[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

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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:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
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