[Senate Hearing 114-48]
[From the U.S. Government Publishing Office]




                                                         S. Hrg. 114-48

 REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA

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

                             FIELD HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                      MARCH 23, 2015--BECKLEY, WV

                               ----------                              

  Printed for the use of the Committee on Environment and Public Works
  
  
  
  
  
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  




       Available via the World Wide Web: http://www.gpo.gov/fdsys
       
       
       
       




 REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA
 
 
 
 
 
 
 

                                                         S. Hrg. 114-48
 
 REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA

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

                             FIELD HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                      MARCH 23, 2015--BECKLEY, WV

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
  
  
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
  



       Available via the World Wide Web: http://www.gpo.gov/fdsys

                               __________
                               
                               
                               
                       U.S. GOVERNMENT PUBLISHING OFFICE
94-986 PDF                     WASHINGTON : 2015       
______________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
      Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
     Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001
                               
                               
                               
                               
                               
                               

               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 23, 2015
                           OPENING STATEMENT

Capito, Hon. Shelley Moore, U.S. Senator from the State of West 
  Virginia.......................................................     1

                               WITNESSES

Jenkins, Hon. Evan H., U.S. Representative from the State of West 
  Virginia.......................................................     4
Trisko, Eugene M., Attorney at Law, on behalf of the United Mine 
  Workers of America.............................................     5
    Prepared statement...........................................     8
Patton, Charles, President and Chief Operating Officer, 
  Appalachian Power Company......................................    13
    Prepared statement...........................................    15
Richardson, L. Jeremy, Ph.D., Senior Energy Analyst for the Union 
  of Concerned Scientists........................................    41
    Prepared statement...........................................    43
Van Nostrand, James M., Associate Professor and Director of the 
  Center for Energy and Sustainable Development, West Virginia 
  University College of Law......................................    87
    Prepared statement...........................................    90
Farmer, Chuck, President, Rouster Wire, Rope and Rigging.........    98
    Prepared statement...........................................   101

                          ADDITIONAL MATERIAL

Union of Concerned Scientists:
    Policy brief: Strengthening the EPA's Clean Power Plan.......   122
    Technical Comments on the Clean Power Plan...................   130
    Report: National Landmarks at Risk...........................   255


 REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA

                              ----------                              


                         MONDAY, MARCH 23, 2015

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                       Beckley, WV.

        OPENING STATEMENT OF HON. SHELLEY MOORE CAPITO, 
          U.S. SENATOR FROM THE STATE OF WEST VIRGINIA

    Senator Capito. I want to thank Congressman Evan Jenkins 
for joining me here today. It's great to be in Raleigh County. 
I want to thank the Raleigh County Commission, the Sheriff's 
Office and Judge Kirkpatrick for letting us use your chambers. 
I want to thank all of you for coming. I want to thank the 
witnesses for being here today.
    This is the first hearing that I've chaired as I've come 
back home as a United States Senator. But it will not be the 
last one, I can tell you that. This issue we have before us, 
which is the Greenhouse Gas Rule and the Clean Air Rule, falls 
right squarely in my subcommittee on the energy--or the 
Environment of Public Works Committee in the Senate. I'm going 
to be chairing that subcommittee. So all the data that we 
collect in our hearings is extremely valuable to us on the 
committee. And I want to thank everybody for their 
participation. But it's no more important to all the folks that 
live in and around West Virginia, particularly Southern West 
Virginia.
    Last month, EPA acting administrator--assistant 
administrator, Janet McCabe, came before our committee, our EPW 
committee, to discuss the agency's proposed carbon regulations 
for new and existing power plants. I asked her to explain why 
has EPA not had a public meeting on its proposed climate rules 
in West Virginia. We asked for that. I wasn't alone. Evan asked 
for that--the Congressman asked for that--many of us did--to 
ask the EPA to come to West Virginia.
    And I was kind of surprised by her response. Because she 
told me that the public hearings were held where the agency 
officials were--and this is a direct quote--comfortable going. 
That was exceedingly unimpressive to me. While it may be 
uncomfortable for EPA officials to face the coal miners whose 
livelihoods and whose communities are threatened by these 
regulations, I think West Virginians deserve to have their 
voices be heard. So that's why I'm here today. The public 
hearing on the Environment and Public Works is live streaming 
on our website, so it will be seen across the Country.
    We're going to hear the voices of West Virginians on the 
devastating impact on the regulations of our fellow West 
Virginians, because we know we receive 95 percent of our power 
from coal-fired power plants. The West Virginia coal industry 
supports families, strengthens our national security and 
affordably powers not only our State, but provides affordable 
electricity to our neighbors.
    West Virginia exports more than half of the electricity 
that we produce. And Charles can back me up on that. Just last 
week, AEP warn notices to--issued warn notices to employees at 
three West Virginia power plants; the Kanawha River plant in 
Glasgow, the Sporn plant in New Haven and the Cameron plant 
near Moundsville. All three plants will close within 2 months. 
These closures are ahead of schedule and early closures 
basically because of the EPA's MATS Rule, which is a previous 
rule different than the one we're discussing today, but still 
has a great impact.
    The upcoming EPA regulations for carbon emissions for power 
plants that we are here to examine today will have even more 
devastating impact. I have grave concerns about these 
regulations. I'm concerned about their cost; the cost to the 
taxpayer, and the cost to the bill payer.
    Numerous studies by well-respected economic analysis firms 
made clear that the EPA has grossly understated the costs. 
Findings from these reports show that costs could go up to $479 
billion over a 15-year period while causing double-digit 
electric price increases in 43 States.
    Over half of our Country's power comes from coal. And EPA 
has gone so far to predict that by effectively eliminating one 
half of our energy generation, we will reduce electricity 
prices by 8 percent. That just doesn't add up to me.
    Here in West Virginia, our monthly electric bills are 
roughly 23 percent cheaper now than the national average 
because coal is cheap, reliable and plentiful. I'm very 
concerned that in formulating these regulations, EPA has not 
considered the impact on the reliability of the grid.
    We actually had a hearing on this last week in our 
committee. That's one of the reasons I'm very pleased to have 
Charles Patton from Appalachian Power as one of our witnesses. 
In his statement, he does speak directly to the impact of these 
rules on our ability to keep the lights on.
    We also have small business owner, Charles Farmer, who will 
be here shortly. I'm very interested to see how he has borne 
the brunt of increased electricity prices on his business 
operations, and how it impacts him and his family and his 
business.
    And the United Mine Workers--we're pleased to have Mr. Gene 
Trisko who is here to represent the brunt of the president's 
war on coal in terms of the effect it has on the UMW and coal 
miners across the Country.
    So as we move forward, I'm also concerned--as we talk about 
emissions, and the lowering of emissions, I'm concerned that 
the United States is sort of out front here--not sort of out 
front. We are out front. What are the other nations doing?
    And is what we're doing going to really make the impact 
that those who are putting these forward hope that it will?
    So I think we're not rushing this. There are legality 
issues. We'll get into that today. But what we're doing is 
really beginning to talk about the economic impacts to our 
families where the impact is most felt, and that's here in West 
Virginia.
    With that, I'm going to ask Congressman Jenkins to make an 
opening statement, and then we'll turn to the witnesses.
    [The prepared statement of Senator Capito follows:]

                Statement of Hon. Shelley Moore Capito, 
              U.S. Senator from the State of West Virginia

    Thank you all for being here today. A special thank you to 
our witnesses for coming to Beckley and to Congressman Jenkins 
for joining me. This is the first hearing I have chaired back 
home in West Virginia as a U.S. Senator, but it will not be the 
last.
    Last month, EPA Acting Assistant Administrator Janet McCabe 
came before the Environment and Public Works Committee to 
discuss the agency's proposed carbon regulations for new and 
existing power plants. I asked her to explain why the EPA did 
not hold a public hearing on its proposed climate rules in West 
Virginia, despite the large role coal has in our economy and 
the multiple invitations by Federal and State legislators.
    I was shocked, and frankly, appalled by her response.
    She told me public hearings were held where agency 
officials were ``comfortable'' going.
    While it may be uncomfortable for EPA officials to face the 
coal miners whose livelihoods are threatened by these misguided 
regulations, West Virginians deserve the opportunity to make 
their voices heard.
    This is why I am here today, holding a field hearing of the 
Environment and Public Works Committee, which is being live 
streamed on the Committee website.
    EPA will hear the voices of West Virginians on the 
devastating impact of their regulations on the just under 2 
million hard-working West Virginians who receive 95 percent of 
their electricity from coal-fired power plants.
    The West Virginia coal industry supports families, 
strengthens national security and affordably powers not only my 
State, but provides affordable electricity to our neighbors--
West Virginia exports more than half of the electricity we 
produce to neighboring States.
    Just last week, AEP issued WARN notices to employees at 
three West Virginia power plants--the Kanawha River Plant in 
Glasgow, the Philip Sporn Plant in New Haven and the Kammer 
Plant near Moundsville. All three plants will close within 2 
months. These closures are years ahead of schedule, and the 
early closures are because of the impact of EPA's Mercury and 
Air Toxins (MATS) rule.
    The upcoming EPA regulations for carbon emissions from 
power plants that we are here to examine today will have an 
even more devastating impact.
    I have grave concerns about these proposed regulations. I 
am concerned about their cost--the cost to the taxpayer and 
cost to the bill payer. Numerous studies by well-respected 
economic analysis firms make clear that the EPA grossly under-
estimated the costs. Findings from these reports show costs 
could get up to $479 billion over a 15-year period while 
causing double digit electricity price increases in 43 States.
    Over half of our country's power comes from coal; yet, EPA 
has gone so far as to ``predict'' that by effectively 
eliminating one-half of our energy generation, we will reduce 
average electricity prices by 8 percent. That simply does not 
add up.
    Here in West Virginia, our monthly electrical bills are 
roughly 23 percent cheaper than the national average because 
our coal is cheap, reliable and plentiful.
    I am also very concerned that, in formulating these 
regulations, EPA has not considered the impact on the 
reliability of our electricity grid. That is one of the reasons 
I am pleased to have Charles Patton from Appalachian Power as 
one of our witnesses. He can speak to the direct impact that 
EPA regulations have on our ability to keep the lights on.
    EPA doesn't have a great track record here. Look at the 
Mercury and Air Toxins, or MATS, rule. EPA predicted this 
regulation would result in the closure of about 5,000 megawatts 
of generating capacity. Instead, the Department of Energy now 
says that between 50,000 and 60,000 megawatts of generating 
capacity will be taken offline. That's a huge mistake that 
would have serious consequences.
    It's not the EPA bureaucrats that have to deal with these 
consequences of a miscalculation. It's the small business 
owners, like Mr. Chuck Farmer, who will bear the brunt of 
increased electricity prices on his business operations that 
not only impact him and his family, but his employees, their 
families and the surrounding community. It's the United Mine 
Workers of America that Mr. Trisko is here to represent who 
will bear the brunt of the President's ongoing war against 
coal.
    Only at a government agency, run by unelected bureaucrats 
would it make sense to impose regulations that cost billions of 
dollars, increase the costs of electricity, negatively impact 
grid reliability, undermine global competitiveness and kill 
jobs.
    Concerning is that estimated emissions growth from China 
and India render any of these perceived ``benefits'' pointless.
    President Obama is rushing through extreme environmental 
initiatives without regard for the real-life consequences. 
Today we are beginning to talk about these economic impacts, to 
families here, where the impact is felt and our communities are 
impacted.

              STATEMENT OF HON. EVAN H. JENKINS, 
      U.S. REPRESENTATIVE FROM THE STATE OF WEST VIRGINIA

    Representative Jenkins. Thank you, Senator. Good morning. 
And thank you for the wonderful turnout and the interest. Let 
me first start by thanking Senator Capito for holding this 
important hearing. She has been a steadfast voice for West 
Virginia and continues to lead the fight against the 
administration's regulatory overreach. She's a real champion 
for our cause.
    I also want to thank her and her staff for taking the 
initiative to hold this important hearing so that the committee 
can hear the voices from real West Virginians, people who 
really care about our State's future and understand the issues 
that we are facing as a State.
    As you know--as Senator Capito mentioned just a moment ago, 
her efforts to try to encourage the EPA to take a proactive 
position to come to West Virginia. I too had that opportunity, 
and questioned Administrator McCarthy just a couple of weeks 
ago, and candidly begged her to come to West Virginia to see 
the real consequences of her agency's policies and what they 
will have with regard to the people of West Virginia. And as 
Senator Capito has run into, she simply says no, unwilling to 
come.
    The EPA continues to overstep its legal authority waging a 
war on coal. And, yes, it is a war on coal that has destroyed 
the livelihoods that we have known for generations in West 
Virginia.
    For example, the EPA is retroactively vetoing already 
issued permits. The permit for the mine in Logan County was 
issued by the U.S. Army Corps of Engineers after an intensive 
deliberative process. Families in that area were counting on 
those new jobs that the mine would help provide and sustain.
    But then 4 years later, the EPA swooped in and 
retroactively vetoed this already issued permit by the Army 
Corps of Engineers. That was the first time in history that the 
EPA has ever taken such an action. But the effects of EPA's 
decisions weren't limited to just the mine operation. They also 
took away the promise of good-paying jobs and more affordable 
energy for West Virginians.
    Coal is an abundant resource in America. Why are we 
forsaking one of our largest sources of affordable energy to 
put ourselves at an economic disadvantage? Why is the EPA 
forcing consumers to pay more for electricity and for all the 
goods and products that require electricity to be produced?
    The Clean Power Plan we're going to be talking about 
today--the focus of today's hearing will bring even more 
economic harm to West Virginia communities. States are being 
asked by the EPA to decrease emissions by an unrealistic 
amount. They are being asked to do it in an unreasonable 
timeframe. If they are unable to comply, they will be fined. 
All sorts of stakeholder corps, from utilities to State 
regulators to grid operators have overwhelming concerns over 
cost, reliability, transmission and grid problems.
    Prior to President Obama, coal provided 48 percent of our 
Nation's electricity. Today we're at 40 percent due to the 
Mercury Rules and others. Under CPP, coal would be reduced to 
30 percent. This has direct impact on coal jobs. We have 
already suffered disproportionately under this Administration's 
policies.
    From 2009 through 2013, the State of West Virginia lost 
nearly 9,000 coal jobs. Americans deserve to know the full 
picture before the EPA moves forward on this aggressive and 
unprecedented plan. The costs associated with CPP are 
staggering. The U.S. Chamber of Commerce's Institute for 21st 
Century Energy estimated that it would lead to 224,000 fewer 
U.S. jobs on average every year through 2030. Worse, it would 
force U.S. consumers to pay $289 billion more for electricity 
in that same time period.
    The coal industry has gone through highs and lows before 
and has recovered. The difference now is that we have a 
Government pushing policies that is picking winners and losers 
in industry and forcing utilities to stop using coal.
    I look forward to the hearing today and hearing from the 
witnesses to hear the issues that they are facing and to 
understand things from their perspective.
    Once again, I would like to thank Senator Capito for 
inviting me to this hearing. This is an important moment for 
the Appalachian region, for Southern West Virginia, for all of 
West Virginia and for our Country. This is an important moment. 
It is critical that we work to preserve our way of life for our 
children and our grandchildren here in West Virginia.
    Thank you, Senator Capito.
    Senator Capito. Thank you, Congressman. We will begin--I 
would ask the witnesses--I think most of you have probably 
testified. Your full statements are submitted into the record. 
If you could, give us a 5-minute--around a 5-minute synopsis of 
your full statement. We'll start with that, and then we'll go 
to questions.
    So I'm going to start with Gene Trisko, who is counsel for 
the United Mine Workers of America. Welcome.

  OPENING STATEMENT OF EUGENE M. TRISKO, ATTORNEY AT LAW, ON 
             BEHALF OF THE UNITED MINE WORKERS OF 
                            AMERICA

    Mr. Trisko. Thank you. Good morning, Chair Capito and 
Representative Jenkins. I'm Gene Trisko. I'm an attorney in 
private practice. I'm here on behalf of the United Mine Workers 
of America whom I've represented in environmental and climate 
matters for some 30 years.
    The UMWA greatly appreciates this opportunity to testify on 
the impacts of EPA's proposed Clean Power Plan. This proposed 
regulation is a neutron bomb aimed directly at the heart of 
West Virginia's economy and the coal miners, communities, 
electric generators and allied industries that depend on coal 
for their livelihoods.
    EPA's carbon rule proposes an overall CO2 
reduction equivalent to a 30 percent cut from 2005 emissions 
with reductions measured against each State's 2012 emission 
rate in pounds of CO2 per megawatt-hour of fossil 
electric generation. West Virginia is assigned a 20 percent 
reduction by 2030 based on the combined building block approach 
that EPA developed.
    EPA's data indicate that West Virginia's electric utilities 
and independent power producers achieved a 20 percent reduction 
of CO2 emissions measured in tons emitted between 
2005 and 2012. In other words, if you were given a fair 
baseline, you're there. You have already achieved EPA's 
reduction.
    EPA's proposed rule gives no credit for these reductions 
because it uses a 2012 baseline for determining required 
emission reductions.
    EPA's regulatory impact analysis for this rule shows total 
U.S. coal-generating capacity declining from 317 gigawatts in 
2010 to 195 gigawatts in 2020. That is an overall reduction of 
122,000 megawatts of capacity. Of this total, 49 gigawatts can 
be attributed to the Clean Power Plan with the balance of 73 
gigawatts due to compliance with the 2011 Mercury Rule, lower 
natural gas prices and other factors.
    EPA projects that the carbon rule would reduce coal 
production in the overall Appalachian region--this region 
stretches from Pennsylvania to Alabama--by 35 percent, from 140 
million tons to 91 million tons in the year 2020. West Virginia 
alone traditionally produces well over 100 million tons of coal 
a year. Under this rule, the entire Appalachian region would 
produce 90 million.
    The fundamental problems that the EPA carbon rule poses for 
West Virginia are twofold. First, the majority of West 
Virginia's coal production is shipped to other States that have 
even larger emission reduction requirements than West Virginia.
    Second, as Senator Capito noted, the majority of the coal-
based electricity generated in West Virginia is exported to 
other States affected by the rule.
    In 2013, West Virginia produced 116 million tons of coal. 
West Virginia's electric utilities and independent power 
producers consumed 30 million tons of coal from all sources. 
That's equivalent to just a quarter of the State's total coal 
production. The rest of it goes somewhere else. You have no 
control over that.
    In 2014, West Virginia power plants generated 88,000 
gigawatt-hours of electricity. Your total in-state retail 
electricity sales were 29,000 gigawatts. That's about one-third 
of total generation. Two-thirds of it goes to other States. You 
have no control over it.
    In short, there is no compliance option for West Virginia, 
including potential interstate agreements that can effectively 
mitigate the adverse impacts of the EPA rule attributable to 
the compliance actions of other States.
    The stakes for West Virginia's economy and jobs are very 
high. Coal mining in West Virginia generates more than $15 
billion of gross State output. Nearly $4 billion of household 
income, and 75,000 direct and indirect jobs.
    EPA's proposal for major expansions of State energy 
efficiency and renewable energy programs interfere with 
traditional State authority and energy planning and appear to 
be well beyond the agency's authority under the Clean Air Act.
    We are mindful in this regard of the cautions recently 
raised by the Supreme Court in UARG versus EPA concerning an 
overly expansive interpretation of EPA's authority to regulate 
greenhouse gases under the Clean Air Act.
    Finally, we do not know the extent to which other nations 
will be willing to commit to a truly global program of 
greenhouse gas reductions. All indications from the United 
Nations' climate negotiation process point to an extremely 
difficult outcome in Paris later this year. It is doubtful that 
those negotiations will lead to meaningful or enforceable 
emission reduction commitments by the developing countries that 
are now the world's largest emitters of greenhouse gases.
    Thank you for the opportunity to be here today.
    [The prepared statement of Mr. Trisko follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Senator Capito. Thank you.
    Now, I'd like to ask Charles Patton to make his opening 
statement. Charles is president of Appalachian Power Company. 
Welcome. Thank you for being with us.

  STATEMENT OF CHARLES PATTON, PRESIDENT AND CHIEF OPERATING 
               OFFICER, APPALACHIAN POWER COMPANY

    Mr. Patton. Thank you. Chairman Capito, I'd like to thank 
you for inviting me here today. And it's always a pleasure to 
see you, Congressman Jenkins. We appreciate the energy and 
enthusiasm which you bring to represent the State of West 
Virginia.
    I appreciate this opportunity to offer the views of 
Appalachian Power Company on the carbon dioxide rules for 
existing power plants that have been proposed by the 
Environmental Protection Agency.
    Headquartered in Charleston, West Virginia, Appalachian 
Power Company serves approximately 1 million customers in West 
Virginia, Virginia and Tennessee. We are a subsidiary of 
American Electric Power. AEP and its six other subsidiary 
utilities deliver safe, reliable and affordable electric 
service in eight additional States, making AEP one of the 
Nation's largest generators of electricity.
    Additionally, AEP's transmission network is the Nation's 
largest and most robust with over 400,000 miles of high-voltage 
transmission. As one of the Nation's largest utilities and one 
of the Nation's historically most coal-dependent utilities due 
to our proximity to this abundant and stably priced natural 
resource, we have been active in the conversation surrounding 
the appropriateness of the Clean Power Plan as a policy 
direction for reducing the carbon footprint of the Nation's 
electric power supply industry.
    I have filed some 26 pages of testimony outlining our 
concerns. As a major coal burner, I'm sure that you will not 
find it surprising that Appalachian Power and our parent 
company, AEP, has serious concerns around the proposed EPA 
plan.
    In that 26 pages of testimony, I have listed some concerns. 
Are EPA's technical assumptions correct?
    Has the EPA appropriately quantified the cost of its 
proposal?
    Are there significant reliability concerns that are not 
receiving appropriate attention?
    Has the EPA overreached its legal authority? These are 
questions and issues that are raised in my testimony.
    Having reviewed a significant number of the comments filed 
by States this past fall, it is clear that the concerns 
delineated a great deal in my testimony are also shared in some 
form by the vast majority of the States in this Nation.
    Therefore, in lieu of offering you a laundry list of 
concerns, I would like to share with you my personal experience 
which gives me great pause regarding the appropriateness of the 
EPA's proposal.
    Approximately 5 years ago, I became the president and chief 
operating officer of Appalachian Power Company. When I arrived, 
it was on the heels of a $2.2 billion capital spending program 
placing scrubbers on our large baseload coal-fired generating 
stations. At that time, given the prevailing cost of 
alternatives, it was the best option for our customers. A 
position that was endorsed by State regulators and key 
stakeholders involved in the regulatory approval process.
    Despite being the least cost solution--yes, that's right, 
coal is the least cost solution. The results were electric 
rates that did increase on average 40 percent. These 
investments and resulting rate increases were common for 
utilities with large coal fleets at that time.
    States like Louisiana, Tennessee, Mississippi, Alabama and 
West Virginia have the highest average residential electric 
consumption rates in the Nation. There are logical reasons for 
this outcome; the rural nature of these States, the lack of 
retail natural gas in rural areas for gas heating, and a 
strategic cost advantage of electricity. And, unfortunately, 
also the socioeconomic factors related to the quality of the 
housing stock in those States.
    In West Virginia, over 400,000 low income and middle income 
families spend 20 percent of their after-tax income on energy. 
Approximately 25 percent of my residential customers are 
delinquent on their electric bills.
    Additionally, many of my customers in the metals industries 
which have electric-intensive production processes are also 
struggling to remain profitable. In fact, the West Virginia 
legislature has enacted legislation specifically targeting its 
large energy-intensive industries to help address this reality.
    Congressman Jenkins, you were there when that--you were 
part of passing that legislation.
    But how much more can they afford? I'm not sure. However, 
as we proceed in addressing carbon, I would ask that this 
committee and all of Congress consider the following. Economics 
and existing EPA regulations have resulted in a profile where 
today 60 percent of AEP's generating capacity is coal compared 
to well over 80 percent in 2000. By 2026, the percentage is 
expected to drop to 45 percent.
    Then if you go back to 2005, you will find that our 
decrease to date in carbon output is somewhere north of 21 
percent, not including future closures planned in 2015 as a 
result of our efforts to comply with EPA's Mercury and Air 
Toxics Standards.
    APCO and AEP do not dispute the legitimacy of pursuing 
policies that reduce our Nation's carbon footprint. However, we 
would suggest to you that we have grave concerns regarding the 
affordability, technical assumptions and need for the Clean 
Power Plan as it is proposed.
    Thank you very much.
    [The prepared statement of Mr. Patton follows:]
   
   
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
   
    
    
    Senator Capito. Thank you.
    Our next witness is Dr. L. Jeremy Richardson, who is the 
senior energy analyst, Union of Concerned Scientists, 
Washington, DC. And I understand your father is in the 
audience. I want to welcome him as well. Welcome, Dr. 
Richardson.

STATEMENT OF L. JEREMY RICHARDSON, Ph.D., SENIOR ENERGY ANALYST 
             FOR THE UNION OF CONCERNED SCIENTISTS

    Mr. Richarson. Thank you very much, Senator Capito and 
Representative Jenkins.
    As you said, I'm a senior energy analyst at the Union of 
Concerned Scientists. UCS is the Nation's leading science-based 
nonprofit working for a healthy environment and a safer world. 
I have a very unique perspective on the issues before you 
today. As a scientist, I understand the urgency to reduce 
carbon emissions to protect the planet's climate. As the 
brother, son and grandson of West Virginia coal miners, the 
question of how we go about tackling climate change is deeply 
personal to me.
    First, on behalf of UCS's more than 450,000 supporters, I 
want to say today that we strongly support the Environmental 
Protection Agency's efforts to limit carbon emissions from 
power plants under the Clean Air Act. Simultaneously, however, 
we want to emphasize the need for special consideration for the 
families and communities that are facing the negative 
consequences for the transition away from coal.
    Human-induced climate change is already having impacts that 
are being felt by people here in West Virginia, our Nation and 
around the world. If we collectively fail to make deep 
reductions in our carbon emission, we will greatly increase the 
risks of serious economic, health and environmental 
consequences from accelerating sea level rise, storm surges, 
heat waves, drought, wildfires, frequent heavy downpours and 
increase hurricane intensity. These impacts are a direct 
consequence of the increasing concentration of greenhouse gases 
like carbon dioxide in our planet's atmosphere primarily caused 
by the fossil fuels that we burn for energy.
    These facts compel us to act and to act decisively. In 
doing so, however, we must recognize that some regions of our 
Country are facing a heavier burden than others in this 
transition to a less fossil-intensive electricity system.
    The proposed Clean Power Plan provides a sound and flexible 
framework for reducing emissions from the power sector. But it 
is not ambitious enough in its overall result of a 30 percent 
reduction in emissions by 2030.
    Our analysis shows that EPA significantly underestimated 
the potential for renewables such as wind, solar and geothermal 
energy resources that emit no carbon and are already delivering 
safe, reliable and affordable power to consumers all around the 
Country.
    As we all know, the coal industry faces challenging times. 
Many blame environmental regulations entirely for the downturn. 
But the truth is that regardless of who occupies the White 
House, the industry faces strong and persistent headwinds. 
Multiple market factors are making coal fired power too 
expensive relative to other cheaper, less polluting options 
like natural gas, renewable energy and energy efficiency. 
Thankfully, West Virginia has many assets that it can leverage 
to diversify its economy. But we must let go of the idea that 
coal is all we've got.
    Communities all around coal country from Beckley to Welch 
to Pikeville are eager to have this conversation. They realize 
that times are changing and they are calling for leadership. 
Over 200 people from a wide range of perspectives attended a 
forum that UCS organized in September 2013 to talk about the 
State's bright future. Participants pointed to the State's 
topnotch work force, its natural resources, of course, a 
multitude of opportunities for recreation and tourism, emerging 
opportunities in advanced manufacturing and much more. The 
conversations have continued from the ground up.
    Williamson is remaking itself as a healthy community 
focused on sustainability. Communities across West Virginia 
have been participating in a series of dialogs called What's 
Next West Virginia. And a few leaders are listening as 
evidenced by initiatives in Eastern Kentucky and in Southern 
West Virginia. Even the President's budget includes significant 
investments in the Appalachian region.
    Together with Federal policymakers, States, especially West 
Virginia, should help ensure that economic diversification and 
resources for workers in communities are an important part of 
their compliance plans. Fortunately, there are a variety of 
policies both within the context of State compliance plans and 
through complementary policies enacted by State legislatures 
that can help, including market-based mechanisms and tax 
policies, like West Virginia's Future Fund that was established 
last year. By working together, we cannot only establish a 
strong standard to protect the planet's climate, but also 
ensure that workers in communities have a fresh economic 
opportunity as market forces continue to drive a shift away 
from coal.
    I do not accept this as an either/or proposition. Our 
children and our grandchildren will face the risks of a vastly 
different climate caused by our failure to act to reduce 
emissions today.
    My young niece, and maybe someday her children and 
grandchildren, will face an uncertain future if we fail to 
invest in the workers and communities that have built this 
Nation's wealth. It is much harder, but it is imperative that 
we do both.
    Thank you.
    [The prepared statement of Mr. Richardson follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    
    Senator Capito. Thank you, Dr. Richardson.
    Our next witness is James M. Van Nostrand. Did I say that 
correctly?
    Mr. Van Nostrand. Van Nostrand, Senator.
    Senator Capito. He is Associate Professor, Director of the 
Center for Energy and Sustainable Development, West Virginia 
University College of Law.
    Welcome.

  STATEMENT OF JAMES M. VAN NOSTRAND, ASSOCIATE PROFESSOR AND 
DIRECTOR OF THE CENTER FOR ENERGY AND SUSTAINABLE DEVELOPMENT, 
            WEST VIRGINIA UNIVERSITY COLLEGE OF LAW

    Mr. Van Nostrand. Thank you very much, Senator Capito and 
Congressman Jenkins. I really appreciate the opportunity to 
speak today.
    Before I start off, I want to share your frustration with 
the inability to get anybody from EPA to come to this State. We 
had a conference back in February 2014 focusing on the then 
anticipated EPA 111(d) Rules. Senator Manchin was our keynote 
speaker. We tried for weeks to get an EPA speaker to come to 
our conference. We started off with Janet McCabe and kind of 
kept working our way down. And we were unsuccessful in having 
them come to our State. So it is frustrating.
    As everyone knows, we have a big basketball game coming up 
on Thursday night in Cleveland, Ohio. I thought today would be 
a good chance to not only talk about the Wildcats and the 
Mountaineers on the court, but let's talk about West Virginia 
versus Kentucky. I guess I would call my testimony a tale of 
two States; why West Virginia is losing the battle for our 
energy future.
    In Kentucky--I think we all saw the Senate race last year 
where Senator McConnell and Alison Grimes were fighting about 
who hated the EPA the most. Most recently, Senator McConnell 
encouraged States to not cooperate with the EPA in the 
implementation of the 111(d) Rules. So we have that going on at 
one level.
    But within the State of Kentucky, there's a tremendous 
bipartisan effort going on led by Governor Steve Beshear, a 
Democrat, and Congressman Hal Rogers, a Republican.
    Several years ago, Governor Beshear started on a policy of 
an all-of-the-above energy strategy in the State of Kentucky. 
And most recently, he and Congressman Hal Rogers have 
encouraged the SOAR project which is shaping our Appalachian 
region. 1700 people showed up for the SOAR convention in 
Pikeville, Kentucky on the issue of the 111(d) Rules. They were 
basically talking about the future of Kentucky, moving toward a 
different future and having a broad bipartisan support taking 
on these tough issues of a transition.
    On the 111(d) Rule, Kentucky was one of the leading States 
in the country. They shared a white paper with the EPA in 
October 2013 saying we know these rules are coming down the 
road and this is what's going to work for Kentucky. These are 
the things that we need to make this rule work for Kentucky. We 
are going to have a disproportionate impact, but these are the 
rules. Kentucky became a national leader in terms of a State 
getting out in front on the 111(d) Rules. We invited John 
Lyons, the head of the Energy and Environment Cabinet for 
Kentucky, to come to our conference back in February a year 
ago.
    Now let's look at West Virginia. We have no comprehensive 
energy planning in this State. Our legislature just recently 
repealed the renewal portfolio standards, which would have 
encouraged renewal energy. They are rolling back net metering. 
And while many utilities around the country were selling off 
their coal plants for pennies on the dollar, in West Virginia 
we're buying additional coal plants and putting them into our 
rate base and actually paying more than their fair market value 
for them.
    I understand Charles Patton is talking about the interest 
of AEP and diversity. Well, we're not seeing that diversity in 
West Virginia. The AEP subsidiary, Wheeling Power, just 
acquired the Mitchell plant. The AEP subsidiary, Appalachian 
Power, just acquired the Amos plant. Mon Power acquired the 
Harrison plant. These are all plants--for our foreseeable 
future, most of our electricity is going to be generated by 
coal. We're not seeing any event--any fuel diversity. We're not 
seeing any of the effects of the shale gas revolution.
    We're not really sharing in those lower energy prices. Both 
utilities operating in West Virginia filed for double-digit 
rate increases last year. And that's before we get to the 
impact of these coal plants being added to our rate base and 
the increase in compliance caused under MATS and of the 111(d) 
Rules.
    Our response on a legal front is, our attorney general has 
filed a lawsuit joined by 11 other States to destroy the EPA 
rule in court. We've joined the Murray Energy lawsuit. I don't 
think the courts are going to be able to stop climate change, 
and I don't think litigation is a climate change strategy, as a 
compliance strategy.
    What's frustrating is it doesn't need to be this way. As 
Jeremy Richardson just mentioned, I think West Virginia has 
tremendous potential. We are sitting on top of the Marcellus 
shale. We are an energy State. We should be winning the energy 
war. We have more resources at our disposal than does Kentucky 
with the availability of natural gas, renewables. We have 
virtually untapped energy efficiency. We are rated number 46 in 
the Country by the American Council for Energy Efficient 
Economy in terms of our energy efficiency commitment. And we 
can do better.
    As my testimony mentions, I think the whole issue of 
reducing greenhouse gas emissions really cries out for a 
legislative solution. I don't think the Clean Air Act is a 
great fit. I have concerns about 111(d), and I certainly have 
concerns about 111(b) that cries for a legislative solution. 
But I don't know that we're going to be able to get that 
solution. We're doing the best--I think the EPA is moving 
forward with the statutory authority on the Clean Air Act. They 
have the authority to do that.
    But a legislative solution would be better because there's 
no question West Virginia is getting hit disproportionately 
hard. But there's limitations on what an agency can do to 
address those desperate impacts. A legislative solution could 
address that.
    In closing--I don't know how the Mountaineers are going to 
do Thursday night. I'm very hopeful we'll be competitive. I 
think on the basketball court we'll be competitive. I worry 
that on the energy front, West Virginia versus Kentucky, I 
worry that we're losing that war. And we should be winning that 
war.
    Thank you very much.
    [The prepared statement of Mr. Van Nostrand follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    
    Senator Capito. Thank you very much. And, boy, they did 
look good last night, didn't they?
    Our final witness is Charles Farmer who is president of 
Rouster Rope, Wire and Rigging, a small business here in 
Raleigh County. Welcome, Mr. Farmer.
    The process is basically a 5-minute synopsis of your 
testimony, and then we're going to move to the question 
portion. Welcome.

 STATEMENT OF CHUCK FARMER, PRESIDENT, ROUSTER WIRE, ROPE AND 
                            RIGGING

    Mr. Farmer. Thank you, Senator Capito, Representative 
Jenkins and panel. Thank you for having me here.
    I hope I represent our State very well, but especially the 
southern part of West Virginia. Twenty years ago, I got into 
the rigging business for the logging industry. We saw them 
leave because of regulation insurance. We are not tied 
completely to the mining industry. But a devastating amount of 
loss of work has happened here.
    The EPA MATS 111 regulations have an effect on small 
businesses which you generally don't see. We had over 170, 80 
mines a year ago. Now we're down to 70, 80. We've lost a lot of 
revenue in our counties for road building particularly. I don't 
know how many of you have been between here and Kentucky, in 
Raleigh, Wyoming, McDowell, Mingo Counties and seen the 
absolute devastation of the economies and loss of business.
    The EPA is making good headway, which we support, for clean 
air and the environment. In a regional timeframe, that would be 
good. But as they press harder and harder to adapt to stricter 
and stricter regulations, we see people leaving here, and a 
work force they are going to be very hard pressed to replace.
    Our good customers, such as AEP, the United Mine Workers, 
and their workers and the mines here, have lost more than what 
we will. We've seen their plants--Clinch River, Glen Lyn, 
Kanawha River, Sporn. The regulations are pushing people out of 
work and leaving this industry. Our revenues are killing us.
    My business is going down instead of going up in this 
wonderful economy that we have. I'm a petroleum engineer from 
West Virginia University. I've lived all over the world. I came 
back to West Virginia to make a difference in this community 
and to employ people in this town to try to make a difference 
and diversify our economy away from the extractive industries.
    Again, I'll go back to the southern part of West Virginia. 
I don't know how many of you travel down there. But that's some 
of the steepest, roughest, uninhabitable terrain to build 
businesses, plants. Without removing the mountaintops, there is 
really no place to put people up out of the flood zone, not 
even to put the businesses here.
    The infrastructure to get there--piping, water, electricity 
is extremely expensive to build that infrastructure here, which 
we support. The line transmission work, the gas and pipelines. 
But we continue to see interference. The delays and delays and 
delays of the projects, and the target moves and moves and 
moves, and the timeframe gets shorter. Our customers do not 
benefit from such haste to prove to the world--America is 
showing the way.
    We had friends come back from China here in the past month 
in the coal industry. And they can tell you in their coal 
industry, they are running zero scrubbers on their plants. And 
we think this is an unfair advantage to the people whose 
economies are growing and ours are shrinking. It goes to all 
industries.
    Now, 20 years ago, we had great hope for this place. But we 
see our customers moving down--Caterpillar left here this past 
year with 120 jobs in the mining equipment business. Our miners 
have had to become workers in the salt mines in Louisiana, and 
elsewhere. There is no work for them.
    I hope that you will remember that the terrain here is not 
very conducive to building large plants and building new towns 
that are not actually in an area of danger from the environment 
that we continue to face.
    When we got into the mining industry, there were so many 
tons of mines built. And through market forces and speculation, 
a lot of the mining grew. And like in the oil and gas industry 
now, our gas industry down here is going to be faced with 
regulations with the escape of methane. And I have drilled many 
wells.
    When you get into productive gas well drilling, it's 
inevitable to get the gas away from the rig. It's a very 
dangerous situation. At some point in time, we feel like 
through these regulations, they're going to drive what is now a 
very expensive proposition--it takes $5 million to $6 million 
to drill one of these Utica/Marcellus wells. We can only 
imagine what the regulations are going to do to the gas 
drilling in Southern West Virginia. Our recounts are already in 
half. We are already seeing people going bankrupt and leaving 
the business because of market forces. But regulations are 
going to put a lot more pressure on them.
    Again, we've seen our customers, such as this panel, spend 
billions of dollars to upgrade only to have the target moved 
again. The compliance efforts of these people have been 
Herculean. We applaud their efforts because we know the power 
companies are dedicated to finding a way to produce energy 
without coal. Without coal, I don't think our southern part of 
the State can survive in any way shape, form or fashion.
    My contemporaries I work with do not think the Federal 
Government has any interest in the viability of this industry 
in the Appalachian basin. We feel like we're being put upon in 
an unfair competition against the world who does not adhere to 
what we're trying to do. We feel like their efforts--the 
Federal Government efforts should be to work with those people 
overseas to get some kind of equal playing field.
    We're not asking for subsidies. Our company will diversify 
and continue to adapt. But to adapt is becoming an extremely 
difficult situation for Rouster Wire, Rope and Rigging. If a 
company here in town is spending $10,000 a month on energy and 
we get a 26 percent increase in energy, you're looking at one 
or two more employees that I could be putting to work. Take all 
the tax--I mean, off the dole and actually be constructive 
citizens of Southern West Virginia.
    As we see our OEMs, our original equipment manufacturers, 
slow down--we're not talking about 4, 5, 10 jobs at Rouster 
Wire, Rope and Rigging. We're talking about hundreds of jobs 
from the ground to the top, to the finished product, to when 
that machinery goes into production. It's going to hurt our 
southern part of West Virginia worse than anything.
    We do want a clean environment. Being fathers and 
grandfathers of children here, we definitely want a clean 
environment. We need consistent, long-term goals that don't 
crush our economy here in Southern West Virginia.
    Thank you very much.
    [The prepared statement of Mr. Farmer follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Senator Capito. Thank you, Mr. Farmer.
    Thank all of you.
    We're now going to move to the question portion. I am going 
to start--there's lots to talk about here.
    I want to start with Mr. Patton. I want to talk about the 
reliability issue because coal is our baseload fuel in this 
country. And if we don't have the baseload, then we can't peak 
when it's really cold or it's really hot or where there's an 
outage or there's a flood or there's something that's happened 
in another region of the country that--or the region that is 
hampering our ability to get power.
    And coal certainly is that baseload. It's secure. I read in 
your testimony where you can store it right on the facility. 
You don't have to look for it to come in maybe through a 
disrupted pipeline or something like that, or whether the sun 
is shining or the wind is blowing. It's there. Coal is there. 
It's solid.
    Let's go back to the polar vortex of last year. I 
understand at AEP there were--that you were peaking at maximum 
capacity. If that were to happen in, say, 2 or 3 years from now 
when you've taken your coal plants down, it could have a real 
effect on the reliability of our power generation. Could you 
speak to that issue?
    Mr. Patton. Yes. Thank you, Senator.
    So first of all, just one point of clarification to 
comments that were made previously about Appalachian Power 
Company. And it is related to your question.
    Appalachian Power Company transferring coal plants to serve 
its customers in West Virginia. Yes, we did. I'm very proud of 
transferring those plants. Because those plants were the 
cheapest options for our customers.
    It's important to understand in this conversation around 
natural gas--and natural gas is a rich, abundant resource. And 
it is the fuel--it is affordable fuel. It is. The price and 
availability of that fuel is indisputable.
    The reality though is that if you have a coal plant and it 
is a coal plant that meets current EPA standards, that coal 
plant is very competitive with natural gas. Because coal on an 
MMBTU basis is still a cheaper fuel than natural gas.
    The difference is the capital cost associated with building 
a new coal plant with all the environmental requirements versus 
the cost of building a new gas plant.
    So the coal plants that Appalachian Power Company has 
transferred to serve its customers in West Virginia--or have 
been transferred because we believe that--to your question--
that those plants are both reliable and they are affordable and 
the best option for our customers.
    To that end, last year the polar vortex, which received a 
lot of attention--at Appalachian Power Company, we set an all-
time peak. But what is not known for most people is this winter 
it did not get the attention of the polar vortex, but we broke 
last year's record. This February was actually colder than last 
year. Both last year and this year, every plant that 
Appalachian Power Company has--every coal plant was running--
was up and operating.
    The Glen Lyn plant, which will not be here next year. The 
Kanawha River plant, which will not be here next year. The 
Sporn plant, which will not be here next year. Cameron, which 
will not be here next year. All of these plants were running. 
I'm sorry. Not Cameron. But all of the APCO plants were running 
this year, and they will not be available next year or in the 
near future until we can build additional capacity.
    The PJM, which is the governing body, tells us that they're 
at sufficient capacity. If there is sufficient capacity, why 
would we have to run every one of our units whenever we get 
into these peak conditions?
    Senator Capito. I think that's a real concern certainly 
where the replacement for this power generation could possibly 
come from.
    Just as a side comment, in your statement you talk about 
the cost of--well, you talked about it a little bit here--
building a new coal-fired power plant, building a new natural 
gas plant. Well, it's not like these things can occur overnight 
either. What's the length of time--let's say you were going 
to--decided to build a natural gas plant in the Wheeling area. 
How long would that take--just real quick--expensive-wise and--
a 10-year project?
    Mr. Patton. No. Once you get permits, I would say you could 
build one in probably--it's probably about a 3-year process.
    Senator Capito. Once you get permits?
    Mr. Patton. Once you get permits.
    Senator Capito. What's the time for the permit?
    Mr. Patton. Well, when I say 3 years--3 to 4 years, you can 
get permitted and build a natural gas plant.
    Senator Capito. What is the approximate cost of something 
like that?
    Mr. Patton. A natural gas plant--to give you a common 
benchmark, a thousand megawatt gas plant would be about $1.3 
billion.
    Senator Capito. Mr. Trisko, let's talk about the EPA's 
legal authority that sort of came through everybody's 
testimony. You know that there's four building blocks. And for 
those of you in the audience, that's what the Clean Power Plan 
is based on, EPA's four building blocks. But building block one 
seems to fit within the EPA's traditional authority to regulate 
emissions at the source.
    But is there any legal basis for EPA to regulate natural 
gas dispatch requirements?
    What that means is, in this Clean Power Plan, they're 
saying--the way I understand it, the natural gas plant has to 
dispatch at 70 percent. Is that your understanding?
    Mr. Trisko. That's what the rule proposes.
    Senator Capito. And presently they're dispatching at, what, 
51 percent or something like that?
    Mr. Trisko. Yes.
    Senator Capito. So do you think there is legal basis for 
the dispatch for the Renewable Portfolio Standard, or to order 
reductions in energy demand on customers?
    Mr. Trisko. Senator, those are all very good questions. Let 
me start at the top. Building block No. 1, the 6 percent 
efficiency improvement for coal plants. Even the author of the 
study that EPA relied upon for that 6 percent efficiency 
improvement has disclaimed the study for purposes of EPA's 
application of the study findings to this rule. Six percent has 
been roundly denounced in the comments EPA has received as 
being unachievable. The figures I hear most commonly are in the 
order of 1 to 2 percent. It's realistic estimates.
    Now, that would be an inside-the-fence reduction. That is 
what the UMWA urged EPA in a number of meetings that we held 
with the agency prior to the proposal of the rule. We said 
figure out what you can get from existing plants inside the 
fence. Send the engineers in, boots on the ground. Consistent 
with what EPA is required in its new source, Backed Guidance, 
by the way. And that went through an EPA stakeholder process 
for over a year. The agency chose to go far beyond the inside-
the-fence approach.
    Now, it starts with the natural gas dispatch requirement. 
To the extent that a coal-based facility has an existing gas 
combined cycle facility located within its fence line, then I 
would say arguably EPA has authority under Section 111(d).
    But to the extent that another utility in another part of 
the State happens to have an existing natural gas combined 
cycle unit, then I don't see 111(d) as providing the authority 
for EPA to require that redispatch requirement.
    Now, Senator, a key phrase in Section 111(d) is a standard 
of performance. Now, this is classic throughout the Clean Air 
Act, a standard of performance. I am at a loss to find within 
the penumbras of previous EPA regulation regarding existing 
source performance standards or new source performance 
standards requirements related to increased residential energy 
efficiency.
    I am at a loss to find authority linking 111(d) to 
renewable energy standard requirements. There's good reason for 
that. Because under our Federal system, Congress has seen fit 
to allow the States to determine based upon their own 
individual social, economic, political characteristics the 
extent to which they would pursue energy efficiency programs or 
renewable energy standards.
    As noted, West Virginia had its own renewable energy 
standard on the books for a period of time and just recently 
chose to repeal that standard. Other States similarly have 
moved in the direction of revising their renewable energy 
standards. Quite a number of States have chosen not to adopt 
them. This is an effort by U.S. EPA, in effect, to require 
those States that have chosen for their own reason not to 
pursue renewable energy standards to impose them under the 
rubric of Section 111(d).
    I don't find the statutory authority for it. And I'm 
hopeful that the D.C. Circuit will likewise be doubtful of it, 
and ultimately the Supreme Court will affirm.
    Senator Capito. Thank you.
    Mr. Farmer, thank you for coming. Thank you for investing 
in West Virginia as a West Virginian. I think one of the most 
frustrating things for me is just the seeming inability for the 
EPA to actually look at what the economic impacts, you know, in 
regions has been. I just think that they have by the fact--as 
we shared, they haven't come and listened to us. They don't 
know about the thousands of miners that have already lost their 
jobs. Certainly, in Eastern Kentucky where Hal Rogers 
represents, they've had thousands of jobs lost there. And in 
Southern West Virginia, again, thousands of jobs.
    Could you just--and you alluded to this in your statement. 
But I really would like to get on the record what your 
employees--how do they feel about knowing that they're on pins 
and needles as to whether they're going to have a job when they 
know that policies emanating from the President and the 
executive branch are really not listening to them, not seeming 
to even care, about what a particular region of this Country 
and how devastating policies that--as you said, tight 
timelines, unachievable deadlines. I mean, this has got to be a 
daily conversation in your building--buildings.
    Mr. Farmer. Senator, I appreciate the opportunity to be 
here again. I again apologize for being late. 30 minutes before 
I was here, I looked like a coal miner. When Hampton called me, 
I had to rush and get a shower.
    Our guys--we have a great, and have had a great work force 
here in Southern West Virginia that's provided energy and 
timber for our war efforts. I think that one common thread that 
runs through the conversation from the aggregate companies to 
the pipelining companies to transmission distribution and power 
generation, people are worried about the world situation here 
in this little part of Southern West Virginia. How would we 
prepare ourselves for a war to generate power and make steel, 
very energy consumptive, extractive base industries? We're the 
people that pick this stuff up. We're the people that get this 
off--materials on the cranes to pick these things up, to tie 
them down, to move them across our roads.
    Our workers, Senator, are extremely worried of my ability 
to continue to provide jobs here in West Virginia which 
continue to shrink and contract. I don't think the world knows 
that much about our area down here and how rough it is. It's 
not--80 percent of the land south of Charleston is owned by 
large land-holding companies and coal companies and trusts. 
Eighty percent of the land north of Charleston is more held by 
private people.
    There's no opportunity for my workers to turn and go across 
town and get a job for $13, $14 an hour. Our average salaries 
are $20, $25 an hour. Our bosses with no education make 
$65,000, $70,000 a year. These jobs are not here. The 
regulations that we see--we're intimately associated with the 
power generation, transmission, distribution business.
    If I recall right, Mr. Patton, when you-all built the 765 
KV line from Oceana to Jackson's Farm, Virginia--from the time 
of conception to the time of first caisson was drilled, it was 
like 10 years. I don't know if that's a fact or not.
    Mr. Patton. More like 14.
    Mr. Farmer. Fourteen years from time of conception through 
the public comment period to constructing the first yard of 
gravel. By the way, that was our first large rigging job for my 
company. It gave me two more employees. And we thank you. But 
now, not only them, but we're worried about our gas line, which 
is what we're focused on this year.
    We don't think that the regulations and--the permitting and 
the regulations that are going to be forced upon them through 
the EPA are going to allow us to continue--possibly not even be 
working here in 5 years. Thank you, Senator.
    Senator Capito. Thank you. Congressman Jenkins.
    Representative Jenkins. Thank you, Senator.
    A couple of questions. First, Dr. Richardson, good morning 
and welcome. From your comments, I think I heard you say--and I 
just want to make sure. You think what the EPA has proposed is 
quote, not bold enough?
    You think the EPA should actually be going further on their 
carbon and their greenhouse gas emission standards?
    Mr. Richardson. That's right. Thanks for the question.
    If you look at the science of climate change and you look 
at the magnitude of the problem, it really is urgent to bring 
down our carbon emissions more so than what the proposed 
regulation would accomplish.
    The analysis that we did at UCS shows that in terms of the 
renewables building block, that the agency actually 
underestimated the potential nationally for renewables to play 
a part in what they proposed.
    Representative Jenkins. The progressive budget has for the 
last several years contained a provision for a carbon tax. And 
in the language in the progressive budget, it specifically says 
through the imposition of a carbon tax, it will have the 
ability to impact the weather and address significant storm 
potential.
    Do you agree, one, with the belief that a carbon tax is a 
good mechanism by which to influence change, vis-a-vis electric 
power generation through the use of coal?
    Do you support a carbon tax?
    Mr. Richardson. I would say that in general UCS's agnostic 
about the particular policy mechanism. But I think that we 
would absolutely agree that a price on carbon is essential.
    I think that one of the most frustrating things for me is 
to hear people talk about how cheap coal is. Because if you 
look at the externalities from the extraction of coal, the 
transportation of coal, the burning of coal, the pollution that 
it releases when it's burned, the ash that's left over after 
it's burned--it has a huge impact on not only on the 
environment, but public health. And if you were to add up all 
of those extra costs that are not included in the price that 
you pay for your electricity, it would double or triple the 
price of coal-fired electricity.
    So I think that the point of having a price on carbon would 
absolutely send a signal that, look, it shouldn't be free to 
dump this substance into the atmosphere.
    Representative Jenkins. You raised during your comments, 
Williamson, West Virginia and held it out as a community leader 
in addressing health issues. Just in the last couple of weeks 
Williamson Hospital announced that they are going to stop 
delivering babies. No OB services in Williamson, West Virginia.
    How do you look at a resident in Mingo County and an 
expectant mother who historically has gone to the local 
hospital, readily accessible, and faces now the impact of not 
being able to have a baby delivered in their own home 
community?
    Mr. Richardson. I think that if you--again, I'm from the 
northern part of West Virginia. I think that if you look at 
Southern West Virginia as a whole, there's a whole series of 
issues that come into play when we talk about the economy.
    The subject of this hearing is just one of those things. 
Absolutely, there is an issue with the availability of health 
services. And healthcare in Southern West Virginia is a huge 
problem.
    Representative Jenkins. As you tried to hold out Williamson 
as a leader in healthcare, transition or transformation, I'm 
just trying to provide a little reality check that this is a 
community and a people that are really struggling.
    Mr. Van Nostrand, again, welcome to you.
    Mr. Van Nostrand. Thank you.
    Representative Jenkins. You mentioned in your comments 
twice bipartisan in comparing Kentucky to West Virginia. I 
think you did it in a context of promoting--look what they're 
doing in Kentucky, bipartisan, bipartisan, twice.
    We've got a Democratic Governor in West Virginia. And 
overwhelmingly within the West Virginia legislature, led by 
Republicans. Both Republicans and Democrats led the charge, 
again, signed by a Democratic Governor for the repeal of the 
renewable energy portfolio. Wouldn't you acknowledge that the 
issues relating to our advocacy has been a bipartisan effort in 
West Virginia?
    Mr. Van Nostrand. Well, certainly we have a split in 
parties and control in West Virginia. I think the point I was 
making about Kentucky was the bipartisan effort to start the 
conversations, to have the issue. You look at the shaping our 
Appalachian region process--it's going to be another conference 
in a couple months from now--and you've got this--a Democratic 
Governor and Republican Congressman who are starting those 
conversations in Kentucky and talking about the future.
    I think it's been effective. I think they're much further 
down the road of a future. And they don't have the benefit of 
Marcellus shale. They don't have the benefit of a great energy 
resource. We should be a better energy State than Kentucky.
    So, yes, I understand--I acknowledge that we have a 
Democratic Governor and legislative control by the House. But 
we have--I was talking about the Federal and State level. Just 
the fact that you can have two U.S. Senators battling for that 
position, Mitch McConnell and Alison Grimes. But the--while 
that's going on--in a Senate race, you've got this action going 
on between a Democratic Governor and Republican Congressman to 
start those conversations.
    That's my point. We really need to start those 
conversations in West Virginia.
    Representative Jenkins. Are you thinking those 
conversations are not already being had about the future of 
West Virginia?
    As a former member of the legislature, we talked about 
Marcellus shale. West Virginia was a leader in establishing 
legislative policies relating to how we're going to, in an 
appropriate way, seize that energy opportunity. We are talking 
about the south and issues relating to the future of Southern 
West Virginia. So when you say I think West Virginia should 
start--I think you're not giving credit for the kinds of 
efforts and discussions that are already being had.
    Let me ask you--you also pointed a finger at West Virginia 
relating to the suit against the EPA. You and I are both 
attorneys by education. Never ask a question you don't know the 
answer to. Is Kentucky one of the States that is suing the EPA?
    Mr. Van Nostrand. Yes, they are.
    Representative Jenkins. I thought they were.
    Mr. Van Nostrand. I don't deny that's going on at one 
level. The question is, while you have these positions being 
taken at one level, is there hard work going on behind the 
scenes to figure out how we're going to make this work for our 
State?
    That's happening.
    Representative Jenkins. Chairman Rogers, the chair of the 
committee I serve on, appropriations, is passionate, 
passionate, and you give him credit for SOAR. I too give him 
credit. But he is as articulate and as passionate and as 
bulldogish as they come in fighting the EPA in standing up for 
coal.
    You can walk and chew gum at the same time. You can talk 
about the future, but you can also be a passionate advocate for 
coal.
    So I'm having a difficult time when you compare Kentucky 
and West Virginia. Kentucky is suing the EPA. Kentucky is 
representative and Congress is fighting the EPA. Kentucky and 
West Virginia in a bipartisan effort are standing up for coal.
    So while you can point to a program or project, I think you 
can--a fair analysis, you can find that West Virginia too is 
looking to the future.
    Mr. Van Nostrand. I guess I would still go back to Governor 
Beshear a few years ago talking about an all-of-the-above 
energy strategy which really looked at, not just coal, but also 
taking advantage of that State's renewable resources--that 
State's energy efficiency resources, that kind of leadership 
going on. And we have not had--I mean, the steps our 
legislature is taking in the last couple of years--the last 
year, we're moving in an entirely different direction.
    Representative Jenkins. In a bipartisan effort?
    Mr. Van Nostrand. Not this year. We have a Democratic----
    Representative Jenkins. Do you know what the vote in the 
House and Senate----
    Mr. Van Nostrand. I testified on the----
    Representative Jenkins. Was that not bipartisan?
    Mr. Van Nostrand. Yes, it was.
    Representative Jenkins. Did the Governor sign the repeal of 
the Renewable Portfolio Standard?
    Mr. Van Nostrand. Yes, he did.
    Representative Jenkins. Is he a Democrat?
    Mr. Van Nostrand. Yes, he did. He also signed the bill to 
wind down that metering.
    Representative Jenkins. Thank you.
    Senator Capito. Mr. Trisko, quickly, on the MATS Rule that 
is the rule that was put into effect in 2008--is that----
    Mr. Trisko. 2011, Senator.
    Senator Capito. 2011. Excuse me.
    How has the implementation of the MATS Rule impacted the 
UMW?
    And do you expect similar impacts from this Clean Power 
Plan to affect the United Miner Workers and their work force?
    Mr. Trisko. Thank you, Senator.
    When the MATS Rule was initially proposed, the UMWA 
estimated potential plant closures amounting to 56,000 
megawatts of capacity. Largely, the smaller and older 
generating plants, such as Kanawha River, Sporn, they would not 
be able to afford the capital expenditures for the investment 
and compliance with MATS. At the time, EPA indicated that their 
estimate of retirements due to the MATS Rule was 4.7 gigawatts. 
So we were pretty much in order a magnitude apart in our 
estimates.
    A number of years went by. Other studies were done by Wall 
Street, by other consulting firms. And the consensus estimate 
of closures as a result of the MATS Rule--and this will 
continue through about the year 2017. There are 1- and 2-year 
extensions available under that rule--are on the order of 50 
gigawatts of capacity.
    You will have another 20 or so gigawatts that will retire 
for any reason--a number of reasons; lower natural gas prices, 
reduced industrial demands, so on and so forth. Those two 
numbers, 50 gigawatts for MATS and another 20 make up the 70-
plus gigawatts that EPA indicates will retire apart from the 
Clean Power Plan.
    Now, Senator, if I might, there's been a missing element 
within this discussion as it relates to reliability and the 
impact on coal. We are not appropriately considering at this 
point the potential impacts of EPA's revision of the 8-hour 
ozone standard. The comment period on that rule closed last 
week. EPA has proposed a range of 65 to 70 ppb. The current 
stand is 75 ppb. They're also put forward an alternative 
standard of 60 ppb.
    EPA's regulatory impact analysis indicates that at the 65 
ppb proposed standard, 51 gigawatts of coal capacity--which are 
identified in the docket in this rulemaking--are subject in 
EPA's view to potential retrofit of selective catalytic 
reduction technology, SCR. It's like the catalytic converter on 
your car, except it's the size of a house and it costs a couple 
hundred million dollars.
    EPA likewise has identified that many of these units 
subject to SCR requirements are older and smaller units. We 
believe it more likely that those plants would retire rather 
than invest in SCR capacity. So, in effect, we are looking at 
yet another 50 gigawatts or 50,000 megawatts of potential 
capacity shutdowns between now and roughly the year of 2023. So 
that would bring the total--taking it from 122 gigawatt 
reduction from EPA's regulatory impact analysis, it would take 
it above 150, in the direction of 170 gigawatts. Our total coal 
fleet is just over 300 gigawatts.
    Frankly, Senator, I do not know how this Country keeps the 
light on with the loss of 150 or more gigawatts of coal 
capacity. That represents more than 20 percent of our total 
electric generation when you consider the generating capacity 
of those facilities.
    Senator Capito. Thank you. I wanted to talk a little bit 
about the letter that Senator McConnell wrote. I think, 
Professor, you might have talked about it. My reading of the 
letter basically says every State has to have a State 
implementation plan. I asked Administrator McCabe if the States 
do not have a State implementation plan, what happens. And she 
said the EPA will make the implementation plan. Which sent sort 
of the wrong kind of chills down my spine.
    But in any event, I think McConnell's point is, if you're 
going to impose certain standards on every State and the State 
has to come up with the State implementation plan, the State 
makes the difficult decision--the State says we're going to 
close this many power plants, your work force is going to be 
cut, you know, and the difficult, hard--at the community level, 
employment level, price and cost of electricity level are made 
at the State.
    I think what McConnell is saying is if the EPA wants to go 
in this direction and they're federally allowed to do it, then 
they're the ones that are going to have to be the ones that 
make the tough decisions. The EPA is going to be the ones 
that's going to tell West Virginia how we're going to meet a 
standard that we basically don't think we're going to meet.
    Which leads me to a whole other issue, which is the 
regional issue. You mentioned it, I think, in your statement. 
The plan allows for you to be able to go to different regions 
so that you could maybe capture certain statistically 
reductions from your regions. We've been discussing our region. 
We're 95 percent reliable on coal. We export our coal. We 
export our electricity. Who is going to want us in their 
region?
    I mean, our numbers are not going to improve anybody's 
numbers. So we're going to be in an island here. I'll quote Mr. 
Richardson when he says, It must be recognized that job impacts 
will be unevenly disbursed. Some regions and States will be 
winners--I appreciate your frankness here--and others will 
experience economic consequences with a shift away from coal.
    I understand basically there's winners and there's losers. 
And we are in a really difficult position here in our State.
    So I think that's why McConnell--and if you would like to 
respond to the McConnell letter, Professor, I want to give you 
that opportunity since I brought it up and that was part of 
your statement.
    Mr. Van Nostrand. I understand the position the Senator is 
taking. My point is, I think--those are tough decisions. But I 
think the States know better. I think our goal--we had our 
conference back in February a year ago. Our goal is--what 
flexibility is EPA going to provide us?
    Because our goal is to try to figure out how to comply with 
this rule in the manner that has the least disruption on the 
economy. What is our lowest cost compliance path?
    And I think the States know that better than EPA. So I 
think the States ought to try to work with the EPA, first, to 
shape this rule.
    In response to what Mr. Trisko said, this is a proposed 
rule. The final rule is going to come out in December. It could 
look entirely different in terms of--and there's nothing that's 
required by these building blocks. The building blocks were 
used to come to the best emission reduction number, the 20 
percent number for West Virginia. There's no requirement. The 
building blocks were a tool used by EPA.
    The final rule is going to come out this summer. I think 
the States--because we're in a better position to know what's 
going to work, we ought to be taking advantage and try to work 
with EPA and--because a Federal plan is going--they don't know 
the State as well. Chances are the compliance costs are going 
to be higher, so our utility rates are going to be higher than 
they need to be.
    Mr. Richardson. If I could just add. One of the things I 
was trying to emphasize with my testimony was that it is 
absolutely critical that we work to diversify our economy here. 
It just doesn't make sense to have all of our eggs in one 
basket.
    I can tell you as well as anybody in this room how proud I 
am of my heritage, my family's heritage mining coal. OK. But it 
just doesn't make sense to have our entire economy based on one 
thing that is subject to these boom-and-bust cycles.
    Think of it in terms of a risk framework, right?
    So you don't want to risk things moving forward and 
changing that you don't have control over, whether it's who is 
sitting in the White House or whether it's how much coal China 
decides to burn. They're working on burning less coal over the 
next decade.
    So there's a lot of issues here that we don't have control 
over in Southern West Virginia. So what I'm trying to say is, 
why can't we build the solar panels? Why can't we build the 
components of the wind turbines going up?
    We can do that here in West Virginia. But we have to decide 
we're going to invest in that and in those different sectors of 
the economy.
    Senator Capito. I appreciate that.
    Let's go to CCS really quickly, carbon capture and 
sequestration. The EPA uses that as sort of a--what do I want 
to say--blunting of the effect of the regulations. Well, if we 
move forward on CCS--and I certainly have been a broad--and 
will continue to be a big supporter of the research and 
development of the CCS. Because I think for all the reasons 
we've talked about, coal still is going to have a role. Maybe 
we're disputing the largeness of the role. We think it still 
needs to have that good baseline, solid role that represents 
the fuel that it is.
    The EPA uses the Kemper plant in Mississippi--and you 
mentioned that in your statements--as the gold standard for 
CCS. Well, I just saw the president of--I think it's Southern 
Company owns that plant, over $2 billion cost overrun. They 
still don't have their sequestration protocol in effect. There 
are some--I think some great research is going on in terms of 
enhanced oil recovery and other things to use once you capture 
the carbon.
    But I know that since I had the Mountaineer plant in Mason 
County for many years, when I represented Mason County, they 
were doing a project on that plant on CCS with--I think it was 
Olstrum and the Department of Energy. They had to pull the plug 
on it. Give us the top two reasons why, please, Mr. Patton.
    Mr. Patton. Well, it was simply a pilot project. And when 
we looked at scaling it up, the cost of it was just prohibitive 
at that time. As you pointed out, the Kemper station in 
Mississippi is somewhere north of $7,000 a kw. So if you were 
building a thousand megawatt plant, it would be $7 billion--
over $7 billion plant. And a new combined cycle gas unit, as I 
said earlier, is $1.3 billion. So the technology----
    Senator Capito. It's just not economically feasible?
    Mr. Patton. It's not economically feasible.
    Senator Capito. Not to say it never will be?
    Mr. Patton. Right. And we should continue to invest in 
technology to ensure a long and bright future for coal.
    But one thing important to note here is that--we keep 
talking about--you go from coal to renewables to solar to 
energy efficiency. And all of those things are great. I believe 
that they should be a significant part of a utility portfolio. 
And Appalachian Power Company and AEP is moving--as I pointed 
out in my testimony, if you look at our overall coal 
consumption, it has dropped. But there's a cost--not only to 
those technologies, which are more expensive. There's also a 
cost of abandoning operational facilities that serve customers.
    So to willy-nilly just say we're going to stop using these 
coal plants and we're going to go and invest in a bunch of 
windmills and solar panels and have our customers pay for the 
coal plants that we abandon, and to pay for the solar and the 
windmills is just not--it's crazy. It's not what you're going 
to do.
    The other thing is that renewables--again, they're an 
important part of the portfolio. But the wind doesn't blow all 
the time, and the sun doesn't shine all the time. And the 
bottom line is, you need some type of fossil based or nuclear 
power to support solar and wind. You have to have those as 
backups.
    As we saw during the polar vortex, the wind didn't quite 
blow the way it was forecasted to. When I was president of the 
Texas company, there were a couple of times we came very close 
to outages in similar situations. So it's just important to 
keep that in mind. It's not a binary decision.
    Senator Capito. Thank you.
    Congressman.
    Representative Jenkins. Mr. Patton, let's stick with you. 
Let's try just for a second to--where the rubber meets the 
road. You've alluded to it in the last moment of your comments; 
price and availability.
    No. 1, once you convert a power plant away from coal, do 
you ever convert it back?
    Mr. Patton. You could under the right economic conditions. 
But you would not today convert it back. Because all you do 
with a plant that you convert is you convert the burners to 
gas-based burners as opposed to burning coal.
    Representative Jenkins. In your decisionmaking process, 
you've listed out several coal-fired power plants that are 
being taken offline, being mothballed. There are plants that 
are being converted. Is a significant--not total. Is a 
significant contributing factor to those business decisions 
that you were making the policies, the proposals, the actions 
from a regulatory standpoint from this administration and this 
EPA?
    Mr. Patton. Absolutely. The Kanawha River plant runs fine. 
It's just--it doesn't meet the EPA requirements.
    Representative Jenkins. Does it meet the EPA requirements 
as of today?
    Or meet the EPA requirements under a set of proposed rules, 
I know in multiple areas, looking forward?
    Mr. Patton. No. The Kanawha River plant falls in the group 
of plants that Mr. Trisko pointed out. It's one of those older 
smaller plants, which putting a scrubber on that unit does not 
make economic sense. It does not meet existing MATS 
requirements.
    Representative Jenkins. So this is death by a thousand 
cuts. We already have rules and regulations that have been put 
in place in recent years that are causing power plants that are 
already operational, working fine, just don't meet--and you are 
forced as a result to take those offline?
    Mr. Patton. That is correct.
    Representative Jenkins. With regard to the issue--and you 
referenced it in your comments earlier. I am very concerned, 
just as the Senator is, about the cost of energy on fixed 
income--predominantly seniors as a percentage of their 
household budget. You referenced over the last few years as a 
result of the new expenditures you've been required to make or 
the changes. Share with me, again, those numbers in terms of 
what it--what the price impact for a person's electric bill.
    Mr. Patton. With the $2.2 billion investment that we made 
at John Amos and Mountaineer plant--we spent approximately $2.2 
billion to comply with the MATS and also with the Cross-State 
Air Pollution Rules.
    Representative Jenkins. Let me make sure that I understand. 
So you have regulations that require you to make investments, 
2.2 billion. You are a regulated utility. You can't charge one 
penny more than what the Public Service Commission in West 
Virginia says you can pay. So when you make that $2.2 billion 
investment, do you then go to the PSC and say would you all--
here is a rate increase to cover these costs, and the PSC then 
says, yes, you're going to be granted authority to raise your 
rates?
    Mr. Patton. Yes.
    Representative Jenkins. Are the people paying for that $2.2 
billion of investment that you've already made in their utility 
bills?
    Mr. Patton. Yes, they do.
    Representative Jenkins. And those are for the regulations 
already. Have you estimated to any extent possible if the 
proposed rules would be implemented--and we've got testimony 
here that says they don't think the proposed rules go far 
enough.
    If these proposed rules as is get implemented, do you have 
a cost estimate that one of my constituents from Southern West 
Virginia would have to pay on an average utility bill?
    Mr. Patton. The numbers are broad throughout the Nation. 
Here in West Virginia, we would be looking at--just solely 
based on the--on the proposed rules, we would be looking at an 
additional 25 percent. That's not--that does not include things 
like the investment in transmission that's going on right now.
    Representative Jenkins. When you say--are you saying that 
25 percent may be the floor that it could be in--that the 
actual number when other factors are considered, the percentage 
increase might be more than that?
    I wasn't sure if I understood your last comment there.
    Mr. Patton. No. I can't--in fact, I believe I misspoke. I 
had to think about the number. In fact, it's not 25 percent. 
It's actually--I think the forecast for West Virginia is 
actually 15 percent, is what it is for West Virginia.
    Whether or not that is precise or it could be more, I don't 
know. I can just base it on the calculations based on the 
current proposal.
    Representative Jenkins. Finally--I heard it from Gina 
McCarthy. I hear it every time the issues of these rules get 
discussed. These are proposed rules. These are proposed rules. 
It's almost kind of a remain calm, don't worry about it. We're 
going to have to wait to see what the final--I can't imagine an 
administrative approach that is so calculating that would say, 
let's do something really strong, get everybody worked up in a 
proposed, and then we'll come in and back off and everybody 
will say, look, we dodged a more aggressive bullet. I can't 
imagine--shame on this administration if that was their 
approach. The fact from a--in your world, do proposed rules 
matter?
    Mr. Patton. Absolutely. Because they drive costs.
    Representative Jenkins. You're making decisions, are you 
not, literally every day, week and month about the future?
    You don't plan a week out. Don't you plan years out?
    Mr. Patton. Absolutely. Power plants typically have a life 
of 30 years. Therefore, you're making 30-year decisions. When 
you've made major capital investments, like scrubbers, you're 
typically looking at an additional 20 years associated with 
those types of investments.
    Representative Jenkins. So are you making decisions as a 
company with an eye toward what is being proposed in this rule?
    Mr. Patton. Oh, absolutely.
    Representative Jenkins. Looking ahead?
    Mr. Patton. Absolutely.
    Representative Jenkins. Proposed rules have consequences?
    Mr. Patton. They have consequences. In that I would suggest 
to you that much of the industry is hamstrung on really what 
it's going to do with some of its generation right now because 
there's so much uncertainty around what these rules will 
ultimately be.
    Representative Jenkins. Senator, if I could ask maybe one 
more to Mr. Trisko. Thank you for your leadership and your 
effort.
    The comment was made earlier by Mr. Richardson, special 
considerations for families is needed. Let me--I didn't delve 
into kind of what he meant by that. I think we kind of--
probably can believe what he's suggesting.
    From your perspective, from a representative of the UMWA, 
what sort of, quote, special considerations, do you think are 
necessary to help the hard-working coal miners of West Virginia 
get through this storm that they're faced with?
    Mr. Trisko. Congressman, that's a wonderful question. The 
answer is that we need policies that encourage the continued 
utilization of our Nation's greatest fossil resource. You know 
that the coal reserves in the United States have greater energy 
content than all of the oil in Saudi Arabia. We do not have 
policies that enable us to continue to utilize that. Rather 
than an all-of-the-above energy strategy, we appear to be 
headed toward a natural-gas-only strategy. That is an all eggs 
in one basket gamble.
    When we see the play out of the reduction of capital 
expenditures in drilling that is ongoing within the oil and gas 
sector, when we see the development of LNG export terminals, 
watch out for the price of natural gas and what your consumers 
will pay.
    As for workers, unfortunately, because our members tend to 
be among the highest wage and highest benefit of workers in the 
rural areas of Appalachia, the loss of one of our jobs is 
equivalent to the loss of more than three jobs elsewhere in the 
economy. Those jobs are not made up in alternative sectors 
because the alternative sectors do not exist.
    When you look at the impact in, for example, a school 
district of the closure of a power plant which is a major 
contributor to the tax base of the region, and the closure of 
the associated coal mines, you find a cliff. And the cliff is 
where the school district once had funds available to support 
its students. Those funds through its tax base are reduced by 
half or more.
    I was out in Colorado a few months ago talking to 500 folks 
in a high school gymnasium where they were addressing the 
prospect of a loss of a nearby power plant and coal mine. The 
president of the community college, a gentleman in his 70s, 
came up. He was one of the last to speak. He said ladies and 
gentlemen, let me tell you what it means to this community if 
we lose the Craig Power Plant and the Twenty Mile Coal Mine. I 
run these numbers every day. I live with these numbers. If we 
don't have that power plant--in fact, if we lose just one unit 
at that power plant, I cannot guarantee you that our community 
college will be able to remain in business and provide one half 
of the course offerings and faculty that we now have.
    This gentleman recognized clearly that the loss of those 
contributions to the local tax base, to the community college 
would not be replaced in rural Colorado. And nor will they be 
replaced in Southern West Virginia.
    Frankly, it's simply happy talk to suggest that there are 
solutions at the State or the Federal level. We've been at this 
since the great society and the Johnson administration and the 
Appalachian Regional Commission. The funds are not there in 
sufficient quantity to make up for the kinds of losses that we 
in the UMWA, the IBEW, the boilermakers and others are 
beginning to experience. I apologize for the length of the 
question, but my blood pressure increased.
    Representative Jenkins. I like it when I touch a nerve.
    Let me see if I can touch one more nerve. The 
Administration and their budget is throwing out a big figure, a 
billion dollars, to invest in impacted communities, West 
Virginia and other parts of the Country because of this agenda.
    I'm still confused a little bit because my curiosity is--
this is--where are they taking this money from to make that?
    On the one hand, I hear maybe that money is contemplated as 
a result of a tax on coal. Isn't that incredible? We're going 
to tax coal more and turn right around and say, isn't this 
great, we're going to give money back to communities, but we're 
going to try to kill coal through higher taxes in the first 
place. Or they want to take it from the abandoned mine fund.
    Do you know under the President's proposed investment where 
he is suggesting that money come from?
    And do you have an opinion as to whether this is a good 
investment considering the source of the funding from which it 
is being taken?
    Mr. Trisko. Congressman, I'm not an expert on the 
Administration's budget. There have been proposals to increase 
severance taxes on western coal and transfer those increased 
severance taxes east as a compensation mechanism. I suggest 
that you confer with your colleagues west of the Mississippi 
River as to their views on that proposal.
    But a billion dollars, put that in the context of the 
numbers cited in my testimony, the contribution of West 
Virginia coal, just the West Virginia economy, to your gross 
State output, it's about $15 billion a year. And we're talking 
about a billion dollars applied to coal generally. It's a drop 
in the bucket.
    Representative Jenkins. It's a billion dollars nationally.
    Mr. Trisko. It's really a drop in the bucket. Congressman, 
our investment in research and development technology that 
would allow us to successfully deploy carbon capture and 
storage technologies is a far better place for those 
investments. It's got to be a lot more than a billion dollars.
    A few years ago, we were looking at $150 billion in 
potential funds available for commercial CCS applications. Now, 
that did not come to pass for one reason or another. There are 
a number of bills in the Senate and in the House seeking to 
increase funds available for CCS.
    If you want to develop technology that will enable coal to 
be burned cleanly in a carbon-constrained world, CCS or CCUS is 
the way to go. But we must get to the lower cost second and 
third generation technologies. The first generation 
technologies that AEP applied at the Mountaineer plant proved 
themselves to be unduly expensive. And that's why they couldn't 
proceed to commercial deployment.
    We have to have sufficient resources available initially at 
the U.S. Department of Energy. And I'm talking far more than 
what was provided in AARA in order to enable those second and 
third generation technologies to be deployed.
    When we have those technologies, then coal will be able to 
compete effectively against natural gas on a CO2 
basis. That's the direction that we need to be headed.
    Mr. Richardson. If I could just add a clarification. The 
proposal that you were just mentioning was not an 
administration proposal. That was a Center for American 
Progress proposal in a report that they just released a few 
minutes ago that talked about fairness among Federal coal mine 
leasing royalties. So that was not an administration thing.
    The thing that you're thinking of, the billion dollars was, 
in fact, from a proposal to shift some of the money from--its 
existing money from the abandoned mine lands fund that has not 
been appropriated and actually spend it on communities here. It 
was a billion dollars over 5 years. It would require Congress 
to actually change how--the formula for how those funds are 
related.
    I'd like to add one other thing, which is that--it's going 
to be difficult to say this. But the truth of the matter is 
that a lot of the coal that--the resources that we have here in 
West Virginia, here in Wyoming, around the world, have to 
remain in the ground. OK?
    If you--there are recent studies out there that suggest 
that 92 percent of our current coal reserves must remain in the 
ground to give us any hope of avoiding the worst consequences 
of climate change.
    And what I'm here to tell you today is that is a clear and 
present danger. Not only to this Country, but to countries 
around the world. We're going to figure out a way to solve it 
one way or another. My deepest fear is that we're not going to 
solve this problem here in Southern West Virginia at the same 
time.
    I'm not making any--I'm not trying to be Pollyanna about 
it, that this is going to be easy or whatever. It's going to be 
very difficult. But we've got to figure it out.
    Senator Capito. I think, Dr. Richardson, in your statement 
you were very honest about that. I mean, I appreciate that. As 
you said, you have family from West Virginia, good roots in 
West Virginia.
    But I'm glad that Mr. Trisko talked about some of the other 
impacts. We've talked about job impacts and impacts on the cost 
of your electric bills monthly. But there is another impact. I 
know we have at least one county commissioner--we did earlier--
in the room.
    There is an impact to every single county budget. It's 
schools, yes. It's roads. It's a whole lot of other things. I 
can imagine, Mr. Farmer, when you pay your local taxes and as 
your productivity goes down, it's not just the coal mine, it's 
all the other businesses in and around. So it has a much 
greater effect to the whole community rather than those 
directly working in that business.
    Do you have any further questions?
    Representative Jenkins. I don't. Thank you.
    Senator Capito. I'm going to give the professor here one 
shot at telling me why you think that the direction that the 
EPA has gone--we heard Mr. Trisko's opinion on the legality, 
the legal authority. And you did mention in your statement that 
the preferable way is to legislate as opposed to regulate, 
which is what we're seeing, or executive opinions.
    Briefly, do you believe that EPA has the legal authority to 
go as far as they've gone with the four building blocks to 
bring forth the Clean Power Plan?
    Mr. Van Nostrand. Yes, I do. I share some of the concerns 
of Mr. Trisko in terms of whether or not this particular 
proposal is necessarily lawful because of the language in 
111(d) which refers to sources. I think you would need to go to 
actual limits on sources from power plants, and you would use 
the building blocks to determine how much can we reduce the 
level of emissions on a mass basis. And you would use the 
building blocks to figure out what that level is.
    That's why I do think there is going to be some changes 
when the final rule comes out. Because I think EPA made a lot 
of comment on the precise issues that Mr. Trisko mentioned 
going beyond--outside the fence. I think you can still get 
there by looking at the language in 111(d), and the sources, 
use the building blocks to figure out what kind of limits 
you're going to put on the power plants under 111(d).
    As you mentioned, the 111(b)--my comments also raised some 
concerns, and the Kemper plant is one of them. And I followed 
Senator Manchin's proposed legislation over the last couple of 
years as to whether or not the EPA can really preclude one of 
our energy sources through a rule that way and requiring CCS 
technology when it's really cost prohibitive and not really 
commercially available. I think that's--it's clearly causing 
disproportionate impacts.
    So it brings me back to the legislative solution which 
would have addressed the impacts around the country, the 
winners and the losers. I think the legislative solution is 
much better at doing that. I think the EPA to some extent has 
done that with the best system emissions reduction.
    Because we have a 20 percent reduction in West Virginia 
versus 30 percent under the rule. But there's limitations on 
how much relief they can provide to a region that's clearly 
going to be hit much harder than others.
    Senator Capito. I'm on the legislation with Senator 
Manchin. And by the way, he was extended an invitation to 
attend today. I know some folks from his office were here. He 
was unable to be here. So I want to make sure you all know that 
he's as concerned about being here today as we would like to 
have had him.
    I would say--in conclusion, I want to thank you all--we 
will keep the record open in case we have additional questions 
that we may submit to you in writing. I think we've had a 
really good discussion in a place where we should be having it, 
in Raleigh County, Southern West Virginia.
    All the impacts that Mr. Farmer, I think, talked about 
very--from his heart, very locally. The bigger impacts as you 
look at it more regionally, and then some of the global 
questions too.
    I would like to take the opportunity to say that we are the 
representatives. You know, this is going to say hokey corny, 
but we are the representatives of West Virginians. We are West 
Virginia's voice. And by hearing what you've said to us today--
if you disagree with the direction that we might be going, we 
have that prerogative as your voice to say the direction that 
we think you want us to go.
    So that is--in Washington, we've had a lot of gridlock. 
We've had a lot of pushes and pulls. We've got to get the train 
back on the track. I think we're trying. We're doing better. 
I'm more of a veteran than Evan is in terms of legislative 
service in Washington. I do think we are trying to work in more 
bipartisan ways on certain areas where we have common ground.
    My pledge to you is to continue to do that. At the same 
time, I'm going to be the strong and powerful voice that I wish 
to be in the U.S. Senate to reflect Mr. Farmer and his 
business, and all of our West Virginia constituents that we see 
every day. And that we care about your relatives, Dr. 
Richardson. You know it's a great place.
    So we'll end on this note. Beat the heck out of Kentucky on 
Thursday. We can all agree on that. Thank you very much.
    [Additional material submitted for the record follows:]
    
    
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]