[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





    EPA'S CO2 REGULATIONS FOR NEW AND EXISTING POWER PLANTS: LEGAL 
                              PERSPECTIVES

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 22, 2015

                               __________

                           Serial No. 114-90



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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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, California7
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

                    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)

                                  (ii)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
    Prepared statement...........................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   141

                               Witnesses

Elbert Lin, Solicitor General, State of West Virginia............     8
    Prepared statement...........................................    11
Allison Wood, Partner, Hunton & Williams, LLP....................    33
    Prepared statement...........................................    35
Richard Revesz, Lawrence King Professor of Law, Dean Emeritus, 
  and Director, Institute for Policy Integrity, New York 
  University School of Law.......................................    61
    Prepared statement...........................................    64
    Answers to submitted questions...............................   166
Emily Hammond, Associate Dean for Public Engagement, Professor of 
  Law, George Washington University Law School...................    89
    Prepared statement...........................................    91
    Answers to submitted questions...............................   169
Raymond L. Gifford, Partner, Wilkinson Barker Knauer, LLP........    96
    Prepared statement...........................................    98

                           Submitted Material

Report by the Electric Reliability Council of Texas, ``ERCOT 
  Analysis of the Impacts of the Clean Power Plan,'' October 16, 
  2015, submitted by Mr. Olson...................................   143
Presidential Message, ``Proposed Legislation--`Clean Air Act 
  Amendments of 1989,''' House Document 101-87, 101st Congress, 
  1st Session, submitted by Mr. Griffith.........................   157
 
  EPA'S CO2 REGULATIONS FOR NEW AND EXISTING POWER PLANTS: 
                           LEGAL PERSPECTIVES

                              ----------                              


                       THURSDAY, OCTOBER 22, 2015

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:03 p.m., in 
room 2123 Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Olson, Shimkus, 
Pitts, Latta, Harper, McKinley, Griffith, Johnson, Long, 
Flores, Mullin, Hudson, Rush, McNerney, Tonko, Engel, Green, 
Capps, Doyle, Castor, Welch, Loebsack, and Pallone (ex 
officio).
    Staff present: Will Batson, Legislative Clerk; Leighton 
Brown, Press Assistant; Allison Busbee, Policy Coordinator, 
Energy and Power; Rebecca Card, Staff Assistant; Tom 
Hassenboehler, Chief Counsel, Energy and Power; Mary Neumayr, 
Senior Energy Counsel; Chris Sarley, Policy Coordinator, 
Environment and the Economy; Dan Schneider, Press Secretary; 
Peter Spencer, Professional Staff Member, Oversight and 
Investigations; Christine Brennan, Democratic Press Secretary; 
Jeff Carroll, Democratic Staff Director; Caitlin Haberman, 
Democratic Professional Staff Member; Rick Kessler, Democratic 
Senior Advisor and Staff Director, Energy and Environment; John 
Marshall, Democratic Policy Coordinator; Alexander Ratner, 
Democratic Policy Analyst; Timia Crisp, Democratic AAAS Fellow; 
and Josh Lewis, Democratic EPA Detailee.
    Mr. Whitfield. I would like to call the hearing to order 
this afternoon. And I know we have a number of our friends on 
that side of the aisle and a number over here, and I know that 
Mr. Rush and Mr. Pallone are on their way. And I am sure by the 
time I finish my statement, we can go right to them for their 
statement.
    So at this time 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

    Two weeks ago, we reviewed the substance of EPA's 
CO2 regulations for new and existing power plants, 
all 3,000 pages of them, with EPA Acting Assistant 
Administrator Janet McCabe. Today's hearing will focus on the 
legality of this complicated and far-reaching scheme to 
commandeer each State's electricity system and replace it with 
a cap-and-trade approach similar to the ones that Congress has 
repeatedly rejected. And I say that because I think that is 
what the Federal Implementation Plan is going to be.
    There is nothing in the Clean Air Act that even suggests 
such sweeping agency action is authorized. Indeed, these rules 
are unprecedented in the 45-year history of this statute. If 
Congress wanted to authorize a comprehensive transformation of 
the way America gets its electricity, it would have said so. If 
Congress wanted to see a wholesale Federal takeover of State 
authority on electricity policy, it would have said so. And if 
Congress wanted to largely write fossil fuels out of America's 
energy future, it would have said so.
    In my view, the discrepancy between what EPA is trying to 
do and what the Clean Air Act actually allows it to do is so 
wide that I, along with others, would be flabbergasted if the 
Court ruled this action is legal. I might also say there are 
serious constitutional concerns with what many see as an 
executive branch power grab at the expense of the legislative 
branch and the States.g
    I might add that some of the same reasons EPA's power plant 
rules are bad law are also the reasons they are bad policy, 
particularly in the way the Agency treats the States. The 1970 
Clean Air Act set out a working partnership between the Federal 
Government and States stating clearly that air pollution 
prevention and control are the primary responsibility of State 
and local governments. In contrast, unilateral EPA 
micromanagement of electricity generation is a recipe for 
higher bills, reduced reliability, and job losses that are well 
out of proportion to any environmental benefit.
    The fact that 16 States--and we think there are even going 
to be more--believe they have no choice--they can't sit down 
and talk to EPA about this--they have no choice but to sue the 
Agency over these rules is a sure sign of an unhealthy Federal-
State relationship and a policy that won't work. The House 
passed the Ratepayer Protection Act to address the legal and 
policy shortcomings of the rule for existing power plants. This 
bill would extend the State compliance deadlines so that the 
rule's costly provisions would not take effect until judicial 
review is complete.
    We all recognize that even EPA itself had reversed 20 years 
of legal opinions about the use of 112 and 111(d). And without 
accusing anyone of anything, it is very easy to conclude that 
the reason they reversed this was that it was the only way that 
they could institute this extreme, radical, unprecedented plan 
in time for the President to go to Paris next month and 
proclaim that American is doing more than anyone else.
    And that is OK, but if it is illegal, that should be of 
concern to all of us. And there are many people who believe it 
is illegal. But we will have the opportunity to get into this 
because we have a lot of legal scholars here today, and this is 
one of those issues that many legal scholars are really focused 
on, as are many Americans, whatever they may be doing in our 
society.
    So I look forward to our discussion today with the legal 
issues, with EPA's power plant rules, and the concerns that are 
raised because of this extreme, unprecedented action.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    Two weeks ago we reviewed the substance of EPA's 
CO2 regulations for new and existing power plants, 
all 3,000 pages of them, with EPA Assistant Administrator Janet 
McCabe. Today we continue our scrutiny of these rules as the 
agency begins the process of imposing its requirements on the 
States.
    Today's hearing will focus on the legality of this 
complicated and far-reaching scheme to commandeer each State's 
electricity system and replace it with a cap-and-trade approach 
similar to the ones that Congress has repeatedly rejected.
    There is nothing in the Clean Air Act that even suggests 
such sweeping agency action is authorized. Indeed, these rules 
are unprecedented in the 45-year history of this statute. If 
Congress wanted to authorize a comprehensive transformation of 
the way America gets its electricity in order to address global 
warming, it would have said so. If Congress wanted to see a 
wholesale Federal takeover of State authority on electricity 
policy, it would have said so. And if Congress wanted to 
largely write fossil fuels out of America's energy future, it 
would have said so as well.
    In my view, the discrepancy between what EPA is trying to 
do and what the Clean Air Act actually allows is so wide that I 
am confident that these rules will not withstand judicial 
scrutiny. There are also serious Constitutional concerns with 
what many see as an Executive branch power grab at the expense 
of the legislative branch and the States.
    I might add that some of the same reasons EPA's power plant 
rules are bad law are also the reasons they are bad policy, 
particularly in the way the agency treats the States. The 1970 
Clean Air Act set out a working partnership between the Federal 
Government and States stating quite clearly that air pollution 
prevention and control are the primary responsibility of State 
and local governments. In contrast, unilateral EPA 
micromanagement of electricity generation is a recipe for 
higher bills, reduced reliability, and job losses that are well 
out of proportion to any environmental benefits.
    The fact that 16 States believe they have no choice but to 
sue the agency over these rules is a sure sign of an unhealthy 
Federal-State relationship and a policy that won't work. The 
House passed the Ratepayer Protection Act to address the legal 
and policy shortcomings of the rule for existing power plants. 
This bill would extend the State compliance deadlines so that 
the rule's costly provisions would not take effect until 
judicial review is complete.
    The value of this ``time out'' was clearly demonstrated by 
the recent Supreme Court decision finding EPA's Mercury MACT 
rule to be legally flawed. Unfortunately, this decision came 
after many affected utilities had already initiated costly 
compliance steps, including the irreversible decision to close 
several coal-fired power plants. Similarly, the existing source 
rule as written would require costly and potentially 
irreversible steps to be taken before we know the legal status 
of the rule. I believe that the EPA has made clear by their 
comments following this decision that their goal is to compel 
States to begin complying with the existing plant rule now so 
that in the event that the Supreme Court rules against them, 
decisions will have already been made.
    The whole regulatory scheme before us today rests on an 
implicit deception--a bait and switch. The plain words of the 
statute make clear the limited authority EPA has to regulate 
performance standards for fossil-fueled power plants. But rules 
before us, as we'll hear today, go well beyond mere performance 
standards. In the guise of performance standards the agency has 
created a compliance schedule and complicated incentive scheme 
that lock States into making expensive and far reaching choices 
concerning their electricity systems as soon as possible, 
before the long term implications of their decisions can be 
evaluated, or the long term implications of EPA's regulatory 
overreach can be understood.

    Mr. Whitfield. And at this time, I yield back my 11 seconds 
and recognize the distinguished gentleman from Illinois, Mr. 
Rush, for a 5-minute opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman.
    Mr. Chairman, today, we are holding yet another in what has 
now become an endless series of hearings on the Clean Power 
Plan. Today, we will once again be focusing on the legal 
perspectives, which was exactly the same focus of a similar 
hearing on this very same topic back in March of this year.
    Mr. Chairman, this subcommittee has taken valuable time to 
repeatedly examine the costs of the CPP, the legality of the 
plan, and ways to repeal or eliminate or hinder or obfuscate 
the CPP in using legislative means or whatever means that your 
side might find usable at the time.
    However, Mr. Chairman, I must bring to your attention that 
this very same subcommittee of jurisdiction has yet to hold a 
single hearing in this Congress on the underlying reason why a 
plan such as this is even necessary, not a single hearing, Mr. 
Chairman, to address the very important critical issue of 
climate change, global climate change. In fact, Mr. Chairman, 
it would appear that the majority's side is even hesitant to 
even utter the phrase climate change unless it is doing so in a 
mocking, sneering, or contemptuous manner. Mr. Chairman, your 
side is still bent, still determined to keep their head buried 
deep beneath the ever-changing sand of ignoring climate change.
    Mr. Chairman, in the midst of all these hearings on the 
CPP, I urge, plead with the majority to also hold at least one 
hearing--you can set a time limit, 15 minutes, a half an hour, 
hour, 2 hours, whatever time limit you want to set on the 
hearing--just hold a hearing on the issue of climate change.
    As a matter of fact, Mr. Chairman, I just wanted to say 
that the ranking member of the full committee and I will be 
formally submitting another letter to you and Chairman Upton 
requesting a hearing in the very near future on climate change.
    Mr. Chairman, I want to underline our request by asking you 
and the members of the other side, let's bring this issue of 
climate change up for discussion. Let's hold a transparent and 
substantive debate on the merits of both sides of the argument. 
Is there something called climate change, or is that just a 
figment of most of the American people and the scientific 
community and the experts, is that just a figment of our 
imagination?
    Mr. Chairman, the American people deserve to hear their 
elected representatives voicing their opinions on what many 
believe to be the most consequential issue facing our time. If 
my colleagues on the other side of the aisle truly believe that 
the overwhelming majority of the world's scientists and 
climatologists are either wrong, they are misguided, or they 
are in some ways in cahoots in pulling off a global hoax, then 
let's discuss this openly in a public hearing.
    Even as we sit here today debating whether the EPA has the 
authority to legally put forth rules to increase the Nation's 
common emissions, the National Oceanic and Atmospheric 
Administration released a report just yesterday stating that 
September was the warmest month globally in the history of this 
Nation, the history of this world that we live in. The NOAA 
reports that the average global surface temperature in 
September was 1.62 degrees Fahrenheit warmer than the 20th 
century average.
    Additionally, the agency noted that September was the fifth 
straight month to bring the high temperature mark this very 
year, and that January through September saw the warmest 
temperatures since 1880--you and I can remember that--since 
1880 when this data was first reported.
    Mr. Chairman, the NOAA reports that the temperatures on 
land were 2.09 degrees Fahrenheit higher than the average in 
September, and that the U.S. experienced its second warmest 
September on record. We cannot afford to simply ignore science, 
ignore data, ignore the experts, and ignore the signs that 
Mother Nature continues to show us.
    Mr. Chairman, as we finish today's exercise in futility, 
this exercise of debating the legality of this rule which the 
courts will ultimately decide anyway, I would urge the majority 
to immediately, again, plead with the majority to immediately 
schedule a hearing on the merits of global climate change.
    Mr. Chairman, with that I yield back the balance of my 
time.
    [The prepared statement of Mr. Rush follows:]

                Prepared statement of Hon. Bobby L. Rush

    Mr. Chairman, today we are holding yet another, in what has 
now become a series of hearings on the Clean Power Plan.
    Today, we will again be focusing on the legal perspectives, 
which was the exact same focus of a similar hearing on this 
very same topic back in March.
    Mr. Chairman, this subcommittee has taken valuable time to 
repeatedly examine the cost impacts of the CPP, the legality of 
the plan, and ways to do away with the Clean Power Plan 
legislatively.
    However, this subcommittee of jurisdiction has yet to hold 
a single hearing in this Congress on the underlying reason why 
a plan such as this is even necessary, namely to address 
climate change.
    In fact, Mr. Chairman, it would appear that the majority 
side is hesitant to even utter the phrase climate change, 
unless it is doing so in a mocking, sneering, or contemptuous 
manner.
    Mr. Chairman, it the midst of all of these hearings on the 
Clean Power Plan, I urge the majority to also hold a hearing on 
the issue of climate change.
    In fact, Mr. Pallone and I will be formally submitting a 
letter to you and Chairman Upton requesting a hearing in the 
very near future on climate change.
    Let's bring this issue of climate change up for discussion 
and hold a transparent and substantive discussion on the merits 
of the arguments of both sides of this debate.
    Mr. Chairman, the American people deserve to hear their 
elected representatives voice their opinions on what many 
believe to be the most consequential issue facing our time.
    If my colleagues on the other side truly believe that the 
overwhelming majority of the world's scientists and 
climatologist are either wrong, misguided, or are in cahoots in 
pulling off a global hoax, then let's discuss this openly in a 
public hearing.
    Mr. Chairman, even as we sit here debating whether the EPA 
has the authority to legally put forth rules to decrease the 
Nation's carbon emissions, the National Oceanic and Atmospheric 
Administration released a report just yesterday stating that 
September was the warmest month globally on record.
    NOAA reports that the average global surface temperature in 
September was 1.62 degrees Fahrenheit warmer than the 20th 
century average.
    Additionally, Mr. Chairman, the agency noted that September 
was the fifth straight month to break the high temperature mark 
this year, and January through September saw the warmest 
temperatures since 1880 when this data was first recorded.
    Mr. Chairman, NOAA reports that temperatures on land were 
2.09 degrees Fahrenheit higher than average in September, and 
the U.S. experienced its second-warmest September on record.
    Mr. Chairman, this subcommittee cannot afford to simply 
ignore science, ignore data, ignore the experts, and ignore the 
signs that Mother Nature continues to show us.
    After we finish today's exercise of debating the legality 
of this rule, which the Courts will ultimately decide anyway, I 
would urge the majority to immediately schedule a hearing on 
the merits of the climate change debate.
    The members of this subcommittee, as well as the American 
people, would be well served to hear from the experts so that 
well-informed decisions can be made regarding this issue.
    Thank you, Mr. Chairman, and with that I yield back.

    Mr. Whitfield. Now, Mr. Rush, I want you to know I let you 
go 8 minutes in that opening statement----
    Mr. Rush. Well, thank you, Mr. Chairman.
    Mr. Whitfield [continuing]. Because I wanted you to be 
sure----
    Mr. Rush. I feel very, very passionate about this issue.
    Mr. Whitfield. I wanted you to have plenty of time to talk 
about climate change.
    Now, Mr. Upton is not here today. Is there anyone on our 
side of the aisle that would like to make a comment or discuss 
the legality or talk about China or----
    OK. Seeing no one, the Chair will recognize the gentleman 
from New Jersey, 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.
    Let me begin by quoting President Obama, who recently said 
``climate change is no longer some far-off problem. It is 
happening here. It is happening now. We can't wait for some 
future generation to take action, and we know that any 
meaningful action must include drastically reducing our carbon 
emissions in order to have any chance of preventing the worst 
impacts of a changing climate.''
    And that is why EPA has taken action by finalizing a 
workable plan to reduce emissions of carbon pollution from 
power plants, which are the largest uncontrolled source of 
manmade greenhouse gases in the U.S. The Clean Power Plan 
outlines a path to cleaner air, better health, a safer climate, 
and a stronger economy. And the rule also gives States 
flexibility to choose how to achieve their emission-reduction 
goals, which are State-specific and cost-effective.
    And this is a moderate and reasonable approach and falls 
well within the legal authority and responsibility of the EPA 
to address carbon pollution from power plants. But I am sure we 
are going to hear a different story from our Republican friends 
today. Today's hearing is the seventh on this particular rule 
and the second hearing purportedly to examine the legal 
problems with the Clean Power Plan.
    We should not heed the absurd arguments made on behalf of 
companies that profit from the status quo. Make no mistake, 
many of the arguments presented today are well-known, that 
EPA's plan is not legal, that it is unworkable, that some 
States may refuse to participate. We have heard these claims 
during previous hearings and debates on the House Floor. We 
have heard them in the numerous premature attacks on the Clean 
Power Plan and EPA's carbon standards for new power plants that 
have already been rejected by multiple Federal courts.
    And despite the zeal of the rule's opponents, all of these 
arguments have been soundly refuted and dismissed at every 
turn. Constantly repeating misguided assertions will not 
magically make them legitimate or true. Frankly, these 
frivolous lawsuits are just wasting taxpayer dollars in the 
name of attacking any action by this administration to address 
climate change and carbon pollution.
    And all of this is to say that we are on a well-trodden 
path, and I believe committee time could be put to better use. 
The truth is Congress overwhelmingly passed the Clean Air Act, 
a Republican President signed it into law, and now EPA is 
fulfilling its executive duty to take care that the laws be 
faithfully executed. EPA is doing the job we asked them to do, 
and it is time Members accept that the Clean Power Plan is on 
solid legal ground and just move on.
     As I have said before, Mr. Chairman, those making the 
arguments heard today aren't really interested in finding 
solutions to our carbon pollution problem. They aren't 
interested in developing a plan to help us reduce emissions 
while still maintaining a safe, reasonably priced electricity 
system. They are more than welcome to ignore the facts and more 
than welcome to reject any reasonable plan to address climate 
change, but history will not treat them kindly. History is on 
the side of those who want to act on climate change, those who 
believe in the power of American innovation and our ability to 
successfully meet any challenge, and who look to the future 
rather than the past.
    We have already wasted too much time listening to the 
arguments against the Clean Power Plan and on legislation to 
``just say no'' to climate action. Now, Congress must turn the 
page, and what we cannot do, as President Obama said--and I 
will quote him again--is ``condemn our children to a planet 
beyond their capacity to repair.''
    I yield back. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Let me begin by quoting President Obama, who recently said, 
``Climate change is no longer some far-off problem; it is 
happening here, it is happening now.'' We cannot wait for some 
future generation to take action. And we know that any 
meaningful action must include drastically reducing our carbon 
emissions, in order to have any chance of preventing the worst 
impacts of a changing climate.
    That is why EPA has taken action by finalizing a workable 
plan to reduce emissions of carbon pollution from power plants, 
which are the largest uncontrolled source of man-made 
greenhouse gases in the U.S. The Clean Power Plan outlines a 
path to cleaner air, better health, a safer climate and a 
stronger economy. The rule also gives States flexibility to 
choose how to achieve their emission reduction goals, which are 
State-specific and cost-effective. This is a moderate and 
reasonable approach, and falls well within the legal 
authority--and responsibility--of the EPA to address carbon 
pollution from power plants.
    But I'm sure we will hear a different story from 
Republicans. Today's hearing is the seventh on this particular 
rule, and the second hearing purportedly to examine the ``legal 
problems'' with the Clean Power Plan.
    We should not heed the absurd arguments made on behalf of 
companies that profit from the status quo. Make no mistake, 
many of the arguments presented today are well known: that 
EPA's plan is not legal, that it is unworkable, and that some 
States may refuse to participate. We have heard these claims 
during previous hearings and debates on the House Floor. We 
have heard them in the numerous premature attacks on the Clean 
Power Plan and EPA's carbon standards for new power plants that 
have already been rejected by multiple Federal courts.
    And despite the zeal of the rule's opponents, all of these 
arguments have been soundly refuted and dismissed at every 
turn. Constantly repeating misguided assertions will not 
magically make them legitimate or true. Frankly, these 
frivolous lawsuits are just wasting taxpayer dollars in the 
name of attacking any action by this administration to address 
climate change and carbon pollution.
    All of this is to say that we are on a well-trodden path, 
and I believe committee time could be put to better use. The 
truth is, Congress overwhelmingly passed the Clean Air Act, a 
Republican President signed it into law, and now EPA is 
fulfilling the executive's duty to ``take care that the laws be 
faithfully executed.'' EPA is doing the job we asked them to 
do, and it is time members accept that the Clean Power Plan is 
on solid legal ground and move on.
    As I've said before, those making the arguments heard today 
aren't really interested in finding solutions to our carbon 
pollution problem. They aren't interested in developing a plan 
to help us reduce emissions while still maintaining a safe, 
reasonably priced electricity system. They are more than 
welcome to ignore the facts. They are more than welcome to 
reject any reasonable plan to address climate change. But 
history will not treat them kindly. History is on the side of 
those who want to act on climate change; those who believe in 
the power of American innovation and our ability to 
successfully meet any challenge, and who look to the future 
rather than the past.
    We have already wasted too much time listening to the 
absurd arguments against the Clean Power Plan and on 
legislation to ``just say no'' to climate action. Now Congress 
must turn the page. What we cannot do, as President Obama said, 
is ``condemn our children to a planet beyond their capacity to 
repair.''
    Thank you.

    Mr. Whitfield. The gentleman yields back. And that 
concludes the opening statements.
    And I want to welcome our panel today of five all well-
versed legal scholars on these issues. And I am going to 
introduce each of you individually before you give your opening 
statement rather than doing it in advance. And so for the first 
introduction of our first witness, I am going to call on the 
distinguished gentleman from West Virginia for that purpose, 
Mr. McKinley.
    Mr. McKinley. Thank you. Thank you, Mr. Chairman.
    I am pleased to welcome the Solicitor General of West 
Virginia, Elbert Lin. The Solicitor General, Mr. Lin, oversees 
the Office of the Attorney General's appellate practice, legal 
opinions, and Federal litigation. Formerly a partner at Wiley 
Rein, he assisted clients with a wide variety of litigation in 
regulatory matters with a particular expertise in 
administrative, appellate, and constitutional law.
    West Virginia is lucky to have his expertise, and I thank 
you, Mr. Lin, for coming before our committee today, and we 
look forward to your testimony.
    Thank you, Mr. Chairman.
    Mr. Whitfield. So, Mr. Lin, you will be recognized for 5 
minutes, and then we will go to the other panelists. Thank you.

  STATEMENTS OF ELBERT LIN, SOLICITOR GENERAL, STATE OF WEST 
   VIRGINIA; ALLISON WOOD, PARTNER, HUNTON & WILLIAMS, LLP; 
RICHARD REVESZ, LAWRENCE KING PROFESSOR OF LAW, DEAN EMERITUS, 
    AND DIRECTOR, INSTITUTE FOR POLICY INTEGRITY, NEW YORK 
  UNIVERSITY SCHOOL OF LAW; EMILY HAMMOND, ASSOCIATE DEAN FOR 
    PUBLIC ENGAGEMENT, PROFESSOR OF LAW, GEORGE WASHINGTON 
    UNIVERSITY LAW SCHOOL; AND RAYMOND L. GIFFORD, PARTNER, 
                  WILKINSON BARKER KNAUER, LLP

                    STATEMENT OF ELBERT LIN

    Mr. Lin. Thank you, Congressman McKinley, Mr. Chairman, 
members of the committee. I am honored to testify about the 
legality of EPA's carbon dioxide standards for fossil fuel-
fired power plants.
    As noted by Congressman McKinley, I am the Solicitor 
General for the State of West Virginia. My boss, West Virginia 
Attorney General Patrick Morrisey, has been a leader over the 
last year in litigation concerning the so-called Clean Power 
Plan, EPA's effort to regulate carbon dioxide emissions from 
existing fossil fuel-fired power plants under section 111(d) of 
the Clean Air Act.
    So while there are numerous legal deficiencies with all 
aspects of EPA's new carbon dioxide standards, I will focus on 
two of the major legal defects with the section 111(d) rule. 
First, EPA has exceeded its authority under section 111(d) by 
using three wide-ranging building blocks to calculate statewide 
carbon dioxide emission limits. Block 1 assumes a reduction in 
carbon dioxide emissions based on greater efficiency from coal-
fired power plants. Block 2 then assumes an additional 
reduction based on substituting coal-fired power generation 
with natural gas-fired generation. And block 3 reduces the 
carbon dioxide target further based on substituting coal-fired 
power with renewable energy like wind and solar.
    These building blocks attempt not just to regulate the 
efficiency of power plants themselves but to favor one form of 
electric generation over another and to require States to 
completely reorder their energy portfolios. Indeed, the White 
House fact sheet released with the final rule described it as 
an effort to ``drive a more aggressive transformation of the 
domestic energy industry.'' This is sometimes described as 
EPA's attempt to regulate beyond the fence line of the 
individual power plants, and it is not lawful.
    By its plain text, section 111(d) concerns only the 
reduction of emissions through measures that can be applied to 
improving an individual source's performance. What EPA claims 
is what the Supreme Court once called ``an unheralded power to 
regulate a significant portion of the American economy without 
a clear statement from Congress.'' The last time that happened 
in a case called Utility Air Regulatory Group v. EPA, the 
Supreme Court reversed the Agency.
    EPA's obvious goal is to push States toward a cap-and-trade 
system. The Agency describes emissions trading as an integral 
part of its analysis, its proposed Federal plan is a cap-and-
trade regime, and it puts great weight on the fact that 
Congress passed a cap-and-trade program for sulfur dioxide in 
Title IV of the Clean Air Act. But that is precisely the point. 
The cap-and-trade regime in Title IV is a clear statement from 
Congress. The one advanced by the rule, in contrast, was 
specifically rejected by Congress in 2009.
    A second problem with the section 111(d) rule is that EPA 
is already regulating fossil fuel-fired power plants from 
mercury and other emissions under section 112 of the Clean Air 
Act. The text of section 111(d) in the U.S. Code says it does 
not apply to any air pollutant emitted from a source category 
which is regulated under section 112. This is the so-called 112 
exclusion. As EPA itself has long admitted, a literal reading 
of this text means that EPA cannot use section 111(d) to reach 
emissions from a source category already regulated under 
section 112.
    To escape this literal reading, EPA argued in the proposed 
rule that this text doesn't tell the whole story. It argued 
that in 1990, Congress actually passed two versions of the 112 
exclusion, which the EPA means the statute is ambiguous and 
subject to the Agency's interpretation.
    In our litigation and in comments to EPA, we pointed out 
the significant flaws with this theory, and as a result, in the 
final rule EPA changed tactics. Now, for the first time in 25 
years, EPA claims that the literal text of the 112 exclusion as 
it appears in the U.S. Code is ambiguous. According to EPA, 
Congress was unclear when it referred to sources ``regulated 
under section 112.'' That phrase, EPA contends, can be read to 
limit the exclusion not only to sources regulated under section 
112 but also to pollutants listed under 112. And because carbon 
dioxide is not listed under section 112, EPA argues, the 
exclusion does not apply.
    But this novel approach, EPA's backup to its previous 
backup position, does not get EPA out from under the 112 
exclusion. Despite its claim, the statute is quite clear. It 
refers to source categories regulated under section 112, not 
air pollutants listed under section 112. So what EPA is doing 
is rewriting the statue, which it is of course not permitted to 
do.
    The section 111(d) rule is thus unlawful in at least two 
ways: It relies on expressly picking winners and losers in the 
energy field, and it violates the section 112 exclusion.
    Thank you again for this opportunity, and I look forward to 
your questions.
    [The prepared statement of Mr. Lin follows:]
    
    
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    Mr. Whitfield. Thank you very much, Mr. Lin.
    And our next witness is Allison Wood, who has testified 
here before. She is a partner at Hunton & Williams. And, Ms. 
Wood, thank you for joining us today, and you are recognized 
for 5 minutes.

                   STATEMENT OF ALLISON WOOD

    Ms. Wood. Thank you, Mr. Chairman.
    Good afternoon. It is an honor to appear again before this 
subcommittee to offer testimony on EPA's regulations for power 
plants under section 111 of the Clean Air Act.
    I am a partner, as you said, in the law firm of Hunton & 
Williams, and I have practiced environmental law for over 17 
years. And for the past decade, my practice has focused almost 
exclusively on climate change.
    On August 3, EPA released three rules to limit carbon 
dioxide emissions from power plants. The most controversial 
rule regulates those emissions from existing power plants under 
section 111(d) of the Clean Air Act. EPA also released a 
proposed Federal plan to implement the existing power plant 
regulations, accompanied by two model trading rules, one for a 
mass-based cap-and-trade program and one for a rate-based cap-
and-trade program.
    The third rule regulates carbon dioxide emissions from new, 
modified, and reconstructed power plants under section 111(b) 
of the Clean Air Act. All of these regulations will be 
published in tomorrow's Federal Register, and they all suffer 
from legal deficiencies that are certain to be subject to 
litigation.
    With regard to EPA's final rule for existing power plants 
under section 111(d), that rule continues to suffer from 
numerous legal deficiencies, including the two issues that I 
raised before this subcommittee in March. The first issue is 
whether EPA even has authority under section 111(d) to issue 
the regulations for existing power plants in light of the fact 
that electric-generating units are already regulated under 
section 112 of the Clean Air Act, which addresses hazardous air 
pollutants.
    The second issue is whether EPA's final regulations for 
existing power plants can properly be considered to be a system 
of emission reduction under the Clean Air Act, even assuming 
EPA has authority to issue a section 111(d) rule for electric 
generating units.
    The proposed Federal plan seeks to implement the 
regulations for existing power plants in the form of a cap-and-
trade program for States that do not submit acceptable State 
plans. The accompanying model trading rules seek to provide 
rules that States can adopt to be part of a cap-and-trade 
program. Because the underlying regulations are unlawful, the 
proposed Federal plan and model trading rules also cannot be 
lawfully promulgated.
    With regard to the final regulations for new, modified, and 
reconstructed power plants, it should be noted that the 
emissions rate for these new plants is higher than the rates 
for existing power plants. This has never before been the case.
    The new source regulations also suffer from legal 
infirmities. For example, the final performance standard for 
new coal-fired power plants is based on the use of post-
combustion; partial carbon capture and sequestration, or CCS; 
and requires that carbon dioxide be captured, compressed, and 
safely stored over the long-term. CCS has not been adequately 
demonstrated.
    In the final rule, EPA improperly relies on projects that 
received funding under the Energy Policy Act of 2005 to find 
that CCS is adequately demonstrated, which violates that act. 
The only project that EPA cites that did not receive such 
funding is a small Canadian unit that does not provide adequate 
support for EPA's determination.
    In addition, the subcommittee should be aware that a legal 
prerequisite for regulation of existing sources under section 
111(d) is that their first must be regulation of the same new 
sources under section 111(b). This means that if the final 
regulations for new power plants are overturned by a court, the 
legal foundation for EPA's regulating existing power plants 
would disappear.
    All of these legal issues give rise to a great deal of 
uncertainty regarding all three rules and cast serious doubt 
over whether they will be able to survive review by the courts. 
In the meantime, however, anyone wanting to build a new power 
plant must comply with the standards for new sources. For 
existing sources, States face a firm September 6, 2016, 
deadline for the submission of a State plan or an extension 
request, or they face the risk of the Federal cap-and-trade 
program being imposed on them.
    Meanwhile, the owners of existing power plants have to 
begin preparing as though they are going to have to comply with 
the rule. These preparations take many years, and the owners of 
the power plants do not have the luxury of waiting to see 
whether these rules would survive legal review.
    Thank you again for the opportunity to testify today.
    [The prepared statement of Ms. Wood follows:]
  
  
  
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    Mr. Whitfield. Thank you, Ms. Wood, very much.
    And our next witness is Mr. Richard Revesz, who is the 
Lawrence King Professor of Law and Dean Emeritus and Director 
of the Institute for Political Policy Integrity at New York 
University School of Law. You are recognized for 5 minutes, Mr. 
Revesz.

                  STATEMENT OF RICHARD REVESZ

    Mr. Revesz. Mr. Chairman and members of the subcommittee, I 
am very grateful to have been invited again to testify before 
this subcommittee. I will discuss why EPA's flexible cost-
minimizing approach to setting performance standards for 
existing power plants is consistent with the Clean Air Act and 
the Constitution.
    First, EPA has authority to implement the Clean Power Plan 
under section 111(d) of the Clean Air Act. Interpreting section 
111(d) presents an unusual situation because in the 1990 
amendments, the House and the Senate each used different 
language in amending the same statutory provision, and the two 
amendments were never reconciled in conference. Both amendments 
appear in the final bill reported by the conference committee. 
Both amendments were approved by both chambers and signed by 
the President, and both amendments appear in the Statutes at 
Large. Both amendments are, therefore, the law of the land.
    Opponents of the Clean Power Plan argue because a House 
amendment appears in the U.S. Code, it should be the 
controlling version. However, it is well-established that when 
the Statutes at Large and the U.S. Code conflict, the text in 
the Statutes at Large controls.
    The decision to include only the House amendment in the 
U.S. Code was made by a staff member in the Office of the Law 
Revision Counsel, but this staff member cannot supplant the 
will of Congress. In fact, to follow the approach urged by the 
opponents of the Clean Power Plan would lead to a serious 
constitutional problem. Law would be made without following the 
constitutional requirements of bicameralism and presentment. 
The Supreme Court made clear in Immigration and Naturalization 
Services v. Chadha that such an approach would be 
unconstitutional.
    Opponents also argue the House amendment should take 
precedence because the Senate amendment was labeled as a 
conforming amendment in the Statutes at Large. However, the 
courts have made clear that such labels are irrelevant and that 
an amendment labeled conforming may well be substantive. 
Moreover, the House amendment itself is labeled as 
miscellaneous guidance. This label lends no more substantive 
weight than the conforming label attached to the Senate 
amendment.
    Opponents further argue the Senate amendment should be 
ignored because a line in the Senate report states that the 
Senate recedes to the House, but the Senate managers explicitly 
indicated the statement was not reviewed or approved by all the 
members of the conference committee, and the language pertains 
only to the section of the bill where the House amendment 
appears and does not address the section where the Senate 
amendment appears. And perhaps most significantly, regardless 
of this language, the Senate amendment remained in the text of 
the bill and was ultimately approved by both chambers and 
signed by the President. A statement in a Senate report cannot 
override expressed statutory language.
    Furthermore, even if one does assume that the House 
amendment controls, EPA still has the power to issue the Clean 
Power Plan. Opponents argue the House amendment forbids EPA 
from regulating greenhouse gas emissions from existing power 
plants under section 111(d) because EPA has already regulated 
emissions of hazardous air pollutants from the same plants 
under section 112. However, as EPA has thoroughly explained in 
the Clean Power Plan, the House amendment is subject to 
multiple interpretations.
    Under its interpretation, which is entitled to deference, 
EPA cannot use section 111(d) to regulate pollutants that it 
already regulates under section 112, but it can invoke section 
111(d) to regulate sources that are already regulated under 
section 112, as long as a different polluted is at issue.
    Second, there is no merit to the beyond-the-fence-line 
arguments made the opponents of the Clean Power Plan. EPA's 
approach is consistent with the relevant statute provision 
under which EPA must determine the best system of emission 
reduction for the regulated sources. It is important to 
underscore that the product at issue in the Clean Power Plan is 
electricity, not electricity generated from coal. So it is 
appropriate for EPA to base its determination of the best 
system of emission reduction for power plants on a shift from 
more carbon-intensive forms of electricity generation to ones 
that are less carbon-intensive.
    Of course, in doing so EPA must comply with all the 
relevant statutory factors. In particular, it must consider 
cost and energy requirements, and it must show that the 
standard is adequately demonstrated. EPA explained in great 
detail that the Clean Power Plan meets each of these statutory 
requirements.
    Decades of agency practice have shown that standard of 
performance can involve shifting from a dirtier method of 
producing a product to a cleaner method of reducing the same 
product. For example, EPA has issued standards and guidelines 
requiring the owners of solid waste combustors to implement 
recycling and material-separation programs designed to reduce 
the use of the combustors themselves.
    The 1997 standards and guidelines for medical waste 
incinerators require the units' owners to develop waste 
management programs that could include paper, cardboard, 
plastics, glass, battery, or metal recycling, and were designed 
to reduce the volume of waste to be incinerated and thereby 
reducing the amount of air pollution emissions associated with 
the waste.
    EPA's approach to the regulation of interstate pollution 
under the Clean Air Act's Good Neighbor provision, which was 
upheld by the Supreme Court last year in EPA v. EME Homer City 
Generation, lends further support to the Clean Power Plan. The 
Good Neighbor provision by its terms imposes requirements on 
particular sources that cause interstate problems. But EPA, 
under administrations of both parties for a period of two 
decades has interpreted that provision----
    Mr. Whitfield. Excuse me, Mr. Revesz, I have let you go 
over over a minute, so if you could wrap it up.
    Mr. Revesz. Twenty seconds.
    Mr. Whitfield. Thank you.
    Mr. Revesz. EPA, under interpretations of both parties for 
a period of two decades, has interpreted that provision to 
allow sources to meet their emission-reduction obligations 
collectively through participation in emission-trading schemes, 
much like the ones that the Clean Power Plan contemplates.
    I am very grateful to have been invited and will be 
delighted to answer any questions you might have.
    [The prepared statement of Mr. Revesz follows:]
    
    
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    Mr. Whitfield. Thank you very much.
    And our next witness is Ms. Emily Hammond, who is Associate 
Dean for Public Engagement and Professor of Law at George 
Washington University School of Law. Thank you, Ms. Hammond. 
You are recognized for 5 minutes.

                   STATEMENT OF EMILY HAMMOND

    Ms. Hammond. Thank you, Chairman, and thank you, 
distinguished members of the committee, for having me back to 
testify before you.
    Today, I will speak primarily about how EPA's 
CO2 regulations relates to the electricity markets 
and why the regulations are important from a policy standpoint. 
I will also address the regulatory framework underlying the 
Clean Air Act and the legality of EPA's regulations.
    Delivering electricity to consumers involves a complex 
interaction between energy resources and markets and the 
physical needs of the grid. The electricity markets operate on 
the basis of short-run marginal costs, but in doing so, they 
fail to value fuel sources' reliability or environmental 
attributes. This has resulted in a variety of dysfunctions.
    To take one example, consider nuclear power. It is clean, 
reliable, and safe, but it is struggling to operate in the 
wholesale markets notwithstanding these beneficial attributes. 
Without policies that fold reliability and environmental 
attributes into the electricity markets, we will see decreased 
diversity in our mix of electricity sources. This threatens 
both grid reliability and our ability to flexibly respond to 
the climate change imperative.
    EPA's CO2 regulations represent measured 
approaches to correcting some of these flaws. Could EPA have 
done more? Yes. And, as Mr. Rush commented, this institution 
could do even more. But EPA's new regulations do make headway 
toward correcting fuel sources' environmental externalities 
while also promoting diversity of resources on the grid.
    The Energy Information Administration projects that the 
electricity fuel mix of 2040 will be more diverse under the 
CPP, the Clean Power Plan, than it is today. It will include a 
larger share of renewables, non-generation resources, and 
natural gas. It continues to include nuclear. And contrary to 
popular perception, it will still include a significant amount 
of coal. Overall, the CO2 regulations take a step 
toward a cleaner portfolio of sources that are complementary to 
one another in maintaining grid reliability.
    The key point is that energy decision-making must include 
consideration of the relative mix of fuel sources, as well as 
the environmental implications of that mix. Given the current 
suite of statutes related to energy and the environment, no 
Federal agency is better suited to undertake that task than 
EPA.
    When this institution passed the Clean Air Act and its 
various amendments, it recognized that Congress cannot 
anticipate every future air pollution problem. The statute is 
crafted to permit EPA, which has the expertise, to regulate air 
pollution consistently with the purposes of the statute. And 
EPA has done so here.
    With respect to the regulations for new power plants, EPA 
has properly exercised its discretion to regulate 
CO2 from fossil fuel sources given its finding 
upheld in Federal court that greenhouse gases endanger the 
public health and welfare.
    With respect to EPA's authority under section 111(d), I 
submit that in addition to the reasons provided by Professor 
Revesz, a reviewing court should uphold EPA's regulations by 
taking the approach that the Supreme Court used in King v. 
Burwell, the Affordable Care Act decision. There, the Court 
determined that the issue was too important to leave to the 
shifting whims of the executive branch, and the Court itself 
interpreted the provision at issue consistently with 
legislative intent. A reviewing court should do the same here. 
It should hold that EPA's regulations are consistent with the 
Clean Air Act's purposes of protecting public health and 
welfare, and in so doing, we can take a step in the right 
direction toward better grid reliability and climate change 
mitigation.
    Thank you again for the opportunity to testify, and I look 
forward to your questions.
    [The prepared statement of Ms. Hammond follows:]
    
    
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    Mr. Whitfield. Thank you, Ms. Hammond.
    Our next witness is Mr. Raymond Gifford, who is a partner 
at Wilkinson Barker & Knauer. And we appreciate your being with 
us. You are recognized for 5 minutes.

                STATEMENT OF RAYMOND L. GIFFORD

    Mr. Gifford. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to speak to you today 
about the Clean Power Plan.
    My focus today is going to be on the stateside 
implementation of the rule. What is the rule mean for States, 
how will State institutions need to be reorganized to deal with 
the rule, and what will States do in practice based on the 
rule's design and incentives?
    First, the traditional State institutional arrangements for 
the electricity sector will need to be changed to comply with 
this rule.
    Second, the rule will gain and is gaining prescriptive 
authority while the legal challenge is pending. Absent a stay 
of the rule, States and utilities must move forward with 
resource planning that incorporates the carbon-reduction 
mandates of the rule.
    Third, the design of the rule inexorably leads States 
toward adopting a plan of mass-based trading. This is popularly 
known as cap-and-trade. In addition, States will face strong 
incentives to undertake what the EPA calls ``State measures'' 
meaning State legislation authorizing new renewable and energy 
efficiency programs will be a compelling compliance path.
    Let me explain to the committee how this might well play 
out. The ambition of this rule toward the electric sector is 
totalistic. That is, it needs to fundamentally reorder the 
traditional Federal-State division in the power sector, enforce 
rearrangement of the State institutions dealing with 
electricity. In practice, this means that prerogatives that 
once belonged to State utility commissions or under the self-
regulatory models of rural cooperatives and municipal utilities 
give way to State-unified carbon resource planning under the 
auspices of the State air regulator.
    My second point is that States and utilities are already 
incorporating the assumptions and carbon rations in the rule 
into their resource-planning decisions. The planning horizons 
in the electric power industry extend out 7 to 10 years and 
further. That means to meet the interim goal in 2022, a utility 
needs to make the decision soon, if not now, whether or not to 
retire generation, replace coal with gas-fired generation, or 
to begin substantial increases in renewable-generating 
capacity.
    In recent months, the trade press has noted utilities 
submitted integrated resource plans that put them on a path 
toward compliance under the rule's assumptions. The rule, 
therefore, is having its effect before the legality is ruled 
upon by the courts.
    Finally, I want to point the committee to where the rule is 
headed as a matter of State compliance. When you study the 
rule, the States are essentially presented with a Hobson's 
choice where the most palatable and achievable State plan is a 
mass-based trading platform across the region or across the 
country. Though the term may be politically laden, the States 
will inevitably gravitate to a national cap-and-trade platform 
instituted through each State plan.
    As the Agency makes plain in the final rule ``the EPA 
believes that it is reasonable to anticipate that a virtually 
nationwide emissions-trading market for compliance will emerge 
and that ERCs will be effectively available to any affected EGU 
wherever located, as long as its State plan authorizes 
emissions trading among affected EGUs.''
    For those uninitiated with the rather ineuphonious acronym 
ERC, that means emission reduction credit. EPA anticipates a 
nationwide ERC trading system whereby carbon emissions are 
capped by the rule and then traded across the States to achieve 
compliance. This is nationwide cap-and-trade.
    However, there are reasons to believe that mass-based 
carbon trading will be a heavier lift that past trading 
programs. For one, the size of the transfer payments required 
will be larger than ever before seen. The net effect of the 
rule has to make a generator prefer to shut down or reduce 
output rather than buying ERCs.
    Second, we can expect a great deal of special pleading to 
break out in the States surrounding ERC allocations under State 
plans. Coal-centric smaller utilities without much scale--say, 
a municipal utility or cooperative--will advocate for low-cost 
or no-cost ERC allocations under State plans. Indeed, 
Government-run markets often feature these special set-asides 
for favored constituencies.
    In closing, I hope I have given the committee a sense of 
the legal and policy complexity confronting the States and want 
to underscore the fact that compliance with the rule's carbon 
rationing starts now.
    [The prepared statement of Mr. Gifford follows:]
  
  
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    Mr. Whitfield. Thank you, Mr. Gifford. And thank all of you 
for your testimony.
    At this time, we will open it up for questions, and I will 
recognize myself for 5 minutes of questions to begin with.
    Some people have made the argument that the challenges to 
the Clean Power Plan have been soundly refuted by the courts 
already, some people say that these are frivolous lawsuits, and 
some people say that they have already been rejected. So I 
would ask Mr. Lin and Ms. Wood, has the court really addressed 
the Clean Power Plan in a legal way at this point?
    Mr. Lin. Thank you, Mr. Chairman.
    The lawsuits I think that you are referring to, two of them 
that were brought by West Virginia last year and then earlier 
this fall, given what we read as the clear illegality of the 
rule, we thought that these were efforts worth making to save 
massive amounts of taxpayer dollars both at the Federal level 
and at the State level to stop EPA from even moving forward 
with what is, in our belief, an unlawful rule no matter what 
form it takes.
    The courts have not ruled on the merits of our arguments. 
The courts have only ruled on the procedural grounds as to 
whether the lawsuits were----
    Mr. Whitfield. And was that because the regulation had not 
been printed in the Federal Register so it was not final? Was 
that the reason for the ruling or was there another reason?
    Mr. Lin. That is, in short, the reason on the first one. 
The second one was slightly different and involved the timing 
of publication. But yes, it was essentially that it was not 
final, and it will be final tomorrow.
    Mr. Whitfield. Do you have a comment, Ms. Wood?
    Ms. Wood. No. Mr. Lin has covered it.
    Mr. Whitfield. OK. So it will be final tomorrow, so 
lawsuits would be proper at that time, is that correct?
    Ms. Wood. Yes, under section 307(d) of the Clean Air Act, 
once a final rule by EPA is published in the Federal Register, 
it may be challenged in the DC Circuit.
    Mr. Whitfield. OK. Now, is it true--I have heard the 
arguments, I have read the various memos, there have been 
statements about this in the hearings--that EPA actually 
reversed its legal opinion within the department about whether 
or not it could regulate under 111(d)? Is that your 
understanding? Is that correct, or is that not correct?
    Mr. Lin. Well, the one thing that--and I mentioned this in 
my oral testimony--hthat they have changed is they have, for 25 
years since the amendments in 1990, taken the position that the 
text of the 112 exclusion that is in the U.S. Code is clear, 
and they have always had one reading of that. Now, as Professor 
Revesz has mentioned, they have said that there is this two-
amendment theory that makes it ambiguous, but they have always 
had one reading of the text that is in the United States Code.
    In the final rule they have taken a brand-new position that 
they now do not think that that text is clear, that they don't 
understand it, it is ambiguous, and based on that, have come up 
with a new reading of the text.
    Mr. Whitfield. You are not speaking for EPA. I am assuming 
they have a goal that they want to reach. Their traditional 
legal opinions would not get them to that position, so they 
have got to invent a new legal authority to give them the 
position to use the power to use 111(d) is what I would assume 
it. They can't get there any other way.
    Mr. Lin. Well, as you said, Mr. Chairman, I can't speculate 
as to what EPA was thinking, but there was a lot of commentary 
and litigation on the two-amendment theory, and they have now 
relegated that theory to a footnote as an alternative.
    Mr. Whitfield. And basically, they are not really arguing 
the two-amendment theory anymore, I don't believe.
    Mr. Lin. That is not their primary basis.
    Mr. Whitfield. I mean they have even admitted in documents 
that the substantive amendment is the one and not the 
conforming amendment.
    Mr. Lin. Back in the early '90s when they promulgated the 
landfill rule under section 111(d), they said that the 
substantive amendment, which is the one that originated in the 
House and is in the U.S. Code, is the controlling amendment.
    Mr. Whitfield. Right. Now, the bottom line is I am assuming 
what they are arguing now is that CO2 is not listed 
as a hazardous air pollutant, and therefore, they can regulate 
under 111(d). Would that be where they are on this?
    Ms. Wood. Yes. Basically, what EPA is now saying--and you 
are correct, Mr. Chairman, that they have changed their 
position on this--is that you only are precluded from 
regulating under 111(d) if the pollutant in question is listed 
under 108 as a criteria air pollutant, which CO2 is 
not. And if under 112 you are listed as a source category and 
the pollutant is regulated--and it is that last part that is 
new; it used to just be is the source category regulated----
    Mr. Whitfield. Right.
    Ms. Wood [continuing]. This source category is regulated 
under 112.
    Mr. Whitfield. There is no question about that.
    Ms. Wood. No, there is not.
    Mr. Whitfield. And so the issue is CO2 is not 
listed as a hazardous air pollutant, so that is an argument, 
which good lawyers do to make up to win their case, I am 
assuming. OK.
    My time is expired. Mr. Rush?
    Mr. Rush. Well, thank you, Mr. Chairman.
    Dean Hammond, in your testimony you say that it is 
important to have policies in place that are both 
environmentally conscious and that place a premium on 
reliability, and you cite nuclear power as a clean, reliable, 
and safe fuel source but one that is struggling to operate in 
the wholesale markets. In your professional opinion, are the 
New Source Performance Standards and the CPP examples of 
reasonable policy approaches to increasing greenhouse gas 
emissions while also keeping the lights on?
    And the second part of the question is how does this plan 
impact the value of the Nation's nuclear fleet in States such 
as Illinois and others who rely heavily on nuclear power 
plants?
    Ms. Hammond. Thank you, Mr. Rush. First of all, the Clean 
Power Plan and the New Source Performance Standard do take a 
step toward ensuring that our electricity sources incorporate 
those negative externalities so that the market operates more 
efficiently.
    Do I wish the EPA had done more for nuclear power? Yes. It 
could have gone farther and it didn't. It does provide credits 
for new nuclear construction, but it doesn't really incentivize 
the reactors that are currently struggling to stay open, and 
that is something for which more could be done.
    Mr. Rush. Does the CPP mandate any particular approach for 
States to reduce their carbon emissions, or is there 
flexibility for States to take measures based upon each State's 
circumstances and the work that is already undertaken?
    Ms. Hammond. One of the strengths of the Clean Power Plan 
is that it provides flexibility for the States.
    Mr. Rush. Well, can you elaborate--I am interested in your 
recommendations or your desires for the EPA to further 
incentivize and protect and propagate nuclear power plants. Can 
you give us some examples of some ideas that you might have 
wanted to see the EPA promote as it relates to nuclear power?
    Ms. Hammond. Sure. So, as I mentioned, the Clean Power Plan 
does give States credit for new nuclear construction. It also 
gives States credit for upgrading existing plants. But it 
doesn't really recognize that we have significant portions of 
the fleet that are having trouble on these wholesale markets 
because of the market dysfunctions that I have identified. And 
so to have given credits to States for keeping those plants 
open would have been a very beneficial step toward encouraging 
that fleet to stay in place.
    Mr. Rush. I want to thank you very much for your testimony.
    Mr. Chairman, I want you to note that I have given 1 minute 
and 27 seconds of the 3 minutes that I used in excess for an 
opening statement, so I want to get credit for that.
    Mr. Olson [presiding]. So noted. The gentleman yields back.
    I recognize myself for 5 minutes for some questions.
    Before I ask a few questions, last week, the grid operator 
in my home State of Texas, ERCOT, released a report on the 
Clean Power Plan, the CPP, and its impacts on our State's grid. 
ERCOT is nonpartisan. They have one job, to keep the lights on 
for all Texans they serve. Here are a few of their quotes about 
the CPP's impact in my home State: ``ERCOT estimates that the 
final CPP, by itself, will result in the retirement of at least 
4,000 megawatts of coal generation capacity. This amount of 
unit retirements could pose challenges for maintaining grid 
reliability, and these impacts are likely to intensify ... when 
the effects of the CPP are combined with other environmental 
regulations.''
    ERCOT continued, ``energy costs for customers may increase 
by up to 16 percent by 2030 due to the CPP alone, without 
accounting for the associated costs of transmission upgrades, 
higher natural gas prices caused by increased gas demand, 
procurement of additional ancillary services, and other costs 
associated with the retirement'' of plants.
    I ask unanimous consent to submit ERCOT's report for the 
record. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Olson. So costs are going up without any explanation 
from EPA about the benefits. A few weeks ago, EPA's clean air 
guru Janet McCabe could not give me any details at a recent 
hearing about the impacts of the CPP on our climate. And this 
was despite the fact that she admitted that a major driver for 
the CPP is climate change. She started dancing, danced around 
questions on temperature and sea level because she had no 
answer.
    Take time to read EPA's Regulatory Impact Analysis. You 
will find no specifics because they don't know. They do know 
that this sweeping rule threatens my home State's grid, and it 
may violate the Clean Air Act.
    My first questions are for you, Ms. Wood, and you, Mr. Lin. 
For the first time ever, EPA is proposing a rule which goes 
beyond the fence line. Mr. Lin mentioned in his opening 
statement, but please share your thoughts and details of the 
legal impacts of this new rule and what kind of precedent it 
sets for future actions by EPA. Ms. Wood, you get the first 
crack, ma'am.
    Ms. Wood. Thank you. As I described to the subcommittee the 
last time I was here, there is an analogy that I think makes it 
easier for, you know, most people to understand what is going 
on here. And when you start talking about the grid and, you 
know, shifting dispatch, et cetera, I think it is difficult to 
understand. So an easier way to think about it, the analogy is 
with cars. And I am not suggesting that EPA could regulate cars 
under section 111. In fact, it couldn't. Those are regulated 
under a different title of the Clean Air Act.
    But what EPA is doing here is akin to instead of just 
saying we are going to put, you know, a catalytic converter on 
your car to limit air pollutants, which would be permissible--
that would be the equivalent of building block 1 here where 
they are doing energy efficiency--we are also going to require 
that 1 or 2 days a week if it is available to you, you need to 
take public transportation. You need to take the bus or the 
train. That is equivalent to what is happening with the re-
dispatching to gas. And what EPA is saying here is if you have 
sufficient capacity to generate your electricity using natural 
gas, you must do that.
    And then the final thing that EPA is doing is it is now 
dictating what kind of car you can buy and it says that, say, 
for example every third car you buy, it must be electric. And 
here what they are saying is you have to build a lot more 
renewable solar and wind generation.
    The one thing that EPA did do between the proposal and the 
final rule would be to eliminate building block 4, which was 
going to require programs be put in place to force consumers to 
reduce their use of electricity. EPA has now conceded that it 
can't force consumers to do that and that the owners and 
operators of power plants can't have that done. So that has 
been removed, but that at the time was equivalent to requiring 
folks to telecommute.
    Mr. Olson. In the spirit of bipartisanship, I am over 45 
seconds, so to follow my friend's lead here, I yield back and 
now recognize the ranking member of the full committee, Mr. 
Pallone from New Jersey.
    Mr. Pallone. Thank you.
    We have heard quite a few hyperbolic legal arguments today, 
so I would like to spend some time setting the record straight 
in my opinion. Since 1970, the Clean Air Act has had several 
key features that have helped make it one of the most 
successful environmental laws on the books. Science-based, 
health-protective standards keep our eye on the prize: healthy 
air for everyone. Cooperative federalism allows EPA to set the 
clean air goals and States decide how best to achieve them. EPA 
retains backstop enforcement authority ensuring that every 
citizen of the United States receives the minimum level of 
protection from environmental risks even if their State fails 
to act.
    Now, some have claimed that this cooperative federalism 
arrangement violates the Tenth Amendment. I have heard from one 
of the panelists it basically says that if States refuse to 
submit State plans, EPA will impose its own Federal plan 
imposing a Federal takeover of the generation of interstate 
energy. Essentially, that is what--I don't know if it is a 
direct quote but one of the panelists essentially said that.
    So I just want to ask Professor Revesz, does the Clean Air 
Act's State plan-Federal plan provisions, essentially this 
cooperative federalism, violate the Constitution, in your 
opinion?
    Mr. Revesz. Thank you, Mr. Pallone. It does not. In fact, 
the Federal-State allocation responsibility under section 
111(d) is exactly the same as the allocation of responsibility 
for meeting the National Ambient Air Quality Standards with 
State Implementation Plans. These are the centerpiece of the 
Clean Air Act, as you noted, and they have been in place since 
1971. So this is a 44-year history that has served us very 
well, has saved tens of thousands of lives every year.
    Section 111(d) by its terms says, ``the administrator shall 
prescribe regulations which shall establish a procedure similar 
to that provided by section 7410 of this title,'' which is the 
State Implementation Plan provision under which the National 
Ambient Air Quality Standards are met. So we have been doing 
this for 44 years.
    There is no constitutional problem because the States are 
not required to do anything. They are given an option. They can 
come up with State plans if they wish to do so, and if they 
don't, the Federal Government has the authority to implement 
the Federal Implementation Plan. In fact, under the Clean Power 
Plan, unlike under the National Ambient Air Quality Standards, 
EPA has made clear that it will not withhold highway money. 
There will not be highway sanctions for States that refuse to 
put together State plans.
    So there is no compulsion here. This is in no way similar 
to any of the cases that were decided in which commandeering of 
State institutions was at issue. This is a plain vanilla 
cooperative federalism program of the sort that we have had for 
almost half-a-century.
    Mr. Pallone. All right. Let me just ask you quickly this 
next one because I want to ask Professor Hammond something. Is 
the Clean Power Plan any different than previous Clean Air Act 
rules?
    Mr. Revesz. Well, it is different in that it is directed at 
greenhouse gases. It is not different in many of the ways that 
were discussed earlier. As I indicated, the Good Neighbor 
provision is implemented by EPA through a broad cap-and-trade 
system, and it has been done by the administrations of 
Presidents Clinton, George W. Bush, and Barack Obama for over 
20 years. I mentioned the incinerator rule where owners of 
incinerators are required to come up with recycling plans.
    The features that have been found or have been said to be 
problematic by the Clean Power Plan can find historical 
antecedents in other Clean Air Act programs over a period of 
several decades implemented by administrations of both 
political parties.
    Mr. Pallone. All right. Let me ask Professor Hammond, 
Robert Nordhaus recently said that ``although global warming 
likely wasn't on the minds of lawmakers working on the Clean 
Air Act in 1970, they were aware that the science of air 
pollutants was still evolving and 111(d) was written to account 
for this issue, that the statute itself, in my views, anyway, 
it was really designed to be forward-looking.''
    So, Professor Hammond, what do you think about this 
comment? Is the flexibility reflected in the regulatory 
framework that Congress established in the Clean Air Act?
    Ms. Hammond. Yes, it is. And I agree with that comment. 
Just to the terms, air pollutant, as we know from the Supreme 
Court's decision in Massachusetts v. EPA, is a capacious term. 
It is meant to accommodate new circumstances in the future. And 
with respect to section 111(d), it is meant to fill a gap. If a 
pollutant is not regulated as a criteria pollutant or as a 
toxic, this is the place for EPA to do that. And so it is meant 
to have a holistic approach to air pollution.
    Mr. Pallone. All right. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentleman from Illinois, Mr. 
Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I am going to go and 
talk to and ask Mr. Gifford a line of questions.
    Is it correct that the proposed rule and the final 111(d) 
rule EPA scaled back its expected carbon dioxide reduction for 
existing coal plant efficiency improvements?
    Mr. Gifford. Yes.
    Mr. Shimkus. And so from what your report or your testimony 
says from 6 percent to 2.1, that is 4.2 percent depending upon 
the region of the country. With lower performance requirements 
for actual existing sources, I would assume that EPA would 
produce smaller carbon dioxide reduction mandates, but that is 
not the case. EPA actually increased the overall carbon 
reduction mandates under the rule. Is that correct?
    Mr. Gifford. That is correct.
    Mr. Shimkus. Are the carbon dioxide caps derived from what 
can be achieved at existing fossil fuel-fired power plants?
    Mr. Gifford. No. In fact, the increased carbon dioxide 
reductions in EPA's, you know, carbon rationing, you know, 
methodology all come from increased assumptions of an addition 
of renewable capacity to the grid.
    Mr. Shimkus. I had a similar line of questions in the last 
hearing we had, and there is really terrible faulty 
assumptions, and we are going to continue on this line of 
questioning.
    My understanding is that you have examined the numbers and 
identified that EPA assumes a massive increase in renewable 
energy to reach its carbon reduction mandates. Can you explain 
what assumptions EPA appeared to use to generate its assumed 
massive growth of renewables?
    Mr. Gifford. Sure. How EPA increased the final carbon 
budget for each State while changing the methodology to reduce 
the amount of carbon reductions they could get from building 
blocks 1, 2, and eliminating building block 4, is what they 
said is let's assume that you can add renewable resources at 
the largest historic number from years 2010 to 2014 that have 
been added to capacity year-over-year, and let's assume that is 
potential to add that amount of renewable energy year-over-year 
from 2025 to 2030. Where they really got that number high and 
pumped it up is if you picked, as EPA did, the year 2012 when 
we added twice the amount of wind to the system that we did in 
any other year historically.
    Mr. Shimkus. And I agree with you. How do EPA's assumptions 
stack up against--and I used this agency last time, too--the 
U.S. Energy Information Administration's assumption for 
renewables over the same period?
    Mr. Gifford. EPA is larger by about a factor of 2.
    Mr. Shimkus. Yes. And we found that to be true in the last 
hearing.
    If EPA is overestimating its renewable energy assumptions 
in its baseline, is it underestimating the potential impacts of 
the rule?
    Mr. Gifford. Well, based on what EPA is calculating, which 
is a best system of emission reduction, if you can't 
conceivably add that much renewable at least notionally, you 
are obviously imposing far too heavy a carbon reduction budget 
than is actually feasible.
    Mr. Shimkus. And that is why it is significant, right----
    Mr. Gifford. Correct.
    Mr. Shimkus [continuing]. Because it is just an 
unachievable analysis of where we can get to.
    Mr. Gifford. Yes. And, Congressman, the reason that the 
year 2012 was so anomalous in the amount of wind that was added 
nationally was because there was a dash to add wind because of 
the expected expiration of the production tax credit. So if you 
look at the amount of wind capacity added year-over-year in 
that time period, all of a sudden 2012 pops way up by a factor 
of 2. Then, EPA takes that number and then you use that number 
year-over-year to show potential carbon reduction.
    Mr. Shimkus. So what might we see in the electricity sector 
if EPA's assumptions about renewables are wrong and the energy 
information agencies are correct and there is a smaller 
renewable build-out?
    Mr. Gifford. Well, I think what you will probably see is 
less renewable energy than is actually assumed by EPA. What you 
will probably see more practically is a, you know, massive 
build-out of new gas plants and gas capacity because that is 
the simplest and most reliable way to do it. Now, that is not 
free but that is, I think, probably the first option given many 
of the issues that Professor Hammond mentioned about nuclear, 
which isn't really on the table these days for the reasons she 
mentioned.
    Mr. Shimkus. Which I wish they were also.
    And with that, Mr. Chairman, thank you. I yield back.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentleman from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. Well, I thank the chairman.
    And this is a hearing that I don't think we really need to 
have, but we will go ahead.
    Mr. Lin, West Virginia's moving forward with the lawsuit 
regarding the Clean Power Plan basically unless the EPA were to 
withdraw the plan. You are going to go forward with that 
lawsuit, is that correct?
    Mr. Lin. Congressman, my boss the Attorney General has made 
very clear that we intend to challenge the rule, together with 
a growing bipartisan coalition of States.
    Mr. McNerney. So what would be the ideal outcome of your 
lawsuit?
    Mr. Lin. Well, in any kind of a challenge like this, what 
you are looking for is a vacatur of the rule and remand to the 
Agency. And so, you know, under the two arguments that I have 
articulated today, the EPA doesn't have the authority to do 
what it is doing, and so the rule should be struck down.
    Mr. McNerney. So in other words, you would stop the 
administration from curbing carbon dioxide emissions 
altogether?
    Mr. Lin. Well, what we would do is we would corral the 
Agency within its statutory authority. I think the question of, 
you know, whether this is good policy is an entirely different 
question. I don't think there is----
    Mr. McNerney. Because that would be the effect. It would 
curb the administration's ability to curb carbon emissions?
    Mr. Lin. It would stop this particular rule from going 
forward.
    Mr. McNerney. Well, Mr. Revesz, how long do you think the 
adjudication is going to be lasting on these lawsuits?
    Mr. Revesz. There will be a case filed at the D.C. Circuit. 
It will then depend whether the D.C. circuit, after having a 
decision by the panel, takes the case en banc. I assume----
    Mr. McNerney. Is your microphone on?
    Mr. Olson. Microphone on, please, sir.
    Mr. Revesz. All right.
    Mr. Olson. Thank you.
    Mr. Revesz. It would go before the DC Circuit first. The 
length of time will depend on whether once the panel of the DC 
Circuit decides the case, whether the whole court decides to 
take it en banc, I assume that whoever loses in the DC Circuit 
will petition the court for cert. If the court grants cert, it 
will add time.
    So I would say that it would take between 1 and 3 years to 
get this case finally adjudicated depending on various moving 
pieces.
    Mr. McNerney. But didn't the EPA delay some provisions of 
the Clean Power Plan about that length of time?
    Mr. Revesz. Yes, EPA delayed two provisions. It delayed the 
period for State compliance. It is true, as Ms. Wood indicated, 
the period. The States have to comply in roughly a year, but 
very easily they can get a 2-year extension. It is very, very 
easy for States to do that and EPA basically said it was 
essentially a pro forma thing. So EPA essentially added 2 more 
years from the proposed rule to the final rule. And it also 
delayed the period for compliance by roughly the same period of 
time.
    Mr. McNerney. Do you feel that a hearing like this can have 
any impact on the adjudication?
    Mr. Revesz. I don't think so. I mean this case will be up 
the courts. I assume that by tomorrow or Monday it will be 
before the courts, and the judges will interpret the statute in 
the way they see best. I don't think they will be affected by 
this conversation.
    Mr. McNerney. Thank you.
    Ms. Hammond, would you tell us how the Clean Power Plan has 
addressed the reliability issue?
    Ms. Hammond. Yes. The Clean Power Plan relies on the 
interconnected nature of the grid to promote reliability even 
with some shifts in our electricity fuel sources. It relies on 
the fact that the grid is built to be resilient by connecting 
electricity generation from all sorts of fuel sources. By also 
correcting at least some of those market dysfunctions, it 
permits those other fuel sources to compete, at least some of 
them to some extent, on those markets in a way that further 
promotes reliability because diversity is important to the 
reliability of the grid as well. Different fuel sources have 
different characteristics that enable not only baseload but 
peak demand can be met as well.
    Mr. McNerney. So you do feel like their provisions for 
reliability will be effective in helping to ensure that we have 
reliable electricity?
    Ms. Hammond. Yes. I think that the lights will stay on.
    Mr. McNerney. Thank you. That is all, Mr. Chairman.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentleman from Ohio, Mr. Latta, 
for 5 minutes.
    Mr. Latta. Well, thank you, Mr. Chairman. And to our panel, 
thanks very much for being here today.
    Mr. Lin, if I could ask my opening questions to you. You 
argue that the 111(d) rule was unlawful, would not withstand 
judicial scrutiny. How is EPA's rule influencing electricity-
sector planning today?
    Mr. Lin. Thank you, Congressman. I think that is a very 
good question. And maybe the best place to look at it is--well, 
to answer the question directly, I think it is having a 
tremendous effect. The utilities, as I understand it, have a 
very long time line in terms of what they do in terms of their 
planning and their decision-making. And of course the States 
are taking steps as well.
    And I think the thing to take note of is what happened 
recently with what has been commonly called the MATS decision, 
the Mercury and Air Toxics Standards under Section 112. That 
litigation, sort of consistent with what Professor Revesz said, 
took 3 years from publication of the rule to the Supreme Court 
decision this last June. And after the EPA lost that decision, 
which they did, they said, to reassure their supporters, that 
it was not really a big deal because a majority of the power 
plants were already in compliance.
    And that gives us great pause and great concern about the 
decisions that are already happening here, and that compliance 
is going to happen before judicial review is completed. And we 
could have what essentially amounts to a Pyrrhic victory.
    Mr. Latta. Well, thank you very much.
    Mr. Gifford, would you like to comment?
    Mr. Gifford. No, I think Solicitor General Lin is exactly 
right. In recent weeks we have seen what are called Integrated 
Resources Plans, which are plans that utilities file with the 
State utility commission that have been presented that 
incorporate the assumptions of the rule. And that is what a 
prudent utility has to do given their planning horizons.
    So as Solicitor General Lin said, if you are an electric-
generating unit or a vertically integrated utility right now, 
you have to, in your planning process, incorporate your carbon 
budgets that EPA has handed you. And I think the same thing is 
happening is if this rule were overturned by the Supreme Court 
in 2018, 2019, you could have a situation where a good chunk of 
the Nation's coal fleet is already scheduled to be retired 
under State planning processes.
    Mr. Latta. Thank you. Mr. Lin, back to you if I may. If I 
understand your testimony, you indicate the rules are a 
disguise for broader regulatory planning. Would you like to 
elaborate on that?
    Mr. Lin. Thank you, Congressman. I think the thing to look 
at is building blocks 2 and 3, and the way that EPA itself 
describes them is those are about substituting electric 
generation of another type, whether it is natural gas under 
building block 2 or renewables under building block 3, for 
coal-fired power plants. So they use those building blocks to 
set the target level of emissions reduction, so they are 
assuming in their calculation that there will be a shift in the 
kind of energy generation.
    There has been a lot of talk today about flexibility and 
that the States are being given flexibility and that they don't 
have to do these particular things, but the fact of the matter 
is the reductions that are being required build in these 
assumptions of shifting generation. And if you look at my State 
of West Virginia, we have to meet a 37 percent emissions 
reduction, and we rely almost entirely on coal-fired energy. So 
practically speaking, there is no way to get where they want us 
to go without shifting from one type of generation to another.
    Mr. Latta. Thank you.
     Ms. Wood, under the construct of section 111, is the power 
plant the source of the pollution or is the electricity the 
source of the pollution?
    Ms. Wood. Thank you, Congressman. That is an excellent 
question. The title of section 111 is standards of performance, 
you know, for sources. And the source is in fact here the 
electric-generating unit. It is not the product that that 
electric-generating unit produces, which is electricity. It is 
whatever the thing is that is actually creating the emissions. 
So in the case of a power plant, it is the electric-generating 
unit. If you were talking about a petroleum refinery, it would 
be the refinery. It wouldn't be the gasoline that it made. And 
that is how it is controlled and that is how section 111 works.
    Mr. Latta. Well, thank you very much.
    And, Mr. Chairman, I see my time is about ready to expire 
and I yield back.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentleman from New York, Mr. 
Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    One of the current statements those who oppose the Clean 
Power Plan keep making is that this rule mandates, mandates an 
emissions-trading scheme. As I read it, there is no mandate to 
use emissions trading as the way to meet the standard. 
Assistant Administrator McCabe confirmed that at the hearing 
about 2 weeks ago. And it was the utilities and system 
operators who advocated for including this compliance option in 
the final rule, not just State governments that were already 
participating in these systems.
    So my question to you, Mr. Revesz, is is there anything in 
the Clean Air Act that precludes States from using an 
emissions-trading system to achieve compliance with this rule?
    Mr. Revesz. There is nothing in the Clean Air Act, 
Congressman, that would preclude States from doing that. And in 
fact, under other really important programs of the Clean Air 
Act like the Good Neighbor provisions, we already use trading 
schemes of that sort. And the Supreme Court a year ago upheld 
that program.
    Mr. Tonko. Thank you. And is there anything in the Clean 
Air Act that prevents EPA from allowing emissions trading as an 
option for achieving compliance?
    Mr. Revesz. There is not, Congressman, and EPA has done 
that in the past under other programs.
    Mr. Tonko. Thank you. And we keep hearing that this rule is 
unprecedented. Well, considering that it is the first time that 
EPA has regulated carbon emissions specifically from power 
plants, that is true, but hasn't EPA regulated other emissions 
by, for instance, setting mass or rate limits for new and 
existing sources?
    Mr. Revesz. EPA has. It is very clear that the term 
standard of performance--which actually the statute doesn't say 
standard of performance for a source; it is just standard of 
performance--does not involve necessarily the use of end-of-
pipe technologies. It can involve changes in production 
processes. If there are three ways of producing the same 
product and one way is a lot dirtier than other ways, EPA can 
decide that a standard of performance is to produce the product 
in a cleaner way. EPA and the courts have made very clear that 
changes in production processes are a perfectly fine way of 
meeting standard-of-performance requirements.
    Mr. Tonko. Thank you. Given that the States are given 
flexibility to achieve compliance with pollution limitation 
through the preparation of individual State plans, I would 
believe that offers great flexibility----
    Mr. Revesz. It does.
    Mr. Tonko [continuing]. To our States? And further, 
Assistant Administrator McCabe also confirmed that two of the 
factors that led EPA to include emissions trading as an option 
in the final rule are 1) the extensive experience that States 
and power plants already have with emissions trading, and 2) a 
strong interest on the part of many States' utilities and grid 
operators in using emission trading to help meet their 
obligations. Is that not true?
    Mr. Revesz. That is true. Once the limitations are set, 
trading provides a lower-cost way of meeting the requirement, 
and that is why market operators find it attractive.
    Mr. Tonko. Well, thank you. I think this is noted in the 
preamble to the rule, and I think it just needs to be further 
clarified. And so I appreciate your response to the questions 
concerning whether or not there is a mandate that is brought to 
bear with an emissions-trading scheme that is placed on all the 
operators out there.
    So with that, I thank you for the clarification. And, Mr. 
Chair, I yield back.
    Mr. Olson. The gentleman yields back. The Chair would like 
to announce when the bells ring, we have votes being called. 
That will be about an hour, so we intend to recess for an hour, 
try to do two more questions, one Republican, one Democrat, 
after the bell rings. So calm down, OK?
    I now recognize Mr. McKinley from West Virginia for 5 
minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    Mr. Gifford, there is a Mildred Schmidt in every community 
of West Virginia, and I am just curious if West Virginia does 
indeed have to reduce its CO2 emissions by 37 
percent, is Mildred Schmidt going to have to pay more for her 
electricity?
    Mr. Gifford. Without a doubt.
    Mr. McKinley. OK.
    Mr. Gifford. Right. And that is the feature of this rule to 
the proponents is it induces you to close down your coal-fired 
power plants.
    Mr. McKinley. Thank you.
    Ms. Wood, 111(b) is based on the use of carbon capture and 
storage. I just had the opportunity to visit China and India to 
inspect their carbon capture facilities, and the officials 
there have already determined that CCS is not commercially 
viable, and they are not going to implement it on their people, 
recognizing the cost that they would be burdened with. And 
there are none in America operating commercially, is that 
correct?
    Ms. Wood. That is correct. Right now, there are none.
    Mr. McKinley. So 111(b) is a predicate for 111(d). I that 
not correct?
    Ms. Wood. Yes, it is.
    Mr. McKinley. If 111(b) is struck down, what is going to be 
the impact on 111(d)?
    Ms. Wood. You can't have a 111(d) existing-source rule 
without first having or simultaneously having a 111(b) new-
source rule. So if the new-source rule were struck down, 
regardless of everything we are talking about, the legal 
infirmities of the 111(d) rule, it would not have its legal 
foundation and could not exist.
    Mr. McKinley. I just find this incredible that major 
producers, major users of coal are saying it is just not 
commercially viable. So we will follow up with that.
    Mr. Lin, in your testimony you raised a remark about the 
building blocks. Some of the building blocks are illegal 
partially because they are aimed at reducing the use of coal-
fired energy. Could you elaborate a little bit on that?
    Mr. Lin. Of course. There are two points I think that are 
worth making. The first is that the scope of EPA's power under 
section 111(d) is to set standards that lead to standards of 
performance. And we are talking about performance of individual 
coal-fired power plants.
    And one thing that I wanted to address is Professor Revesz 
has said a number of times, you know, that he has got a lot of 
examples talking about the method of producing the product and 
that there is plenty of precedent for that. Well, that belies I 
think an important distinction here. EPA is not talking about 
changing the method of--at these particular--the method of 
generating electricity is a very, very different question from 
shifting generation from one power plant to some other power 
plant. And so I think, you know, all of his examples talk about 
ways to improve operations at one particular facility, and that 
is what we are talking about. That is the scope of authority 
under 111(d), and that is not what they have done here.
    Mr. McKinley. OK. Again, Mr. Chairman, in consideration of 
the time, I yield back the balance of my time.
    Mr. Olson. The gentleman yields back. The Chair recognizes 
the gentlelady from--sorry, the gentleman from Texas, Mr. 
Green, slipped in there.
    Mr. Green. I thank my neighbor. Mr. Chairman, I would like 
to place a short statement into the record so I can go straight 
to questions.
    Professor Revesz, I have repeatedly stated it makes more 
sense to address climate change by legislation without 
congressional action. However, Federal agencies have acted 
under existing authority. There are many attorneys in 
Washington and around the country doing very well advising 
their clients on the version of the House and Senate amendments 
to the Clean Air Act or the law.
    In their relatively recent Supreme Court decision, what is 
your view on whether Congress spoke directly to that question 
at issue? Do you believe that the Court will rule with the 
Agency on interpretation?
    Mr. Revesz. As long as an agency interpretation is not 
inconsistent with the clear intent of Congress, the Court, 
under traditional doctrines, will defer to the Agency's 
interpretation. And in this case, the Clean Air Act talks about 
the regulation of air pollutants. The Congress in 1970 didn't 
specify which those were because it understood over time the 
science around air pollutants would change. The Supreme Court 
in 2007 held that greenhouse gases are air pollutants. And then 
the administration in 2009 found that they endangered public 
health or welfare, and therefore needed to be regulated under 
the existing provisions of the Clean Air Act.
    Mr. Green. OK. The EPA believes that the House bill's 
exclusion from 111(d) apply only to hazardous air pollutants, 
not any air pollutant. What are your thoughts on that?
    Mr. Revesz. As I indicated in my opening statement, I think 
EPA has interpreted this statute in the correct way, that if 
sources' emissions are regulated under section 112, that same 
emission can't be regulated under section 111(d) as well. But 
if a source's hazardous emissions are regulated under section 
112, the other emissions of a source can be regulated under 
section 111(d) because otherwise it would be a gap in the Clean 
Air Act that Congress didn't intend.
    Mr. Green. How willing has the Court been to apply Chevron 
in cases in the past? Is there any indication that the Court 
would lean this way again or would a pending case offer a new 
point of view?
    Mr. Revesz. Well, legal scholars have debated this for 
many, many years. My own view is that this case will get the 
traditional Chevron deference, as EPA cases have been getting 
since the Chevron case was decided in 1984.
    Mr. Green. OK. Ms. Hammond, isn't there a major difference 
between Burwell and a potential Clean Power Plan case, namely 
that the Affordable Care Act had already taken hold across the 
Nation and the CPP is newly finalized?
    Ms. Hammond. Well, it is true that the CPP is newly 
finalized, but I think the issue for how a court would 
interpret the statutory provisions and decide about deference 
to the agency doesn't hinge on that particular factual 
scenario.
    Here, I agree that Chevron deference would be appropriate 
in this situation, but I think a court could also decide the 
issue is too important to leave to the Agency, in other words, 
promote regulatory certainty. If a court holds that a statute 
has a particular meaning, then they Agency is not free to 
change that meeting later, and the Supreme Court here should 
interpret this section 112 exclusion issue to permit EPA's 
regulations here. And taking that route would promote the 
regulatory certainty and let everybody know, yes, it is time to 
implement the Clean Power Plan.
    Mr. Green. Mr. Chairman, I will yield back so somebody else 
can have time before we go vote.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentleman from West Virginia, Mr. 
Griffith, for 5 minutes, and then recognize Mrs. Capps for 5 
minutes. Then, we will go vote.
    Mr. Griffith. OK. Thank you very much, Mr. Chairman.
    I would note that while I love the people of West Virginia 
and my district borders them, I come from the original 
Commonwealth of Virginia and not our separated segment thereof.
    That being said, we have heard arguments even today that in 
interpreting section 111(d) of the Clean Air Act we should 
treat a technical conforming amendment produced by the Senate 
as equal to a substantive House amendment that prevailed in 
conference on the 1990 Clean Air Act amendments. We know the 
Senate receded to the House with respect to this language.
    What people may not remember but provides important context 
is that the language that the House judged to be appropriate 
was initially proposed by the President of the United States. 
He proposed the language that excludes dual regulation of 
sources in his formal submission of proposed Clean Air Act 
amendments to Congress in the summer of 1989. The language to 
prevent dual regulation of sources under section 111(d) and 
other sections was intentional and a substantive amendment to 
the act.
    Mr. Chairman, I would like to enter into the record the 
cover page of the message from the President and the actual 
revision to section 111(d) that President Bush, the first 
President Bush, proposed and Congress ultimately adopted.
    Mr. Olson. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Griffith. Thank you, Mr. Chairman. I appreciate that.
    Mr. Lin, you state in your testimony that in the context of 
the Clean Air Act amendments of 1990, Congress was particularly 
concerned about electric-generating units being subject to 
double regulation. Can you elaborate?
    Mr. Lin. Yes, Congressman. In the legislative history, as 
recounted by EPA itself, there is tremendous concern about 
power plants being subject to double regulation. One piece of 
evidence of that is section 112(n)(1)(a), which is the 
provision that carved out power plants for special treatment 
with regard to hazardous air pollutants. And it said, as 
opposed to other major stationary sources, it did not 
automatically subject power plants to 112 regulation, but 
instead it said that EPA was to do a study to assess the effect 
of other parts of the Clean Air Act and to determine whether 
regulation of power plants was appropriate and necessary.
    Mr. Griffith. OK. I appreciate that. You know, it is kind 
of interesting. Mr. Shimkus earlier said that when Acting 
Assistant Administrator McCabe was in, she started dancing 
around. I had a similar problem when we were talking. She 
insisted that this was not a cap-and-trade scheme, and yet I 
have heard most of you--I think the only one I haven't heard 
say that it was a cap-and-trade process or program was Ms. 
Hammond. So, you know, it was curious. I speculated they are 
just so afraid that the negative connotations to cap-and-trade 
the American public holds is why she wouldn't give me that, but 
I asked her in several different ways isn't this going to be a 
cap-and-trade scheme? She refused to use those words. Mr. Lin, 
predominantly isn't this a cap-and-trade program?
    Mr. Lin. Well, as I said in my opening statement, I think 
it is clear that what EPA is doing is trying to drive States 
toward cap-and-trade. And they say at several points in the 
preamble that emissions trading is a critical part of their 
analysis. The Federal----
    Mr. Griffith. And in fact, Ms. Wood--and I am sorry. I am 
just looking at the clock.
    Mr. Lin. That is OK. Of course.
    Mr. Griffith. Ms. Wood, I note that I think you said that 
they had two different types of cap-and-trade plans within 
their preamble that they mentioned that they promote. Isn't 
that correct?
    Ms. Wood. Yes, that is correct.
    Mr. Griffith. But they are still cap-and-trade plans, isn't 
that right?
    Ms. Wood. They are. One is mass-based and one is rate-
based, and the State can choose, but at the end of the day, you 
have a cap on your emissions.
    Mr. Griffith. Now, the question that I then followed up 
with Ms. McCabe and we have heard some testimony on today is if 
the State just says we are not doing anything, do you, Mr. Lin, 
see this as the EPA coming in and then forcing a cap-and-trade 
program on the State that doesn't do anything?
    Mr. Lin. If the Federal plan stays the way that it has been 
proposed, there will be a federally imposed cap-and-trade 
system.
    Mr. Griffith. I also thought it was interesting, Mr. Lin, 
that you brought up the MATS rule. On that border between West 
Virginia and Virginia was a little place called Glen Lyn plant 
in Virginia that closed on, I believe, May 1 of this year. And 
the ruling from the Supreme Court saying that, because of 
MATS--it was aging and all that is true, but it was closed 
because of the MATS rule. On May 1 it had to close down. I lost 
another plant in Clinch River, which is close to West Virginia 
and probably provides some power to your State as well as mine, 
but the ruling came out on June 28 saying the EPA had 
overstepped its authority. Isn't that accurate?
    Mr. Lin. That is correct.
    Mr. Griffith. And, Mr. Gifford, these power companies are 
having to make these decisions well in advance, and as a result 
of that, they are building all kinds of gas pipelines, isn't 
that true, across the country?
    Mr. Gifford. Absolutely. They have to.
    Mr. Griffith. Can you put that on the record?
    Mr. Gifford. Yes. Absolutely. They have to.
    Mr. Griffith. All right. Because we have got a lot of gas 
pipeline opponents in my district. They need to know where it 
is coming from. It is coming from this Clean Power Plan of the 
administration.
    I yield back.
    Mr. Olson. The gentleman yields back.
    The Chair recognizes the gentlelady from California, Mrs. 
Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman, for holding the 
hearing. I thank the witnesses for your testimonies.
    I would like to think that we are making progress in this 
discussion, but unfortunately, we have repeatedly heard the 
same story. We keep going over the same questions. While I do 
appreciate there are a wide range of opinions on this topic, 
the science is clear. Human activities are producing vast 
amounts of carbon dioxide, and these are contributing to global 
climate change.
    Furthermore, the energy sector is the leading source of 
emission for carbon dioxide in the United States, and as a 
country, we have an obligation in my opinion to contribute to 
national and worldwide reductions of greenhouse gases. Given 
our status as a global superpower, we have an obligation to 
lead this charge. Unfortunately, we spend more time debating 
the scientific consensus on climate than identifying and 
implementing tangible solutions.
    But here is the bottom line: Our dependence on fossil fuels 
is driving climate change, and we need to take bold action to 
curb carbon pollution and move toward a clean sustainable 
energy future.
    So, Professor Revesz, we have heard on multiple occasions 
from the majority that the costs associated with the Clean 
Power Plan will be exorbitant, yet you have stated that this 
plan will have reasonable costs and in fact will return 
significant benefits. Would you please expand on how you have 
come to this conclusion?
    Mr. Revesz. Well, EPA has estimated that the net benefits--
that is benefits minus costs--of the Clean Power Plan, range 
between 26 and 45 billion a year in 2030, and that is because 
the Clean Power Plan has two big categories of benefits. One is 
the benefit that comes from greenhouse gas reductions, and the 
other is health benefits to come to citizens of the United 
States.
    By 2030 and every year after that, the Clean Power Plan is 
expected to avoid 3,600 premature deaths, 1,700 heart attacks, 
90,000 asthma attacks, and 300,000 missed days of work and 
school. Those are the benefits. There are costs, about $8.4 
billion a year. And the benefits minus the costs yield a net 
benefit of between 26 and $45 billion a year starting in 2030.
    Mrs. Capps. That is pretty precise, too. And as a former 
school nurse, I can relate to the increased asthma costs and 
some other health-related matters in southern California where 
I am from.
    Professor Hammond, you referred to the negative 
environmental externalities of power generation and the fact 
that the Clean Power Plan and CO2 regulation would 
lead to a more diverse energy generation landscape in the 
future. I have had some experience with this recently in my 
district on the central coast of California with two leading 
academic institutions that are spawning all kinds of new 
industry. Can you please elaborate on how, given the 
flexibility of the regulations, States will be able to meet the 
regulatory requirements with existing technology?
    Ms. Hammond. Yes. Not only can they ask for fuel switching, 
but they can also innovate or encourage innovation related to 
electricity storage, which of course your State is a leader in, 
also demand-response and efficiency programs. So there are many 
ways for States to flexibly meet the requirements.
    I want to emphasize that the building blocks are not what 
is required. States have the flexibility to meet their 
standards in ways that make sense for those States. And 
everything is on the table for the States.
    Mrs. Capps. Right.
    Ms. Hammond. It is very flexible.
    Mrs. Capps. It is a very timely period of time right now, 
isn't it, very critical to see with this flexibility what can 
happen. Given the incentive for clean power development, do you 
see these regulations encouraging the development of new energy 
technology?
    Ms. Hammond. Absolutely. That is something to be excited 
about with the Clean Power Plan, and it is also consistent with 
the Clean Air Act, which has always, since the '70s, been 
designed to encourage newer, cleaner technology.
    Mrs. Capps. I am going to try one more question. I hope we 
can make it.
    Professor Revesz, are there any reasons to expect the 
States will not be able to achieve the targets outlined in the 
Clean Power Plan?
    Mr. Revesz. No. The targets are very reasonable, and in 
fact, on average, the States are already about halfway there of 
the 32 percent reductions from the 2005 baseline the Clean 
Power Plan expects by 2030. We have already achieved about 15 
percent of the 32 percent. And we are basically on a path to 
achieve further reductions, even absent the Clean Power Plan.
    Mrs. Capps. I think that is a very exciting prospect, and, 
you know, I am impressed that we are on this track. We want to 
continue this. We want to resume our position as global 
leaders. In renewable energy we have a ways to go, but what you 
have said today is very encouraging.
    I yield back. And thank you, Mr. Chairman, for squeezing me 
in.
    Mr. Olson. The gentlelady got it done.
    Mrs. Capps. We got it done. Thank you.
    Mr. Olson. We will reserve. We will go in recess right now, 
come back in about an hour. This committee is in recess.
    [Recess.]
    Mr. Olson. We will come to order. Thank you all so much for 
coming back. As you can see, no Members we expected to come 
back, but I have one final question for you, Ms. Wood. Can you 
explain this Good Neighbor provision that Professor Revesz 
talked about? Does it really support the Clean Power Plan, the 
CPP? Last question.
    Ms. Wood. Thank you. The Good Neighbor provision is part of 
the NAAQS program, the National Ambient Air Quality Standard 
provision. It is part of section 110 of the Clean Air Act. It 
is different. And what that provision covers is the attainment 
of National Ambient Air Quality Standards. And the way that 
States can do that is much more broad than under section 111, 
which is the standards of performance for sources. So it can 
encompass many more things than a standard of performance can. 
It is not as limited to the source or limited to an emission 
rate. It works differently. It is a completely different 
program.
    Mr. Olson. Thank you for that clarification.
    OK. In conclusion, I would like to thank so much all the 
witnesses, the Members for coming and for taking part in 
today's hearing. I remind Members that they have 10 business 
days to submit questions for the record and ask that witnesses 
all agreed to respond promptly to those questions.
    This subcommittee is adjourned.
    [Whereupon, at 5:02 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    In 2010, during the second year of the Obama 
administration, a Democratically controlled Congress failed to 
pass sweeping cap-and-trade legislation. That flawed scheme was 
rejected because it would have done far more economic harm than 
environmental good and people realized that cap and trade was 
nothing more than an economywide energy tax. But now, the EPA 
is regulating where the administration failed to legislate, 
issuing final rules for CO2 emissions from new and 
existing power plants that seek to fundamentally change the way 
we generate, distribute, and consume electricity here in the 
United States. For the sake of jobs and affordable energy, 
these rules must be stopped as the case for cap-and-trade has 
only gotten worse with time. Today, we continue our review of 
this expansive regulatory agenda, and focus on the legal 
concerns with these rules.
    Beyond the constitutional issues of these sweeping 
measures, these rules take the Clean Air Act in an 
unprecedented new direction, in which it was never designed to 
go. In the past, EPA emissions performance standards were 
technologically achievable. With these rules we are seeing new 
coal generated electricity effectively banned, costly 
renewables favored over other sources, and even clean-burning 
natural gas and nuclear power relegated to a constrained 
future, this is just plain wrong.
    These rules raise significant concerns for States and 
consumers. Back in Michigan the temperatures are dropping, the 
lakes are near freezing, and we face another winter. Affordable 
electricity for heating is absolutely essential for my State, 
and especially for low-income households and those on fixed 
incomes. Manufacturers in Michigan and across the country need 
affordable energy to remain globally competitive--American 
manufacturers can compete against anybody, except the EPA. One 
study from NERA estimates that the existing source rule as 
proposed would boost electric rates in Michigan and 42 other 
States by double digits, and that is on top of already rising 
electricity rates due to other onerous EPA regulations. This 
will deal a crushing blow just as things are looking brighter 
for manufacturing.
    Michigan winters are cold enough that if the electricity 
goes out, people may be harmed. Despite some acknowledgement of 
this future by EPA, their rules ensure that reliability 
concerns remain. This is not surprising, since Congress did not 
authorize EPA with the responsibility for electric reliability. 
In contrast, NERC and others with such expertise have warned of 
serious reliability concerns with the steps EPA insists on 
taking.
    The Ratepayer Protection Act fixes many of the problems 
with the existing source rule. It restores the State authority 
envisioned in the Clean Air Act by empowering every Governor to 
waive the provisions of the rule if found to threaten the 
affordability or reliability of their electricity systems. 
Under this bill, any State that wishes to go along with EPA's 
regulations remains completely free to do so.
    These and other legal concerns are not mere technicalities. 
Quite the contrary, if left unaddressed they could lead to 
higher electric bills, an increased likelihood of blackouts, 
and lost American jobs. The new EPA's regulations on their own 
do significant damage--but cumulatively they will break the 
camel's back--that is why our continued work is so important,


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