[Senate Hearing 114-22]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 114-22
 
                     STATE REGULATORS' PERSPECTIVES
                        ON THE CLEAN POWER PLANT

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 11, 2015

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED FOURTEENTH CONGRESS
                             FIRST SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
DAVID VITTER, Louisiana              BARBARA BOXER, California
JOHN BARRASSO, Wyoming               THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia  BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho                    BERNARD SANDERS, Vermont
JOHN BOOZMAN, Arkansas               SHELDON WHITEHOUSE, Rhode Island
JEFF SESSIONS, Alabama               JEFF MERKLEY, Oregon
ROGER WICKER, Mississippi            KIRSTEN GILLIBRAND, New York
DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
MIKE ROUNDS, South Dakota            EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska

                 Ryan Jackson, Majority Staff Director
               Bettina Poirier, Democratic Staff Director
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             MARCH 11, 2015
                           OPENING STATEMENTS

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1
Boxer, Hon. Barbara, U.S. Senator from the State of California...     3

                               WITNESSES

Myers, Michael J., Chief, Affirmative Litigation Section, 
  Environmental Protection Bureau, New York State Attorney 
  General........................................................     6
    Prepared statement...........................................     8
    Responses to additional questions from Senator Inhofe and 
      Senator Boxer..............................................    20
Nichols, Mary D., Chairman, California Air Resources Board.......    26
    Prepared statement...........................................    28
    Responses to additional questions from Senator Boxer.........    33
    Responses to additional questions from Senator Sessions......    38
Easterly, Thomas, Commissioner, Indiana Department of 
  Environmental Management.......................................    41
    Prepared statement...........................................    43
    Responses to additional questions from Senator Boxer.........    88
Parfitt, Todd, Director, Wyoming Department of Environmental 
  Quality........................................................    91
    Prepared statement...........................................    93
    Responses to additional questions from Senator Boxer.........    99
Nowak, Ellen, Commissioner, Public Service Commission of 
  Wisconsin......................................................   101
    Prepared statement...........................................   103
    Responses to additional questions from Senator Boxer.........   107

                          ADDITIONAL MATERIAL

Letter from Nature Geoscience; Ocean access to a cavity beneath 
  Totton Glacier in East Antarctica..............................   192
Articles:
    NASA; NOAA find 2014 Warmest Year in Modern Record...........   197
    Washington Post; The melting of Antarctica was already really 
      bad. It just got worse.....................................   200


        State Regulators' Perspectives on the Clean Power Plant

                              ----------                              


                       WEDNESDAY, MARCH 11, 2015

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m. in room 
406, Dirksen Senate Building, Hon. James Inhofe (chairman of 
the committee) presiding.
    Present: Senators Inhofe, Boxer, Barrasso, Capito, Crapo, 
Boozman, Sessions, Fischer, Rounds, Carper, Whitehouse, 
Merkley, Gillibrand, Markey.

            OPENING STATEMENT OF HON. JAMES INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. We will bring this hearing to order.
    It is great to have the panel. I had a chance to meet each 
one of you. I really do think that the most important thing, 
when we get into these rules and regulations is the State 
perspective. Because they are the ones who have to carry these 
things out, have to pay for all this stuff.
    So we are here today with State officials on the CO2 
regulations for existing power plants. Existing. The Clean 
Power Plan is unprecedented in the scope, complexity and 
requirements it will impose on State governments. That is what 
you guys are going to have to carry out.
    The proposal undermines the longstanding concept of 
cooperative federalism under the Clean Air Act, where the 
Federal Government is meant to work in partnership with the 
States to achieve the underlying goals. Instead, this rule 
forces States to redesign the ways they generate, manage and 
use electricity in a manner that satisfies President Obama's 
extreme climate agenda.
    To date, we have 32 States who have opposed this rule. 
There is the chart. There are 32 States that oppose the rule. 
Twelve States, including my State of Oklahoma, are suing the 
agency over a lack of authority to promulgate the proposal. 
Nine States have passed resolutions in their legislatures that 
express limits to the proposal's application. Five States have 
passed laws that would limit the proposal's application.
    Had the EPA engaged in a meaningful dialog with all these 
States, the agency would not be rushing ahead to impose such an 
unfair and unworkable and likely illegal regulation.
    While the EPA is busy selling this as a plan to save the 
world from global warming, we know that this rule will have 
minuscule impacts on the environment. In fact, last week during 
the EPA budget hearing, Administrator McCarthy admitted that 
the agency has yet to do any modeling that would measure the 
proposal's impact on temperatures and sea level rise. There is 
a reason for that. And the reason for that is that NERA, which 
is a very highly respected group on economic modeling and 
analysis, used EPA's models and numbers and found that after 
spending $479 billion over a 15-year period, we would see the 
double digit electricity prices increase in 43 States, reduce 
grid reliability, resulting in voltage collapse and cascading 
outages. However, the Clean Power Plan will reduce 
CO2 concentrates by less than 0.5 percent, global 
average temperature rise will be reduced by only 0.016 degrees 
Fahrenheit, and sea level rise would be reduced by 0.3 
millimeters, which is the thickness of three sheets of paper.
    Further, any perceived benefits will be rendered pointless 
by the continued emissions growth in India and China. Hold that 
up higher, that is a good chart there. You can see the 
problems. This is the whole point that Administrator Jackson 
was talking about, what we do unilaterally here in the United 
States isn't going to have that much effect. It doesn't affect 
other countries.
    These results, or lack thereof, show that this rule is not 
about protecting the environment or saving lives of the local 
citizenry. This proposal is about expanding the government's 
control into every aspect of American lives. As MIT climate 
scientist Richard Lindzen, and Richard Lindzen is noted to be 
one of the foremost climatologists in the Country, he said, 
``Controlling carbon is a bureaucrat's dream. If you control 
carbon, you control life.''
    EPA's rushed timeline, impractical assumptions and 
arbitrary mandates pay no mind to the fact that this will be 
damaging to State economies and local residents. Their 
proposals are nothing more than a blatant and selfish power 
grab.
    We have been through these arguments multiple times before, 
most recently when the President failed to garner enough 
support for cap and trade under a Democrat-controlled House and 
Senate. We are talking about back when Nancy Pelosi was a 
majority, so they had the White House and the House and the 
Senate. They couldn't get a majority vote in order to support 
this.
    So I appreciate very much all of the people coming so we 
can hear the voices from the States. It is nice of you to take 
the time to be here.
    Senator Boxer.
    [The prepared statement of Senator Inhofe follows:]

            Statement of Hon. James M. Inhofe, U.S. Senator 
                       from the State of Oklahoma

    TSCA (Toxic Substances Control Act) is a law that everyone 
agrees is outdated and in serious need of modernization. I am 
very pleased that today we have before us a bill with the 
strong bipartisan support of 9 Democrats and 9 Republicans.--I 
am proud cosponsor of this bill and hope to move it through 
Committee by way of constructive and orderly process.
    For years Senator Lautenberg worked to update the 1976 law, 
releasing bill after bill every Congress, and in 2012, he came 
to me with a clear message: this law will not be updated 
without bipartisan support and input from all stakeholders. 
Frank and I held a series of stakeholder meetings, and though 
that process we got a lot of good information on all sides of 
the issue and I would in particular welcome Ms. Bonnie 
Lautenberg to the committee this morning.
    Just about 2 years ago, Senator Lautenberg teamed up with 
Senator Vitter to introduce a bipartisan bill that created not 
only the first real momentum for meaningful reform, but a 
foundation for the legislation we have before the Committee 
today.
    We all know that Senator Vitter and myself and our 
Republican colleagues are not ones to typically offer up bills 
granting EPA more authority. But in this case I believe it is 
not only the right thing to do, but the conservative thing to 
do.
    TSCA is not a traditional environmental law that regulates 
pollutants like the Clean Air or Clean Water Acts--instead it 
regulates products manufactured for commerce. Under the U.S. 
Constitution, the job of regulating interState commerce falls 
to Congress, not the states. We support this legislation not 
only because it better protects our families and communities, 
but because it ensures American industry and innovation can 
continue to thrive and lead without the impediment of 50 
different rulebooks.
    It is important to note that today that we have a number of 
witnesses focused on public health and the environment and none 
from industry. This is certainly not because no one in industry 
supports this bill--I would like unanimous consent to place 
supportive statements in the record from a number of groups 
including the American Alliance for Innovation which has sent 
us a letter signed by XX trade associations. The reason the 
majority has chosen these witnesses is to focus on the health 
and environmental provisions of the bill, which have been 
significantly strengthened as the necessary tradeoff for 
greater regulatory certainty for the regulated as well as 
better ensuring protections for all Americans, not just those 
in the few states with a patchwork of programs.
    Major environmental laws do not get passed without 
bipartisan support--Frank recognized that--and the simple fact 
is that any partisan TSCA reform effort will ensure that 
nothing gets done and Americans are stuck with a broken Federal 
system to all our detriment. I hope we get this done to honor 
Senator Lautenberg's legacy.

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Boxer. Thanks so much, Mr. Chairman. I want to 
welcome all of our witness. I am very proud that Mary Nichols 
is here. She is really a legend in our State, and has worked on 
the environment for her whole adult life. She now is Executive 
Director of the California Air Resources Board. She is going to 
describe the successes that we are having.
    I am also proud that my home State of California has been a 
leader in this field. And here is the deal: we are prospering. 
We have to reduce carbon pollution in order to address 
dangerous climate change. And we can't wait any longer, because 
we are seeing the impacts all around us. According to NASA, the 
10 warmest years on record occurred since the year 2000. And 
2014 was the warmest year on record.
    Now, people can put their head in the sand, but that is the 
fact, and facts are stubborn things. According to a new peer-
reviewed research in the proceedings of the National Academy of 
Sciences, and I trust my colleagues respect the National 
Academy of Sciences, California's record temperatures are 
driving the State's extreme drought, and scientists predict it 
will get worse over the coming decades. And just 2 weeks ago, 
scientists at NASA and at Cornell and Columbia found that if we 
fail to act aggressively to cut carbon pollution, we have an 80 
percent chance of a mega-drought in the entire west.
    In the face of all this peer-reviewed science showing the 
impacts from uncontrolled dangerous carbon pollution, States 
really should be working together to find solutions to prevent 
climate change. Let me say, we know the American people want 
action. This isn't a guess, this is a poll. In a Stanford poll, 
83 percent of Americans, including 61 percent of Republicans, 
say if nothing is done to reduce emissions, global warming will 
be a serious problem in the future.
    So again, you can sit here and say it is not an issue. But 
the American people are in disagreement with that conclusion.
    Ultimately, climate change deniers in the Senate continue 
to attack the landmark Clean Air Act. Just last week, our 
majority leader, Senator McConnell, told State governments to 
ignore the Clean Air Act. Imagine, ignore the law of the land, 
and one of the most popular legislative actions in our history. 
So we know we can reduce carbon while growing the economy.
    And I want to talk about California here and the Regional 
Greenhouse Gas Initiative. For New York, it is prospering as 
well. And we will hear some of that from our witness.
    California is on a path to cut its carbon pollution by 80 
percent by 2050, as required under our greenhouse gas emissions 
law in our State, AB 32, and the people who tried to overturn 
that lost at the ballot.
    During the first year and a half of the State's cap and 
trade program, California added 491,000 jobs, a growth of 
almost 3.3 percent, which outpaces the national growth rate of 
2.5 percent. We are living proof that growing the economy and a 
safe environment go hand in hand. And we are a very large 
State. This has benefited the middle class.
    It may interest you to know that the Energy Information 
Administration found last month that California's monthly 
residential electric bill averaged $90, compared to Oklahoma's 
monthly bill, which averaged $110. Under California's climate 
program, many consumers are even receiving a twice a year 
climate credit of $35. That further lowers their utility bill. 
So California, New York and other States around the Country 
should be proud of their leadership in putting forward real 
solutions to climate change and showing that meeting the goals 
of the Clean Power Plan will benefit our States and our people.
    I look forward to hearing from today's witnesses. Thank 
you, Mr. Chairman.
    [The prepared statement of Senator Boxer follows:]

             Statement of Hon. Barbara Boxer, U.S. Senator 
                      from the State of California

    Thank you all for being here today. I ask unanimous consent 
to place into the record my statement, which lays out several 
reasons I oppose the Udall-Vitter bill. The bill I introduced 
with Senator Markey, the Alan Reinstein and Trevor Schaefer 
Toxic Chemical Protection Act, addresses fundamental flaws in 
the Udall-Vitter bill. Unfortunately, the Republican majority 
would not permit it to be considered today.
    I want to note the presence of Linda Reinstein, Alan's 
wife, and Trevor Shaefer who are here today, as well as 
consumer advocate Erin Brockovich, who endorses the Boxer-
Markey bill and opposes the Udall-Vitter bill.
    It is clear that in its present form, the Udall-Vitter bill 
fails to provide the public health protections needed and is 
worse than current law. This bill still does not have the tools 
necessary to put safeguards in place--even for the most 
dangerous toxic substances like asbestos. I would like to enter 
into the record an analysis by one of the leading legal 
scholars on environmental law who said:
    ``[T]he Vitter-Udall-Inhofe bill will not make it easier 
for EPA to regulate harmful toxic substances . . . . When 
considered in light of its aggressive preemption of State law 
that would actually remove existing protections in many states, 
the bill is actually worse than the existing statute from a 
consumer protection perspective. And the changes to the 
regulatory standard and the failure to change the standard for 
judicial review will provide job security for chemical industry 
lawyers for years to come.'' [Tom McGarity, University of Texas 
Law Professor, March 17, 2015]
    I have never seen such an unprecedented level of opposition 
to any bill. I want you to see what that opposition looks like, 
and I ask my staff to stand up now and show you the names of 
more than 450 organizations that oppose the Udall-Vitter bill. 
Some of the groups listed include:

     8 State Attorneys General (California, Massachusetts, New 
York, Iowa, Maine, Maryland, Oregon, Washington)
     Breast Cancer Fund
     Asbestos Disease Awareness Organization
     Trevor's Trek Foundation
     Environmental Working Group
     EarthJustice
     Safer Chemicals, Health Families
     Association of Women's Health, Obstetric and Neonatal 
Nurses
     * American Nurses Association
     Physicians for Social Responsibility
     United Steelworkers

    Let me quote from some of the letters we have received in 
opposition to the bill.
    The Breast Cancer Fund said this: ``The Frank R. Lautenberg 
Chemical Safety for the 21st Century Act . . . undermines what 
few health protections from toxic chemicals now exist . . .
    It advances the interests of the chemical industry and 
disregards years of work by health care professionals, 
scientists, public health advocates and State legislators to 
enact meaningful reform and to prevent diseases linked to 
chemical exposure.''
    According to the Asbestos Disease Awareness Organization, 
``The fact that the Vitter-Udall bill will not even restrict, 
much less ban, the deadly substance that claims 30 lives a day 
is nothing short of a national travesty. Any Senator who 
supports this industry proposal is in essence supporting the 
continuation of the toll asbestos has already had on millions 
of American families.''
    EarthJustice had this to say about the Udall-Vitter bill: 
``[T]he chemical industry got exactly what it wanted--again.''
    The Director of Safer Chemicals, Healthy Families, Andy 
Igrejas, said: ``Firefighters, nurses, parents of kids with 
learning disabilities and cancer survivors all still oppose 
this legislation.''
    The Attorneys General from New York, Iowa, Maine, Maryland, 
Oregon and Washington had this to say: ``[W]e believe that, 
rather than bringing TSCA closer to attaining its goal, the 
draft legislation's greatly expanded limitations on State 
action would move that goal further out of reach.''
    Massachusetts' Attorney General says: ``On the crucial 
issue of preserving our state's abilities to protect the health 
and safety of the citizens within our borders the bill strays 
far from a bill that can adequately protect our citizens from 
the potential risks that may be posed by certain toxic 
chemicals in commerce.''
    According to California's Attorney General: ``In 
California's view, this constitutes poor public policy that 
undermines the fundamental health and environmental protection 
purposes of TSCA reform.''
    And California EPA says, ``Unfortunately, rather than 
reforming TSCA to ensure that State and Federal agencies can 
efficiently and effectively work together to protect the 
public, this legislation takes a step backward from what should 
be the common goal of achieving strong public health and safety 
protections under a reformed version of TSCA.''

    Senator Inhofe. Thank you, Senator Boxer.
    We are going to have some introductions, by request, of 
some of the members of the panel. Let's start with Senator 
Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. It 
gives me great pleasure to bring greetings from the committee 
to one of those witnesses this morning, who is Todd Parfitt, 
the Director of the Wyoming Department of Environmental 
Quality. He has a long history of working in the State of 
Wyoming and specifically working in this department. You will 
remember, Mr. Chairman, that our former Wyoming Department of 
Environmental Quality director, John Corra, testified here a 
number of years ago. Todd has worked closely with him and has 
succeeded him and is now our director.
    It is interesting, Mr. Chairman, because today, as Todd 
testifies, he will have worked with a Democrat Governor and a 
Republican Governor in Wyoming. He has always put Wyoming 
first. He has done what is best for our State and our 
environment. So it is a privilege today for me to introduce one 
of those testifying, the Director of the Department of 
Environmental Quality for Wyoming, Todd Parfitt.
    Thank you, Mr. Chairman.
    Senator Inhofe. Thank you, Senator Barrasso.
    Anyone else here for introductory purposes? I don't believe 
they are.
    We are going to go ahead and start with our testimony. We 
would like to ask you to do your best to confine your time to 
the time required. We will start with you, Mr. Myers, then we 
will to the end, to Ellen Nowak. You are recognized.

 STATEMENT OF MICHAEL J. MYERS, CHIEF, AFFIRMATIVE LITIGATION 
   SECTION, ENVIRONMENTAL PROTECTION BUREAU, NEW YORK STATE 
                        ATTORNEY GENERAL

    Mr. Myers. Thank you, Chairman Inhofe, Ranking Member Boxer 
and members of the committee, for inviting me today to testify.
    I am Michael Myers, from the New York Attorney General's 
office. My perspective is slightly different from those of 
other members of the panel. As an environmental lawyer, I have 
worked for the past 15 years at the Attorney General's office, 
counseling State regulators on legal issues related to air 
pollution and climate change, and also litigating those issues 
in the courts.
    It is particularly appropriate that the committee should 
seek to hear State perspectives. Because under the provisions 
of the Clean Air Act that EPA is using for the Clean Power 
Plan, Section 111(d), States are in the driver's seat. But for 
us to succeed in this critically important area, each State has 
to be willing to take the wheel.
    From the perspective of a State, New York, that has already 
taken action to cut power plant greenhouse gas emissions, I 
have good news for other States: you can significantly reduce 
these emissions from the power sector and do so in a way that 
helps grow your economy. New York and other States in the 
Regional Greenhouse Gas Initiative have reduced greenhouse 
gases from the electricity sector in our region by 40 percent 
from 2005 levels. Reinvesting the proceeds from the auction of 
pollution allowances in renewable and energy efficiency 
projects has kept down electricity costs in our region.
    EPA's Clean Power Plan would build off the work that the 
RGGI States and others like California have done in this area. 
The plan would cut greenhouse gases from power plants by about 
730 million metric tons, equivalent to the annual emissions of 
powering half the homes in America.
    The shift to cleaner generation would also result in 
substantial public health benefits, including 150,000 fewer 
asthma attacks by 2030.
    But back to the point I started with: for this plan to 
work, States have to be willing to step up. Some are 
discouraging States from doing so on the grounds that the Clean 
Power Plan is unlawful. My written testimony highlights why 
such arguments are meritless.
    First, action under Section 111(d) to address greenhouse 
gases from fossil-fueled power plants is required under the 
Clean Air Act. The law requires EPA to ensure that States 
achieve emission reductions from power plants necessary to 
protect human health and welfare from the harms of carbon 
pollution.
    Second, EPA's regulation of hazardous air pollutants from 
existing power plants under one provision of the Clean Air Act 
does not preclude the use of Section 111(d) to require those 
plants to cut their greenhouse gas emissions. The implication 
of that claim is that EPA had a choice. It could either use the 
Act's hazardous air pollution program to cut power plant 
mercury emissions that poison the fish we eat, or it could 
combat climate change by using the provision the Supreme Court 
speaks directly to power plant carbon emissions. Not only does 
this interpretation defy common sense, it is wrong as a matter 
of law.
    Third, it is clear that EPA has the authority to set 
substantive emission limitations for States to meet. In the 
absence of such a benchmark, State plans could vary widely in 
terms of their stringency and effectiveness. States have a lot 
of flexibility, however, on how to achieve their emission 
targets in a way that best suits their respective 
circumstances.
    Fourth, it is also clear that EPA has the authority to 
interpret the best system of emission reduction to reflect the 
various ways in which States and utilities have reduced 
greenhouse gas emissions from the electricity sector. EPA's 
building blocks approach appropriately recognizes successful 
strategies, such as cap and invest programs, renewable 
portfolio standards, and energy efficiency that States and 
utilities have already shown can significantly reduce carbon 
emissions and do so cost effectively.
    In conclusion, here is what I would urge State regulators 
to consider. The world's scientists are telling us that we need 
to act now if we are to have a chance at avoiding catastrophic 
harms from climate change. Our faith leaders are telling us we 
have a moral imperative to act. The law, the Clean Air Act, 
requires us to act. And EPA's plan for cutting greenhouse gases 
from existing power plants is on sound legal ground.
    Both EPA and your fellow States are open to working with 
you on how best to cut emissions in your State. The time is now 
for State leadership. So take the wheel.
    Thank you for the opportunity to testify. I look forward to 
answering the committee's questions.
    [The prepared statement of Mr. Myers follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
            
        Senator Inhofe. Thank you, Mr. Myers.
    Mary Nichols is the Chairman of the California Air 
Resources Board. You are recognized.

            STATEMENT OF MARY D. NICHOLS, CHAIRMAN, 
                 CALIFORNIA AIR RESOURCES BOARD

    Ms. Nichols. Thank you, Chairman Inhofe, Ranking Member 
Boxer, members of the committee. Thank you for inviting me to 
be here. I am Mary Nichols, Chair of the California Air 
Resources Board, and I am honored to be here to support EPA's 
proposed Clean Power Plan, which we believe will unlock State 
innovation across the Country to protect our people and grow 
our economies.
    The framework proposed by EPA is a workable, practical plan 
that will cut carbon pollution, along with other forms of 
pollution, with a focus on increasing energy efficiency and the 
use of cleaner domestic energy sources. It provides an 
opportunity for a better future.
    This is a future that we are already working to create in 
California. Our success story has been one of bipartisanship. 
The 2006 California Global Warming Solutions Act was signed by 
our Republican former Governor, Schwarzenegger, who appointed 
me to this position, and our Democratic Governor, Jerry Brown, 
who has reappointed me and also, more importantly, has placed 
climate change at the core of his agenda, championing our 
enormously successful carbon market, ramping up green energy 
programs and working nationally and internationally to spread 
solutions that will protect our vulnerable citizens, our 
extremely valuable agricultural industry, our coastline and our 
forests against the already-growing reality of climate change.
    Californians overwhelmingly support our board's efforts to 
move California toward cleaner and more efficient sources of 
energy and to address the grave threat that global warming 
poses to America and to the world.
    I am here today to share some of our successes with you and 
to emphasize that EPA is using its Clean Air Act authority in 
the way that it was meant to, to spread success across the 
Country and to encourage each State to develop its own plan to 
cut carbon pollution and to grow its economy.
    I am going to skip some of what is in the prepared 
testimony, because I really want to focus on the fact that we 
believe that working together, not just as an environmental 
agency, but under the direction of our Governor, with the 
Public Utilities Commission, and our Energy Commission, as well 
as the independent system operator that controls the 
transmission wires, we can deliver not only a more resilient 
energy system but we can also meet and even exceed the targets 
that EPA has set. We are on track for a third of our State's 
energy needs to be met by renewable energy by the year 2020. 
And Governor Brown has established a goal of getting to 50 
percent of our energy from renewable resources by 2030.
    Our carbon-wide carbon intensity has already fallen by 
nearly 5 percent since 2009, and it will keep falling. Now, 
that is not only due to electrical power plants, it is also due 
to cleaner fuels and cleaner vehicles, which are an integral 
part of our plan. The power plan, the EPA power plan, is only 
one piece of the overall President's climate plan. But it is an 
important one.
    But the main thing I want to emphasize is that this is 
happening at the same time that California is prospering. We 
are growing jobs. We are growing our economy faster than the 
rest of the Country. We have grown our jobs since the carbon 
market has gone into operation by 3.3 percent. Personal income 
and wages are up, again, growing at rates well above the 
national average. Our electric power grid delivers power 
reliably, resiliently and efficiently, thanks to the continued 
stewardship of the transmission operators. And as Senator Boxer 
indicated, power bills are actually down. Californians pay the 
ninth lowest electricity bills in the Country.
    States all across the Country, and we do talk to many of 
our colleagues, are discovering that clean energy pays big 
dividends. For example, Oklahoma is on track to exceed its 15 
percent renewable energy target for 2015, thanks to a very 
successful wind energy industry, a policy that has yielded 
billions of dollars in investment in that State and helped to 
cut pollution.
    And of course, California and Oklahoma are not alone. We 
know that Texas, often billed as our rival in many ways, leads 
the Nation in wind industry. Many States in the Midwest, as 
well as the West and the South, are taking action to ensure 
their ratepayers and their citizens against risks to 
reliability that come from dirty and inefficient coal plants by 
replacing them with cleaner power and energy efficiency 
investments are being used, again, in States red and blue, to 
cut power bills.
    We think that the Clean Power Plan will encourage States to 
take broader advantage of strategies that they are already 
using, saving money and invigorating economies across the 
Country. And of course, to the extent that they choose to work 
together around their regional grids, they will do even better, 
because we all know that a regional approach will be more cost 
effective for all.
    As a result, we believe the net benefits of this plan 
amount to something like $48 billion to $82 billion in 2030, 
representing lives saved, sick days avoided and climate risks 
abated, as well as greater productivity, lower costs and a more 
efficient and secure energy system.
    So bottom line is, the Clean Power Plan builds on 40 years 
of Clean Air Act success, federalism, as the Chairman 
indicated, and now confronts us with an opportunity to address 
one of the most severe challenges of our time in a way that can 
also create new jobs and increase our energy security.
    Thank you very much.
    [The prepared statement of Ms. Nichols follows:]
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    Senator Inhofe. Thank you, Ms. Nichols.
    Thomas Easterly is Commissioner of the Indiana Department 
of Environmental Management. You are recognized.

STATEMENT OF THOMAS EASTERLY, COMMISSIONER, INDIANA DEPARTMENT 
                  OF ENVIRONMENTAL MANAGEMENT

    Mr. Easterly. Thank you, Chairman Inhofe, Ranking Member 
Boxer and members of the committee. Good morning.
    My name is Thomas Easterly and I am the Commissioner of the 
Indiana Department of Environmental Management, also known as 
IDEM. I bring you greetings from Governor Pence of Indiana, and 
I appreciate the opportunity to share with you Indiana's 
current perspective on the Environmental Protection Agency's 
111(d) regulations for fossil fuel electric generating units.
    The proposed regulations will detrimentally impact Indiana 
for a number of significant reasons. We are the most 
manufacturing-intensive State in the United States. More than 
80 percent of Indiana's electricity comes from coal. We have a 
300-year supply of coal in our State, and 28,000 Hoosiers are 
employed in the coal industry. We recognize that we need all 
forms of energy to power our economy, and the Pence 
administration is developing an updated energy plan for the 
State that will foster greater use of renewables and other 
energy sources. At the same time, we know that coal is a 
crucial Hoosier energy resource that must continue to be 
utilized.
    IDEM's mission is to protect Hoosiers and our environment. 
Following the release of the proposed rule, my office carefully 
examined the proposal in light of our mission. We also engaged 
private sector stakeholders and other State agencies in an 
extensive review of the proposal and its potential impacts. Our 
analysis came to only one conclusion. This proposal will cause 
significant harm to Hoosiers and most residents of the United 
States without providing an measurable offsetting benefits.
    For those reasons, Indiana's Office of Energy Development, 
Office of Utility Consumer Counselor, Department of Natural 
Resources, Utility Regulatory Commission and my agency filed 
joint comments urging the USEPA to withdraw this proposal. A 
copy of the joint comments and a letter from Governor Pence 
that accompanied the joint comments has been shared with the 
committee.
    The most ironic impact of the proposed regulations is that 
they are likely to increase worldwide greenhouse gas emissions 
by decreasing the international competitiveness of U.S. 
businesses due to increased energy costs. Competitive 
businesses have been investing in cost-effective energy savings 
activities for decades. Under this proposal, the total cost of 
the products produced in the United States will need to 
increase, eroding our international competitiveness and 
resulting in the loss of manufacturing jobs in Indiana and 
across the Nation.
    When these businesses close, U.S. emissions will decrease. 
But worldwide greenhouse gas emissions will increase, as our 
businesses move to areas with less efficient and more carbon-
intensive energy supplies.
    Indiana once held a competitive advantage due to our low 
cost of electricity. But not anymore. Indiana's low cost of 
electricity advantage has slipped and EPA regulations have 
significantly contributed to that change in position. The State 
Utility Forecasting Group in Indiana has forecast that a 30 
percent increase in Indiana electrical costs, in part, from 
USEPA regulations already in place, and the 111(d) proposal 
will add additional costs on top of that 30 percent. USEPA 
itself predicts that its 111(d) proposal will increase the cost 
of natural gas and the cost per kilowatt hour of residential 
electricity by about 10 percent in the next 6 years. 
Furthermore, increases in energy costs hit the poor, elderly 
and most vulnerable in our society first. At a time when 
Indiana is doing all that it can to grow its economy and create 
jobs, the EPA's proposal creates a very real possibility that 
the increased energy costs will slow our economic progress and 
raise people's utility bills.
    In Indiana, we are obviously concerned about the economic 
impact of EPA's proposed rules on business and consumers, but 
we have also filed 31 pages of technical comments. We want to 
make sure the rule does not result in unintended consequences, 
such as reduced reliability resulting in brownouts, or not yet 
having all of the necessary infrastructure in place to convert 
from coal to natural gas. For purposes of due diligence, 
Indiana is evaluating all available responses to the proposed 
regulations from submitting a State plan to participating in a 
regional approach or simply refusing to comply at all, known as 
the just say no option.
    However, the fact that this misguided policy will harm 
Hoosiers and other people in our Country while actually 
increasing the worldwide level of the very emissions it is 
designed to decrease compels Indiana to oppose the proposed 
regulations.
    Thank you for the opportunity to share our views and I 
welcome your questions.
    [The prepared statement of Mr. Easterly follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]   
    
    Senator Inhofe. Thank you, Mr. Easterly.
    Todd Parfitt is the Director of the Wyoming Department of 
Environmental Quality. You are recognized.

  STATEMENT OF TODD PARFITT, DIRECTOR, WYOMING DEPARTMENT OF 
                     ENVIRONMENTAL QUALITY

    Mr. Parfitt. Good morning, Chairman Inhofe, Ranking Member 
Boxer and members of the Senate Environment and Public Works 
Committee.
    My name is Todd Parfitt. I am the Director of the Wyoming 
Department of Environmental Quality. I thank the committee for 
inviting the State of Wyoming to share its perspective on the 
Clean Power Plan. The State of Wyoming has provided extensive 
comments to the Environmental Protection Agency on its proposed 
rule.
    In Wyoming, we take great pride in how we manage our 
natural resources, providing for both environmental stewardship 
and energy production. As our Governor, Matt Mead, has stated, 
it is a false question to ask, do we want energy production or 
environmental stewardship? In Wyoming, we must and do have 
both.
    Wyoming sends electricity to both the eastern and western 
power grids, reaching from Iowa to Washington. Wyoming 
generated 49.6 million megawatt hours of electricity in 2012, 
with 66 percent of this electricity consumed beyond our 
borders. This electricity generation includes 88 percent coal 
and 9 percent wind.
    EPA's proposal impacts States differently. Each State has 
unique characteristics and energy portfolios that drive the 
application of each of the four building blocks. For Wyoming, 
the proposed goal is problematic and unrealistic to achieve. 
EPA is proposing a compressed time line in which States are to 
develop and submit their State plans. Considering the 
complexities of the proposal and developing a compliance plan, 
along with any needed State legislation, the time lines are 
problematic if not unrealistic. Wyoming's emission reduction 
required by 2020, which is 70 percent of the proposed State 
goal, is far greater than can be achieved through heat rate 
improvements alone. This disparity is often referred to as the 
cliff.
    Wyoming's evaluation identified either data errors or 
incorrect assumptions in all four building blocks. I will focus 
on key concerns with block three, renewable energy, since it 
has the largest impact on Wyoming's proposed goal. One hundred 
percent of CO2 emissions from fossil-fueled power 
plants, regardless of end user, will be attributed to the 
energy-producing State. Sixty-six percent of electricity 
generated in Wyoming is consumed outside its borders.
    According to EPA, renewable energy credits will be 
attributed to the consuming State, not the producing State. 
Eighty-five percent of 4.3 million megawatt hours of wind 
energy generated in Wyoming is consumed outside its borders. 
Yet when EPA calculated Wyoming's State goal, they applied a 6 
percent escalation factor to all 4.3 million megawatt hours 
generated in Wyoming.
    More than half of the land in Wyoming is owned and managed 
by the Federal Government, subjecting many renewable 
transmission projects to NEPA. While the intent is good, the 
process is slow. A BLM high priority wind project took over 4 
years for a NEPA decision. Now the Fish and Wildlife Service 
requires an additional NEPA decision. Two Federal fast track 
transmission projects in Wyoming are in their eighth year of 
the NEPA process. Both are still awaiting a final decision.
    Finally, EPA's assessment of available land in Wyoming for 
wind energy development failed to consider high priority 
environmental conflicts such as greater sage grouse habitat, 
other designated critical habitats, and protected areas of 
cultural and historical significance. Factoring in these 
considerations reduces available lands for renewable, as 
proposed, by 83 percent. All of these factors lead to an 
unrealistic goal for Wyoming.
    Now, directing your attention to the two graphs. Graph one 
depicts as a bar graph Wyoming's glide path as proposed by EPA.
    Senator Inhofe. Which one is one?
    Mr. Parfitt. Graph one is on your right.
    Graph one depicts a bar graph of Wyoming's glide path as 
proposed by EPA. One can observe the dominant influence of the 
renewables component as shown in green.
    After review, Wyoming determined what is practically 
achievable, given EPA's proposed avenues. This is shown in 
graph two. The line in the graph represents Wyoming's carbon 
emission requirements according to EPA's analysis. The colored 
bars were derived through extensive analysis by the State, 
representing what may be possible in Wyoming.
    As can be seen, there is a wide gap between EPA's and 
Wyoming's analysis. Based on the proposed goal and with limited 
options, the simplest illustration to show an avenue for 
Wyoming to meet the initial 2020 goal is to consider how many 
coal-fired power plants must be closed. This would result in 
four plants closing, representing nearly 4,200 megawatts of the 
State's total coal fleet of over 6,700 megawatts. Stranded 
investment for these four would be nearly $1.5 billion, and 
does not include the cost of replacement power.
    We look forward to continued dialog with EPA and the other 
States as EPA considers our comments and reconsiders their 
proposal. Thank you for allowing me to provide input to your 
committee.
    [The prepared statement of Mr. Parfitt follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]    
    
    Senator Inhofe. Thank you, Mr. Parfitt.
    Ellen Nowak is a Commissioner, Public Service Commission of 
Wisconsin. You are recognized.

    STATEMENT OF ELLEN NOWAK, COMMISSIONER, PUBLIC SERVICE 
                    COMMISSION OF WISCONSIN

    Ms. Nowak. Good morning, Chairman Inhofe, Ranking Member 
Boxer and members of the committee.
    Thank you for the opportunity to speak on behalf of the 
State of Wisconsin and provide you with a summary of our 
State's assessment and concerns with the EPA's Clean Power 
Plan.
    My name is Ellen Nowak. I am the chairperson for the Public 
Service Commission of Wisconsin. Last fall, I was intimately 
involved with the construction of the comments that the State 
of Wisconsin submitted to the EPA. I submitted those comments, 
together with our analysis, with my written testimony for the 
record.
    Wisconsin is a manufacturing-heavy State, with industrial 
customers representing over one-third of energy sales. More 
than 60 percent of our State's power generation comes from 
coal. If the problems in the Clean Power Plan are not remedied, 
the work Wisconsin has done to restore our manufacturing sector 
will be threatened.
    As a regulator, I also remain concerned about the 
reliability of the grid, considering the dramatic, fast shift 
in energy production required by this proposal. With that 
background, and because of the far-reaching impacts of the 
EPA's Clean Power Plan, we brought together an 
interdisciplinary team. This team consisted of public service 
commission experts in utility rate modeling, economics, 
environmental regulation and engineering, along with department 
of natural resource experts in environmental regulation, 
particularly the Clean Air Act. Using a standard accepted 
utility modeling program, we forecasted the cost of this 
regulation under a number of scenarios with varying assumptions 
about the future.
    Candidly, our team felt that taking into account the 
impacts of this regulation on every family and every business 
in the United States is the kind of analysis that should have 
been done by the EPA before making such a proposal. The results 
of our analysis have been provided to the committee. Here are 
two highlights.
    First, this single Federal regulation will cost Wisconsin 
ratepayers between $3.1 billion and $13.4 billion. This is only 
a production cost increase. It does not include necessary 
upgrades to the gas and electric transmission infrastructure 
that will add significantly to the cost of compliance. These 
costs are also on top of the $11.6 billion in carbon dioxide 
reduction measures that Wisconsin ratepayers have paid for 
since 2000. Not only do we not receive credit for these 
investments under the Clean Power Plan, but the proposal 
actually penalizes Wisconsin for being an early actor.
    Second, as our assumptions about this rule became more 
realistic, the cost rose. For instance, would you assume that 
this massive increase in reliance on natural gas would drive 
natural gas prices higher? That very reasonable assumption 
significantly raises the cost of this regulation.
    At the heart of the matter, we question the very foundation 
of this proposal. The EPA constructed four building blocks, 
each of which was evaluated independently. Then to determine 
the foundation for each State's target reduction, the best 
system of emission reduction, or BSER, they added the carbon 
dioxide reductions resulting from each of those individual 
building blocks.
    Unfortunately, EPA ignored how the building blocks would 
affect each other when all four were implemented together. For 
example, increasing reliance on natural gas, as suggested by 
building block two, would severely decrease the heat rate 
improvement achievable in the coal fleet to far below the 6 
percent required under building block one.
    Furthermore, EPA used indiscriminate and unsupportable 
approaches to determine the four building blocks. For example, 
building block one applies a national level heat rate 
improvement to each coal-fired plant, regardless of the ability 
of an individual plant to realize these gains. In contrast, 
building bock three, the State renewable goals, takes a 
regional approach and is driven by the average renewable 
portfolio standards found in States arbitrarily grouped 
together.
    As it is currently written under any previous 
interpretation of the Clean Air Act, the BSER system proposed 
by the EPA is actually not a system at all. First, the building 
blocks are outside the coordination and control of the emission 
unit owner or operator. Second, they are not recognizable 
systems of work or practice or control that can be applied to 
an emission unit. And third, they cannot guarantee a certain, 
conclusive greenhouse gas emission reduction when implemented 
as a whole.
    To further highlight this point, engineers at the Public 
Service Commission modeled the EPA plan and concluded the 
building blocks would deliver a 15.6 percent reduction in 
carbon dioxide emissions. This is a far cry from the 34 percent 
that the EPA claims is attainable and necessary for Wisconsin 
to comply.
    Finally, the compliance timelines in the proposal are 
unrealistic and unworkable. The lead time required for 
planning, permitting and construction, not to mention the EPA's 
own requirements, will require the full proposed compliance 
period through the end of 2030.
    In conclusion, I sincerely appreciate the opportunity to 
speak to this esteemed committee today. You will find my 
submitted written testimony delves much deeper into the issues 
of modeling and the technical aspects of the rule that we find 
troubling.
    We can all agree on the need to protect our environment. 
But this proposed rule does not strike the right balance in 
protecting public health, reliability of the grid and economic 
security. Thank you very much.
    [The prepared statement of Ms. Nowak follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
       
    
    Senator Inhofe. Thank you, Ms. Nowak. The end of your 
remarks answered the first question I was going to ask you, the 
problem that if you submitted a SIP in compliance with building 
block one, and yet they came along and say, no, we have to have 
a FIP, a Federal program for two, three and four, would that 
create a problem. I think you adequately answered that.
    But very similarly, I would like to ask you, North Carolina 
proposed to delay the Clean Power Plan until a final ruling by 
the courts on the plan's many legal uncertainties. If you 
remember, during our budget hearing, the administrator of the 
EPA talked about, I think it was $3.5 million to hire a bunch 
of new attorneys because of all the lawsuits and problems. I 
would ask you, in your State of Wisconsin, you could end up 
taking steps to comply with the Clean Power Plan that the State 
came back and found that it was ultimately out of compliance. 
So what kind of problem would that be for Wisconsin?
    Ms. Nowak. It creates a lot of uncertainty. As a regulator, 
the parties we regulate, ratepayers all want and deserve 
certainty about where rates are going to go and what we may do. 
When we become commissioners, they don't give us crystal balls. 
So unfortunately, we can't look into the future. But we have to 
make the best decision, based on the information before us.
    We ran into a similar issue with the Cross State Air 
Pollution Rule, when it was hung up in the courts, and 
utilities were starting to make movements to attempt to comply. 
We have to do the best to allow them to try to recover. But we 
have to be judicious, obviously, in spending ratepayer dollars. 
So we will work closely and obviously monitor the legal 
proceedings and any legal proceedings that Wisconsin is 
involved in, so we don't unnecessarily spend ratepayer dollars.
    Senator Inhofe. Mr. Easterly, in your written testimony you 
talked a little bit and elaborated a little bit more on how the 
Clean Power Plan proposal could actually increase, increase the 
cost. This is an increased amount of emissions, and this is a 
position that I have held ever since Lisa Jackson said that 
doing something unilaterally in the United States is not going 
to affect it. Because this isn't where the problems are, as you 
saw on this chart, with China.
    Did you want to elaborate any more on that concept about 
that, could it increase instead of decrease emissions?
    Mr. Easterly. Most of our businesses, the basic bottom of 
our economy, the steel industry, the auto industry, rely on 
energy costs. And they are internationally competitive. So you 
can buy steel from Brazil, you can buy steel from India, you 
can buy steel from Russia and use it. Actually, why would you 
bother to bring the steel to the United States? You just bring 
the finished product here.
    So the emissions will happen in those countries. Some of 
those countries have decided to, I understand China signed an 
agreement to consider stopping the growth of their emissions by 
about 2030. But between now and 2030, those emissions, they are 
so much higher per unit of production than we have here. So as 
our businesses have to stay in business by being 
internationally competitive, I am very concerned that total 
emissions will go up.
    Senator Inhofe. All right. Thank you very much.
    Ms. Nowak, have you done an analysis as to how much of a 
rate increase would the PSC have to approve to implement this 
plan?
    Ms. Nowak. We expect it to be in the double digits, 
depending on which method of compliance we use. It could be 
easily into the upper 20 percent of an increase.
    Right now, we have an aggregate number of a $3 billion to 
$13 billion for the State to comply. How that is eventually 
broken down on a per ratepayer increase is something that will 
be fleshed as we know more details and utilities come in and 
ask for recovery. But this is going to be a significant 
increase on ratepayers all across the board, low income to our 
large manufacturers.
    Senator Inhofe. Thank you.
    I am going to be asking you for the record, Mr. Myers, or 
if there is time at the end of my 6 minutes, if you would agree 
with the position that many have taken, that wouldn't it be 
better to wait until these controversial legal issues are 
cleared up before requiring them to comply? I hope we have 
time, because I do want to hear your answer to that.
    So I would say to Ms. Nowak, Mr. Easterly and Mr. Parfitt, 
what parts of the Clean Power Plan will require enactment of 
new laws in your State, and how long would it take to develop, 
pass and implement these laws? Let's start with you, Mr. 
Parfitt.
    Mr. Parfitt. Mr. Chairman, as far as legislation that may 
need to be put into place, anything that would relate to a 
multi-State plan, if there were to be one developed, would 
certainly need some legislative discussion. Anything dealing 
with a renewable portfolio standard, basically the building 
blocks three and four would likely require some sort of 
legislation.
    Now, the timing of that, our legislature meets for a 40-day 
session and then a 20-day session. So, alternating. Our next 
session coming up is a budget session. So there are some timing 
concerns related to when something could be brought forth to 
the legislature in a meaningful way through an interim topic 
study as well.
    Senator Inhofe. All right. Mr. Easterly?
    Mr. Easterly. So, in Indiana, our legislature also doesn't 
meet year-around. So the next time they could consider things 
is 2016. We don't have authority for building blocks two, three 
and four. And then if I have to pass rules, we have an 18-month 
rulemaking process. We will be years out.
    Senator Inhofe. Any further comment?
    Ms. Nowak. We have at least a 3-year rulemaking process on 
a controversial rule, which I would submit this would be one. 
And we would also have to change, we don't have authority over 
building blocks three and four. If we were to increase our RPS, 
or change our energy efficiency standards, those would all 
require legislative action as well, which adds to the 
timelines.
    Senator Inhofe. Thank you. Senator Boxer.
    Senator Boxer. Thank you so much.
    What I am stunned by is some of the States' attitude of 
gloom and doom when we have States that are doing this 
prospering far more than your States. That is what kind of 
stuns me. But it is OK, I respect your view.
    I want to ask Mary Nichols this question. When you listened 
to Mr. Easterly respond to my chairman, in where they said, 
well, actually, these rules could mean that we would be 
increasing carbon worldwide, because some companies will leave 
the States, they will be so upset at these rules. Have we found 
companies running away from California? Last I checked, Silicon 
Valley was booming. We have increases in manufacturing. Am I 
wrong on the point?
    Ms. Nichols. You are not wrong, Senator Boxer. We have 
experienced growth across the board. But particularly in the 
clean energy sector in California, because of our policies. We 
are the leading State in terms of investment in clean 
technology, and also in renewable energy in the Country right 
now. Solar energy in particular is building.
    Obviously we have some natural advantages in California in 
terms of renewables. And I think it is important to say that 
there needs to be transition time for all industries and all 
States. When we implemented our cap on carbon emissions with a 
trading program, there were many who were concerned about the 
rising costs of electricity to our manufacturing sector. It is 
a critical concern for everybody, along with reliability. No 
State, no Governor can afford to take risks with the lights 
going out in their State. That is job one. No matter how much 
we care about the environment or greenhouse gases, and we do, 
profoundly, we know that our job is also to make sure that the 
lights stay on.
    So I think it is important to recognize that this proposal 
that EPA has put out does have within it the flexibility and 
the time that is needed. I recognize the concerns of my fellow 
States, and I think they are legitimate concerns. But I would 
assert that the proposal, as EPA has put it out, which 
admittedly they will be modifying as they go forward, can 
address those concerns.
    Senator Boxer. I think that is such an important point. 
Because you make it very clear that we need transition time. 
And we started a little earlier. I think EPA does get that, 
Gina McCarthy does get that. She is very sensitive to the 
States.
    Mr. Myers, I wanted to ask you, last year former EPA 
Administrator Christy Todd Whitman, who served under George W. 
Bush, testified before our Clean Air Subcommittee that it was 
settled law that the Clean Air Act can be used to control 
carbon pollution. Are EPA's proposed carbon standards supported 
by the three Supreme Court decisions in Massachusetts v. EPA, 
2007, American Electric Power v. Connecticut, 2011, and Utility 
Air Regulatory Group v. EPA, June 23d, 2014?
    Mr. Myers. Yes, they are, Senator. The Massachusetts v. EPA 
case, as you may recall, recognized that EPA has the authority 
under the Clean Air Act to regulate greenhouse gas emissions. 
And the Connecticut v. American Electric Power case was a case 
that New York was involved in, where we sought to get the very 
same emissions that the EPA Clean Power Plan is going to get 
at. The Supreme Court in that case told us that Federal common 
law nuisance did not apply, because Section 111 speaks directly 
to these power plant emissions.
    And with respect to the last decision, the UARG decision 
that you mentioned, the Supreme Court again reaffirmed EPA's 
authority under the Clean Air Act to regulate greenhouse gas 
emissions, and there found that under the Act's stationary 
source permitting program, if you are emitting a certain amount 
of conventional pollutants, then you also have to apply the 
best available control technology for CO2 emissions.
    So I think all told, those decisions provide a sound 
foundation for EPA's Clean Power Plan.
    Senator Boxer. Thank you, Mr. Myers.
    Mr. Parfitt, last month the Chief Environmental Counsel at 
Berkshire Hathaway Energy, which owns a dozen utilities across 
the Country, including Rocky Mountain Power, a regulated 
utility serving Wyoming, stated about the State's compliance 
with the Clean Power Plan, and I would like to get your 
reaction to that, ``If the State wants to push back against the 
plan, that is OK. But we really do have to have a backup plan, 
because if not, we will be caught in a situation where we don't 
have any option, and that is the worst of all positions to be 
in.''
    She also stated the Clean Power Plant's 2030 targets are 
achievable and urged Wyoming to collaborate with other States 
to meet them.
    Do you agree with Rocky Mountain power that Wyoming would 
be best served by completing a State compliance plan?
    Mr. Parfitt. I can't speak specifically to the comments of 
Rocky Mountain Power. But what I can say is that our 
evaluation, when we look at the entirety of the plan, it 
doesn't work for Wyoming. Because as shown in the charts that 
we displayed, the options, the building blocks as presented by 
EPA in the proposal don't work for Wyoming. So we would say 
that no, the plan doesn't work. We have more than one utility 
within the State.
    Senator Boxer. I totally appreciate that. Last question. 
Have you told EPA your concerns and have you given some options 
to the EPA? Because they really want to work with the States. 
Have you let them know how you feel and specifically what is 
wrong with what they are doing for Wyoming?
    Mr. Parfitt. Yes, we have provided comments from both the 
DEQ and Public Service Commission, and have had discussions 
since the comment period.
    Senator Boxer. Good. Thank you.
    Senator Inhofe. Thank you, Senator Boxer. Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman.
    During the time that we were on the campaign trail this 
last year, and I am new to the committee and new to the process 
up here, one of the items that we talked about a lot was the 
anticipated cost to the average American family with regard to 
an increase in their costs for electric rates. The United 
States Chamber of Commerce, last summer, I believe, estimated 
the average cost to the average American family to be 
approximately $1,400 more per year in their electric rates.
    I was curious, Mr. Parfitt, in a recent statistic that 
comes in the case of my State, South Dakota, that our electric 
rates would increase probably about 20 percent or more as a 
result of the Clean Power Plan, this is significantly than the 
8.8 cents per kilowatt hour that South Dakotans pay now. 
According to the Wyoming Public Service Commission, compliance 
costs for the 111(d) proposal could well exceed $50 per ton of 
carbon.
    What impacts will this have, not only on ratepayers in 
Wyoming, but also on ratepayers in surrounding States? I know 
that people in South Dakota receive power from Wyoming. 
Wyoming, as you indicated earlier, supplies power, because of 
your location to the natural resources available, you are an 
exporter of power. Could you share a little bit about what 
effect this will have on the rates for people in the other 
States as well?
    Mr. Parfitt. Yes. We do provide power to many other States. 
If our compliance path, as we have viewed it, based on the 
proposal, results in the premature closure of plants and the 
stranded assets, it would likely result in raising of rates for 
all the customers, not just those in Wyoming. It would be 
shared across the network.
    Senator Rounds. What does the EPA propose or how does the 
EPA propose that you respond to those stranded costs? What is 
their expectation?
    Mr. Parfitt. This is an issue that we had raised with EPA 
before the proposal was put out to notice, in hopes that would 
be taken into consideration. In our view, that hasn't been 
taken into consideration and we don't see, at least at this 
point, the off ramp. We have expressed this concern to EPA in 
our comments. So we are waiting to see how they might respond 
in June when they come out with the final proposal.
    Senator Rounds. So you have not had a comment back, or 
there is not a process within this to get a response back for 
the stranded costs that you have indicated our State would 
have, and would have to pass on to other States that also 
expect the electricity or the places where your organizations 
have contracts with them to provide ongoing electric power, 
those stranded costs? You don't know how those would be 
handled?
    Mr. Parfitt. At this point, EPA has not conveyed to us how 
they would address that particular comment. The conversations 
that we have had with EPA have been primarily to get 
clarification on some of the corrections that we pointed out 
within the proposal itself.
    Senator Rounds. The EPA claims that the rules give States 
flexibility to create their own plans. But it appears that it 
overlooks the fact that electricity transmission does not stop 
at State borders. Many States, including South Dakota, depend 
on neighboring States to help support their own electricity 
generation and ensure the reliability of the grid. EPA's 
modeling suggests that under the 111(d) proposal, Wyoming could 
cut its generation by 7.5 million megawatts, or million 
megawatt hours. How will you continue to power the regional 
economy with cuts like this, and is that an accurate statement?
    Mr. Parfitt. As far as how we would continue, if we were 
looking at closing down existing power plants, that would 
create a reliability issue. However, this is getting a little 
bit out of my expertise, within the expertise of the Public 
Service Commission in terms of how to maintain the reliability 
of service to all of its customers.
    Senator Rounds. Thank you, I appreciate your time. Mr. 
Chairman, I yield back.
    Senator Inhofe. Thank you, Senator Rounds. Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    To each of you, welcome. I am glad to see you. Thanks for 
what you do and thanks for sharing your thoughts with us and 
responding to our questions.
    My colleagues know I come before many of these issues not 
as a sitting Senator but as a recovering Governor. I want to 
share with you a little bit of a perspective from the little 
State of Delaware, from a guy who was born in West Virginia, a 
guy who was a coal miner for a little bit of time. So I come 
with a lot of different perspectives.
    When I was Governor of Delaware, I could have shut down the 
economy of my State in order to try to be in compliance with 
the clean air standards. And we would have been out of 
compliance. The reason why is the folks who were creating cheap 
electricity to the west of us, some of them put bad stuff up in 
the air and it came our way. We are at the end of America's 
tailpipe, similar to Maryland, Pennsylvania and New Jersey, New 
York.
    I am a big believer in the Golden Rule, treat other people 
the way I want to be treated. The concerns that you are laying 
out here for us today, I think they are important concerns and 
we have to be mindful of them. I get it. EPA needs to be 
mindful of them as well. But I just want you to know that there 
are other folks who have been adversely affected by the ability 
of some people in our Country to develop cheap electricity, 
dirty electricity, and we suffer the consequences. I don't like 
it. We haven't liked it. We tried to go to court to resolve 
that and we finally have succeeded in doing that.
    I want you to get in a car with me, use your imagination. 
We're in southern Delaware. We are driving on Prime Hook Road 
to the east, to the Delaware Bay. We get to the Delaware Bay. 
There used to be a parking lot there, a big parking lot there. 
It is not there anymore. Well, actually, it is; it is 
underwater. You look off to the right, you will see a bunker 
sticking up out of the water, about 500 feet out. That used to 
be about 500 feet on the land, now it is 500 feet out in the 
water.
    Something is going on here. We can't just make this stuff 
up. And the key is for us, is how can we have cleaner air, how 
can we address the issues of rising waters? Delaware is the 
lowest-lying State in the Country. It is a real problem for us. 
And in order for us to address this, we need to figure out how 
to do it together. I am not interested in seeing EPA jam 
anything down your throats. But we need to figure out to work 
on this together.
    One of the issues is, why are we creating a lot of 
electricity? It sounds like you export a lot of electricity. My 
understanding under the rules that are being contemplated here, 
you don't get a lot of credit for that. And the credit, I 
guess, goes to California and those other States. We have to be 
able to figure out how to deal with that. We ought to be able 
to use some common sense in figuring out how to deal with that.
    I want to ask a question of the lady from California. It 
sounds to me like your economy is doing pretty well. And the 
question of can you have a cleaner environment and a stronger 
economy, I think you have answered that. We think the answer is 
yes, you can. I think it is a false choice. I think most of you 
at this table would agree with that.
    There are a couple of things the folks from California, you 
are in a situation where you acted early, you have been a good 
citizen, a good steward. And my sense is you are going to be 
punished for it, if we are not careful, by EPA. We are in the 
same situation. We don't like that. What do you think we should 
do about it?
    Ms. Nichols. I think your comment earlier about States 
needing to work together is exactly correct. To my friend from 
Wyoming, my local utility, the Los Angeles Department of Water 
and Power, just concluded a very large agreement with a Wyoming 
wind company to import wind-generated electricity from Wyoming 
to help replace some of the coal-fired energy that they have 
been relying on. They are actually taking responsibility for 
being the largest emitter in our State, even though the 
electricity that we were using was coming from Utah, as it 
happens. And there will be costs associated with transitioning 
away from the coal and into the wind.
    But overall, the net of it is that Los Angeles ratepayers 
will still be doing OK, because the utility is taking steps to 
help their customers become more efficient in their use of 
energy. That I think is kind of the critical ingredient here, 
that if our rates go up because of new investments that we are 
making, that has to be offset in order to shield the ratepayers 
from rate shocks and fro things that would just make it 
untenable for them to move forward on this cleaner electricity 
plan that we are on.
    But given some time for the transition, we can do it. I do 
think that it was right to come up with a crediting mechanism. 
I think EPA needs to do this if they want to encourage regional 
cooperation as they say they do. They are going to have to 
allow States to work together on either a bilateral or regional 
basis to come up with programs where they can effectively share 
the cost and the benefits.
    That is what we are doing right now through our agreement 
with the Canadian province of Quebec, where we now run 
literally a bi-State, bi-national trading program with 
emissions allowances. Obviously, not everybody is going to want 
to go that far afield. But the concept, I think, is one that 
has been proven to work.
    Senator Carper. Thanks. Very briefly, can each of you just 
give me what you think is a fair compromise to the issue of 
Wyoming generating all this clean electricity by wind and 
shipping it off to California and other places, not really 
getting the credit for it? It sounds like the credit, as I 
understand it, goes to California or the other Sates that are 
the customers. What is a fair way to deal with this? What is a 
fair compromise? Ms. Nowak, very briefly.
    Ms. Nowak. I didn't fully understand your question.
    Senator Carper. Mr. Parfitt, can you try to answer this? It 
certainly pertains to you.
    Mr. Parfitt. As it pertains to the Clean Power Plan, I 
think there are two issues, or actually three issues at play. 
The first is the attribution of fossil fuel emissions, 
CO2 emissions, being attributed 100 percent to the 
energy-producing States.
    Senator Carper. Right.
    Mr. Parfitt. The other issue that is at play here is the 
renewable energy that is generated in Wyoming, which most of 
it, 85 percent of that, is shipped out of State.
    Now, applying an escalator to that, 100 percent of that to 
the producing State, is unfair and I think it is a 
disadvantage.
    Senator Carper. Mr. Chairman, I will say this. We have to 
figure out a good compromise here, and you all have to help us. 
Thank you.
    Senator Inhofe. Thank you, Senator Carper. Senator Capito.
    Senator Capito. Thank you. I would like to thank the panel, 
thank the Chairman and Ranking Member.
    Let me just say a few words about my home State of West 
Virginia and what we have had to say about the Clean Power 
Plan. Our own DEP has called it patently illegal, invading the 
province and it has been put forward with the finesses of a 
bull in a china shop. I would note in the comments that 32 
States have submitted negative comments, or comments of great 
concern to this rule, while the numbers that have submitted 
comments in support are much, much smaller in terms of States.
    But I want to talk about the reliability issue. West 
Virginia has joined with other States, probably several of 
yours, to block this plan, and we will be hearing this suit in 
the next several months. And the DEP in West Virginia has said 
that these goals are unattainable. We have heard some testimony 
to that.
    With that in mind, I would like to talk to Mr. Easterly, 
because we have a lot in common in terms of your production of 
your electricity, predominantly with coal. We have 95 percent 
of our electricity is generated by coal, for obvious reasons. 
We have a lot of coal, although not as much as Wyoming.
    So EPA has indicated that it does not have any significant 
concerns about reliability with this rule. Yet last week, PJM 
Interconnection released a new analysis that found that the 
Clean Power Plan could trigger up to 49 gigawatts of generating 
capacity in jeopardy. Let me just quantify, 49 gigawatts is the 
equivalent of the electricity that is used to power 50 million 
homes. This is one of the studies that was recently released 
that I think calls into question the reliability issue.
    Are you concerned about reliability in Indiana? I would 
note that Ms. Nichols did mention the reliability issue as a 
very important one for the State of California. I would like to 
hear your comments on that.
    Mr. Easterly. Yes, we are. We have another group that deals 
with the reliability. But here is our fundamental problem. The 
plan, even in EPA's best thought process, has significantly 
more fossil fuel-fired reductions by closure than it does new 
generation of renewable and wind and other things. So the plan 
necessarily will reduce the flexibility of our electric supply 
in the United States. You add this to the fact that we have had 
record PJM demand days, they are a little better handled this 
year than they were last year under the polar vortex. And we 
are in PJM and MISO.
    So we have increasing demand, we have decreasing supply. 
And the renewable supply is valuable, but it is not reliable. 
So sometimes the wind is blowing, sometimes it is not. 
Sometimes the solar panels don't have clouds or snow on them 
and sometimes they do. So you can't count on them for either 
thing, for their nameplate capacity is much higher than their 
actual generation. And they are not always available when you 
need them.
    So I am very concerned, as are a lot of people in the 
industry, that we will see some catastrophic result some time 
during the implementation of this plan. We just don't know 
where or when.
    Senator Capito. Ms. Nowak, do you have a comment on that, 
the reliability issue?
    Ms. Nowak. Certainly. We have some significant concerns. 
From the perspective of system reliability, the modeling 
program used by the EPA to evaluate the building blocks and 
whether the goals are actually achievable uses less robust data 
than possessed and used by our own RTO, MISO. And so they are 
responsible for maintaining our grid. Unfortunately, the EPA 
never asked MISO to do any studies of the grid prior to 
releasing this proposal.
    Examples of the work that we think needs to get done 
includes gathering information about firmness of the interState 
pipeline deliverability for gas-fired units, plans for 
replacement of units, the impact on the increase of 
intermittent renewable resources on reliability, and 
considering the electric grid location and network 
deliverability of units to be expected to be retired. Again, 
the modeling used by the EPA doesn't appear to consider any of 
these very fundamental and necessary factors. So we are 
concerned.
    Senator Capito. I would note in my State we are heavily 
reliant on coal for obvious reasons. But we also have a lot of 
natural gas. But to transition these older plants to natural 
gas is just not a realistic endeavor. It is exceedingly 
expensive. And to build new ones takes a lot of time and a lot 
of energy. You are going to expend energy to move forward on 
this as well.
    You have also just recently closed one of your nuclear 
plants in Wisconsin. And your plan that was put forward for you 
under this Clean Power Plan does not take into consideration 
your loss of nuclear power. That has to be a problem for you, 
too, in terms of meeting this challenge. Would you make a 
comment on that?
    Ms. Nowak. Sure. The loss of that plant is huge for 
Wisconsin. We think that eventually that is going to have to be 
replaced with a carbon neutral source. That was not taken into 
account, and that will increase the cost of this proposal for 
Wisconsin to comply.
    Senator Capito. Ms. Nichols, let me ask you a quick 
question. We had a hearing last week on ozone and the new 
regulations that are going to be put into effect. Is every 
county in California compliant with the current ozone 
regulations that we have presently?
    Ms. Nichols. No, Senator, we are not. We have remaining 
challenges in both Southern California and in the Central 
Valley meeting the ozone standards. And the new ozone standard 
will add an extra challenge, as well as some extra time to that 
effort.
    Senator Capito. So you put that on top of what we are doing 
here with the Clean Power Act.
    Ms. Nichols. We care about the health of our citizens, 
Senator.
    Senator Capito. I care about that as well.
    Ms. Nichols. We rely on the science.
    Senator Capito. In terms of how we are going to meet this 
challenge, in terms of our timelines, extension of timelines, 
extension of measures? What is going to be the best, Mr. 
Parfitt, for Wyoming? What is going to be the easiest thing to 
knock down on this Clean Power Plan that is going to make the 
biggest impact for you to be able to meet the challenges? 
Deadlines, timelines? Lower standards, less reductions?
    Mr. Parfitt. Certainly timelines are a big component of 
this when you consider developing a plan and the time involved 
with that and the complexities and the amount of agencies and 
States that would have to be involved in that discussion, let 
alone the legislation and rules that we have already mentioned 
here and the time that would take would seem to be very 
problematic.
    Senator Capito. Thank you.
    Senator Inhofe. Thank you, Senator Capito. Senator Merkley.
    Senator Merkley. Thank you very much, Mr. Chair.
    Underlying this entire discussion is the challenge we have 
with carbon pollution, methane pollution and the impact it is 
having across the world. But we don't have to look across the 
world, we can look to my home State of Oregon. And indeed, we 
are seeing that the fire season has grown by 60 days over the 
last several decades, and the number of acres of forest that 
has been burned has increased dramatically. We have an oyster 
industry that is having great trouble because the baby oysters 
have trouble forming shells because the ocean is 30 percent 
more acidic than it was before the Industrial Revolution.
    We have a farming community that is suffering significant, 
repeated, worst ever droughts because the snow pack in the 
Cascades is steadily declining. And this year is one of the 
lowest ever. While rain earlier in the year can fill a 
reservoir, if you don't have the snow pack, come August, you 
are in trouble.
    So as we see this impact on farming and fishing and 
forestry, right now, we are not talking 50 years in the future 
or 100 years in the future, we are seeing it right now, just 
like Delaware. Senator Carper was talking about land that is 
now underwater. Should the entities that are being damaged by 
carbon pollution be able to sue those who are generating the 
carbon proportional to their contribution? Mr. Easterly?
    Mr. Easterly. I am not a lawyer, so I can't answer should 
somebody be able to sue. But remember that the environment of 
our earth has been changing for all of recorded history. 
Indiana used to be under a huge ice sheet. There are natural 
variations. And the things you talked about, some scientists 
would say, are due to the Pacific Decadal Oscillation. And they 
are likely to continue causing harm for the next 20 years.
    Senator Merkley. Thank you, Mr. Easterly. Mr. Parfitt, 
would you like to answer?
    Mr. Parfitt. I would echo those comments. This is a legal 
question and I am not an attorney that can address that.
    Senator Merkley. OK, a legal question. But the principle, 
you understand, of polluter pays, when you do some damage to 
your neighbor, shouldn't you bear some respo9nsibility just as 
a basic fundamental principle?
    Mr. Parfitt. I think this is a complicated question. You 
have users who may have some responsibility as well. So from a 
legal standpoint --
    Senator Merkley. OK, you don't want to answer the question. 
That's fine. Ms. Nowak.
    Ms. Nowak. If the utilities and entities are following 
existing law and regulation, I would think it would be a very 
chilling effect to have them subjected to legal claims.
    Senator Merkley. OK, well, everyone in their first year of 
economics learns about externalities, things that are not 
reflected in the market, damage done by activities, certainly 
our libertarian friends would say, when you do damage to your 
neighbor, you should compensate for that damage. The fact is, 
carbon is produced and methane is produced in a million 
different ways. There is no State that doesn't produce a lot of 
both.
    But we are seeing a differential in how States are taking 
this on. Oregon, now, about 70 percent of its electricity is 
produced in non-fossil format. And Ms. Nichols, you were 
referring to a 2020 goal of one-third. But that didn't include 
your hydropower, I believe. What is it with hydropower 
included?
    Ms. Nichols. If we included the hydro that we receive, we 
would be already at above our 30 percent, 33 percent goal. So 
we chose not to add it, or the legislature chose not to add it 
or nuclear, because they were trying to really push for new 
solar, wind, geothermal and biomass energy.
    Senator Merkley. Right. Say what that percentage would be 
again if those things were included, the other non-fossil. If 
you include the other non-fossil.
    Ms. Nichols. It would be about 40 percent.
    Senator Merkley. Forty percent.
    Ms. Nichols. Yes.
    Senator Merkley. Well, you have to aim for Oregon, where it 
is 70 percent. We are shipping a lot of wind power out.
    Ms. Nichols. We envy Oregon.
    Senator Merkley. And we often respect greatly the examples 
that you are setting, particularly here is, you have set up a 
marketplace. Now, if we turn back in time, there was a proposal 
that came really from right wing think tanks about using 
markets to regulate sulfur dioxide to take on acid rain. And 
the concept was not to regulate every smokestack, but to 
proceed to set up the marketplace and therefore the most cost 
effective solutions would be adopted. How did that work out? Do 
you have a memory of that?
    Ms. Nichols. Senator, I was the assistant administrator at 
EPA when we implemented the acid rain trading program. I am 
very proud of the success of that program. It did reach its 
goals in terms of the amount of sulfur dioxide that was 
reduced, and it did so less expensively. We relied on that plan 
in designing our cap and trade program in California.
    Senator Merkley. So the marketplace for sulfur dioxide 
worked extraordinarily well, actually, lower costs and faster 
results than anyone anticipated. It was really an off the chart 
success, and congratulations. Why wouldn't that same strategy 
work well in carbon dioxide?
    Ms. Nichols. Well, we believe it would. It was, as you 
know, defeated here, but within California it was actually put 
on the ballot and the voters chose to keep that system in 
effect. Because I think they became convinced that it would 
lead us to a cleaner future.
    Senator Merkley. It was, you see carbon dioxide reduced in 
the most effective manner, to achieve similar off the chart 
positive results.
    Ms. Nichols. Yes, sir.
    Senator Merkley. And isn't the Clean Power Plan really 
based around that same core principle of States developing 
their own plan through a range of different choices of how to 
address carbon? Not quite a cap and trade, but that is a 
possibility that the State could employ.
    Ms. Nichols. It is clearly allowable. It is not required. I 
know that EPA was very familiar with our program when they 
designed the rule. But I also understand that they tried really 
hard, it doesn't seem like they have quite succeeded just yet, 
anyway, to indicate to States that they would have the ability 
to design a plan that fit their own unique situation.
    Senator Merkley. Thank you very much.
    Senator Inhofe. Thank you, Senator Merkley.
    Senator Barrasso would be next, but he has graciously 
conceded to let Senator Boozman go ahead.
    Senator Boozman. Thank you very much. Again, just for a 
second, but I appreciate it.
    Ms. Nichols, following up on Senator Merkley's question, 
you are out of compliance for ozone. And the EPA's regulatory 
impact analysis says the annual cost to California alone would 
be $800 million to $2.2 billion per year. Do you feel like 
individuals should be able to sue you for non-compliance?
    Ms. Nichols. Under the Clean Air Act, citizens have the 
ability to sue EPA, or indirectly, the State, for non-
compliance with any element of a SIP. California has submitted 
a State Implementation Plan and we are in compliance with our 
plan. We are moving forward steadily every year, bringing down 
our levels of ozone. And we have actually come into compliance 
in many counties.
    Senator Boozman. So your argument, then, is the same as Ms. 
Nowak's in the sense that if you are doing things as required 
by law, then you shouldn't be sued?
    Ms. Nichols. One of the reasons why we are here to defend 
the carbon plan, the EPA plan, is that it helps us with our 
ozone standard as well. We need all the help we can get.
    Senator Boozman. But in regard to the question, you agree 
with Ms. Nowak in the sense that if you are in compliance with 
what the regulation requires, you shouldn't be sued?
    Ms. Nichols. Mr. Boozman, I went to law school, too, and we 
were taught that anybody can file a lawsuit.
    Senator Boozman. I didn't go to law school.
    [Laughter.]
    Ms. Nichols. Anybody can file a lawsuit and sometimes they 
win.
    Senator Boozman. I guess what I am saying, what she is 
saying is, that really would wreak havoc in the sense, there is 
no way that you are going to be--when do you feel like you are 
going to be ozone-compliant?
    Ms. Nichols. At this point, we are projecting off into the 
future, we are working as hard as we can, but it will probably 
be as challenging, it not more challenging, to meet the ozone 
standard as it is to meet the greenhouse gas standard. That is 
exactly why we are supporting the EPA rule, because it will 
help us with both.
    Senator Boozman. Do you agree it will cost you $800 million 
to $2.2 billion a year?
    Ms. Nichols. I can't verify that number. I would say, 
though, that the economic analysis that EPA did in advance was 
using all the tools that we would have used in the same way.
    Senator Boozman. Good. Thank you, Mr. Chairman.
    Senator Inhofe. Thank you, Senator. Senator Whitehouse.
    Senator Whitehouse. Thank you, Chairman, and thanks very 
much to the panel for being here.
    Let me ask first, Commissioner Nowak, in 2013, Commissioner 
Nowak, the Milwaukee Journal Sentinel published an editorial in 
your home State that said, ``Climate change is happening. Human 
activity plays a huge role in that. The consequences of doing 
nothing could be dire and expensive.'' Do you agree with the 
Milwaukee Journal Sentinel on that?
    Ms. Nowak. Thank you for the question. My role as a 
regulator or an economic regulator, we ensure also the 
reliability of the grid, I did not or do not endeavor to take 
on the policy behind what is before us. My role here has been 
analyzing it and rules that come before us. I look for three 
things. An environmental rule is coming; does it compromise the 
affordable, the safety and reliability of our grid. That is the 
lens that I look through this rule.
    Senator Whitehouse. No amount of environmental cost would 
figure under your analysis, then?
    Ms. Nowak. No, that is not what I said.
    Senator Whitehouse. That is exactly what you said. I am 
just trying to make sure that you put it properly and want you 
to explain further.
    Ms. Nowak. No. The environmental rules cannot unduly 
compromise the reliability of the--
    Senator Whitehouse. No matter how great the environmental 
cost?
    Ms. Nowak. There is a balance that needs to be struck.
    Senator Whitehouse. How do you strike that balance if you 
don't know whether climate change is happening and whether 
human activity plays a huge role in that and whether the 
consequences of doing nothing could be dire and expensive, 
which I assume dire and expensive are words that would fit into 
that calculus?
    Ms. Nichols. We look at what the impact on our ratepayers 
would be and the benefits to the environment under the proposed 
rule.
    Senator Whitehouse. But the impact on your ratepayers could 
be felt through climate change as well as through just the 
rates that they pay, could they not?
    Ms. Nichols. Those are --
    Senator Whitehouse. That is not a part of what you looked 
at? That is not part of your analysis?
    Ms. Nichols. The benefits have been put forth by the EPA in 
their plan. And we are weighing the costs against the benefits 
that the EPA has proposed.
    Senator Whitehouse. For what it is worth, the Executive 
Director of the Wisconsin Business Alliance has called 
renewable energy an economic opportunity for Wisconsin that 
will ``result in business growth, job creation, cleaner air and 
a quicker path to energy independence.'' She recently said, 
``We should look for opportunities to promote jobs and the 
environment and the Clean Power Plan is a great way to do 
that.'' So there appear to be other voices from Wisconsin.
    Mr. Parfitt, Rocky Mountain Power's owner, the spokesperson 
for Rocky Mountain Power's owner, has said that multi-State 
approaches are likely to be a less costly way to meet the Clean 
Power Plan's targets. Wyoming's Casper Star-Tribune has said 
that, the Montana officials have held earlier discussions with 
other States about the prospect of cooperating to meet the 
EPA's targets consistent with the multi-State approach that 
Rocky Mountain Power's owner referred to.
    Their Wyoming counterparts, the Wyoming Casper-Star Tribune 
continued, have thus far rejected regional advances. Now, 
Montana, which is also a rural State that generates a 
significant portion of its electricity from coal, has come up 
with five draft options for complying with the proposed 
standards, including options that would not require Montana to 
shutter its coal plants.
    So if Montana can do this, why can't Wyoming? And if 
Montana will work with other States, why won't Wyoming?
    Mr. Parfitt. First I will address Montana's five different 
alternatives. In their alternatives, they assume that they will 
get credit for 100 percent of the wind energy. And that is not 
what has been conveyed by EPA. We have been told that we will 
get no credit for wind energy that is consumed outside the 
State. So that is one difference.
    As far as the multi-State discussions, I will say that we 
have been involved with the same group, the Center for New 
Energy Environment, and participating in those conversations 
along with Montana and 13 other States. Now, there are 
challenges with a multi-State plan, particularly when we don't 
know what the end goal is going to be. All we have right now is 
what has been proposed. We don't know how EPA is going to 
change that proposal based on the comments that have been 
received.
    So we don't know what the targets are going to be.
    Senator Whitehouse. Do you agree that climate change is 
happening, that human activity plays a huge role in it and that 
the consequences of doing nothing could be dire and expensive?
    Mr. Parfitt. I am here to talk about the Clean Power Plan 
and whether or not we are going to do something to address 
CO2 emissions, whether or not this is a good plan 
and is it workable for Wyoming. And the answer is, it is not 
workable for Wyoming.
    Senator Whitehouse. Irrespective of the amount of damage 
that CO2 2 might do? There is no number from 
CO2 harm that could cause you to change your point 
of view on that?
    Mr. Parfitt. Not on the proposed plan and what that does to 
plants.
    Senator Whitehouse. Very well. And finally, Mr. Easterly, 
how have you built the costs of climate change for Indiana into 
your analysis of the value of the Clean Power Plan?
    Mr. Easterly. I don't think you can quantify any cost of 
future climate change on the State of Indiana. Let's go back to 
your other question.
    Senator Whitehouse. Why do you not think you can quantify 
it? Isn't that part of your job?
    Mr. Easterly. There is nothing concrete to quantify. There 
is speculation.
    Senator Whitehouse. Have you read the report that says that 
8 to 23 percent likely increase in energy costs could come to 
Indiana?
    Mr. Easterly. The energy costs refer to the Clean Power 
Plan, yes.
    Senator Whitehouse. No, this is not from the Clean Power 
Plan. This is from increased heat levels in Indiana requiring 
increased cooling load during the--you are not familiar with 
that report, obviously?
    Mr. Easterly. Not that one.
    Senator Whitehouse. OK. When you are talking about the cost 
of electricity, are you talking about on a per kilowatt hour 
basis?
    Mr. Easterly. Yes.
    Senator Whitehouse. Let me just say, I am sorry to go over, 
can I just make a Rhode Island point?
    Senator Inhofe. How long is the Rhode Island point?
    Senator Whitehouse. Less than a minute.
    Average monthly bills of residential customers in Wisconsin 
are $95.21, in Indiana they are $110.44, and in Wyoming they 
are $90.85. In Rhode Island they are $91.48, lower than two of 
these States, even though our kilowatt hour costs are higher. 
Because we have invested intelligently in energy efficiency and 
is that figure that really matters at the pocketbook.
    Senator Inhofe. Thank you, Senator Whitehouse. Senator 
Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. First 
to Ms. Nowak, it is affordability, reliability and safety, are 
those what you consider?
    Ms. Nowak. Correct.
    Senator Barrasso. Thank you. Mr. Parfitt, just to kind of 
review, when it comes to how the EPA credits renewable energy, 
Wyoming, which produces a significant amount of renewable 
energy, still stands to be severely disadvantaged. You talked 
about how much Wyoming produced in terms of wind energy. I 
think you said that 85 percent of Wyoming's wind energy is 
exported to a number of other State. I heard Chairman Nichols 
say that California wants to buy even more Wyoming wind energy.
    But the EPA has said no, that renewable energy is going to 
only be credited to the State where it is consumed, not where 
the energy is created, the hosting State, which means that 
Wyoming gets absolutely no credit for most of the wind energy 
that it develops. So I appreciate Senator Carper saying that 
needs to be addressed.
    My question is, how is this going to impact Wyoming's 
ability to attain our emission target? And how much additional 
renewable generation would we have to develop just to meet the 
EPA's proposed target?
    Mr. Parfitt. This makes it very difficult for Wyoming to 
achieve its target. The estimate of renewable would be 
somewhere around 9 million megawatts of wind energy that would 
have to be developed in order for us to meet our target. Right 
now Wyoming consumes about 600,000 megawatts of wind energy. So 
that equates to about a 1,400 or 1,500 percent increase of 
renewable that Wyoming uses right now.
    Senator Barrasso. And you mentioned a lack of flexibility 
from the EPA in giving Wyoming what we would need in order to 
continue to produce a lot of the renewable sources. You 
mentioned that more than half of the land in Wyoming is 
federally owned, that this has a significant on meeting the 
mandates coming out of the EPA. Your reference to permits, to 
the NEPA process, to the ESA requirements for which Wyoming has 
absolutely no control, and it doesn't seem the EPA is proposing 
any sort of relief in the plans to address these. You 
specifically cited that only one-sixth of the total area that 
the EPA has identified for wind energy development is actually 
available for wind energy development, due to sage grouse 
considerations, permitting requirements.
    It seems the EPA is telling people in Wyoming to move 
faster in renewable energy while refusing to acknowledge that 
Washington's foot is still on the regulatory brakes. So can you 
go into a little more detail about how Federal land ownership 
in Wyoming and the red tape that goes with developing energy 
resources on that land is a Washington roadblock that the EPA 
ought to address, if they want Wyoming to develop cleaner 
energy faster?
    Mr. Parfitt. Yes. What we have seen for wind energy 
projects, when you have to go through the NEPA process, or 
those projects go through the NEPA process, that they have 
taken anywhere from four to 8 years to get approved through the 
NEPA process. Then there is an additional Fish and Wildlife 
Service process for eagle take permits. Those will add to the 
time involved.
    The other piece of it is transmission. You have to have 
transmission to move the energy out of the State. Those right 
now, we have two projects that have taken up to 8 years to get 
through the permitting process. And they are still in that 
process now.
    Senator Barrasso. And we had previous discussion and debate 
and votes, actually, in the Energy Committee, about 
transmission lines under the Democrat-controlled Senate in the 
past. And Democrats specifically voted to block transmission 
lines on the public lands, which half of the Wyoming land is 
public land. So that I think actually has played into exactly 
what you are talking about as well.
    Mr. Parfitt. That is correct.
    Senator Barrasso. You also talked about the potential 
closure of four coal-fired power plants in Wyoming, over $1.4 
billion, according to the Wyoming Public Service Commission. 
That is lost investment. And who knows how much it will cost to 
replace the lost power.
    Of course, that is going to be passed on, I would assume, 
to citizens within the six-State territory of Pacific Corps. 
And Senator Whitehouse asked a specific question about Pacific 
Corps. So would that mean that folks in not just Wyoming, but 
California, Washington State, Oregon, Idaho and Utah are all 
going to get a big new energy tax increase because of what the 
EPA is trying to do in closing those four power plants in 
Wyoming and having to build new plants? Am I correct in 
characterizing what you are saying?
    Mr. Parfitt. That is correct. Those costs would be 
distributed amongst all the States involved with that system.
    Senator Barrasso. So California would have higher electric 
bills as a result of the EPA mandates here through that Pacific 
Corps.
    Mr. Parfitt. There is a portion of Northern California that 
is part of that system.
    Senator Barrasso. A growing number of States are raising 
concerns that any type of implementation plan worked out with 
EPA is immediately going to become federally enforceable, 
making a State vulnerable to sue and settle lawsuits between 
environmental groups and the EPA. But unlike most sue and 
settle arrangements, which deal with a single plan or single 
facility under EPA's Power Plant rule, a States entire 
electricity system could become subject to environmental 
lawsuits. EPA actually agrees with this concern. During 
question and answer in an event in February, the EPA's Acting 
Air Administrator, Janet McCabe, says she sees potential for 
States being subject to third party lawsuits if they submit 
State implementation plans. We have heard it from the Texas 
public utilities commissioner as well.
    Mr. Chairman, I would like to, if there is time to ask a 
couple of folks here, maybe the first three in the panel, if 
so, do you believe EPA can promise some sort of protection 
against these lawsuits? What are you seeing, Ms. Nowak?
    Ms. Nowak. We think the very foundation of this proposal 
already intrudes upon States' rights. And to have any State 
plans subjected to Federal authority is a great concern of 
ours. I think State energy policy should be left up to the 
States and in conjunction with the Department of Energy, not 
set by the Environmental Protection Agency. So we have great 
concerns about losing any State authority over any of our 
existing laws.
    Senator Barrasso. Mr. Easterly.
    Mr. Easterly. We do not believe EPA can protect us from 
lawsuits under the Clean Air Act. They can happen and they do.
    Senator Barrasso. Mr. Parfitt.
    Mr. Parfitt. We don't believe that we can be protected from 
the lawsuits from third parties with a State plan, as the 
proposal has been written.
    Senator Barrasso. Mr. Chairman, I am out of time. Thank you 
very much.
    Senator Inhofe. Thank you very much. Senator Fischer.
    Senator Fischer. Thank you, Mr. Chairman, and thank you all 
for being here today.
    Commissioner Easterly, when we had the Acting Air 
Administrator Ms. McCabe here earlier in the year, I asked her 
some questions about the heat rate efficiency assumption for 
building block one. And we know that EPA relied on the Sargent 
and Lundy analysis for that 6 percent heat rate. And in their 
own terms, they said that the EPA misapplied the data in a 
cumulative manner inconsistent with how the study was 
conducted.
    Do you have any other concerns with how the EPA developed 
that 6 percent heat rate assumption that is out there?
    Mr. Easterly. Yes. Part of EPA's thought process for 
building block one assumed that you would operate the plants in 
a way that gained efficiency, which really means you have to 
operate them at a steady State output. But then we have 
building two, which says, but oh, your coal plants are the last 
resort. You must operate your combined cycle natural gas plants 
first and use the coal plants to make up for swings in 
renewable and gas, and that will just make it much worse.
    There is also emission controls that you have to add on to 
the coal plants, which have good reasons to be there. But they 
all decrease the efficiency of the plant because this rule is 
based on megawatt outputs and there is a huge parasitic load 
for controlling those emissions. So there is a bunch of reasons 
that the plants are going to be less efficient on a per 
megawatt hour basis than more efficient.
    Senator Fischer. So do you think that improvement is 
achievable in your State?
    Mr. Easterly. We are hoping, and hoping is a strong word, 
that we might be able to get 2 percent if everything was done 
that could be done. But it is a serious challenge, because 
anything that is cost-effective, you have a reason to do it 
anyway if you are the utility, because you make more money. So 
the things that are left will only be cost-effective because 
the cost of not doing them under this plan is more expensive 
than the little incremental thing you will get.
    Senator Fischer. That is exactly right. Would compliance 
with other environmental regulations, would that have any 
impact on your State's ability to meet that 6 percent?
    Mr. Easterly. It will, because we still have some utilities 
that are going to have to add more energy for NOx and SO2 
reductions that aren't there now. So that will decrease their 
efficiency as it is calculated under this rule.
    Senator Fischer. I support an all of the above energy 
policy, and I know that many of my colleagues on this panel 
also support that all of the above, that we need to have a 
balance in our energy portfolios. I think that is extremely 
important for a number of reasons, security reasons, cost 
reasons. It is the wise thing to do.
    Do you think that this Clean Power Plan encourages 
diversity within our energy sector?
    Mr. Easterly. Not in the long run. In the long run, it 
basically is the plan to continue to shut down coal-fired power 
plants and have natural gas and renewables. And those are fine 
sources of energy, but if you have ever been in business, once 
you get close to a monopoly, you have pricing power. And that 
gas suddenly won't look like it does now in price. When I 
worked in the utility industry for a short period of time, we 
had a natural gas price spike. It was very disruptive to all of 
our customers.
    So I am worried those are going to happen in the future.
    Senator Fischer. Let me go to another panelist, then I will 
ask another question. Mr. Parfitt, do you think that we are 
encouraging States to look at a balanced portfolio when it 
comes to their energy needs with this plan that is before us 
now?
    Mr. Parfitt. From our view, the answer would be no. It 
seems like the purpose is to go to redispatch of other types of 
energy sources to replace coal. So it is not looking at a mix, 
it is really aimed at reducing coal.
    Senator Fischer. I am from the only public power State in 
the Country. In Nebraska, we rely on our public power. It is a 
strength for our State. It is a definite strength for our 
ratepayers. We are very concerned about the impact it is going 
to have on families across our State, when and if this plan is 
implemented. Because we rely on our coal-fired electric plants. 
We have diversified portfolios, we continue to develop those. 
But to have a requirement, a mandate to have those implemented, 
I think in an unreasonably short period of time, will affect 
families and it will affect our most needy families.
    Mr. Parfitt, how do you view that in Wyoming? You are our 
neighbors to the west. How do you view that? How are your 
families going to see what is coming to them?
    Mr. Parfitt. We share the same concerns in terms of what 
the proposal will do to utility rates. Particularly with our 
compliance pathway as we see it, we would see an increase in 
rates due to the premature closure of coal plants and the 
stranded assets associated with that.
    Senator Fischer. And Ms. Nowak, in Wisconsin, I don't know 
what your energy portfolio looks like in your State, but I 
would assume that some of your ratepayers won't be pleased when 
they get their bills?
    Ms. Nowak. Not at all. You are correct, Senator. Our 
ratepayers have already invested over $11 billion since 2000 to 
clean up our air. That is continuing to be paid for. We have 
reduced emissions by 20 percent if you look at 2005 as a 
baseline. So they have done that. We are not getting credit for 
it. We are a predominantly coal State. Like Indiana, we are a 
heavy manufacturing State. This will have a very large impact, 
our modelers have estimated between $3 billion and $13 billion 
just for generation alone. That doesn't include any natural gas 
infrastructure or transmission infrastructure that needs to be 
done.
    So that is going to hit every ratepayer from the low income 
to our large manufacturers.
    Senator Fischer. It will hit every family in Wisconsin and 
across this Country.
    Ms. Nowak. Right.
    Senator Fischer. Thank you. Thank you, Mr. Chair.
    Senator Inhofe. Thank you, Senator Fischer. Senator 
Sessions, you were the first one here and the last to speak, it 
looks like.
    Senator Sessions. Had a little Budget Committee hearing. 
That makes us all nervous.
    Senator Sessions. Well, Mr. Easterly, I came here, I 
remember thinking that I don't like this idea that there needs 
to be a mix of sources of power. We just should add more 
nuclear power, that was my simple idea. But as I have been 
here, and seen the arguments, I am of the belief that if you 
become too dependent on one source of power, you are not able 
to have the competition that keeps costs down. Do you believe 
that is still a valid concern?
    Mr. Easterly. Yes, Senator. Ironically, we don't have any 
nuclear, and I would love to have some. But it is so hard to 
build it, as you know. It is not likely to come in my lifetime.
    Senator Sessions. Well, that is disappointing, I have to 
tell you. Natural gas rates have fallen and the costs of plants 
are up, NRC is more regulatory than ever. We are almost killing 
it off, which would be a disaster.
    I think the unifying issue that we can all agree on, 
Republicans and Democrats, is a more healthy environment, less 
particulates, less NOx, less mercury, less 
SOx , things that make people sick ad kill trees and 
that kind of thing. I think we can do better about that. In the 
course of that, I think it will have a benefit on 
CO2 emissions probably at the same time.
    But I am going to press down on the brow of my constituents 
billions and billions of dollars in costs over the 
CO2 issue, frankly. We just need to balance this out 
and be reasonable about it, in my opinion.
    So I believe you said, Ms. Nowak, that you believe that if 
these regulations pass, the cost of electricity will go up. Mr. 
Parfitt, in your State, do you think it would go up also?
    Mr. Parfitt. Yes, that is correct.
    Senator Sessions. Mr. Easterly.
    Mr. Easterly. Oh, yes. We just aren't sure how much, but 
more than double digits.
    Senator Sessions. And Ms. Nichols, do you believe that if 
these pass, you indicated, I am not sure what you said, so do 
you believe it will go up or not?
    Ms. Nichols. You know, there has been a trend, I would say, 
over decades, for the cost per unit of electricity to go up. 
But what we think is important is the bill, what the customer 
actually sees. And in that event, we are holding steady. We are 
able to hold that steady.
    Senator Sessions. Even if these new rules are passed?
    Ms. Nichols. I believe so, yes.
    Senator Sessions. Mr. Myers, what is your view about that?
    Mr. Myers. Yes, Senator, I would concur with Ms. Nichols 
that it has been our experience that you can reduce carbon 
emissions and also keep electricity prices down.
    Senator Sessions. Well, Ms. Nowak, you indicated, and we 
have spent a lot of money, you have spent a lot of money to 
make coal cleaner than it has ever been before. If those plants 
are closed, are you saying those are the stranded costs, lost 
investments that are damaging to the ratepayers in your State?
    Ms. Nowak. Correct. The costs that our modeling estimated 
it would cost is for new generation only. It doesn't take into 
account paying for units that have been recently built. Power 
plants are paid for over many, many years. So ratepayers will 
be paying for plants that are run much less while at the same 
time paying for new electricity. So yes.
    Senator Sessions. Mr. Easterly, I would ask you to see if 
you can say yes or no on that, too. But let me ask a simple 
question. It seems to me that mandates, regulations drive up 
costs, and in an economic sense the same as raising taxes and 
having the government do it. The government could raise taxes 
on everybody and then pay for cleaning up power plants or 
whatever they want to do to achieve a certain goal.
    So I just want to translate this into reality for the 
people who are buying electricity, businesses and homeowners 
and people like that. So these mandates that require greater 
expenditures to produce electricity are the equivalent of a tax 
on their lifestyle. Isn't that correct?
    Mr. Easterly. Yes, it is. But different people benefit and 
don't benefit. So if you are in a regulated utility that makes 
a profit, if the price goes up and your percent of profits is 
the same, that goes up. If you are an REMC, a co-op, your 
customers are your owners and they really see it. There is no 
net benefit there.
    Senator Sessions. I think that is the question, is the tax 
on the economy worth the benefit that is achieved. And Dr. 
Lundborg here, from the Copenhagen Institute, said that the 
increase in CO2 over the next 60 years, is not going 
to be a detriment to the world. In fact, it will be a net 
benefit. He will agree that if this continues out into the next 
150 years, you begin to have a cost.
    So he questions all the expenditures we are talking about 
today. I just believe that is a fundamental thing. He talked 
about how many lives could be saved for just a fraction of 
these costs, helping poor people in a lot of different ways.
    Thank you, Mr. Chairman. I appreciate this hearing and the 
good witnesses we have had.
    Senator Inhofe. Thank you, Senator Sessions. Senator Boxer 
wanted to have just a moment for a unanimous consent request to 
enter something into the record. So we will recognize you for 
30 seconds to do that and me for 30 seconds, and then it is 
over.
    Senator Boxer. It is never over.
    OK. So, Mr. Chairman, I ask unanimous consent to place into 
the record a very important chart that shows that Californians 
are paying $20 less per month for electricity than the national 
average as we reduce carbon pollution in such a great way. I am 
so grateful to Mary Nichols for playing a role in this.
    Senator Inhofe. Without objection, so ordered.
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    Senator Inhofe. And my 30 seconds, two documents, one from 
the Census Bureau that says California has the highest U.S. 
poverty rate when comparing income and cost of living across 
the State. And second from the Manhattan Institute, the 
migration from California to Oklahoma increased by 274 percent 
in the 2000's. And we are adjourned.
    Without objection, so ordered.
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    [Whereupon, at 11:50 a.m., the hearing was adjourned.]
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