementation, I am
talking about the plan, submitting the plan.
Ms. McCabe. Well, that is right. The----
Mr. Whitfield. And that is a major chore.
My time has expired. At this time, I am going to recognize
the gentleman from Illinois, Mr. Rush.
Mr. Rush. I want to thank you, Mr. Chairman, again. And,
Madam Administrator, one of the foremost beneficiaries of the
CPP is low-income communities, and I have a special and
particular interest in the low-income communities. And are you
aware of the NRDC report that just came out?
Ms. McCabe. Yes, I am.
Mr. Rush. That report stated that low-income Americans,
again, would benefit most from CPP. Do you have any commentary
on that, and what are your thoughts about that?
Ms. McCabe. Well, we know that the impacts of climate
change that we are already experiencing in the country, and
that we can expect to experience more, can have an especially
impactful effect on low-income communities who are already at a
disadvantage when it comes to the impacts of pollution. We
expect and we are seeing that climate change will lead to more
heat waves, more air pollution, which will exacerbate asthma,
low-income communities often have higher rates of asthma,
disruption such as from the increased intensity of intense
storm events that can have an adverse impact on low-income
communities that are not in a position to recover as easily as
others with more means. So we definitely see that low-income
communities are more at risk of the adverse impacts that we see
on public health, welfare, and economic wellbeing and will
benefit significantly from steps that we can take here.
Mr. Rush. And do you agree that States have a
responsibility to promote the general health and welfare or
low-income communities and low-income individuals, that there
is a way for the States to both invest in cleaner, more
efficient community provisions, such as the CPP, and also
provide help to those most vulnerable communities through
direct bill assistance?
Ms. McCabe. Well, the Clean Power Plan, and our proposal,
would allow States all the latitude they need to design a plan
that meets the needs of all the communities in their State and
provide protections to low-income communities to make sure that
the benefits of the program are realized for all citizens
across the State.
Mr. Rush. Madam Assistant Secretary, if this bill passes
and becomes--well, the bill under consideration, what will be
the result in your estimation, what will be the outcomes, what
kind of impact would this bill have on the EPA's stated role
that--of protecting our environment? What will be the----
Ms. McCabe. Well, it would clearly delay the reductions
that are to be achieved through this program, and that so many
people see as necessary. In fact, many, many Americans see as
necessary and are asking EPA to take action. It would create
additional uncertainty, and one of the things that we always
hear from the power sector is that certainty is one of the most
important things for them to be able to plan how they are going
to manage their resources in the future, knowing that carbon
reduction is on the way. And so they want to know and get on
with it. And the bill also would create an opportunity, as you
have identified, for Governors to basically opt out of the
program, which is completely inconsistent with the way Congress
set up the Clean Air Act, which is that the Federal Government
sets the expectations for what a clean and healthy environment
should be across the country, and then States use their
flexibilities to achieve those goals in the way that works best
for them.
Mr. Rush. And would you agree that if this bill passes,
then the Congress would be playing a sort of environmental
Russian roulette in the health and welfare of our Nation and
its citizens, particularly as it relates to the environment?
Ms. McCabe. Well, it would be a concern for there to be a
delay in a reasonable and commonsense program to make these
reductions.
Mr. Rush. Right. One State might get it right, one State
might get it wrong, the next State might get it in between, so
we are playing some kind of a hide-and-seek game with our
citizens and the environment. Would you agree with that?
Ms. McCabe. I think you have raised real concerns.
Mr. Rush. Thank you. Mr. Chairman, I yield back.
Mr. Whitfield. Gentleman yields back.
At this time recognize the gentleman from Texas, Mr. Olson,
for 5 minutes.
Mr. Olson. I thank the Chair. And good morning,
Administrator McCabe.
Ms. McCabe. Good morning.
Mr. Olson. I would like to start by reading a couple of
quotes from the Public Utility Commission back home. It is
called the PUC, and they have one of the largest States in
America. Texas has almost 10 percent of this country's
population, and we have an enormous proportion of America's
energy production in its busiest port in Houston. And these
quotes aren't from a coal lobbyist. They are from a commission
that helps keep the lights on and keeps rates fair. I quote,
``Rule 111(d) will create significant electrical reliability
problems in Texas.'' Another quote, ``The carbon emission
limits for Texas will result in significantly increased costs
for Texas electricity consumers.'' The final quote, it will
cost--``Increase in energy costs for consumers, up to 20
percent in 2020.'' That does not include new transmission
lines, new power plants. The cost will hit--this is their
quote, ``$10 to $15 billion in annual compliance costs by
2030.'' I know you think this rule has plenty of flexibility.
Others disagree.
Recently, FERC Commissioner Moeller has said that the rule
will mean havoc on the grid if there isn't a reliability safety
valve. The operators want an automatic way to react if
reliability is threatened, too. My question is can you commit
right here to put a relief mechanism to protect reliability or
even affordability in the final rule? If no, why not? What is
the harm?
Ms. McCabe. Well, you have raised concerns that, as I
mentioned in my testimony, we have as well, and we always do.
We have received many, many comments from across the country,
including your State of Texas, raising these issues with a lot
of good ideas. And as Administrator McCarthy and I have said on
many occasions, we do expect to make some changes in the rule
that will address a lot of these concerns, including
considering a variety of ideas that people have suggested to us
for things like a reliability safety valve. So I think when the
final rule comes out, you will see that we have been very
responsive to these concerns.
Mr. Olson. But a safety valve, yes or no? Yes or no?
Ms. McCabe. You know, the Administrator signs the final
rule so I can't commit here, but I will tell you that these are
the kinds of things that we are looking at very, very, very
closely.
Mr. Olson. So looks like a sort of sideways, not yes or no.
Next question is about small power systems. There are
dozens of power systems, utilities across the State of Texas
run by municipal cities. We have them all across America
actually. These communities have come together to build one or
two efficient little power plants to keep the lights on. For
example, back home in Texas, the Texas Municipal Power
Authority has one small coal-fired plant that supplies power
for four cities, Denton, Bryant, Garland, and Greenville,
northcentral Texas. They don't have back-up gas plants to take
up the slack, or inefficiencies to fix. They told the EPA
recently that their best bet to comply might be just to shut
power plants down, just close it down. They rely on this power
for affordable power. The impact to the economy will be severe.
There are straight investments made to power directly to these
towns. Won't your rule have an impact on small, self-reliant
communities like Denton, Bryant, Garland, Greenville, all
across America? Will it hurt these communities, ma'am?
Ms. McCabe. Congressman, we have spent a lot of time with
the small municipal providers and rural electrics, and we have
heard their concerns. I think comments like that though don't
take into account the flexibility that the States will have to
design plans that address concerns like that. There is nothing
in the rule that requires any single plant to do any particular
thing, and there are lots of opportunities for the State of
Texas and every State across the country to design a plan that
makes sure that they are paying attention to the particular
needs of the particular types of power providers in their
State.
Mr. Olson. But if they review the rules and they say the
best bet maybe just to close down. I mean that is a real
problem, ma'am. Have you considered they will just close down
because of these new rules? It is part of the equation going
forward. What are you going to do to fix this problem?
Ms. McCabe. The decision to close a plant is made on the
basis of a lot of considerations that go way beyond
environmental regulation, but what I am saying is that the plan
does not put any State in the position of having to make that
particular choice on behalf of a particular company. There are
options that they can build into their plan to avoid those
situations if that is in the best interest of those companies
and the customers that they serve.
Mr. Olson. Well, the folks back home disagree.
I yield back the balance of my time.
Mr. Whitfield. At this time I will recognize the gentlelady
from California, Mrs. Capps, for 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman, for holding this
hearing, and I thank Ms. McCabe for your testimony.
And as we know, the science is clear that increased
concentrations of carbon dioxide and other greenhouse gases are
causing our planet's climate to change. Climate change affects
our daily lives by increasing health risks, making our oceans
more acidic, threatening food and water supplies, exacerbating
drought, among many other impacts, and these impacts are
predicted to only intensify in the future, negatively impacting
our children and grandchildren. And that is why we all have a
responsibility to act now to reduce the carbon emissions and
other greenhouse gases that are driving climate change.
As you know, power generation was responsible for nearly 40
percent of the carbon dioxide emitted last year in the United
States. Of this, 76 percent was from the coal-powered sector.
The simple truth is that we cannot address climate change
without reducing these emissions. That is what EPA is doing
with the Clean Power Plan. The plan is strong yet flexible,
allowing each State to determine the best ways to achieve its
carbon dioxide targets. And EPA is in the process of reviewing
public comments to ensure that the Clean Power Plan will meet
its goal, minimize cost and reliability concerns, and maximize
benefits to human health and the environment.
Ms. McCabe, can you elaborate on the flexibility that
States have, and just tell us what that--some examples or what
that means the States have in meeting the carbon reduction
targets, and the process EPA has used to develop this kind of
plan.
Ms. McCabe. I would be happy to, Congresswoman. So there
are a number of ways we built flexibility into the plan. First
of all, as I have said already, there is no prescribed approach
or control technology that States or companies have to use that
we identified for, but there are many other ways that companies
can go about reducing carbon including really positive
community building things like investigate renewable energy and
energy efficiency.
Another flexibility in the plan is the length of the time
to implement it. So all the way until 2030, States and
utilities would have to plan. So that builds in a lot of
flexibility right there. Now, this is also not a rule--some
environmental rules have an hourly emission rate that companies
are required to meet. This will not have that. It will have an
annual type of approach averaged over the year, which means
that if utilities need to have variation in their emission
rates over the course of the year, they will be able to do that
and still meet this because, for carbon, that makes sense.
Another flexibility we built into the rule was allowing
States to join together with other States in regional plants,
which even opens up the flexibility even more. And we have had
a lot of interest from States in that, especially in--and are
looking at more informal and less complicated ways that they
could join up with one another or with other States.
Mrs. Capps. Thank you. You know, we have entrusted EPA and
this process with promoting and protecting clean air for over
40 years. They have consistently performed well. Since 1970,
EPA has cut many dangerous air pollutants by 90 percent or
more. I think we lose sight of that amazing fact. And our
economy, at the same time, has tripled in size. So here is
another question. Do you think EPA would have had this much
success protecting clean air and public health if States had
been allowed to opt out of EPA regulations that they didn't
like over this long history?
Ms. McCabe. It has been absolutely essential that the way
Congress set up the Clean Air Act has worked for EPA to set
those national targets, and then every State to step up and do
their part. And as you recognized, air pollution doesn't
respect State boundaries.
Mrs. Capps. Absolutely. Just one--see if we can get this
question in. As you know, the discussion draft before us would
not only allow States to simply opt out of the Clean Power Plan
if they don't want to participate, it would also delay
implementation of the plan indefinitely until every lawsuit has
been litigated. Ms. McCabe, is climate change an urgent problem
or one that can wait indefinitely to be addressed?
Ms. McCabe. Climate change, as is being emphasized by
scientists almost every day now, is something that we must pay
attention to and begin our work on now.
Mrs. Capps. Thank you, and I have one question. I will just
put it out if you have time to address it. Ms. McCabe, what are
some of the benefits that would likely be denied to our
constituents if this bill became law?
Ms. McCabe. Well, this is part of a large effort, a global
effort, to address climate. This is a very significant part of
that. If we don't pay attention to the increasing levels of
carbon, we will see increasing weather events, air pollution,
droughts, and all of the health and welfare impacts that come
along with those sorts of events.
Mrs. Capps. Thank you very much.
Mr. Whitfield. At this time, I will recognize the gentleman
from West Virginia, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman. And thank you, Ms.
McCabe, for appearing here. I have got three questions if I can
get to them kind of quickly with this. Representatives of FERC
in 2014 made a statement and I was just calling up on my
computer, my little phone here, to find out what that statement
was again. They said--because your response earlier was you
seemed to discount the reliability by this, is what I heard,
was the grid is going to be fine under this rule. But what he--
but they went on to say--FERC said that they worried that the
electric grid doesn't have the infrastructure to replace the
retiring coal and nuclear plants, saying some U.S. regions
would be subject to rolling black-outs due to this deficiency
by the year 2017. Do you agree with what FERC is concerned
about?
Ms. McCabe. I think we are all--we all want to make sure
that----
Mr. McKinley. That is a yes or a no. I have three I am
trying to get to.
Ms. McCabe. No, I do not agree with that.
Mr. McKinley. You don't agree with that statement? OK,
thank you.
The second is that Mr. Pallone said that, and I appreciate
his remark, but he used a term, he said there are bad States
out there. Maybe West Virginia would be considered a bad State
in his eyes because 98 percent of the power that we generate--
that we consume in West Virginia comes from coal. So I am
curious on this concept that you are coming up with. What is
the cap going to be in West Virginia, and what is the
alternative that we have? If we burn coal, what are we supposed
to do?
Ms. McCabe. Yes, so the proposal was designed to
accommodate States that burn a lot of coal and States that
don't. I come from Indiana. It is also a State that burns
predominantly coal, and when----
Ms. McKinley. Well, it says here you were to change the
heat rate. One of your blocks says change the heat rate, but
yet there is none--there is no increased funding under the--or
other groups to be able to do that research to be able to
accomplish it, so I am really concerned it is a dream, an
ideological dream, because I don't see how they are going to
cut back, but please, if you could, what is the cap, what is
the change in West Virginia, do you have a proposed idea what
you want to do in the CO2?
Ms. McCabe. I can't tell you now what change----
Mr. McKinley. Could you get back to me on that?
Ms. McCabe. Well, in the final rule, we will reflect all
the changes that----
Mr. McKinley. The final----
Ms. McCabe [continuing]. We will make.
Mr. McKinley. Prior to the final rule, how are people going
to respond to that if they don't know what the effect it could
have on a State like West Virginia?
Ms. McCabe. Well, States like West Virginia and others have
given us lots of input suggesting ways in which we ought to
adjust their target.
Mr. McKinley. OK, so you don't have a plan. Let me--let's
go to the third question. And I was reading the testimony of
the next panel, and there are increases in residential electric
costs associated with this act, and will be assessed in the
context of the long-term declining trend of real income among
American families. And Congressman Rush from Illinois made a
good point, and he is concerned about low-income families. But
low-income families and households have lost 13 percent of
their income between 2001 and 2013. Thirteen percent of low-
income families are going to struggle with this as a result of
this. So my concerns are with the--and we are going to spend $7
\1/2\ to $8.8 billion perhaps to be in compliance. It is going
to be passed on to the ratepayers. What am I supposed to tell
Mildred Schmidt who lives next-door to you or lives next-door
to me, how is she going to deal with this issue?
Ms. McCabe. Well, given the reliance--the way the industry
is going in terms of employing energy efficiency, we lay out
that our proposal will lead to lower energy bills by 2030. So
energy bills will go down, and that information is----
Mr. McKinley. But----
Ms. McCabe [continuing]. Available to----
Mr. McKinley [continuing]. I want to make sure I am
hearing--you said energy prices are going to go down?
Ms. McCabe. Energy bills will go down, Congressman.
Mr. McKinley. How in the world are they going to go down if
we are spending this----
Ms. McCabe. With energy efficiency, people will be buying
less electricity.
Mr. McKinley. And you are serious? You really----
Ms. McCabe. I----
Mr. McKinley [continuing]. Believe this?
Ms. McCabe. I do. We are seeing it all across the country.
We are seeing it in places like New England that have been very
aggressive on energy efficiency. If we use less energy, out
bills can go down. And our carbon emissions can go down.
Mr. McKinley. So you--so let me make sure I am clear. You
are saying--your testimony here before us that by the time this
thing is fully implemented, that the rate pay through the--
consumers are going to be paying less electricity with electric
bills as a result of having this draconian standard forced upon
them.
Ms. McCabe. That is what our analysis shows across the
country.
Mr. McKinley. Do you believe it yourself that it--Mildred
Schmidt is going to be paying less for her electric bill?
Ms. McCabe. I believe that if we get serious about energy
efficiency and managing the--our use of electricity, that that
can lead to lower energy costs.
Mr. McKinley. Unbelievable. It just seems delusional. Thank
you very much.
Mr. Whitfield. I may just make one comment. The Energy
Information Agency just released a report showing the
electricity rates for the country between 2014 and 2015 have
gone up for the entire country.
At this time, I would like to recognize the gentleman from
Texas, Mr. Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and ranking member, for
holding the hearing. The EPA's Clean Power Plan has been
subject to much debate. The Supreme Court has consistently
agreed the EPA has the authority to regulate greenhouse gases,
so the legal challenges facing the Clean Power Plan are very
interesting. I have been in Congress for some time, and since I
joined the House, worked extensively on trying to pass
commonsense environmental legislation, and unfortunately, we
haven't done that in the last few years. We need to work
together to address the issues of carbon emissions, and that
doesn't mean eliminating certain fuels, and it certainly
doesn't mean eliminating the EPA. We need to represent our
constituents to find that exception or compromise. I want to
thank the EPA because we just learned that the partnership with
the input you are getting from Federal Energy Regulatory
Commission on the reliability issue. That is one of the
concerns we have. Of course, if there is a reliability issue it
could also impact the prices because some of our markets are
competitive. So the EPA, at least from what I saw, understands
they don't understand reliability but FERC does, and so we want
to make sure whatever you do does not cause reliability issues
in our communities.
Recently, you and Administrator McCarthy indicated
willingness to address issues with the interim deadlines of the
CPP. I repeatedly supported efforts to implement rule changes
with timelines that allow industry time to adjust to protect
for reliability. It is important for the sake of our economy,
electricity reliability, and workforce that we give ample time
to implement the new rules. What types of comments did EPA
receive regarding the interim goals that led the agency to make
these statements?
Ms. McCabe. Yes, that is an issue that we got a lot of
comment on, Congressman, and just to make sure everybody knows,
the ultimate compliance deadlines for the rule is 2030, but the
proposal had an interim goal that would operate between 2020
and 2029. And we heard from some States that that posed a very
substantial reduction on them early in the process. Our intent
was to make sure that progress was being made in this run up to
2030, but in a way that could be moderately metered-in, in a
way, so that reasonable choices could be made.
So we have heard all the way from don't have any interim
targets, to other sorts of ideas about how to adjust those, but
primarily the issue has been don't have it so that any one
State has a significant initial reduction that they have to
make as quickly as 2020.
Mr. Green. Would interim relief provide States enough time
to draft State implementation plans and receive guidance from
EPA?
Ms. McCabe. Certainly. And we are already gearing up to
provide States with guidance and information on how to put
their plans together.
Mr. Green. Does EPA believe that concrete monitoring
requirements and performance metrics would accomplish the same
goals as the Clean Power Plan but allow the States to tailor a
path to 2030?
Ms. McCabe. Well, the plan would allow the States complete
latitude to design plans that make sense for them.
Mr. Green. The--obviously, the large-scale reduction is
challenging, especially when addressing the last few percentage
points. Does EPA's Clean Power Plan include graduation dates to
accommodate the States' efforts to reduce emissions? Do they
get credit over a period of 10 years to 2030?
Ms. McCabe. Yes, sure. I mean they work their way down to
that final timeline. And I should note too that as has always
been the case with State implementation plans on air quality,
there are opportunities along the way to make adjustments if
needed.
Mr. Green. How does EPA think--what does EPA think about
the reliability safety valve for States requiring compliance
and flexibility to address reliability issues would have FERC
sign off on the nature of the reliability problem. Do you think
that would be workable?
Ms. McCabe. We think there are a number of good ideas about
how to manage something like a reliability safety valve. You
know, we employed something like that in the Mercury and Air
Toxics Rule that has turned out to not be needed by very many
people at all, but it was good to have it there as a backstop.
And we are in good discussions with FERC about the options
there.
Mr. Green. So we are not reinventing the wheel here. It has
been used before and can be used again here?
Ms. McCabe. That kind of approach was used before, that is
right.
Mr. Green. Thank you, Mr. Chairman. I yield back.
Mr. Whitfield. At this time recognize the gentleman from
Pennsylvania, Mr. Pitts--no, Mr. Barton from Texas for 5
minutes.
Mr. Barton. I am willing to let Mr. Pitts go if he is--
well, thank you, Mr. Chairman. Thank you, Mr. Pitts. Thank you,
Honorable McCabe, for being here.
I have a few comments I want to make, then I have a--
several questions.
My first comment is that there is absolutely no health
benefit to this proposal. EPA's primary responsibility is to
protect the public health, and the Clean Air Act gives the EPA
wide authority and wide latitude in order to do that. It is one
of the few Federal agencies that has the authority to set a
rule without any real consequences being looked at in terms of
a cost benefit if the Administrator thinks that it is in the
public interest, to protect the public health, but this
particular rule has no health benefit at all. What it is is a
politically correct social policy.
Now, that may be acceptable, it may not be, but this is not
a health-based rule. It is not a rule based on a real economic
science, nor is it required by any existing Federal law. There
is no Federal mandate and statute right now that requires this
rule to be set. Again, it is simply the Obama administration
deciding what is politically correct social policy, and they
are foisting it on the States to comply.
I don't think it is going to actually be implemented, I
think the courts are going to strike it down, but if it were to
be implemented or attempted in a serious way to be implemented
under the current timelines in the proposed rule, the only
certainty would be that electricity rates would go, reliability
would go down, and there would be routine blackouts in many
parts of the country. Now, as you know, Madam Administrator, we
had a blackout here in Washington, DC, not too long ago, a
temporary blackout. As you also know, we had a coal-fired power
plant in Virginia that was in Virginia and was shut down not
too many years ago. If that power plant had still been online,
there wouldn't have been a blackout.
Now, I don't travel much internationally, but I do travel
some, and there are parts of the world where it is a given that
there is not 100 percent electricity reliability, and people
plan for it. Fortunately, we don't have to do that here in the
United States, but if this rule were to actually be
implemented, that would become an occurrence that would not be
unusual.
Now, my first question to you is, what does the EPA
consider to be a--an acceptable price for electricity for the
average retail consumer per kilowatt hours?
Ms. McCabe. I don't have an answer to that, Congressman. We
work----
Mr. Barton. You don't have an answer?
Ms. McCabe. We work with the energy regulators. That has
been a significant issue that is not within EPA's jurisdiction.
What we do is we look at expected impacts on----
Mr. Barton. Well, do you accept that if you shut down 30
percent approximately of the coal-fired generation's capacity
in the United States, that there is going to be an adverse
price impact because of that?
Ms. McCabe. Well, I don't believe that our proposal
predicts anywhere near that kind of impact.
Mr. Barton. OK, what does----
Ms. McCabe. And I----
Mr. Barton. In your--what do you say--the studies I have
shown indicate that, but I am not as aware of all the studies.
What is the official EPA impact, and what percent of the coal-
fired power generation is going to be shut down if this is
implemented as the EPA projects it to be?
Ms. McCabe. Well, let me emphasize again that there are
lots of reasons why power plant shut down.
Mr. Barton. Well, why don't you just answer my question?
Ms. McCabe. In the----
Mr. Barton. EPA certainly has some projection about how
many--what percentage the coal-fired capacity in the United
States of electricity generation is going to be down.
Ms. McCabe. In our----
Mr. Barton. I am told it is 20 to 30 percent.
Ms. McCabe. In our regulatory impact analysis, if I
remember correctly, and I will confirm this for you, I believe
that we projected that about 10 percent----
Mr. Barton. Ten percent.
Ms. McCabe [continuing]. Of coal plants would become
uneconomical. Keeping in mind----
Mr. Barton. Did you----
Ms. McCabe [continuing]. That----
Mr. Barton. Did you provide that to the committee, because
that is about half of the most benign economic study that I
have seen. I am not saying you are wrong, I am just saying it
seems to be overly benign.
Ms. McCabe. We will confirm that for you, but that is a
reflection of the flexibility and the time that is allowed in
this plan, and the fact that the average age of the coal-fired
fleet in this country is----
Mr. Barton. Well, my time has already expired. Let me ask
one--do you think it is fair that one State, i.e., my State,
the State of Texas, by itself has to have 20 percent of
reductions for the whole country?
Ms. McCabe. The State of Texas has significant carbon
emissions because of its size and the amount of power that is
produced there.
Mr. Barton. So----
Ms. McCabe. This will----
Mr. Barton [continuing]. The Obama administration is just
telling Texas to go jump in the lake, we don't care about your
economy.
Mr. Whitfield. Gentleman's time has expired.
Ms. McCabe. Not at all.
Mr. Whitfield. At this time I would like to recognize the
gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman. And welcome.
Administrator McCabe, a lot of people are speculating about the
impact the rule is going to have on reliability in the grid,
and we know it is a very elaborate, complicated machine. I am
not sure there is any way to actually know the impact until
States all submit and implement their respective plans, and
because the grid is so interconnected and you expect 50
different State plans. Can you talk about the administration's
plan to ensure that all of these plans work together in a way
that protects the reliability of the grid, because we know
energy production and consumption isn't always limited by State
lines?
Ms. McCabe. Yes. So there are a couple of good points that
you raise. One is that we don't know what the State plans will
look like, and so a lot of the predictions about things that
will or won't happen are based on people not knowing what
choices States will make. The other is that, as you pointed
out, it is an interconnected system. In fact, many power
companies themselves operate in multiple States. And what we
are seeing, which is very positive, is lots of conversations
happening both between the energy regulators and the
environmental regulators, and also between the power companies
and the State Governments across State lines in regions,
talking about ways that they can work together. How the--how
States can set up their plans so that they can interconnect
with each other in ways that make that sort of either averaging
or working together across companies, across States, very easy
to do. And all of those things will help make sure that power
is where it needs to be, when it needs to be, over this long
trajectory of implementation.
Mr. Doyle. Let me ask you about how this proposed rule
treats nuclear power, specifically, existing plants which we
have in Pennsylvania. It is, as you know, our only source of
reliable base-load electricity that is carbon-free, but my
understanding is the proposed rule gives States little credit
for preserving plants in the nuclear fleet, approximately a 6
percent credit. Is EPA reconsidering how it treats existing
nuclear power plants in its rule? It seems to me that any
nuclear power plant whose operator makes the significant
investment to pursue relicensing during the compliance period,
that should be treated as new capacity. And I say that because
there is no guarantee that the NRC would grant such a license,
and it is far from assured that plant operators will make the
commitment and spend the money to pursue relicensing when many
of these plants are already financially challenged. So it just
seems to me if we start to lose a large chunk of our nuclear
fleet, I don't see how we are going to meet our greenhouse gas
goals.
Ms. McCabe. Yes.
Mr. Doyle. So how are you going to treat the existing----
Ms. McCabe. That is a very good point, and we did receive a
lot of input on how we proposed to handle nuclear plants, so we
are thinking very hard about that. Our intent certainly is not
to put any barriers in the way of continued use of nuclear
power seeking relicensing, upgrading, if that is appropriate,
plants that are under construction going forward. We also
recognize some of the challenges that that industry is facing
today, and we don't want the Clean Power Plan to interfere with
the use of that power. So we are looking at all of that,
Congressman, and we will be addressing----
Mr. Doyle. And are you considering looking at relicensing
as----
Ms. McCabe. We are looking hard at that issue and
considering what our options are there.
Mr. Doyle. I see. Also I want to talk a little bit about
the concerns people have of the impact on base-load power
plants. You know, we can argue over the merits of this type of
power, but for the time being and the foreseeable future, these
are the plants that are providing the bulk power that we rely
on. Are you concerned about the impact that closures on the
grid, its operation, its ability to perform in severe
circumstances, has the EPA conducted any low-flow analysis to
determine the impact on power flows and grid stability----
Ms. McCabe. Well----
Mr. Doyle [continuing]. Both on this rule?
Ms. McCabe. As part of our proposal, we took a look forward
and it is not a reliability analysis in that normal sense of
the word, but we took a look into the future and we are
comfortable that what we were putting forward was a reasonable
approach to--in order to preserve reliability. Coal would
remain about 30 percent of the Nation's power supply in 2030,
so many of those base-load plants would become efficient and
would continue to operate. There are lots of other
organizations that are looking at these issues. The Federal
Energy Regulatory Commission just held a series of 4 hearings
that we attended and were very involved in. So we--this is not
EPA's area of expertise, so we know that we need to be
communicating and working with the agencies whose expertise it
is to make sure that we are doing this right.
Mr. Doyle. Thank you.
Mr. Chairman, thank you.
Mr. Whitfield. Thank you.
At this time recognize the gentleman from Pennsylvania, Mr.
Pitts, for 5 minutes. Gentleman from Ohio, Mr. Latta, for 5
minutes.
Mr. Latta. Well, thank you, Mr. Chairman. And, Madam
Administrator, thanks very much for being with today.
In the proposed Clean Power Plan, EPA estimates costs of
between $5.5 billion and $8.8 billion every year for each of
the years from 2020 through 2030. Are these costs over and
above the costs associated with EPA's Mercury and Air Toxics
Rule, which EPA estimates will cost about $9.6 billion annually
in the coming years?
Ms. McCabe. Those are costs associated with this program.
Mr. Latta. Let me ask, now, how did you come up with those
estimates?
Ms. McCabe. We used standard approaches and guided by
guidance from the Office of Management and Budget, working with
our economists in EPA to make determinations about the expected
costs and the benefits.
Mr. Latta. OK. And, you know, just to follow up where Mr.
Barton was with his questioning. Has the EPA done an analysis
of the accumulated effect on the electricity rates of all its
recent major air rules affecting power plants?
Ms. McCabe. No. No, we haven't.
Mr. Latta. You have not?
Ms. McCabe. I don't believe we have.
Mr. Latta. OK. Given the billions of dollars and new costs
from these rules that have not yet been reflected in the rates,
shouldn't the EPA be producing a clear cumulative assessment
for the public to review? And just to, you know, I know the
folks in this committee have heard me say it before, but I
represent a district of about 60,000 manufacturing jobs, and a
lot of my jobs out there are in plants that use--that are
really high users of electricity that keep these people working
every day, but is there a clear cumulative assessment for the
public to review out there from the EPA?
Ms. McCabe. Well, it is--there are many things that--of
course, as you know, that go into the cost of electricity, and
so EPA, as we are required to do, for each program we look at
the costs associated with that program, and each program before
it has looked at the costs associated with that program.
Mr. Latta. And, you know, on the next panel you might have
already seen who is going to be testifying before us, but the
next panel we have some very powerful testimony about the
impact the higher rates on families with middle or lower
incomes, and what assurances can we give these ratepayers in 31
States reviewed that they don't need to be concerned about
higher electricity rates?
Ms. McCabe. Well, I think as we have discussed already here
this morning, there are a number of elements that go into this
proposal and will go into the final rule that will give States
flexibility to make sure that they are implementing this in a
way that can protect especially lower income ratepayers, which
is something that States are very conscious of, and have tools
at their disposal to do.
Mr. Latta. Great, I was just talking a bit about what
happened in my State, in Ohio, under the EPA--under Ohio EPA's
comments on the proposed Clean Power Plan. It indicated that
compliance with building block 2, and building block 2 was the
use low emitting power sources, using lower emitting power
plants more frequently to meet demands means less carbon
pollution is what it says here in building block 2. Under the
Ohio EPA's testimony, they are looking at the cost to Ohioans
of approximately $2.5 billion more for electricity rates in
2025 alone. And similarly, the chairperson of the Wisconsin
Public Service Commission recently testified that the proposed
Clean Power Plan would cost Wisconsin ratepayers between $3.1
billion and $13.4 billion, and this is only a production cost
increase. It does not include necessary upgrades to the gas and
electric transmission infrastructure that is also going to add
up to the cost for compliance. Are these types of costs to
implement the Clean Power Plan acceptable to the EPA's
perspective?
Ms. McCabe. Well, I--it is hard to assess costs for a plan
that no State has developed yet and so I can't really speak to
that, but I will point out that in the industry, we are seeing
an increased use of gas and less use of coal because of fuel
prices, gas-based generation is quite economical compared to
coal, and so this is the way the industry is going. That is
exactly how the Clean Air Act tells us to build our rule is to
look at the direction that the industry is going and set
targets based on that.
Mr. Latta. Well, and, you know, like in the State of Ohio
we have a lot of plants that are either going to have to be
shutting down or converting. The number is over 40, but we have
to also consider in that number and that cost that they are
either going to have to convert those plants or build brand new
plants. And so just because the cost of a certain energy out
there might be lower today, we still have to have the
infrastructure and the plant to be able to produce that power.
And so I think those are things that, you know, the EPA has to
really look at when you are looking at these numbers.
Mr. Chairman, I see my time has expired and I yield back.
Mr. Whitfield. Gentleman yields back.
At this time recognize gentleman from Kentucky, Mr.
Yarmuth, for 5 minutes.
Mr. Yarmuth. Thank you, Mr. Chairman. Administrator, thank
you for being here today. You know, I haven't been on the
committee for a long time, and already this conversation is
sounding a lot like Groundhog Day, which is OK because I know
my lines in this play. One of the things that astounds me as we
talk about environmental issues, and we do week after week in
this subcommittee, is that we get a lot of alarmist talk and
this has been the historical pattern for as long as the EPA has
been in existence, and I recall the same kind of concerns with
acid rain, the same kind of concerns with mercury, and the same
kind of concerns when we passed Waxman-Markey, at least in the
House, in 2009. So just as a--an analysis that I make, when we
were analyzing Waxman-Markey back in 2009, and we had made some
significant changes in the way the original bill was introduced
that made it easier for States like Kentucky, which gets 92
percent of its energy from coal, to comply without an adverse
impact on our constituents, I started calling on major users of
electricity, UPS, or the global hub of UPS, Ford Motor Company,
General Electric, the Louisville Metro Government, University
of Louisville, all of those users, and without exception they
were either for the plan or neutral on the plan. So they had
made an assessment that there was not going to be a significant
impact on their utility costs. As this rule has now been
circulating--this proposed rule has been circulating, I have
waited for my constituents to chime in, and the same reaction I
have gotten, we haven't heard from anybody who is concerned
about the long-term implications of this new rule. And I think
the reason is that early on the EPA did allow flexibility--
include flexibility among the States. Our Governor and our
energy department came up with a plan that they thought could
help us comply with minimal impact on our consumer rates, and
we have to reduce our emissions by 18 percent between now and
2030 under the rule. That is a little more than 1 percent a
year. So when you actually frame it that way, the idea that we
couldn't come up with 1 percent reduction a year just by using
conservation, changing installation patterns, classes, so
forth, is kind of silly. And I suspect, and with all due
deference to Texas, I don't know Texas' situation, it seems to
me that that is a small price to pay to have a significant
reduction in carbon emissions. In my district, carbon emissions
not only add to global climate change but also to respiratory
problems. As always, it was a documented correlation between
emission of carbon dioxide and those problems. We have a huge
problem in the immediate proximity to power plants in my
district in Louisville. So all of these things, these doom and
gloom scenarios, and I don't want to use the pun of the sky is
falling, but the doom-and-gloom scenarios seem to me to not
play out in reality.
So one question I would ask you is that under the proposed
terms of the legislation that we are discussing, do you see any
scenario in which refusing to do your own plan or opting out of
a Federal plan would result in a safe, low-cost, and clean
electricity system going forward?
Ms. McCabe. I think it would be very disruptive to have a
system where States could opt out of a federally required plan
that other States are doing, and especially with an
interconnected, interstate power system.
Mr. Yarmuth. The chairman asked a little while ago, and the
chairman is a good friend, why we were doing this, the proposed
rule, when there are so many--being filed, my State has joined,
and my--full disclosure, and I think we can probably say the
same thing--ask the same question about this bill. Why would we
do this when this bill passed and get vetoed, and it would
never be overridden, but we are getting, again, to make the
same arguments that we made week after week after week. So I
want to thank you for your work. Again, I think thanking you
for providing the States the flexibility to tailor their plans,
and if we go forward and this is the final action, Kentucky
will have a very workable plan to meet the obligations of the
act, and with minimal impact on our consumers. So thank you for
that.
And I yield back.
Mr. Whitfield. At this time recognize the gentleman from
Kansas, Mr. Pompeo, for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman. And thank you for
being here today Ms. McCabe.
I saw a recent trade report that said there were roughly
640-plus State implementation plans that were backlogged. Is
that report correct or roughly correct?
Ms. McCabe. That sounds about right. That refers to a
number of different submissions that States would have made,
some of them very minor.
Mr. Pompeo. Could you provide us a list of all those 650-
plus backlog----
Ms. McCabe. I don't think----
Mr. Pompeo [continuing]. SIPs?
Ms. McCabe. I don't think we have a list of them all
because these are handled by our regional offices.
Mr. Pompeo. Could you not put them all together? I mean----
Ms. McCabe. Well, I will take that back----
Mr. Pompeo. That same----
Ms. McCabe. I will take that back, Congressman.
Mr. Pompeo. Wow, can't put together a list from the
regions, that is something. Does that not indicate that when
these States put together these plans, these are very short
timelines for approvals, they didn't--implementation plans,
that there is some risk that the Clean Power Plan might not be
able to work, you just don't have the resources to do that and
approve these plans in a timely fashion?
Ms. McCabe. No, I expect that the agency would make sure
that we----
Mr. Pompeo. So you get to these and you put these other 655
in the back of the queue?
Ms. McCabe. Well, Congressman, if I could take a minute and
explain. The----
Mr. Pompeo. You can take about 10 seconds.
Ms. McCabe. We work with the States to prioritize the plans
that they submit to us that make the most different for public
health and welfare in the States, and some are less critical,
and so they--we don't get to them as quickly.
Mr. Pompeo. You said a minute ago that you thought that the
cost for consumers would be reduced, as a result, at the end of
2030 ratepayers would have a lower burden, is that correct?
Ms. McCabe. That is what our regulatory impact analysis
says.
Mr. Pompeo. Why on Earth are you worried about a State
opting out if this is so great? You seem very concerned that a
State might opt--I can't imagine some Governor opting out when
it is going to save his ratepayers money. I am interested in
why you are concerned about that.
Ms. McCabe. Well, I think we are hearing from a number of
States that they don't agree with this program, and so it seems
like there might well be States that would----
Mr. Pompeo. Why do you think----
Ms. McCabe [continuing]. Opt----
Mr. Pompeo [continuing]. You know more than they do----
Ms. McCabe. Well----
Mr. Pompeo [continuing]. About what it is going to cost the
ratepayers? I mean if this is such genius and such glory, and
such an enormous cost savings, why aren't--you said the
northeast was doing it already, right? Didn't you say the
northeast was already doing efficiency gains?
Ms. McCabe. Yes.
Mr. Pompeo. Why do we need this rule? It is--this is
beautiful, this is lower cost and lower CO2, this is
magic.
Ms. McCabe. Well, this is an urgent environmental public
health and economic problem that we are faced with----
Mr. Pompeo. And you assume the Governors care about that
too, right? These aren't bad--these Governors aren't up to hurt
the people in their State, correct?
Ms. McCabe. The States are moving in different directions--
--
Mr. Pompeo. No, answer my question. Yes or no, are
Governors trying to harm the health of their constituents?
Ms. McCabe. I assume the Governors are not trying to harm
the----
Mr. Pompeo. Right, and they would like to reduce the rates
for their constituents too, is that right?
Ms. McCabe. I would----
Mr. Pompeo. So tell me why your rule is needed if this is
such an uninhibited good.
Ms. McCabe. Under the Clean Air Act, we have an obligation
to address air pollution that is harming the public wealth
and--health and welfare. Carbon has been identified and
confirmed now by the Supreme Court that it is doing that. We
are moving forward with----
Mr. Pompeo. Let's get to health. You talked about asthma.
How many fewer asthma cases as a result of the Clean Power
Plan?
Ms. McCabe. We predicted there would be thousands of fewer
exacerbated asthma----
Mr. Pompeo. How many? Where is the report, where is the
study that shows exactly how many fewer asthma----
Ms. McCabe. Those predictions are laid out in our
regulatory impact analysis.
Mr. Pompeo. How much more increased snowpack as the result
of the Clean Power Plan?
Ms. McCabe. That is not something that we predicted, and
that is not something that you could predict from----
Mr. Pompeo. These are your indicators. These are EPA's
indicators of climate change. They are on your Web site. I am
staring at it right now.
Ms. McCabe. Yes.
Mr. Pompeo. I assume there will be a benefit to the
snowpack, so how much more snowpack as a result of the Clean
Power Plan?
Ms. McCabe. Climate change is affected by many things and
needs to be looked at over a long----
Mr. Pompeo. You can't--yes or no, will there be more
snowpack as a result of this rule or less?
Ms. McCabe. That is not something you can predict.
Mr. Pompeo. So you don't know. The answer is you don't
know.
Ms. McCabe. That is not something that is predictable by--
--
Mr. Pompeo. How many fewer heat-related deaths as a result
of the Clean Power Plan?
Ms. McCabe. I don't know. I will----
Mr. Pompeo. You don't know? How much sea-level rise will be
diminished as a result of the Clean Power Plan?
Ms. McCabe. This is one step, Congressman. It takes many,
many steps.
Mr. Pompeo. Right. The answer is you don't know, correct?
You don't know the answer to the question. You don't know.
These are your indicators, this is your science, this is your
assertion, it is in deep disagreement with lots of other folks
who have a different view of this, and yet you won't put
forward the health-related benefits that are associated with
this in a scientific way. Instead, you come before us today and
make assertions unsupported by data, unsupported by science,
and you list a series of indicators and you say, gosh, we are
going to put this enormous cost--your own data says in the
billions of dollars, but we don't know what health impact this
will have on America. Mr. McKinley said earlier this is
delusional. It is worse than that; it is unfounded in science.
And for that reason alone, we need to move forward with this
legislation.
And, Mr. Chairman, I thank you for having this hearing
today.
Mr. Whitfield. At this time recognize the gentleman from
New York, Mr. Engel, for 5 minutes.
Mr. Engel. Thank you. I would like to first give
Administrator McCabe a chance to answer some of these questions
because I don't understand why some Governors have an
ideological--they seem to do things that would pollute the air
and not be very beneficial to their constituents. Would you
care to elaborate any more because you didn't have very much
chance to expand on your thoughts?
Ms. McCabe. Well, people have different views, and States
take different approaches to things. What I was trying to say,
Congressman, and I appreciate you giving me the opportunity, is
that Congress, in setting up the Clean Air Act, set up a system
where the Federal Government would set expectations for
protecting public health and welfare across the country,
recognizing that States make different choices, but also
recognizing that a child in Washington State and a child in
Florida should have just as clean an environment, regardless of
individual choices that their States might make.
Mr. Engel. Yes, I couldn't agree with you more. And let me
remind my colleagues that the Clean Air Act was enacted by an
overwhelming bipartisan majority, was signed into law by
President Nixon, and it stands as one of the most successful
public health laws in our Nation's history. Today's discussion
draft would definitely delay implementation of the Clean Power
Plan and allow Governors to essentially opt out if they and
they alone determine that their compliance would adversely
impact ratepayers or electric reliability. It is a fact, is it
not, that the United States emits more carbon pollution than
any other nation except China, and existing power plants are
the country's largest single source of carbon pollution? Is
that a fact?
Ms. McCabe. That is correct.
Mr. Engel. So it is obvious that these emissions have
significant health impacts that threaten the lives and
wellbeing of people all over America. But since 1970, we have
cut many dangerous air pollutants by 90 percent or more, and
while our economy has tripled in size, and I believe that means
millions of lives have been saved and illnesses avoided, and
let me quote an EPA analysis which estimates that in the year
2010 alone, the Clean Air Act has prevented over 160,000
premature deaths, 130,000 cases of heart disease, 1.7 million
asthma attacks, 86,000 hospital admissions, and billions of
respiratory illnesses. The monetary value saving Americans from
those harms is projected to reach $2 trillion in the year 2020
alone, and from 1990 through 2020, the monetary value to
Americans is projected to exceed the cost by a factor of more
than 30 to 1.
I am particularly interested in, Madam Administrator,
because my district has some of the highest rates of asthma in
the United States, rates of death of asthma in the Bronx where
I am from are about three times higher than the national
average, hospitalization rates are about five times higher, and
it seems to me that today's discussion draft would endanger
lives and jeopardize health are dramatically weakening and
delaying Clean Air Act safeguards.
So let me ask you, Madam Administrator, will you please
talk about how air pollution impacts the health of our
communities, and explain how this discussion draft would delay
or prevent the air quality benefits of the Clean Power Plan?
Ms. McCabe. Well, it is very clear that air pollution does
affect the health of people in our communities, and especially
low-income and communities of color that already are suffering
from a variety of pressures on their health and on their
healthcare. Higher levels of particulates and nitrogen oxides
and sulfur dioxide lead to asthma, as well as heart attacks,
other sorts of respiratory illnesses, and in some cases
premature death. And all of that information is very well
established and very well laid out. So the Clean Air Act has
been incredibly helpful to the public health of this country,
saving much suffering, much cost to those families' lives and
to the economy from the healthcare costs avoided.
Mr. Engel. Can you elaborate on the State flexibility,
because there is flexibility, of the Clean Power Plan in terms
of State implementation?
Ms. McCabe. Yes. There is a long trajectory in time for
States to design plans that work for them. There is no
prescribed approach for any State to follow, so they can be
very respectful of their particular power sources and the needs
of their communities. There is the ability for States to
cooperate with other States, either near or far, in small or
large groups, to widen the pool of cost-effective approaches.
So this system which Congress set up to allow States to do
these sorts of plans is very well designed to afford lots of
flexibility.
Mr. Engel. Well, thank you. And thank you very much, and I
am very pleased that you are raising these issues today because
the health of our constituents depend on it. Thank you so much.
Ms. McCabe. Thank you.
Mr. Whitfield. At this time recognize the gentleman from
Illinois, Mr. Kinzinger, for 5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman. Administrator,
thank you for being here with us. Appreciate your service and
to be willing to come in front of the committee.
In the proposed rule, your agency states specific goals for
reducing carbon dioxide in the power generation section. More
specifically, the rule says that once final goals have been
promulgated, a State will no longer have an opportunity to
request that the EPA adjust CO2 goals. I just want
to delve into that a little bit just so that I know. In the
final rule, will the carbon dioxide goals set for each State be
fixed, or will they be fixed in number?
Ms. McCabe. That is what we proposed, and so we are looking
at the comments that we received on that, Congressman, so we
are looking at that, but----
Mr. Kinzinger. OK.
Ms. McCabe. The idea is that States should be able, once
the rule is final, to go forward and develop and implement
their plan.
Mr. Kinzinger. So let me delve into that a little further.
You know, I have seen a number of studies come out recently
concerning the price, we have talked about that a lot, the
price increase with these rules potentially. Will there be an
opportunity for a State to request that the EPA adjust those
goals if the State administrators find that those goals will
cause electricity prices to substantially increase?
Ms. McCabe. That is not what we propose. We believe that
the plan allows enough flexibility that States should be able
to implement these plans in a way that is reasonable----
Mr. Kinzinger. Well----
Ms. McCabe [continuing]. And will protect----
Mr. Kinzinger. What kind of flexibility--I mean if you have
a number that is set and when the State basically comes back
and says, hey, look, we have information that says this is
going to skyrocket prices on our customers, what is the
flexibility that we can adjust that besides actually adjusting
that if that number stays fixed?
Ms. McCabe. Well, I would say that if a State found some
sort of extraordinary problem with the plan that it had
developed, there is always the ability to come back and talk to
EPA about making adjustments, but it is important that----
Mr. Kinzinger. You just said it is fixed, though, it is a
fixed number.
Ms. McCabe. But it is important that the goals be clear and
it is important that the goals be fairly set across the country
from----
Mr. Kinzinger. Well, yes, and I get the clear thing, and if
this works out, I would imagine a State would want to stick
with it if, as you say, this drives down prices and it is
amazing, but if they find out that this isn't, you know, quite
what it is sold to be, I mean I would think that there would be
an opportunity to address that beyond extraordinary measures,
something that would be--doesn't even have to be extraordinary,
just taking measures to adjust something that doesn't seem to
be working out.
Ms. McCabe. I think we need to remember that these plans
will be implemented in the context of the changes that are
happening in the energy system now. So----
Mr. Kinzinger. So the same is for the assigned goals in
terms of reliability should there be an opportunity if
reliability, not just pricing, you know, pricing we can get,
but reliability is the real national security issue, would
there be an opportunity for States to make an adjustment if
that situation became----
Ms. McCabe. Right. So as I have said already this morning,
we are looking at talking with organizations like FERC and
others who are expert in these issues to make sure that our
final rule will protect reliability.
Mr. Kinzinger. Well, I would hope so, and I just want to
add that, you know, look, pricing increases to me is very
important and it is very detrimental, but I think even above
that is, you know, power reliability issues, and there ought to
be a real off-ramp. And I would also add, you know, and I think
I would probably get the same result from you, but when it
comes to like issues of job loss, if it is proven that this
could create job loss, there ought to be an opportunity for
States to make adjustment. Would there be any other Federal
agency or State agency that would have a role in deciding
whether to change the goal at this point if you were setting
out goals for States, any agency besides yours that would have
any input in that?
Ms. McCabe. Well, it is really EPA's responsibility under
the Clean Air Act to make those decisions.
Mr. Kinzinger. OK. And I just--I already talked about, you
know, the issue of an off-ramp if you have reliability and you
are going to want to put in a good word for that because I
think that will be extremely important, and you have probably
seen that in a lot of your comments. So, you know, with all the
regulations coming down from EPA, and the discussion of this,
are we locking States into economic hardship in regards to
these mandates coming down from the Federal Government as a
result of these duly proposed rules?
Ms. McCabe. I would say that we are not, Congressman. I
know there is a lot of debate about those issues, but I would
encourage people to think about the flexibility that is here,
the opportunities that people are seeing, there is a lot of
positive conversation going on around the country.
Mr. Kinzinger. I agree, and I would love to see positive
conversation and flexibility when it comes to your role in this
because I think, you know, listening to the States on the
ground that have a real interest in this that, you know, live
this day-by-day, you know, I fly airplanes, I am not a
manufacturer so I listen to a lot of manufacturers about what
works with that. It has become an--so I would hope you would
listen to States in this process and understand what situations
may come along.
With that, I will yield back.
Mr. Whitfield. Gentleman yields back.
At this time recognize the gentlelady from Florida, Ms.
Castor, for 5 minutes.
Ms. Castor. Thank you very much, Mr. Chairman. And welcome,
Administrator McCabe.
As--under current laws, EPA begins down the road with the
Clean Power Plan, you--EPA will set the overall carbon emission
reduction goals under Section 111(d) of the Clean Air Act, and
then it is up to States to determine how best to achieve the
reductions. And as States begin to set the goals and establish
plans for carbon reduction, it is clear that consumers'
pocketbooks will be better off when States plan ahead, and when
they use many different and varied tools to reduce carbon
emission. You mentioned a few here today. Conservation plans
for States, are consumers going to be better off if a State has
a robust conservation plan?
Ms. McCabe. Yes, they will.
Ms. Castor. And energy efficiency?
Ms. McCabe. Yes, absolutely.
Ms. Castor. So what do you say to States that are moving
backwards on that today?
Ms. McCabe. Well, it seems that there are opportunities out
there that we would think every State would want to take
advantage of, and some States are further ahead than others,
and that is what the Clean Power Plan anticipates, is that
those kinds of measures will indeed be implemented.
Ms. Castor. Wouldn't that raise a red flag for consumers if
they know, OK, we have to have--we have to reduce carbon
pollution but then leadership at the State level says, well, we
are--our idea of doing that is to eliminate conservation goals,
shouldn't that raise a red flag for consumers and their
pocketbooks?
Ms. McCabe. Well, a lot of Americans across the country are
very smart about these issues, and we are hearing that they are
in favor of moving forward with this kind of plan for both the
economic and the public health benefits that it will provide.
Ms. Castor. Now, what is the starting line on this? For
States, what do you tell them is the baseline, because you have
to establish a place in time where all States have to start,
and then measure their plans and their goals for reduction.
Ms. McCabe. Right. So we started with 2012. This is a rule
that requires us, as I have mentioned this morning, to look
around and see the effective measures that are being used, and
have an expectation that those will be increasingly used all
across the country. So that is what we did, but we looked at
States where they were in 2012 and projected forward.
Ms. Castor. So if they have reduced their carbon emissions
from 2012, they will get some credit towards their State goals.
Ms. McCabe. Well, their carbon emissions are down. They
have already taken steps to implement energy efficiencies,
invest in renewables, their carbon emissions are already going
down so they are that much closer to their goal.
Ms. Castor. Is there any way for a State to get credit for
reduction prior to that date of 2012?
Ms. McCabe. Well, this is a good issue, and a lot of people
have raised it to us and given us different ideas about it. The
key issue is any reduction made early is a reduction that
doesn't need to be made later. So that is a very good thing for
people to do, and as you have noted, planning, having a robust
planning process is going to make it the most cost-effective,
affordable, and reliable as the States implement their plans.
Ms. Castor. Now, one of the problems I see in--especially
in my home State of Florida where the costs of the changing
climate are so severe in the years is the problem the State
utility framework and how--and the costs that they can consider
because, typically, in the Public Service Commission framework
and utility regulations, they don't consider costs of flood
insurance, because the--of sea level rise, they don't consider
cost of property insurance increases on consumers, they don't
have to take into account increases to property taxes when a
local government has to address flooding from storm water. Can
the EPA provide any guidance to States on this, or you say you
have all the flexibility in the world, States, and you need to
consider those costs broadly?
Ms. McCabe. Well, we do give--the Clean Air Act gives the
States the flexibility to do that. I will note that we predict
in our regulatory impact analysis a significant debt economic
benefits from this rule on the order of 30 to $49 billion, and
that is taking into account the expected benefits to
constituents like yours in Florida that are seeing the impacts
of climate change today.
Ms. Castor. I am sorry, I have run out of time. Thank you.
Mr. Whitfield. At this time recognize the gentleman from
Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman.
In response to your answers to several people, including
Representatives McKinley and Pompeo, I would just have to point
out that the Virginia State Corporation Commission does not
agree with you that this is going to somehow make the price of
electricity go down, and I quote, ``To achieve the carbon
emission reductions required by the proposed regulations,
customers in Virginia will likely pay significantly more for
their electricity. The incremental cost of compliance from one
utility alone, Dominion Virginia Power''--which only serves 2
of the 29 jurisdictions I represent--``would likely be between
$5.5 and $6 billion on a net present value basis in addition to
new investment, Virginia residences and businesses will also be
responsible for paying remaining costs for useful existing
facilities forced to retire prematurely under the proposed
regulation. The proposed regulation places a risk several
billions of dollars of recent investments in existing coal-
fired facilities. Contrary to the claim that rates will go up
but bills will go down, experience and costs in Virginia make
it extremely unlikely that either electric rates or bills in
Virginia will go down as a result of the proposed regulation.''
Now, I assume that you are aware that the Virginia State
Corporation Commission is not some private body of electric
generators, that is the regulatory agency that sets the
electric rates in Virginia, that says what the companies can
charge, and they say, just to one company, it is going to cost
5 to $6 billion. When you add in all the other companies, it is
going to be billions, and that it is highly unlikely that the
rates will go up but the bills will go down, they said
``extremely unlikely,'' let me get it correct. I said
``highly,'' they said ``extremely unlikely that either electric
rates or bills in Virginia will go down as a result of the
proposed regulation.'' So I just point that out to you so when
others say please listen to these folks, they have decades of
experience in figuring out what the rate is supposed to be so
that the electric companies don't charge too much, but get a
return for their heavy investment.
Now, that being said, you also indicated that folks were
moving to gas-based generation because it is more affordable.
That is true today, although even last year for a number of
months, the rate was over--the cost of natural gas was higher
than that which it cost to create the same number of BTUs with
coal, that fluctuates, but further, you have to build
pipelines. Now, right now in my district, there is a big
pipeline being proposed to be built, and in the noncoal-
producing areas of my district, people are opposed to that
pipeline because they are not sure that at that size it is
going to be safe. So I submit to you that we may not be ready
in 2020. And further, I would ask, don't you all work with the
DOE, because they are working on clean coal technologies and
they have indicated to us that it will be probably about 2025
before those new technologies are onboard. But according to
your plan, at least as we have heard about it up to this point,
you keeping out it is not final yet. The States are supposed to
come up with their plan 13 months after the final rule, so this
is 2015, some time in 2016, Virginia is going to have to come
up with a plan. They can't wait until 2025 when the new
technologies will be viable, and there are 5 or 6 clean coal
technologies looking really promising. How much greater benefit
are we going to get as a society in that 5- or 6- or 7-year
period that we are going to put lots of people out of business,
raise the cost of electricity, and yet the technologies are
almost there? I would submit the plan is flawed and that is why
we need this bill.
I would also say to you, and I don't have to ask this from
any legal standpoint, if one State were able to pull out of
your plan under a legal theory, would that destroy your plan,
yes or no?
Ms. McCabe. It would be inconsistent with the way the Clean
Air Act works, and it would be disruptive.
Mr. Griffith. But you understand that Laurence Tribe, when
he was here to testify, I asked him about collateral estoppel
on the case that I asked you about last time, where the EPA
lawyers conceded that you didn't have the power under 111(d) to
do this regulation, he said collateral estoppel would only
work, or res judicata would only work for the State of New
Jersey if they chose to use it. You could lose on that point.
Now, I don't think you are right on 111(d) anyway. I don't
think you have that authority. It is interesting, though, that
this bill would say that all of these cases would have to go
forward, but this Thursday, you are arguing in front of the
Circuit Court of Appeals that it is premature to bring the
court case that says you don't have the underlying authority.
Wouldn't it be great to go ahead and get the Supreme Court to
decide whether any of this regulation, final or otherwise,
whether you had the authority to regulate at all under 111(d)
in the existing power facilities and the electric generation
units, wouldn't that be great to go ahead and get that out of
the way? And why would you all want to stall that, and wouldn't
this bill, if passed, encourage you all for judicial efficiency
to go ahead and let's find out whether or not you have the
power to do what you say you do. I don't think you do. You
think you do. The Supreme Court has yet to rule. The more you
delay makes this bill more practical. Your arguments on
Thursday make me want to carry this bill.
Thank you very much, and I yield back.
Mr. Whitfield. At this time recognize the gentleman from
California, Mr. McNerney, for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman.
Ms. McCabe, in light of the fact that human-caused climate
change is advancing and that the impacts are going to be more
and more severe over time, I have suggested to my colleagues
that have coal-fired interests that they embrace carbon
sequestration, carbon capture sequestration sort of to protect
their local industries. How would the implementation of CCS
impact coal-fired power plants under the Clean Air Plan?
Ms. McCabe. CCS would be a technology the State could
choose to build into its plan as a way of reducing carbon
emissions from their coal fleet.
Mr. McNerney. So in a sense, it would protect their coal-
fired power plants, and coal miners and go on down the line.
Ms. McCabe. That is correct.
Mr. McNerney. Thank you. Have you studied the discussion
draft?
Ms. McCabe. Yes, I have.
Mr. McNerney. Do you think that carbon emissions would be
reduced under the Clean Air Plan if this bill is adopted?
Ms. McCabe. I don't think it would be. I think it would all
be delayed.
Mr. McNerney. Delayed? More than delayed, do you think it
would be disrupted?
Ms. McCabe. Perhaps, yes.
Mr. McNerney. Have the States worked well with the EPA to
develop the Clean Power--you know, under the Clean Air Act, and
have they worked together well under the Clean Air Act?
Ms. McCabe. Absolutely. There has been tremendous
discussion from States all across the country. We continue to
have those discussions.
Mr. McNerney. Well, my region is the central valley of
California, the northern part of that central valley. If this
bill is adopted, how do you think that would affect the air
quality in that region?
Ms. McCabe. Well, it would mean that States would delay, in
the first instance, putting their plans together, not just
California but all States would, and as States having the
option to opt out of the plan altogether could certainly impact
California.
Mr. McNerney. Thank you. FERC recently had a listening
session on the Clean Power Plan. What was your takeaway from
those hearings?
Ms. McCabe. Those were very interesting conversations. We
very much appreciated being a part of them. I think we heard a
lot of the things that we have been hearing from people in
their public comments to us, which makes sense. A lot of good
questions, a lot of good discussion, interest by FERC in making
sure that they understand how they can be helpful to EPA as we
go forward and do our job under the Clean Air Act. So I think
it has served as another opportunity for people to raise their
concerns, and also as a basis for ongoing conversation.
Mr. McNerney. So in your opinion, it was a positive
conversation.
Ms. McCabe. Absolutely.
Mr. McNerney. Are you having those types of conversations
in States about the Clean Power Plan?
Ms. McCabe. Certainly, yes.
Mr. McNerney. And a lot of those are productive.
Ms. McCabe. They are. They are.
Mr. McNerney. Are there many that aren't productive?
Ms. McCabe. Well, I think when States come and sit down
with us, they have questions about how to go forward with this,
and we are working with them on the kinds of resources that
they will need, technical resources, training that they will
need. There is great interest. And I recognize that there is
controversy as well, but when we sit down with the
environmental regulators, they are focusing in on how to make
this work.
Mr. McNerney. Do they share the kind of concern about
economic impact we are finding here today?
Ms. McCabe. I think everybody wants to make sure that we
can implement this program just as we have implemented so many
under the Clean Air Act in a way that preserves affordable and
reliable electricity for this country, but also delivers the
billions of dollars of benefits to the public health and
welfare and to the economy of this country that, over the years
through the Clean Air Act, has delivered for the American
people.
Mr. McNerney. So would you say that the effort to reduce
sulfur dioxide emissions had a positive impact on the economy?
Ms. McCabe. Absolutely, I would, yes.
Mr. McNerney. And your opinion that this Clean Air Plan
could be similar in its results?
Ms. McCabe. And it is absolutely essential, given the
threat to or country that climate change poses.
Mr. McNerney. Thank you. I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson of Ohio. Thank you, Mr. Chairman. And, Ms.
McCabe, thank you for being here with us today.
I am in favor of both gas-fired and coal-fired power to
heat and cool our homes and run our businesses. I think we need
both, and I think that is very clear. I see a dichotomy though,
a conflict, between building block 2 and building block 1 of
the proposal. In building block 2, the EPA assumes that gas
plants will run far more, at a 70 percent capacity factor, in
order to run coal-fired plants, far less. This will reduce the
heat rate efficiency of coal-fired plants because running any
plant less, and on an intermittent basis, always reduces
efficiency. Anybody that understands the science and technology
of coal-fired power understands that. So what this says to me
is that building block 2, which calls for running coal plants
less, is at odds with the goals of building block 1, which
calls for improving the heat rate of coal-fired plants. You
can't run coal-fired plants less, while running gas plants
more, and then turn around and argue that the heat rate of coal
plants should be improved. To me, this seems an obvious example
of using Big Government--implementing rules that are
practically impossible for an industry to meet, in this case,
the coal-fired industry.
So my question to you is, did the EPA consider that the
amount of switching to natural gas effectively required by this
rule would require coal-fired plants to operate less, thus
driving up heat rates substantially, while eliminating the heat
rate at the coal units? Help me understand this conflict.
Ms. McCabe. Well, so one thing, it is important to note
that the building blocks we used were not a prescriptive
formula for every State, or for any State. It was a way of
characterizing the kinds of approaches that are used that
reduce carbon. And we do predict that there will continue to be
base load coal-fired power plants providing power.
Mr. Johnson of Ohio. OK, so I can to my other questions,
let's--let me stay focused here.
Ms. McCabe. Yes.
Mr. Johnson of Ohio. Would you agree--I understand that, so
it was not a prescriptive formula----
Ms. McCabe. Yes.
Mr. Johnson of Ohio [continuing]. But would you agree that
requiring coal plant to run less in one section, and then
mandating that it improve its heat rate efficiency in another
section, that that is a dichotomy, that those 2 things are in
conflict?
Ms. McCabe. Well, I understand that when----
Mr. Johnson of Ohio. I mean, you understand the technology,
that is a yes or no question.
Ms. McCabe. I do understand the technology, and it can be
harder to run as efficiently when you are running less, but
there----
Mr. Johnson of Ohio. OK, I will take that as the answer. I
personally feel that this demonstrates an extreme shortcoming
of the proposal, Ms. McCabe, because what may be called
flexibility is really the closure of a significant percentage
of the plants that power America. Even before 111(d) takes
effect, we will have huge numbers of retirements of coal-fired
plants because of that intermittent, on and off again, running
less situation.
It is also clear, turning back to some of the questions for
the areas that some of my colleagues have addressed, that at
the same time States would be developing the plans, there will
be serious legal questions about the Clean Power Plan
regulatory scheme. And I heard one of my colleagues ask the
question earlier that the EPA, by its own track record, is
unlikely to be providing timely guidance and assistance to the
States, and the agency appears not to want to consider slowing
down the process time. Whatever the confident assurances of the
agency are, this is going to be a very messy process, and I
think that everyone understands it.
So why would you not want to resolve the legal issues
before you and your agency go through the work, and you put the
States and the industry through all this problem? Why would you
not support wanting to let the legal issues work themselves
out? What is the rush to judgment on this that is in our
interest before we answer the legal questions about whether or
not you guys should be able to do this or not?
Ms. McCabe. Well, first, Congressman, there is no way that
the Administrator would sign a rule that she did not believe
was fully within her authority. So we----
Mr. Johnson of Ohio. So can you tell me that you think that
there are not going to be legal challenges to this? I mean and
have you guys not listened to--or have you not heard the many
voices that are decrying the EPA's authority to do this?
Ms. McCabe. We have heard many of those----
Mr. Johnson of Ohio. Why wouldn't you want the courts to
make that determination before--I mean you have seen your
budget drop 20 percent over the last 5 years. Your staffing
levels continue to come down, and you complain that you don't
have enough money to do what you are supposed to do, or enough
people to do what you are supposed to do. Why would you want to
take on something that you might have to turn around and throw
away if the courts decide you didn't have the authority to do
this?
Ms. McCabe. Because----
Mr. Johnson of Ohio. I am out of time, Ms. McCabe. I am
sorry. I wish I could give you time to answer that question,
but that just seems like a flawed approach, and not in the best
interests of hard-working Americans to spend their money this
frivolously on something that we know the courts have major
questions about.
Mr. Chairman, I yield back.
Mr. Whitfield. Yes, the gentleman's time has expired.
At this time recognize the gentlelady from North Carolina,
Mrs. Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman. And thank you, Ms.
McCabe, for being with us today.
You know, I have listened to so much of the testimony and
the questions, and I think this is a very well-rounded
discussion that we are having. And again, you know, for me and
my constituents back in North Carolina, this is obviously going
to negatively impact the consumers and their utility bills. It
is going to increase the cost. And I understand the issues. You
know, certainly, we all want clean air, we want to do
everything we can to achieve that, but I do have some specific
questions. When we are talking about the litigation moving
forward and, you know, you had mentioned in the budget proposal
that the EPA expects a great deal of litigation, and this kind
of comes up again after Mr. Johnson's testimony, you know, one,
what type of litigation are you anticipating, and how long do
you expect the judicial review of the initial legal challenges
to take?
Ms. McCabe. So we do expect legal challenges. EPA gets
challenged on many of its rules, as you know, and it can take
several years. If it goes all the way to the Supreme Court,
that can add time to it. And then even after that, it could go
back--if it goes to the Supreme Court, it could go back to a
lower court for further proceedings.
Mrs. Ellmers. Given that fact and, you know, obviously, we
are looking at an incredible amount of time, years, in fact,
you know, we are still looking at the situation and we are, you
know, we are hearing from our States, and I certainly am
hearing from North Carolina, how this is going to be very, very
difficult as they are trying to go through the rule and address
the issues. You know, there is a 1-year extension that is
proposed in the rule, but that obviously is not adequate in the
timeline that we are talking about. So given the fact that we
know that this could, you know, litigation could move forward
for years, how does the EPA plan on dealing with this issue?
Will they demand that the States be required to submit their
State plans, or are they going to hold back on that issue,
allowing the States to see what the courts are going to do?
Ms. McCabe. Well, Congresswoman, the judicial system
already has a way of dealing with this. So as I have said, EPA
gets challenged on many rules. In this administration, most of
our rules have been found to be lawful, and work has gone ahead
on them. If a court finds that our legal basis is so
questionable that they think that we are not likely to succeed
on the merits, they can in response to a request put a judicial
stay in place that would then toll the requirements, and that
has happened on occasion. We don't believe that a court will
find a substantial likelihood that we will not succeed.
Mrs. Ellmers. And there again, you know, to that point, and
thank you, you know, that would certainly help the situation,
but it also doesn't alleviate the cost that our States are
incurring. This will be an incredible cost to North Carolina,
as it will all of my colleagues and the States that they
represent. You know, according to the Unfunded Mandate Reform
Act, the EPA is required to estimate the burden on States to
develop State plans. So considering this and considering the
length of time we are looking at, what does the EPA estimate
will be the cost to States to prepare State plans?
Ms. McCabe. I believe we estimated that. I don't have those
numbers with me, Congresswoman, but we can get them.
Mrs. Ellmers. OK, if you could provide that to the
committee and also to my office, I would appreciate that. Thank
you. And in light of the comments that have been made regarding
the proposed Clean Power Act, is the EPA going to reevaluate
these estimates, so moving forward, as the comments are being
made, is there a process to reformulate the plan, or are we
sticking to the plan until the process is through? Will you
adjust and be flexible to the comments that you are receiving?
Ms. McCabe. Absolutely, and you will see that in the final
rule that we will have been responsive to many of those
comments.
Mrs. Ellmers. In my last 40 seconds that I have, I do want
to go back to a question that my colleague from Illinois asked,
Mr. Kinzinger. He was asking if the EPA is the only agency, and
then you had also commented to one of my other colleagues that
you were working with FERC, and that there were hearings with
FERC. If FERC comes forward and tells you, in fact, again,
going off of Mr. Kinzinger, that there is a reliability issue,
that there is a national security issue with this, will the EPA
take that recommendation and use that moving forward?
Ms. McCabe. Well----
Mrs. Ellmers. Are you required to do so?
Ms. McCabe. We are so far away from States developing plans
that anybody could make a sound judgment on reliability about.
So we will do our job under the Clean Air Act. We will take
into consideration any input that we get from anybody. We
certainly will listen very seriously to any input that FERC
wants to give us, but we are just not at a point where anybody
could make that pronouncement at this point.
Mrs. Ellmers. Thank you. Thank you, Mr. Chairman. I went
over my time a little bit.
Mr. Whitfield. At this time I recognize the gentleman from
Oklahoma, Mr. Mullin, for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman.
Ma'am, I really almost feel for you because the way that
you are sitting here having to take these questions I can tell
you are just having, you know, a blast doing it. And I am
meaning that a little cynical there, but you are here and I
really do appreciate that.
However, I do question the direction that the EPA is going
with this. I have heard you talk about that many, many
Americans believe with you and there are with you on this, but
yet all the reports we keep hearing back over and over again
isn't true. I mean the only many, many Americans I assume you
are talking about is Sierra Club and some of our minimalists
who live in the city and they don't ever live in the country,
which I find quite hilarious sometimes because if you are an
environmentalist, you would think you would want to live in the
environment.
But besides that, you go into the fact that you are saying
that you are not going to reduce the amount of energy being
generated, is that right? You don't find a concern with the
amount of energy being generated?
Ms. McCabe. Well, we think there are many opportunities to
employ energy efficiency that----
Mr. Mullin. What are those opportunities because just in
Oklahoma alone just in my district we are going to lose 3,000
gigawatts, which is about 70 percent of our coal-fired power
plants. Southwestern Power, who represents that region there,
they are saying they are going to lose 13,900 megawatts. What
is going to replace that?
Ms. McCabe. Well, I am not sure exactly what the SPP is
basing all those predictions on.
Mr. Mullin. Ma'am, these are the figures that are coming
from the individuals that are providing my constituents and
providing my region with power.
Ms. McCabe. Right.
Mr. Mullin. Now, if the EPA is doing their due diligence by
understanding the research that they are putting out there and
before you come in front of Congress and you start relaying
these facts that you don't believe it is going to reduce power,
what do you think about talking to the stakeholders? I mean
these are the individuals that are responsible for providing
reliability to us that when we go and we flip our switch on, it
is going to work.
Ms. McCabe. We certainly are talking with all of these
entities, including----
Mr. Mullin. So what is going to replace this?
Ms. McCabe. It will be different kinds of generation. I
can't speak to all of them----
Mr. Mullin. What kind of generation are you going to
replace it with because not all regions are the same? We don't
have the same flexibility as everybody else.
Ms. McCabe. That is right.
Mr. Mullin. The infrastructure isn't in place yet. The EPA
is moving on with this rule. I mean you are talking about
saying it is not going to reduce reliability, but ma'am, the
fact is it will reduce it. If we are taking that much off
online, wouldn't the EPA have some type of study out there to
back up what you are saying that it is not going to shut down
or reduce reliability? Wouldn't you think there would be
something out there that you could back up what you are
bringing facts as I am assuming the rest of America is going to
believe you are backing your statements up with facts, aren't
you?
Ms. McCabe. Absolutely. And--
Mr. Mullin. So what are those facts?
Ms. McCabe. We have analysis; the Department of Energy has
done various kinds of analysis.
Mr. Mullin. What is it that you are talking about
specifically? What is going to replace it?
Ms. McCabe. Well, as you have said, every State is
different. Their needs and their flexibilities are different.
There is----
Mr. Mullin. But you are treating all States the same.
Ms. McCabe. No, we are not treating all States the same.
Mr. Mullin. Really?
Ms. McCabe. No.
Mr. Mullin. Well, you are making them all combined.
Ms. McCabe. We are setting targets for them that are based
on a uniform approach across----
Mr. Mullin. Which is a one-size-fits-all approach which
is----
Ms. McCabe. It is----
Mr. Mullin. You said a uniform approach.
Ms. McCabe. No, no, it is not one-size-fits-all.
Mr. Mullin. Well, uniform is everybody looks the same. That
is the purpose of a uniform.
Ms. McCabe. OK. Well, then I will change my word. This is
not one-size-fits-all. This is an approach that takes into
account the energy needs and the energy resources of every
single State.
Mr. Mullin. OK. Ma'am, we are going to agree to disagree on
that one because the fact is you are talking in circles.
Now, let's go back to the thing, and as you said, that it
is not going to cost the individual, the ratepayer, it is not
going to raise their cost. Isn't that what you said?
Ms. McCabe. That is what our national analysis shows.
Mr. Mullin. Where are you getting that statement? Because
Southwestern Power says it is going to cost them $2.9 billion
per year to comply, $2.9 billion per year. Now, if you
understand business at all, you understand that that has to be
passed through to somebody. So if it is going to cost
Southwestern Power $2.9 billion per year, who is going to pay
for that?
Ms. McCabe. There are investments that everybody is making
that they look at over time. Remember, we have a long period of
time to implement this.
Mr. Mullin. Who is going to pay the $2.9 billion a year? It
is not just investments. It has got to be passed on to
somebody. Is the EPA going to pay that out of your budget?
Ms. McCabe. What our analysis shows and what other people
look at is----
Mr. Mullin. The analysis, ma'am, we have already proved
that your analysis isn't lining up. It is an assumption. You
keep calling it an analysis; it is an assumption that you are
calling an analysis. The truth is the $2.9 billion, the cost
has to be passed on to somebody, and ultimately, it is going to
be all of our constituents that are going to be paying for it.
And it looks like to me that the EPA's analogy is, well, we
know best. Just shut up and follow us. You weren't elected, we
were, and we were elected to represent our constituents.
Thank you.
Mr. Whitfield. The gentleman's time is expired. Is Mr.
Flores around? Does anyone know?
OK. Well, I guess that concludes the questions for Ms.
McCabe.
Mr. Rush. Mr. Chairman?
Mr. Whitfield. Yes.
Mr. Rush. Mr. Chairman, I just heard a number of members
have questions about the EPA's analysis and somebody is
suggesting that EPA didn't even have enough analysis. And I
just wanted to inform the Chair and the other members that here
I have in my possession I have about--this is about 10 to 12
pounds of analysis from the EPA and the regulatory impact
analysis for the proposed carbon pollution guidelines for
assisting power plants and emissions standards for modified and
reconstructed power plants. I would be happy to move that this
be included in the record. So in order to be said again and
again and again that the EPA does not have an analysis and here
it is. This is about 10 pounds of it and so, I don't know. I
would be happy if the chairman wants or desires I would be
happy to move that this get included into the record so that we
can just put to rest the fact that EPA does not have an
analysis.
Mr. Whitfield. Well, let me just say we understand the EPA
has a lot of analyses and we have a lot of industries, utility
companies, local communities that have analyses as well and
they don't agree. So that is where we are.
Mr. Rush. Well, Mr. Chairman, I just want to say it has
been stated here so many times it is almost hurtful and harmful
to keep hearing that the EPA doesn't have an analysis. Here it
is, 10 to 12 pounds.
Mr. Whitfield. So are you moving that we put it in the
record?
Mr. Rush. I don't know, Mr. Chairman. It will take up too
much----
Mr. Whitfield. Yes.
Mr. Rush [continuing]. Probably take up too much paper and
too much----
Mr. Whitfield. Well, thank you so much for bringing it to
our attention.
Mr. Rush. I want you to know that there is your analysis.
Mr. Whitfield. We appreciate that.
Mr. Rush. Here it is right here.
Mr. Whitfield. Ms. McCabe, thank you for being with us
today. We are to continue to engage you and EPA on this issue
as we move forward.
At this time I would like to call up the second panel. And
on the second panel, we appreciate your patience this morning.
We have Mr. Eugene Trisko. I tell you what I am going to do. I
want all of you to just come on up and I am going to introduce
you right before you give your 5-minute opening statement.
So if you all would have a seat and then we will begin on
the left with Mr. Trisko and then we will let each one of you
give your 5-minute opening statement.
So our first witness this morning is Mr. Eugene Trisko, who
is the energy economist and attorney on behalf of the American
Coalition for Clean Coal Electricity.
And once again, thank all of you for being here. Thanks for
your patience. We do value your comments and thoughts on this
important issue.
So, Mr. Trisko, I am going to recognize you for 5 minutes,
and you will note that there is a little box on the table, two
of them. They have colors, and when it gets red, that means the
5 minutes is up. So just be aware of that. And also be sure and
turn the microphone on so that all of us can hear.
And, Mr. Trisko, you are recognized for 5 minutes.
[Audio malfunction in hearing room.]
Excuse me, Mr. Trisko, would you just move the microphone a
little bit closer because some of our members were having a
little bit of an issue. Thank you. Is your microphone on?
STATEMENTS OF EUGENE M. TRISKO, ENERGY ECONOMIST AND ATTORNEY,
ON BEHALF OF THE AMERICAN COALITION FOR CLEAN COAL ELECTRICITY;
LISA D. JOHNSON, CHIEF EXECUTIVE OFFICER AND GENERAL MANAGER,
SEMINOLE ELECTRIC COOPERATIVE, INC., ON BEHALF OF THE NATIONAL
RURAL ELECTRIC COOPERATIVE ASSOCIATION; SUSAN F. TIERNEY,
SENIOR ADVISOR, ANALYSIS GROUP; MELISSA A. HOFFER, CHIEF,
ENERGY AND ENVIRONMENT BUREAU, OFFICE OF THE ATTORNEY GENERAL,
COMMONWEALTH OF MASSACHUSETTS; KEVIN SUNDAY, MANAGER,
GOVERNMENT AFFAIRS, PENNSYLVANIA CHAMBER OF BUSINESS AND
INDUSTRY; AND PAUL N. CICIO, PRESIDENT, INDUSTRIAL ENERGY
CONSUMERS OF AMERICA
STATEMENT OF EUGENE M. TRISKO
Mr. Trisko. Will this help? Should I go back to the top? We
started at good morning.
Mr. Chairman, we have analyzed consumer energy costs for 31
geographically diverse States, and these States are expected to
be States that will be heavily impacted by EPA's Clean Power
Plan.
The 31 State reports analyzed the pattern of energy
expenditures among three categories, a pretax and after-tax
household income. The studies rely on actual State residential
energy expenditures in 2014 from the U.S. Department of
Energy's EIA and Government surveys of residential and
transportation energy consumption per household income groups.
The household income data are based upon U.S. Bureau of the
Census data for 2013, the most recent data available. Energy
expenditures as a percentage of after-tax income are estimated
for the effects of Federal and State income taxes and Federal
social insurance payments using CBO tax rates and individual
State income tax data.
The key findings of these studies are: first, one-half of
the households in these 31 States have average pretax annual
incomes below $50,000. The median after-tax income of these 38
million households is $23,317, equivalent to a take-home income
of less than $2,000 per month. The 50 percent of households in
these 31 States with pretax incomes of $50,000 or less spend 14
to 19 percent of their after-tax income on residential and
transportation energy with median expenditures of 17 percent.
Low-income families, those with pretax annual incomes of
less than $30,000, represent 30 percent of the households in
these 31 States. Their median after-tax income is 15,464. These
households spend an estimated 18 percent to 25 percent of their
after-tax income on residential and transportation energy with
a median expenditure of 22 percent.
Recent consumer savings at the gas pump are being eroded by
steady increases in electricity prices. Residential electricity
represents 76 percent of total residential energy expenditures
in the 31 States on a household weighted average basis. From
2005 to 2014 residential electricity prices in the 31 States
increased overall by a weighted average of 38 percent in
current dollars and by 13 percent in constant 2014 dollars.
Large electric pricing increases will result with the
implementation of EPA's proposed Clean Power Plan. A recent
analysis by National Economic Research Associates estimates
that the carbon rule will increase delivered electricity prices
in the 31 States by 15 percent on average during the period
2017 to 2031. These average price increases mean that
electricity prices for consumers will be 15 percent higher on
average each year under the Clean Power Plan than they would be
without the Clean Power Plan.
Peak year electric price increases during this period
average 22 percent for the 31 States. These estimates are
conservative because NERA did not consider any additional
natural gas infrastructure or electric transmission investments
needed to comply with EPA's proposed rule.
The U.S. Census Bureau reports that the real pretax incomes
of American households have declined across all five income
quintiles since 2001 measured in constant 2013 dollars. The
largest percentage losses of income are in the two lowest
income quintiles.
The loss of annual income among all American households
averages $3,947 per household since 2001. In comparison, DOE's
current estimate of annual gasoline savings for American
consumers due to lower oil prices is $700 per household.
Declining real incomes increase the vulnerability of lower
income households to energy price increases such as rising
utility bills. Lower income families are more vulnerable to
energy costs than higher income families because energy
represents a larger portion of their household budgets. Energy
costs reduce the amount of income that can be spent on food,
housing, healthcare, and other basic necessities. The data
presented in the 31-State report show that minorities and
senior citizens are disproportionately represented among these
lower income households.
Thank you for the opportunity.
[The prepared statement of Mr. Trisko follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Mr. Trisko, thank you.
And our next witness is Ms. Lisa Johnson, who is the CEO
and general manager of the Seminole Electric Cooperative, on
behalf of the National Rural Electric Cooperative Association.
And your headquarters is in where?
Ms. Johnson. Tampa, Florida.
Mr. Whitfield. In Tampa, OK.
You are recognized for 5 minutes, and just be sure the
microphone is on.
STATEMENT OF LISA D. JOHNSON
Ms. Johnson. Thank you, Mr. Chairman, Ranking Member Rush,
and members of the committee. I appreciate the invitation to
address the challenges facing electric cooperatives as we work
to comply with EPA regulations.
My name is Lisa Johnson. I am the CEO of Seminole Electric
Cooperative, and I am also testifying on behalf of the National
Rural Electric Cooperative Association.
I applaud this committee's willingness to examine complex
issues such as 111(d) regulations and work toward an equitable
solution. While everyone can agree on the importance of
environmental stewardship, regulations that would eliminate
whole industries, drastically raise electric rates, and call
into question the reliability of our Nation's transmission grid
are excessive and unnecessary.
I am here today to express support for Chairman Whitfield's
discussion draft, the Ratepayer Protection Act. This act would
delay the Clean Power Plan to ensure that it survives legal
challenge before taking effect and provide States like Florida
with an important safety valve for consumers and for the
reliability of the grid.
Seminole Electric Cooperative, through our nine-member,
not-for-profit, consumer-owned electric cooperatives, serves
more than 1.4 million individuals and businesses in 42 of
Florida's 67 counties. The residential customers our members
serve are predominantly rural. Approximately one-third have
household incomes below the poverty level and more than 75
percent have household incomes less than $75,000.
Seminole employs more than 500 individuals at three
locations in Florida: our headquarters in Tampa; the Seminole
Generating Station or SGS, a 1,300 megawatt coal-fired power
plant located in northeast Florida; and the Midulla Generating
Station, or MGS, an 810 megawatt natural gas-fired power plant
located in south central Florida.
SGS employs more than 300 individuals and provides more
than 50 percent of the energy used by our members. Under the
proposed Clean Power Plan SGS would close by 2020 despite being
one of the cleanest coal plants in the country, despite
Seminole's environmental investments of more than $530 million,
and despite having a professionally rated useful life that
carries into 2045.
Worse, the financing structure for SGS carries through
2042. If the plant closes in 2020 our members will continue to
pay for it in addition to paying for replacement generation.
SGS is the bedrock of rural Putnam County. In addition to
our hardworking employees, there often hundreds of contractors
on-site. On March 11 there were 732 contractors at SGS
addressing work during our spring maintenance outage. These
contractors stay in local hotels, eat at local restaurants and
shop at local retailers.
Seminole is also the largest taxpayer in Putnam County
paying more than $5 million in property taxes in both 2013 and
2014. Rural Putnam County and the city of Palatka cannot afford
to lose SGS or any of the associated jobs, especially by 2020.
Closing SGS prematurely would call into question our ability to
generate and transmit electricity to our members. In 2014 more
than 50 percent of our members' energy requirements were served
via SGS. Seminole does not have sufficient natural gas
facilities to serve this load adequately without our coal
units.
And Seminole will not be the only utility in need of new
sources of electricity. EPA's own model calls for the closure
of more than 90 percent of Florida's coal-fired units.
Florida's existing transmission constraints both in and out of
State and EPA's short compliance timeline will prevent us from
purchasing or building this power economically if it is
feasible at all.
The only viable option to replace SGS is natural gas.
Florida is already 65 percent dependent on natural gas for
generation and the likely effect of the Clean Power Plan is
that this percentage will soar 85 percent. This overreliance on
one fuel source exposes us to the price fluctuations and
volatility common in the gas markets.
The new gas-fired-generating facilities, transmission
infrastructure, and pipelines needed to replace the output of
just SGS cannot be permitted and completed by 2020 even if we
started today. If the Clean Power Plan takes effect before the
construction of sufficient generation or transmission
infrastructure, significant power deficiencies may occur,
harming reliability.
The Clean Power Plan has failed to recognize the economic
impacts it would have on Seminole, our employees, our member
cooperatives, and the communities we support. It is also failed
to present a proposal that would maintain reliable electric
service for our members and for Florida in general. As such,
Seminole supports the Ratepayer Protection Act and urges this
committee to continue its work to protect consumers.
The best result for Seminole is for EPA to withdraw its
proposal. In the absence of that, this legislation will protect
Florida and Seminole by ensuring we do not have to comply with
regulations that may be unlawful or may seriously harm
consumers.
A lot of us take it for granted that when we flip a switch,
the lights come on. The Clean Power Plan as proposed will call
that into question.
Thank you.
[The prepared statement of Ms. Johnson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Ms. Johnson.
At this time I would like to recognize Susan Tierney, who
is the senior advisor with the Analysis Group. And thanks for
being with us and you are recognized for 5 minutes.
STATEMENT OF SUSAN F. TIERNEY
Ms. Tierney. Thank you, Mr. Chairman.
Chairman, Ranking Member Rush, and members of the
subcommittee, my name is Susan Tierney. I practice economics in
the electric and natural gas industries. I am a former State
utility regulator, a former State environmental official, and
formerly the assistant secretary for policy at the United
States.
One out of every 15 tons of carbon emission anywhere in the
entire world comes from the U.S. power sector. Taking action in
the U.S. power sector will make a difference on the costly
impacts of climate change.
I want to talk about two reports that I have recently co-
authored in which we found, first, that many observers have
raised concerns about EPA's proposals and their effects on
electric system reliability. Such warnings are entirely normal
whenever there is a major change in the electric industry, and
these warnings play an important role in focusing the attention
of the industry on taking steps to ensure reliable electric
service to Americans.
Second, natural gas is putting pressure on coal and has
already led to retirements of coal unrelated to environmental
regulations. Given the significant shifts already underway in
the electric system, the industry is already needing to adjust
its operational and planning practices to accommodate changes
even if EPA had not proposed this regulation. The reliability
practices in the industry have been used for decades and they
provide a strong foundation from which any reliability concerns
about EPA's regulations will be addressed.
Third, the Clean Power Plan provides States with a wide
range of compliance options and operational discretion that can
prevent reliability issues while also enabling reduction of
carbon pollution. Experience has shown that such approaches
provide seamless reliable implementation of emissions
reductions targets. By contrast, stakeholders concerns about
the Clean Power Plan presume that there will be inflexible
implementation. They are based on worst-case scenarios and
assume that policymakers, regulators, and importantly, the
market will standby on the side until it is too late, and there
is no historical basis for this. The lights have not gone out
when we have had industry changes.
Fourth, the industry, its regulators, and the States are
responsible for ensuring electric system reliability while
reducing carbon pollution from power plants, as required by
law. These responsibilities need not be in tension as long as
all parties act in a timely way and use the many reliability
tools at their disposal. These issues will be solved by the
dynamic interplay of actions by regulators, entities
responsible for reliability, market participants, as they
always are with many solutions proceeding in parallel.
This one reason why a recent survey of 400 utility
executives found that more than 60 percent felt optimistic
about the Clean Power Plan and either supported the emissions
reductions target or make them more stringent. The markets tend
to respond to clarity and precision and rules rather than
uncertainty of the sort that would be introduced by this bill.
Fifth, PJM, the grid operator for the Nation's largest
competitive wholesale market and serving customers in 13 States
and the District of Columbia, is already adapting to changes
underway in the electric industry. PJM's own analyses
demonstrate that regional market-based approaches can meet
clean power goals at lower cost with retirements spread out
over a period of time. These results indicate that energy
efficiency and renewable energy will in fact lower the cost of
compliance and lower the exposure to coal plants associated
with retirements.
Based on our analyses and experience, we conclude that the
impacts on electricity rates from well-designed pollution
control programs will be modest in the near term and can be
accommodated by long-term benefits, in other words, lower
electricity bills and positive economic value to States'
economies.
States have a long track record of using various regulatory
tools to encourage programs and investments that minimize the
cost of electricity service consistent with all sorts of public
policies ranging from taxes, zoning issues, environmental
programs, reliability issues, labor requirements, and States
figure out how to do that in a least-cost way.
Although States differ in many ways, every single State has
programs, policies, and practices that will enable them to sit
in the driver's seat to figure out how to best accommodate
changes being introduced by this important carbon control
requirement. Market-based mechanisms in particular offer unique
opportunities to minimize cost while reducing carbon pollution.
And finally, States have a very long track record of taking
steps necessary to protect low-income customers from the
hardship associated with electricity rates.
Thank you very much.
[The prepared statement of Ms. Tierney follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[Additional material submitted by Ms. Tierney has been
retained in committee files and also is available at http://
docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103312.]
Mr. Whitfield. Thank you.
Our next witness is Melissa Hoffer, who is the chief of the
Energy and Environment Bureau, Office of the Attorney General
for the Commonwealth of Massachusetts. So you are recognized
for 5 minutes, Ms. Hoffer.
STATEMENT OF MELISSA A. HOFFER
Thank you, Chairman Whitfield, Ranking Member Rush, and
members of the committee. Our office really appreciates the
opportunity to be here today to provide testimony on EPA's
Clean Power Plan and the proposed Ratepayer Protection Act.
Section 111(d) authorizes EPA to establish standards for
any emissions from existing sources that endanger public health
and welfare but are not regulated under the National Ambient
Air Quality Standards program or the NAAQS program, or the
Hazardous Air Pollutant program, the HAP program. The 1970
Clean Air Act legislative history confirms that Congress
intended that these three programs together would ensure no
gaps in regulation of stationary source emissions that pose
danger to public health or welfare. Courts have therefore held
that these provisions collectively establish a comprehensive
program for controlling and improving the Nation's air quality.
Let's be clear. Those who challenge EPA's authority are
taking the position that simply because EPA is on the one hand
regulating emissions of hazardous pollutants from power plants,
it may not also regulate emissions of carbon dioxide, which is
a different type of pollutant not regulated under the Hazardous
Air Pollutant program. The Clean Power Plan imposes no double
regulation of the same pollutant. Rather, it proposes to do
exactly what Congress intended, use Section 111(d) to regulate
a pollutant that is not regulated under either the NAAQS or the
HAP programs.
It makes no sense that EPA's opponents would exclude the
largest sources of carbon dioxide, which are power plants, from
regulation under Section 111(d) simply because they also happen
to be huge sources of different toxic air pollutants. That
interpretation is not supported by the text of the statute or
the legislative history of the 1990 amendments.
The more reasonable interpretation is that Congress
intended for EPA to do both. There is no evidence that Congress
intended with the 1990 amendments to make a sweeping
substantive change to Section 111(d). In fact, to the contrary,
Congress specifically provided that EPA's regulation of
emissions under Section 112 must not diminish Section 111(d)
requirements. Accordingly, EPA has long regulated source
categories under both 111(d) and Section 112 and I have
provided some examples and materials attached to my testimony.
In the four presidential administrations since the 1990
amendments, EPA has consistently interpreted Section 111(d) to
require regulation of any air pollutant not regulated under the
NAAQS program on the one hand or the HAP program on the other.
Opponents interpretation would effectively gut Section 111(d)
undermining its function as recognized by the Supreme Court of
the United States in AEP v. Connecticut, which is to ``provide
a means''--and this is a direct quote from the decision--``to
seek limits on emissions of carbon dioxide from domestic power
plants.'' They ignore the Senate amendment and the fact that
the House amendment itself is subject to multiple readings.
Consistent with the DC Circuit's ruling, EPA has correctly
attempted to harmonize the House and Senate amendments to the
extent they appear inconsistent. The discussion drafts
compliance extension provisions are not necessary. The DC
Circuit may stay any EPA final rule if it finds the party
seeking a stay has demonstrated that it is likely to prevail on
the merits, without the relief it would be irreparably harmed,
the issuance of the stay would not substantially harm other
parties interested in the proceedings, or on balance a stay
would favor the public interest.
The discussion draft would jettison this careful balancing,
which has been a part of judicial tests for over 50 years, in
favor of what is effectively an automatic stay rule that would
halt Clean Power Plan implementation for years during the
pendency of any litigation without regard to the merits of the
claims, the impacts to other interested parties, or the
consequences for the public interest. It would also create an
unprecedented escape hatch for States wholly to opt out of
urgently needed carbon dioxide pollution control requirements
solely on the basis of unverified claims regarding cost or
purported reliability concerns.
With the passage of the 1970 Clean Air Act Congress
establish national air pollution control requirements and it
employed a cooperative federalism model to implement those
requirements. The discussion draft's opt-out provision would
break the promise backed act by the Federal Government of the
Clean Air Act that states the EPA will work together to protect
public health.
The Clean Power Plan's flexible approach leverages States'
innovation and expertise to achieve cost-effective reductions
of dangerous global warming pollution. For example,
Massachusetts is part of the multistate Regional Greenhouse Gas
Initiative, or RGGI, which instituted a mandatory power sector
cap-and-trade program since 2009. When RGGI went into effect,
the RGGI States have reduced power sector carbon dioxide
emissions 40 percent below 2005 levels by encouraging shifts to
less carbon-intensive fossil fuel generation, increasing
reliance on renewables and reducing energy demands through
efficiency.
Regionally, in the first 3 years of the RGGI program, RGGI
added $1.6 billion to the regional economy and created
thousands of new jobs in the process. As a result of RGGI,
electricity consumers, including households and businesses,
enjoy a gain of over $1 billion as their overall electricity
bills drop over time.
The Clean Power Plan with Massachusetts to rely on what we
know works, including RGGI, to achieve the required carbon
dioxide reductions, and that is good for our economy. Due in
large part to our innovative energy environmental policy, clean
energy is now a multibillion-dollar sector in Massachusetts
supporting double digit job growth----
Mr. Whitfield. Ms. Hoffer, I have let you go over 1 minute
and 20 seconds.
Ms. Hoffer [continuing]. In 2013 to 2014. Thank you.
[The prepared statement of Ms. Hoffer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[Additional material submitted by Ms. Hoffer has been
retained in committee files and also is available at http://
docs.house.gov/meetings/IF/IF03/20150414/103312/HHRG-114-IF03-
Wstate-HofferM-20150414-SD001.pdf.]
Mr. Whitfield. At this time I would like to recognize the
gentleman, Mr. Sunday, who is the manager of Government
affairs, Pennsylvania Chamber of Business and Industry, for 5
minutes.
STATEMENT OF KEVIN SUNDAY
Mr. Sunday. Thank you. Chairman Whitfield, Ranking Member
Rush, members of this committee, my name is Kevin Sunday,
manager of Government affairs for the Pennsylvania Chamber of
Business and Industry. It is an honor to appear before you
today to express our concerns regarding EPA's Clean Power Plan
proposal and also to support Representative Whitfield with
ratepayer protection legislation.
As background, the Pennsylvania Chamber of Business and
Industry is the largest broad-based business advocacy
association in Pennsylvania and our members are of all sizes
and industrial sectors. All our members need energy to survive
and compete, and so do Pennsylvania citizens.
Our unemployment rate in Pennsylvania is below the national
average and we have made substantial and documented reductions
in air pollution over the past decade. We are the second-
leading State in total electricity, natural gas, and nuclear
power generation, and we are fifth in coal production.
Our manufacturing sector is the eighth-largest in the
Nation employing almost 600,000 people. To cite but one example
about how our manufacturers need power, one of our member
companies involved in processing natural gas worked with the
local utility to install a dedicated local substation to give
them the voltage they need to operate. Their facility, I would
add, requires hundreds of local workers, many of them union
tradesmen. Further, that same utility is investing in tens of
millions of dollars in infrastructure in the Marcellus Shale
pipe, also using union labor, to deliver the power that other
drillers and manufacturers will need.
But unfortunately, EPA's proposal threatens Pennsylvania's
biggest competitive advantage, which is low energy prices. The
significant cost of this rule by EPA's own estimation will
result in relatively small reductions in global emissions of
less than half of 1 percent likely soon to be eclipsed by
development abroad.
We have a number of questions about EPA's Clean Power Plan
which I have included in greater length in my written testimony
but generally here are the three key ones: Are building blocks
1 and 2 truly realistic in a restructure generation market like
Pennsylvania's? Why is 71 percent of Pennsylvania's goal based
on an expectation that we mandate incredibly high amounts of
renewable generation and energy efficiency requirements? And
why is Pennsylvania being punished for being an early adopter
of renewable generation and energy efficiency?
In the Clean Power Plan Pennsylvania's renewable goal is
the second-highest in the Nation, an almost 800 percent
increase over current levels, and we are expected to deploy it
at a faster rate than any other State. Senator Bob Casey, Jr.,
made a great point in his comment letter to EPA that
Pennsylvania is ``second-to-last in terms of technical
potential for meeting the overall needs of its own energy
sector through renewable generation.'' To get to EPA's goal of
30,000 more gigawatt hours, ratepayers are going to have to
fund extremely expensive solar, geothermal, or other renewable
projects, something they unfortunately know all too much about.
In 2004, almost a decade before EPA's 2012 baseline year,
Pennsylvania passed the Alternative Energy Portfolio Standards
Act. To highlight one of the problems with this act, between
2008 and 2013, the AEPS mandates doubled from about 5.7 percent
to 10.2 percent of electricity sales but the annual cost of
compliance increased 54-fold. By the time we get to the peak
mandate under existing law of 18 percent in 2021, the cost of
electricity statewide could increase by as much as $3.2
billion.
Also ignored in the Clean Power Plan's 2012 baseline is our
energy efficiency law which was passed in 2008 and to date has
cost consumers $1.7 billion to reduce their electricity
consumption by 4.5 percent. Utilities and ratepayers are also
expected to spend another $735 million over the next 3 years
for additional energy efficiency mandates, and all told,
Pennsylvania spent the fifth-highest amount annually of any
State to comply with energy efficiency mandates.
I want to now highlight our experience with the Chesapeake
Bay TMDL, another multibillion-dollar Federal mandate that we
believe is instructive in this conversation. Originally, EPA
pledged flexibility, but then the agency settled with
environmental groups and gave Pennsylvania regulators just 6
months to develop a federally enforceable compliance plan. Now,
reminiscent of a 111(d) FIP, EPA has said that if the target
reductions are not met, EPA will sanction the State and
permitted facilities. There also remains the continual threat
of citizen suits to ratchet up enforceability in compliance
time frames.
And just one final point to crystallize this at a local
level: The City of Lancaster spent $150 million in sewage
improvements and millions more in green infrastructure as part
of their Bay TMDL mandate. EPA hailed them as ``leading the
way, a national example.'' Flash forward to this past winter,
EPA is pressuring city officials to sign a new consent decree
to get additional reductions at an additional cost to taxpayers
for as much $400 million.
Again, thank you for your time this morning and afternoon,
and I look forward to answering any questions you may have.
[The statement of Mr. Sunday follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Well, thank you, Mr. Sunday.
And our last witness is Mr. Paul Cicio, who is the
president of the Industrial Energy Consumers of America. And
you are recognized for 5 minutes. And be sure and turn it on.
STATEMENT OF PAUL CICIO
Mr. Cicio. Thank you, Mr. Chairman, Ranking Member Rush.
The Industrial Energy Consumers of America represents
energy-intensive trade-exposed companies. These companies
consume 73 percent of all of the electricity in the
manufacturing sector and 75 percent of the natural gas. As a
result, small changes to the price of energy have relatively
large impacts to our global competitiveness.
As a sector, we use 40 quads of energy, and this has
basically not changed in 40 years. In that same time period,
the value-added output of the industrial sector has increased
761 percent, a tremendous success story. The industrial sector
is the only sector of the economy whose greenhouse gas
emissions are 22 percent below 1973 levels. These industries
are very energy efficient.
IECA supports action to reduce greenhouse gas emissions so
long as it will not impair our competitiveness. We must have a
level playing field with global competitors. Several countries
that we compete with control electric and natural gas prices to
their industrials and provide subsidies and/or practices to
give them a competitive advantage. If we were the military, one
would say that we are engaged in hand-to-hand combat.
As proposed, the Clean Power Plan would impose significant
electricity and natural gas costs and accomplish too little to
reduce the threat of climate change. All costs of this
unilateral action will be passed on to us the consumer and will
directly impact competitiveness and jobs.
The EPA cannot look at the Clean Power Plan in isolation
from the significant cumulative cost that it will impose on the
industrial sector either directly or indirectly through a
number of recent rulemakings. Since 2000, the manufacturing
sector is down 4.9 million jobs. Since 2010, manufacturing
employment has increased 525,000. We are in the early stages of
recovery and fear that the Clean Power Plan could threaten this
recovery.
In contrast, for example, China, a primary competitor has
increased industrial employment by 31 percent since 2000. And
U.S. manufacturing trade deficit since 2002 has grown to $524
billion, of which 70 percent is with China. China's industrial
greenhouse gas emissions have risen over 17 percent just since
2008. China produces 29 percent more manufactured goods than we
do in the United States but emits 317 percent more than the
U.S. manufacturing sector. That is over three times as much.
But despite our low greenhouse gas levels, the EPA will
increase our costs and make it easier for China's carbon-
intensive product to be imported, which means the Clean Power
Plan would be directly responsible for increasing global
greenhouse gas emissions.
There are consequences to increasing energy costs on the
industry sector and it is called greenhouse gas leakage. And
the EPA so far has failed to address its impact and has thus
underestimated the cost. For example, when a State's
electricity costs rise due to the Clean Power Plan, these
industries with multiple manufacturing locations will shift
production and shift their jobs to low-cost-electricity States,
along with the greenhouse gas emissions, creating State winners
and losers. When they do, it will increase the price of
electricity to the remaining ratepayers in that State.
If these industries still cannot be competitive, they move
offshore, moving jobs and greenhouse gas emissions,
accomplishing nothing environmentally. One needs to only look
towards California that has high electricity costs since AB 32.
To our knowledge there is not a single energy-intensive trade-
exposed company that has built a new facility there. Instead,
California is importing manufacturing product, they are
forfeiting jobs, increasing global greenhouse gas emissions.
And the same is true for the EU ETS. It is for this reason that
we urge policymakers to hold offshore manufacturing competitors
to the same carbon standard as domestic manufacturers.
Thank you.
[The prepared statement of Mr. Cicio follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Cicio. And thank all of you
again for your comments.
And I would like to recognize myself for 5 minutes of
questions.
These hearings are always so interesting because when you
listen to the testimony, it raises so many questions in your
mind, and sometimes you even question your sanity in some ways.
But I was listening to Ms. Hoffer and she was so emphatic
in her legal defense of the 111(d) regulation, for example, and
I know, Mr. Trisko, that you are an accomplished Clean Air Act
lawyer as well. And in my opening comments I talked a little
bit about--I am not an expert in the Clean Air Act but, as far
as I know, in this proposed rule they basically view a State as
a source because there is a number, a cap for that source, and
so to comply with the regulation, as they say, to get States
the flexibility to go outside the fence to address it. Would
you agree with me that this is an unusual interpretation and
legal analysis by EPA to decide that it gives them the
authority to do this regulation?
Mr. Trisko. Absolutely, Mr. Chairman. Now, Professor Tribe
has discussed these issues at some length both in his testimony
and in his written commentary on the rule.
There is another aspect of 111(d) relating to the term
``standard of performance'' that I believe is extremely
problematic for EPA's attempt to bring in energy efficiency
outside-the-fence measures and renewable energy requirements
also outside the fence that call into question the basic legal
soundness of the EPA's approach.
When you look at the fundamental architecture of the Clean
Air Act with its scheme of regulation for criteria pollutants
on the one hand, regulated largely under Titles I, II, and IV,
and hazardous air pollutants such as mercury on the other hand,
I think it makes perfect sense that in this instance sources
that already are subject to a MACT requirement under Section
112 be exempt from Section 111(d) requirements because exposing
them to 111(d) would in effect create a form of double
regulation.
Moreover, had Congress intended the last time it visited
the Clean Air Act in 1990 to include CO2 regulation
as a possibility under Section 111(d), I would note that
CO2 was addressed explicitly in the context of
regulation of automotive tailpipe emissions in an amendment
proposed in the Senate by Senators Worth and Heinz. The Senate
rejected that amendment indicating that CO2
emissions----
Mr. Whitfield. Absolutely.
Mr. Trisko [continuing]. Should not be regulated----
Mr. Whitfield. You are exactly right and I appreciate your
making that comment.
I might say also, Ms. Hoffer was talking about great
progress that is being made in Massachusetts, and I understand
how--and by the way, it exemplifies why some States get so
upset about what is going on here. In your view, Massachusetts
has been progressive and have really tried to address the
issue. And one of the consequences of that is that
Massachusetts has the third-highest electricity rates in the
country per kilowatt hour, and between 2014, 2015 went up about
$3 per kilowatt hour. And that is a decision that they have
made. But other States have decided that they don't want to
pursue that right now.
And the impact of this is on those people you talked about
this, Mr. Trisko, that one-half of the household in the 31
States that you all looked at, 38 million households, their
median income is $23,000. And so when you talk about upping
electricity rates on these people who have no other choice, it
is a dramatic impact on them.
And I didn't have an opportunity to get go into it, Ms.
Johnson, but I read your article. Here you have got one of the
cleanest coal plants in America operating, you have spent $500
million on it, it has a useful life up through 2045 and you are
probably going to be forced to close it down. Is that correct?
Ms. Johnson. That is correct, Mr. Chairman.
Mr. Whitfield. I mean it is unbelievable.
My time is expired.
Mr. Rush, you are recognized for 5 minutes of questions.
Mr. Rush. Yes, Ms. Hoffer, you have been the target of some
pretty stringent remarks by the chairman and I just want to
give you an opportunity to respond. So what is your reaction to
some of the remarks concerning your fine State and what you are
doing in Massachusetts and the cost of energy or electricity in
your State? Do you want to respond?
Ms. Hoffer. I will briefly respond to Mr. Trisko's point.
Since 1977, in fact, EPA has regulated the same sources under
both 111(d) and 112. I just want to quickly give you the
examples of those. So there is the regulation of landfills
under Section 111(d) for methane and nonmethane organic
compounds and under Section 12 for vinyl chloride ethylbenzene,
toluene, and benzene. Then there is also regulating fluorides
from phosphate fertilizer plants under Section 111(d) and
regulating hydrogen fluoride and other pollutants under Section
112. So this is a, you know, long-standing practice of EPA.
And on the cost point, there are a couple things I would
like to add. So with the Regional Greenhouse Gas Initiative, or
RGGI, most of the States had to pass implementing legislation
to put the RGGI program into work, and many of the
participating States decided to take the allowance auction
proceeds so the amount of money that is paid for an allowance
to emit one ton of carbon dioxide and use that to promote
energy efficiency.
So Massachusetts has been ranked in, you know, first or
among the first States for energy efficiency in the country for
the past couple of years because we have been able effectively
to take that money and invest it back into energy efficiency in
our State, which over time has had the effect of lower electric
bills. And we had this exchange earlier today about electricity
rates versus electricity bills, and for those of you who live
in States where the electricity markets have been deregulated,
you know when you get your energy bill there is a couple
different charges on it. There is the charge for the
electricity itself, there is often a distribution charge, which
is for your local wires and the, you know, ability of the
distribution companies to deliver service to you, and then
there is a transmission charge. And what you see over time with
efficiency improvements is that the total bill comes down.
And that is what you really want to focus on with this. And
I think we can hear more from other witnesses on the panel
today as well, but huge beneficiaries of the energy efficiency
under RGGI have been the industrial ratepayers, and that has
been a real plus for Massachusetts.
Mr. Rush. I want to thank you.
Dr. Tierney, according to the National Climate Assessment,
if we do not seriously invest in addressing climate change
impacts now, we can expect to see more expensive and costly
future damages affecting almost every facet of our society from
negative health impacts to stress on our infrastructure and
water systems to harming our national security up to and
including hurting our overall economic growth. In your
professional opinion, do you believe that the proposed CPP is
both flexible and provides States with feasible deadlines so as
to not drastically impact reliability and/or costs for
consumers? And also why is it so vital that we act now rather
than down the road?
Ms. Tierney. Thank you very much for that question. As a
co-lead author of the Energy Production and Use chapter of the
National Climate Assessment, we took a survey of the literature
on the costly impacts already being faced by Americans
associated with the effects of climate change. Florida, for
example, faces tremendous costs of a variety of sorts, and
California, I think of California, and the well-known costly
drought conditions are extraordinary in terms of their cost on
consumers.
One of the things that is valuable to think about as we
think about this Clean Power Plan, right now, we have the
ability for people who are using fossil fuels to produce
electricity are polluting for free with regard to carbon. No
wonder it is cheap to do that because you are really dumping
some kind of cost on somebody else. And as a result of that,
the Clean Power Plan provides a lot of flexibility for States
to figure out how to address that problem quite creatively. I
think of a State like Florida, which indeed hangs as a separate
part of the electric system. Florida has the ability to
establish some kind of mutual assistance program with other
States, enabling the two States to have more affordable
compliance programs for both of them.
Mr. Whitfield. The gentleman's time is expired.
At this time I recognize the gentleman from Texas, Mr.
Olson, for 5 minutes.
Mr. Olson. I thank the chairman.
Welcome, Mr. Trisko, Ms. Johnson, Ms. Tierney, Ms. Hoffer,
Mr. Sunday, Mr. Cicio. Long day, I know that, but thank you for
coming this afternoon.
My first question would be for Mr. Trisko and Ms. Johnson.
And in your testimony, sir, you talked about how our seniors
may be hit the hardest by increases in electricity prices. And
you also say they may have the lowest ability to absorb these
costs with their energy demands. And my mother-in-law, my kids
call her Mamie, is case in point. She moved from cool, dry,
Southern California to hot, humid southeast Texas 3 years ago.
She is on a fixed income. Energy is one of her biggest
expenses, air-conditioning. If she has some increase in prices
because of this rule, she might not have the quality of life
she has currently because her prices will go up. She might not
be able to keep that air-conditioner where she wants it and I
don't want that to happen to her. So could you elaborate on the
issues seniors face across America, sir?
Mr. Trisko. I am happy to, Congressman. I think it is
important to bear in mind when looking at the electricity price
increases that I cite in my testimony to bear in mind that the
NERA analysis, and I have used the most conservative NERA
numbers in this report, including all four EPA building blocks,
but the NERA analysis included in its baseline the rate
increases associated with the EPA mercury rule, the MATS rule,
and that compliance is beginning now and will continue over the
next several years. There will be significant increases in
electricity prices as a consequence of the compliance with the
MATS rule. So these numbers are additive on top of an
increasing trend.
The impact on fixed-income seniors is fairly obvious
because most of the fixed-income seniors fall into the lower-
income categories either below $50,000 or in many cases below
$30,000 a year. You are basically looking at Social Security
recipients receiving at best COLA increases, which barely keep
pace with the rate of inflation.
So if your electric bill goes up by let's say 15 to 20
percent in real terms compared to what it is today as a
consequence of--
Mr. Olson. Like my Mamie, like my mother-in-law, yes, sir.
Mr. Trisko. Well, as a consequence to these regulations,
you are for those individuals really creating a question of
heating versus eating, and there is survey evidence that bears
that out.
Mr. Olson. Ms. Johnson with Florida, large senior
population, how does that impact your seniors back home in
Florida?
Ms. Johnson. Very similar situation, Congressman. Thank you
for the question. As I mentioned, a third of our population
that we serve have incomes below the poverty level, and over 75
percent of them have incomes below 75,000, although that is not
poverty-level income. That is in the lower to mid-bracket of
incomes. And as Mr. Trisko mentioned and I agree, those lower-
income households spend more money on their electricity service
per month. If you increase their bills, if you increase the
rate that they pay, even if you are trying to work with them to
decrease the amount of electricity that they use, they will
disproportionately be impacted negatively by an increase.
Mr. Olson. And this is number two because seniors feel heat
more than normal people. They want the air colder. My mother-
in-law keeps it really cold because that is what she is used to
and her body has told her that she can't take that extreme
heat. So thank you for your perspective.
My final question is for you, Mr. Sunday. You mentioned in
your testimony that Pennsylvania has a competitive advantage
because of low energy prices. I mean it sounds like jobs are
coming to Pennsylvania, flocking there. And as you know, the
steel industry went away to Asia about a decade ago, so how
will these increased prices from this rule impact your ability
to recover and thrive in Pennsylvania?
Mr. Sunday. We are on the verge of a manufacturing
renaissance and frankly we cannot afford higher energy prices.
I mentioned the energy efficiency laws. To the point of steel,
the Industrial Energy Consumers of Pennsylvania gave us some
data that the State's standing energy efficiency laws in some
utility jurisdictions add $40,000 a month to their bills. That
is quite a few employees that they can hire a year.
We stand on the precipice of turning things around in
Pennsylvania but, you know, we don't want to turn back now.
Mr. Olson. Mr. Cicio, you mentioned jobs coming back to
America. How about jobs leaving if this rule goes into effect?
How many jobs will fly overseas again?
Mr. Cicio. Well, we don't know exactly how many jobs
because we won't know that until we find out what the final
rule is.
But let's talk practical terms here. Let's just look at two
industries that use a lot of electricity: steel and aluminum.
The percent of electricity of operating costs of aluminum is
about 30 percent of the cost. Relatively small changes has a
huge impact on whether they produce here or produce somewhere
in the world. Steel is about 20 to 25 percent. So you can see
that high operating cost has a huge sensitivity to price
change.
Mr. Olson. Thank you. I yield back.
Mr. Whitfield. Thank you. At this time I recognize the
gentleman from New Jersey, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
I know everyone is concerned about rates and reliability,
so, Ms. Tierney, I wanted to ask you a little bit about rates.
It appears to me that the EPA analysis shows some increases of
electricity rates but it also shows that by the end of the
compliance period electricity bills are expected to be lower.
So, first, why bills would be lower at the end of the program,
and second, for the projected rate increases, how do they
compare to rate increases that we have already seen over time?
Ms. Tierney. Thank you, Congressman Pallone.
One of the reasons why EPA projects that there will be
lower electricity bills is the point that has been described
previously. If you are using less electricity because of energy
efficiency, you are buying fewer units of electricity. Even
though the unit price of electricity might rise in a small
percentage, your total bill in terms of the quantity you use
and the price, that is going to lead to a lower cost impact.
My colleague here from Massachusetts has just reported that
one of the things we have observed in the Northeast and mid-
Atlantic States is those strong investments in energy
efficiency get you two bangs for bucks. It means that there are
a lot of jobs locally in the local economy to put on insulation
in a variety of things. The consumer ends up using electricity
and then over time you don't have to run the most expensive
power plants on the system to produce electricity, and it is a
virtuous cycle in that regard. So that is the reason why the
EPA's logic there is there will be lowered bills over time.
Mr. Pallone. Can I ask you, are there larger forces in the
Clean Power Plan at work with regard to increased rates? Is the
power system already undergoing change for reasons unrelated to
the Clean Power Plan?
Ms. Tierney. Absolutely. Since the shale gas revolution
began to lower the price of a domestic fossil fuel, that has
put pressure on existing aged inefficient coal-fired power
plants. We have seen reductions in those coal-fired power
plants in terms of their operations. We have seen no
reliability problems associated with that. And in fact, we see
today the announced retirements of coal plants around the
country are being flanked on the other side with an equal
amount of proposals for new gas-fired power plants, new
renewable infrastructure, new transmission, new gas pipeline
infrastructure. As a result of that, we are seeing the market
respond very favorably to the signals about lowering supply.
Mr. Pallone. Well, in the same vein that you recently took
a look at the impact of the Clean Power Plan on electric
systems reliability. Do these doomsday claims have any merit?
Ms. Tierney. They don't in my opinion. The doomsday
scenario is helpful to all of us because here we are talking
about it. It does not suggest that everybody will stand by. I
have never seen the mission-oriented electric industry stand by
when it has to face a new reliability issue. They will do that
now. States are very responsible for this so I think that the
worst-case scenario, gloomy outlook is one that we won't see
happen.
Mr. Pallone. Thank you.
Ms. Hoffer, Massachusetts has come out in support of the
EPA's proposed Clean Power Plan and it is clear from your
testimony that EPA has the legal authority for the plan. Could
you briefly comment on the logic of legal challenges to a
proposed rule? How about legislation that seeks to halt, alter,
or undermine a proposed rule? I would say that challenging a
proposed rule either in the course of this legislation is a bit
premature but what do you think?
Ms. Hoffer. It is absolutely premature and there is no need
for it. And in fact, as Administrator McCabe said earlier, it
would be extremely disruptive. Climate change is an existential
threat to humanity, and there is a significant cost associated
to that, which affects all sectors of the economy. So one way
to think about it is it isn't the status quo compared to doing
the Clean Power Plan, but increasingly expensive climate
response costs compared to doing something now, which is
already a bit late to reduce and abate the threat.
EPA has estimated that climate and weather disasters have
affected the American economy to the tune of over $100 billion
since 2012 alone, so we need to be doing things as quickly as
possible and there is already a rational legal limitation. If,
for example, as I explained earlier, a moving party came into
the court and wanted to challenge the final rule and was able
to make out a case that the rule should be stayed during the
pendency of that challenge based on the traditional standards
that courts typically apply for a stay, a stay would be
granted. So we already have a way and a legal mechanism that is
well recognized that could be applied in this instance so it is
not necessary.
Mr. Pallone. Thank you, Mr. Chairman.
Mr. Whitfield. The gentleman's time is expired.
We have two votes on the House Floor. I believe we are
going to be able to finish our questions before we go, so at
this time I would recognize the gentleman from West Virginia,
Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you. I will try to be brief, very quick
on this.
The statements earlier today by Ms. McCabe that the
increased cost of about $8.5 billion is going to lead to lower
utility bills I found fairly incredible. And it is just further
manifestation I think of this disturbing trend coming from the
administration over the years and calls into question I think
their credibility.
Look back on some of the statements that we have dealt
with. Al Qaeda is on the run in 2012. 2014 we heard Yemen is a
counterterrorism success story and we found that to be false as
well. We heard over the years that the more EPA regulations
create jobs. For every million dollars in regulations, it
creates 1 \1/2\ jobs. We are hearing about this proposed
Iranian deal is good for Israel, but the Prime Minister says
absolutely that is false. Now I am hearing this is going to
save money for the consumer.
So, Mr. Trisko, can you respond to that? I just thought
that was an outrageous statement and really called into
question a lot of the credibility.
Mr. Trisko. Congressman, yes, thank you. The reason that
EPA has presented such a low estimate of the annual compliance
costs with the Clean Power Plan is that it has netted out from
those costs the assumed savings from energy efficiency
initiatives. Now, NERA's analysis using the four building
blocks of the EPA rule, and this is the cost to consumers of
investments in energy efficiency to meet EPA targets, indicates
a cost to consumers, and this is in net present value terms, of
$560 billion. That means Americans will be asked by this rule,
American consumers will be asked to spend $560 billion in
investments in energy efficiency.
Congressman, I believe that estimate of that extent of
energy efficiency investment is simply fatuous. As of just a
few years ago the most recent data--and these don't change very
quickly--the average American house is owned for a period of 7
to 8 years. You cannot recover a major investment such as in
replacing sliding glass doors or an HVAC, a heat pump system,
you cannot recover those costs in the space of 7 to 8 years.
You can do relatively simple things like attic insulation and
weather-stripping and that sort of thing, but those don't get
you close to the targets that EPA is advocating for States in
this rule.
So if you are going to have energy efficiency to the extent
that EPA is advocating it, consumers ought to be able to shell
out on the order of a half a trillion dollars to pay for it.
Mr. Pallone. I yield back the balance of my time to help
out.
Mr. Whitfield. The gentleman yields back.
At this time I recognize the gentleman from Virginia, Mr.
Griffith, for 5 minutes.
Mr. Griffith. Thank you very much.
Ms. Hoffer, we are just going to disagree on the law. Mr.
Trisko, you and I are going to agree on the law as to whether
or not the EPA has authority under 111(d). But I would submit
to both of you that in this case on Thursday of this week the
EPA is going to argue in front of the U.S. Court of Appeals for
the DC Circuit that it is premature to take the question up as
to whether or not they have authority under 111(d).
Now, there are some other arguments as well, but at the
very least it would seem to me in the matter of efficiency
settling this issue more quickly as to whether or not there is
even authority to go forward with the regulations would be in
the interest of the American public. Mr. Trisko, would you not
agree with that, that the EPA ought to say, OK, at least asked
to whether or not we have authority since we are already
regulated under 112, can the court rule on that so we can move
forward to the Supreme Court? Because we all know that issue is
going to end up in the Supreme Court, wouldn't you agree?
Mr. Trisko. Congressman, I would agree. And let me cite
another precedent that is occurring in the here and now. The
Supreme Court will hear arguments and render a decision in the
challenge to EPA's mercury rule. There are power plants that
are being retired, basically being put into stranded asset
category today, this month, this year, tens of thousands of
megawatts of capacity. The Supreme Court could vacate the EPA
mercury rule. In that event, wouldn't it have made sense before
those plants were retired and rendered stranded assets----
Mr. Griffith. And those jobs lost.
Mr. Trisko [continuing]. To have the answer?
Mr. Griffith. Yes, sir.
Mr. Trisko. To have the answer.
Mr. Griffith. And that screams out for this proposed draft
to be passed, wouldn't you agree?
Mr. Trisko. Yes, sir.
Mr. Griffith. All right. And, Ms. Johnson, likewise, you
would feel that you are about to have some stranded cross.
Wouldn't you like to know in advance that the EPA at least has
the authority to promulgate these regulations? You might still
be opposed to them, but wouldn't you like to know whether they
have the authority before you are forced to shut down that
facility?
Ms. Johnson. I certainly would, Congressman.
Mr. Griffith. And that screams for this piece of
legislation, this draft legislation to be passed, wouldn't you
agree?
Ms. Johnson. Yes, I agree.
Mr. Griffith. And you would agree then with the State
Corporation Commission of Virginia when they said that because
of stranded costs in part but contrary to the claim that rates
will go up but bills will go down, experience of cost in
Virginia make it extremely unlikely that either electric rates
or bills in Virginia will go down as a result of the proposed
regulation. You certainly have no reason to disagree in
Virginia and for the people that you serve in your area would
that also be true?
Ms. Johnson. I believe that is true. I don't know how you
could retire a plant prematurely when there is valuable life
left in it and have to replace new generation to take that up
and pay for it twice and not have the costs go up.
Mr. Griffith. Yes, ma'am.
And, Mr. Cicio, one of the things I wanted to ask you about
if I heard your testimony correctly, the Chinese produce how
much more product today than we do percentagewise?
Mr. Cicio. I believe it is 23 percent.
Mr. Griffith. About 20 some percent and yet their carbon
footprint is how much more for that production?
Mr. Cicio. Three hundred percent more.
Mr. Griffith. So when we make it difficult for businesses
like Mr. Sunday's businesses to do business in Virginia, United
States, Pennsylvania for Mr. Sunday's case, we send some of
those jobs--not all them but some of them will go to places
like China or India, isn't that correct?
Mr. Cicio. That is correct. Turn it around. Look at it this
way. If you create jobs in the United States and you don't
import from China, you are reducing global emissions.
Mr. Griffith. So this may actually have a contrary effect
on the environment where everybody is claiming that this will
help the environment by pushing jobs to places like China,
Vietnam, India, wherever----
Mr. Cicio. That is correct.
Mr. Griffith [continuing]. We could be making the
environment worse. And I note that India has said they are not
planning on cutting back on carbon. They are going to use more
carbon, they are going to use more coal because it is
affordable to produce the energy, to produce jobs, and they
want to catch up with the U.S. and China, isn't that correct?
Mr. Cicio. That is correct. And even Japan just last week
announced they will build 40 coal-fired power plants, so it is
not just developing countries.
Mr. Griffith. And the Germans as well are building some
more coal plants. And of course one of the things that people
often forget because they will say that we are the--I think
somebody earlier tonight said we are, you know, second only to
China in carbon footprint. We are the world's third-largest or
most populous country, we are the world's largest economy, and
we are currently producing the second-most products, so that
accounts for some of this, and we have benefited the rest of
the world with our innovations. We can benefit them now with
our innovations without the force of Government regulation,
particularly this particular regulation we are discussing
today, the Clean Power Plan, by moving forward to make us
better and more efficient in the factories as opposed to
debilitating folks like in my district who don't have the money
to spend on these increased electricity.
Thank you so much. I yield back.
Mr. Whitfield. Thank you. Mr. Rush?
Mr. Rush. Mr. Chairman, I ask unanimous consent to enter a
number of letters into the record from various organizations,
public health organizations, environmental public interests,
environmental justice organizations, and consumer groups. So I
ask unanimous consent that these letters be entered into the
record.
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. And then I would like to submit for the
record by unanimous consent the comments that were submitted to
EPA regarding its proposed 111(d) rule by the National Black
Chamber of Commerce, the United States Hispanic Chamber of
Commerce, and National Association of Realtors, and would also
like to submit a statement in support of the Ratepayer
Protection Act by the National Association of Home Builders.
[The information appears at the conclusion of the hearing.]
\1\
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\1\ The report entitled ``Analysis of Legal Basis for EPA's
Proposed Rule on Carbon Pollution Emission Guidelines for Existing
Stationary Sources'' has been retained in committee files and also is
available at http://docs.house.gov/meetings/IF/IF03/20150414/103312/
HHRG-114-IF03-20150414-SD004.pdf.
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Mr. Whitfield. So that concludes our hearing. You all were
very patient. Thank you very much for taking time to focus on
this important issue. We look forward to working with all of
you as we move forward. We will keep the record open for 10
days.
And that will conclude today's hearing. Thank you very
much.
[Whereupon, at 1:20 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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