[Senate Hearing 114-36]
[From the U.S. Government Publishing Office]





                                                         S. Hrg. 114-36

                         LEGAL IMPLICATIONS OF
                          THE CLEAN POWER PLAN

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON CLEAN AIR
                           AND NUCLEAR SAFETY

                                 of the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 5, 2015

                               __________

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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED FOURTEENTH CONGRESS
                             FIRST SESSION

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

                 Ryan Jackson, Majority Staff Director
               Bettina Poirier, Democratic Staff Director
                              ----------                              

              Subcommittee on Clean Air and Nuclear Safety

             SHELLEY MOORE CAPITO, West Virginia, Chairman
DAVID VITTER, Louisiana              THOMAS R. CARPER, Delaware
JOHN BARRASSO, Wyoming               BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho                    BERNARD SANDERS, Vermont
JEFF SESSIONS, Alabama               SHELDON WHITEHOUSE, Rhode Island
ROGER WICKER, Mississippi            JEFF MERKLEY, Oregon
DEB FISCHER, Nebraska                EDWARD J. MARKEY, Massachusetts
JAMES M. INHOFE, Oklahoma (ex        BARBARA BOXER, California (ex 
    officio)                             officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                            C O N T E N T S

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                                                                   Page

                              MAY 5, 2015
                           OPENING STATEMENTS

Capito, Hon. Shelley Moore, U.S. Senator from the State of West 
  Virginia.......................................................     1
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     3
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     5
Cardin, Hon. Benjamin L., U.S. Senator from the State of 
  Maryland, prepared statement...................................   275

                               WITNESSES

Morrisey, Hon. Patrick, Attorney General, State of West Virginia.     6
    Prepared statement...........................................     9
    Response to an additional question from Senator Whitehouse...    15
Pruitt, Hon. Scott, Attorney General, State of Oklahoma..........    15
    Prepared statement...........................................    18
    Response to an additional question from Senator Whitehouse...    23
Martella, Roger Jr., Partner, Sidley Austin, LLP.................    23
    Prepared statement...........................................    26
Speakes-Backman, Kelly, Maryland Public Service Commissioner, 
  Chair, Board of Directors, RGGI................................    41
    Prepared statement...........................................    43
Heinzerling, Lisa, Professor, Georgetown University..............    52
    Prepared statement...........................................    54

 
                         LEGAL IMPLICATIONS OF
                          THE CLEAN POWER PLAN

                              ----------                              


                          TUESDAY, MAY 5, 2015

                               U.S. Senate,
         Committee on Environment and Public Works,
              Subcommittee on Clean Air and Nuclear Safety,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:59 p.m. in room 
406, Dirksen Senate Office Building, Hon. Shelley Moore Capito 
(chairwoman of the committee) presiding.
    Present: Senators Capito, Carper, Barrasso, Crapo, Inhofe, 
Cardin, Whitehouse, and Markey.

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

    Senator Capito. I would like to thank everybody for being 
here today. This is our first Clean Air and Nuclear Safety 
Subcommittee hearing on the EPA's Clean Power Plan.
    I would like to thank all the witnesses for appearing 
before us today and say a special thank you to my State's 
attorney general, Patrick Morrisey, who has been leading the 
national legal fight against this rule, which would have, we 
believe, a devastating impact in our home State of West 
Virginia. So thank you and thank you, Attorney General 
Morrisey, for traveling across the mountain. Appreciate it.
    Back in February, in a full committee hearing in this room, 
I asked EPA Acting Assistant Administrator Janet McCabe to 
explain why the EPA did not hold a public hearing on its 
proposed Clean Power Plan in the State of West Virginia, one of 
those States very heavily impacted. Despite the large role that 
coal has in our economy, in our electricity generation, and 
despite the multiple invitations issued by me and many, many 
others, Federal and State legislators, to have them come to our 
State, she told me basically that public hearings were held 
where people were ``comfortable.'' That response was 
unacceptable to me then and to the people of my State.
    As Attorney General Morrisey will also point out in his 
testimony, this rule will have a devastating impact on our 
State, other coal-producing States, electricity ratepayers 
across the Country, and the reliability of our grid.
    We know from nearly five decades of experience that the 
Clean Air Act works best when implemented in the spirit of 
cooperative federalism. When the Federal Government works with 
the State as partners, we can and have improved our air 
quality, protected our economy and the electricity grid at the 
same time.
    However, the Clean Power Plan does none of this, in my 
opinion. Instead, we have an EPA dictating to the States and 
effectively micro-managing interstate electricity policy 
decisions to a degree even the Agency admits is unprecedented. 
This raises a broad array of legal issues and is quite simply 
bad policy.
    As a result, many States, including West Virginia and 
Oklahoma, whose attorneys general will be here today, have 
raised grave concerns about the legality of the rule and the 
implications for their citizens and ratepayers. In addition to 
significant constitutional and other legal questions, States 
have expressed concerns about the feasibility of EPA's proposed 
requirements and the likely impacts on electricity costs and 
reliability.
    At risk is the ability the States have always had to make 
the decision about their electricity generation. West Virginia 
has chosen to rely on coal to provide affordable and reliable 
electricity for our consumers and businesses. Other States have 
made different choices that best serve their citizens. But 
under the Clean Power Plan, each State's electricity plan will 
have to make EPA's criteria for reducing carbon dioxide 
emissions and be approved by the EPA.
    Other EPA regulations like Utility MACT rule is already 
contributing to rising electricity rates and growing concerns 
about reliability. We have had testimony in this committee in 
other hearings. With the economy still far from fully 
recovered, the last thing job creators need is another 
expensive regulation likely to drive up our energy prices. And 
the last things our families and senior citizens need is to see 
their electric bills continue to go up.
    Next week I will be introducing greenhouse gas legislation 
with my colleagues that will preserve the proper balance of 
State and Federal authority, help ensure reliable and 
affordable electricity, and protect jobs and our economy. I 
look forward to working with many colleagues on the committee 
to advance this bill.
    I would also like to say anecdotally that throughout the 
State of West Virginia we have such uncertainty and such 
disappointment, I think, that our voices haven't been heard in 
our State with the EPA coming to the State to listen, and we 
don't feel that the calculation of the economic impact in our 
communities has been fully explored, nor even taken into 
consideration as we move forward with these rules.
    With that, I would like to yield to the ranking member, 
Senator Carper, for an opening statement.
    [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 for the first Clean Air 
and Nuclear Safety Subcommittee hearing on EPA's Clean Power 
Plan. I would like to thank all of our witnesses for appearing 
before us today, and say a special thank you to my State's 
Attorney General, Patrick Morrisey, who has been leading the 
national legal fight against this rule, which would have such 
devastating impacts on our home State of West Virginia.
    Back in February, in a full committee hearing in this room, 
I asked EPA Acting Assistant Administrator Janet McCabe to 
explain why the EPA did not hold a public hearing on its 
proposed Clean Power Plan in West Virginia, despite the large 
role coal has in our economy and our electricity generation, 
and despite the multiple invitations by Federal and State 
legislators.
    She told me public hearings were held where people were 
``comfortable'' going. That response is unacceptable to me and 
to the people of my State. As Attorney General Morrisey will 
also point out in his testimony, this rule will have a 
devastating impact on our State, other coal producing States, 
electricity rate payers across the country and the reliability 
of our grid.
    We know from nearly five decades of experience that the 
Clean Air Act works best when implemented in the spirit of 
cooperative federalism. When the Federal Government works with 
the States as partners, we can, and have, improved air quality 
and protected our economy and our electricity grid at the same 
time.
    However, the Clean Power Plan does none of this. Instead, 
we have EPA dictating to States and effectively micromanaging 
intrastate electricity policy decisions to a degree even the 
agency admits is unprecedented. This raises a broad array of 
legal issues and is, quite simply, bad policy.
    As a result, many States--including West Virginia and 
Oklahoma, whose Attorneys General we will be hearing from 
today--have raised grave concerns about the legality of the 
rule and the implications for their citizens and ratepayers. In 
addition to significant constitutional and other legal 
questions, States have expressed concerns about the feasibility 
of EPA's proposed requirements and the likely impacts on 
electricity costs and reliability.
    At risk is the ability that States have always had to make 
decisions about their electricity generation. West Virginia has 
chosen to rely on coal to provide affordable and reliable 
electricity for our consumers and businesses. As a result, we 
have some of the lowest electricity rates in the Nation. Other 
States make different choices that best serve their citizens. 
But under the Clean Power Plan, each State's electricity plan 
would have to meet EPA's criteria for reducing carbon dioxide 
emissions and be approved by EPA.
    Other EPA regulations like the Utility MACT rule have 
already contributed to rising electric rates and growing 
concerns about reliability. With the economy still far from 
fully recovered, the last thing job creators need is another 
expensive regulation likely to drive up energy prices. And the 
last thing our families and senior citizens need is to see 
their electric bills continue to go up.
    Next week I will be introducing greenhouse gas legislation 
with my colleagues that will preserve the proper balance of 
State and Federal authority, help ensure reliable and 
affordable electricity, and protect jobs and our economy.

          OPENING STATEMENT OF HON. THOMAS R. CARPER, 
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Carper. Thank you, Madam Chairman. Thanks so very 
much for holding our hearing today.
    I want to welcome our witnesses. Nice to see you all today. 
And thanks for joining us for this important conversation.
    Today's hearing will continue the discussion of the legal 
implications of EPA's proposed carbon regulations known as the 
Clean Power Plan. I was born, as some of you know, in Beckley, 
West Virginia, Raleigh County, West Virginia. One of the 15 
founders of West Virginia, Raleigh County, was my great-great-
great-great-great-grandfather, Joseph Carper. And as a native 
of a county where coal mining was important, remains important, 
and now as a Senator, recovering Governor, representing the 
lowest lying State in the Nation, I have a unique perspective 
on the balance that we must strike to make environmental 
regulation work; not just for my State, not just for your 
States, but for all of our States.
    For those of us from States that are already being impacted 
by climate change, the EPA's Clean Power Plan to regulate our 
Nation's largest source of carbon pollution is not just 
important, but it is essential. Many States, such as Maryland, 
my home State of Delaware, have already taken action to reduce 
lower power plant emissions. However, we need all States to do 
their fair share to protect the air that we breathe and stem 
the tide of climate change. In order for these standards to be 
effective, the EPA must ensure that all 50 States are capable 
of complying with these standards.
    Today, the EPA has conducted an unprecedented level of 
State and local government outreach, not just to State and 
local governments, but to utilities, to businesses, in order to 
craft a comprehensive plan that works for each State. Under the 
Clean Power Plan, States can create their own plan for meeting 
their targets in a number of ways, including by increasing 
renewable energy, such as wind and solar, and increasing the 
efficiency of their electrical grid.
    Unfortunately, since the day that EPA proposed the Clean 
Power Plan, it has been criticized as being outside the 
Agency's authority under the Clean Air Act and the U.S. 
Constitution. I believe these claims are without basis in fact.
    In 2006, 10 States actually sued EPA to force it to 
regulate carbon pollution from power plants. Since then, the 
U.S. Supreme Court has ruled, not once, not twice, but three 
times in support of EPA's legal authority to control carbon 
pollution under existing law.
    In 2007, the Supreme Court confirmed in Massachusetts v. 
EPA that, as passed by Congress, the Clean Air Act gave the EPA 
the authority to regulate carbon pollution.
    The legal precedent for the Clean Power Plan is, at least 
in my mind, clear; and attempts by Congress and other parties 
to challenge its legality are essentially an attempt to delay 
implementation of the Plan.
    As we have seen in the past, litigation over carbon 
pollution regulations has the potential to be stuck in the 
courts for several years. The longer we wait to reduce our 
carbon output, the more severe and perhaps irreversible the 
effects of climate change will become; and, frankly, the more 
severe the changes that will have to be adopted to deal with 
this coming problem.
    Meanwhile, public health and our economy will continue to 
be endangered by more frequent storms, intense droughts, and 
sea level rise.
    Personally, I am committed to making sure Congress does all 
it can do to support the implementation of the Clean Power 
Plan, and I look forward to hearing from our witnesses today 
about our progress in doing so.
    Let me just close with one thought. I was born in Beckley, 
West Virginia; family still in that area, all over the State, 
actually. I remember going as a little boy going to a little 
church, Grace Gospel Church just outside of Beckley in a town 
called Shady Springs, which you know, Madam Chairman. And at a 
very early age I was told the Golden Rule: treat other people 
the way we want to be treated. I think the Golden Rule is 
probably the most important rule of all, and I think it should 
be apply here as well.
    I want to make sure that we treat West Virginia fairly. I 
want to make sure that we treat Delaware fairly. I want to make 
sure that the States that are seeing sea level rise, which 
poses enormous threat to us--the highest point in Delaware is a 
bridge; it is not a mountain. It is not a mountain, it is a 
bridge. We already see the effects of sea level rise in my 
State and we are concerned about it, and, frankly, so are a lot 
of other States. I want to make sure we are fair to us in the 
First State; I want to make sure that we are fair to the folks 
in the Mountain State.
    With that in mind, let's have a good hearing. Thank you.
    Senator Capito. Thank you.
    I would like to tell the audience and the witnesses that we 
are scheduled to have a vote somewhere between 10:15 and 10:30, 
so my plan would be to try to get through opening statements 
and then adjourn quickly and let us go vote, make that one vote 
and come back to the question portion. I reserve the right to 
change my mind. I might say we will just rotate inside and out. 
That might be a better way to do it. But at that point I just 
wanted to put you on alert.
    At this time, I would like to recognize the chairman of the 
full committee, Mr. Inhofe, from Oklahoma, for purposes of 
making some comments.

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

    Senator Inhofe. I thought that was just my wife that made 
that statement, about changing her mind.
    [Laughter.]
    Senator Inhofe. I appreciate it very much, Senator Capito.
    We have some people here today from Oklahoma; they came up 
here, the Rural Electric Coop. They are concerned. You know, in 
Oklahoma we get this question all the time. They say, now wait 
a minute. If we are reliant upon fossil fuel for 50 percent of 
the power to run this machine called America and they take that 
away, how do you run the machine called America? And I said, 
come up and find out, because I don't know either.
    Three things real quickly. Cap-and-trade started, this was 
way back in 2002, and at that time they first said the world is 
coming to an end, all the global warming and all that stuff. 
Now, they tried to pass it legislatively from 2002 up until the 
current time, and they are unable to do that. So what we are 
looking at now is the Federal Government coming in under the 
Obama administration, trying to do through regulation what they 
couldn't do through legislation.
    Second, when Lisa Jackson was the Administrator of the EPA 
under Obama, I asked her the question, in this room, live on 
TV, I said, you know, if we were to pass, either through 
regulation or through legislation, would this have the effect 
of reducing CO2 emissions worldwide? And she said, 
no, it wouldn't because this isn't where the problem is. So 
even if you are a believer in those things, it wouldn't work.
    The last thing, I am not a lawyer, but I was on several 
radio shows this morning with Scott Pruitt, our attorney 
general, and I learned a lot, Scott, from you. But when the 
President's own law professor, Laurence Tribe, recently 
testified before the House, he said that the EPA was attempting 
an unconstitutional trifecta, usurping the prerogatives of the 
States, Congress, and the Federal Courts all at once. This was 
Barack Obama's Harvard Law professor.
    With that, I look forward to the opening statements.
    [The prepared statement of Senator Inhofe follows:]

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

    We are here today to talk with legal experts and Attorneys 
General about the Environmental Protection Agency's proposed 
CO2 regulations for existing power plants. This 
proposal is another attempt by the Obama administration to 
circumvent the role of Congress and achieve through regulatory 
fiat what the President could not achieve through legislation.
    Congress has already been very clear in its opposition to a 
federally mandated emission reductions scheme when cap-and-
trade legislation failed under a Democrat controlled Senate, 
yet the President is choosing to ignore the will of Congress 
and the American people by mandating this country's energy 
system be restructured in an unprecedented, likely illegal and 
economically damaging way.
    It's not just Republicans that disagree with the legal 
premise of the Clean Power Plan. The President's own 
constitutional law professor, Lawrence Tribe, recently 
testified before the House Energy and Commerce Committee 
hearing that his EPA was attempting an ``unconstitutional 
trifecta usurping the prerogatives of the States, Congress and 
the Federal Courts--all at once.''
    It is very telling when even legal and environmental 
experts that agree with the Administration's overall objective, 
do not agree with the means by which they are attempting to 
achieve that objective.
    The EPA, an agency of unelected bureaucrats, expects the 
States to cede authority over its intrastate energy systems, so 
that the EPA can then tell its citizens what type and how much 
energy they can use. This is counter to the purpose of the 
Clean Air Act and undermines the longstanding principle of 
cooperative federalism where the Federal Government is meant to 
work in partnership with the States to achieve environmental 
objectives.
    This proposal is legally unsound, and comes with a $479 
billion compliance cost, will result in double digit 
electricity price increases in 43 States and has negligible 
environmental benefits--environmental benefits the EPA did not 
even bother to measure and will be rendered pointless by 1 
month of carbon emissions in China.
    This is why 32 States oppose this rule and 12 have sued the 
EPA over this proposal. I am thankful that two of the States 
leading the charge against this rule--West Virginia and 
Oklahoma--are here to testify.
    This is an unprecedented regulatory action where the agency 
is attempting to rewrite the law in a manner that Congress 
explicitly prohibited. Congress writes the laws and the 
agencies interpret them--even under President Obama.
    I will not stand by and let the EPA force States to spend 
their resources in a manner that will harm local economies and 
force their citizens to pay for the President's misguided 
legacy. Especially when it is not a matter of if the Clean 
Power Plan will be ruled illegal, but when.
    I thank all the witnesses for being here and I look forward 
to their testimony.

    Senator Capito. Thank you.
    I would like to recognize, we will go, from my view, left 
to right. Our first witness is Hon. Patrick Morrisey, who is 
the Attorney General of the State of West Virginia. Welcome.

STATEMENT OF HON. PATRICK MORRISEY, ATTORNEY GENERAL, STATE OF 
                         WEST VIRGINIA

    Mr. Morrisey. Well, thank you very much, Chairman Capito, 
Ranking Member Carper, and all of the distinguished members of 
this subcommittee. I very much appreciate the opportunity to be 
here today to testify against the President's so-called Clean 
Power Plan.
    I do want to say at the outset I feel good about this 
hearing because West Virginia seems to have some support, both 
from the Chair and the ranking member side. So, Senator Carper, 
you are always welcome to come back to the great State of your 
birth. Thank you.
    Now, I am here today to talk about the legal problems in 
the Obama administration's so-called Clean Power Plan, commonly 
known as the 111(d) Rule. This Rule seeks to require States to 
reduce emissions from existing coal-fired power plants by, on 
average, a staggering 30 percent over a 15-year period.
    Now, make no mistake about it, finalizing this proposal 
would have a devastating impact on my State, other coal-
producing States, and citizens from across the Country who feel 
the negative impact of high electricity prices, lost jobs, and 
a potential lack of reliability in the power grid.
    Now, West Virginia is one of the poorest States in the 
Country, and yet we are the second largest producer of coal. It 
is a very important resource for us. This proposal would result 
in even greater economic dislocation in Appalachia at a time 
when we can least afford it.
    Now, it is my duty as the chief legal officer of the State 
of West Virginia to fight against this unlawful power grab, 
which is hurting our citizens. West Virginia has already led a 
bipartisan coalition of 15 States before the U.S. Court of 
Appeals in D.C., and if this Administration elects to finalize 
this rule, West Virginia will challenge it in court, and we 
expect that the coalition of 15 States that we are currently 
working with will grow.
    Today I would like to talk about just a few of the legal 
defects of this proposal.
    Now, as you all know, the EPA bases its claim for legal 
authority to adopt this Rule entirely on Section 11(d) of the 
Clean Air Act. However, a nearby provision, Section 112 of the 
Clean Air Act, EPA prohibits the Agency from invoking Section 
111(d) for any pollutant ``emitted from a source category which 
is regulated under Section 112.'' We think that language is 
very clear.
    And as EPA has repeatedly explained time after time, this 
text literally means that if EPA has already regulated a source 
category under Section 112, EPA may not then come in and 
require States to regulate any pollutants emitted from the same 
source category under 111(d).
    Now, this is where the EPA runs into some trouble because, 
as we know, in 2012 they already finalized a major rule 
affecting coal-fired power plants under Section 112.
    Now, the EPA's legal argument for avoiding this Section 112 
exclusion is not credible and defies all traditional rules of 
administrative law and statutory construction. Let me explain.
    When Congress enacted the present version of the Section 
112 exclusion in 1990, they actually made a mistake. It 
accidentally included two provisions in the statute at large, 
two amendments to the same exact text. One was a substantive 
amendment that replaced a cross-reference and exchanged the 
exclusion to its present form. The second was a conforming 
amendment, a technical amendment, if you will, that was made 
107 pages later.
    But once you actually applied the substantive amendment to 
the text, it made the conforming change wholly unnecessary, and 
that is why the technical error was never included in the U.S. 
Code.
    Now, what happened there is actually consistent with the 
way Congress has always operated. To the extent that there are 
clerical errors in a text, when Congress goes back through the 
revisers to decide what goes in the Code, they analyze that and 
they apply traditional rules of statutory construction. And, in 
fact, we have never seen a situation before where a Federal 
agency has literally tried to push such sweeping proposal on 
the basis of a typo. It is unprecedented.
    But perhaps the most radical feature of Section 111(d) Rule 
is its sheer breadth. Rather than follow the traditional 
pathway of opposing an emission rule on a particular source 
category to make that source category more environmentally 
friendly, the Section 111(d) Rule requires States to replace 
coal-fired energy with other sources of energy, and even reduce 
consumer demand for energy. That means that the Section 111(d) 
Rule seeks not only to regulate power plant emissions, it is a 
mandate for States to fundamentally reorder their electricity 
sectors and pick winners and losers between those sectors. This 
Rule would regulate from power to plug.
    Now, as Allison Wood, a well-respected attorney, recently 
indicated before the House Energy and Commerce Committee, the 
EPA's claim here is analogous to the Agency asserting that its 
authority to regulate automobile emissions provides it with the 
power to order citizens to take a bus to work or buy electric 
cars on the theory that the measures would reduce car 
emissions.
    Section 111(d) simply does not grant the EPA such broad 
sweeping power.
    Thank you very much.
    [The prepared statement of Mr. Morrisey follows:]
    
       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
      Response to a Question for the Record--Hon. Patrick Morrisey

    Senator Whitehouse:

    Question. Please describe any communications you have had 
with any element of the fossil fuel industry regarding the 
substance of your testimony before the EPW Committee for this 
hearing.

    Response. I worked exclusively with my staff in preparing 
my testimony to the Committee, drawing upon my Office's 
extensive familiarity with the so-called Clean Power Plan. 
Although we did not discuss the remarks with any outside group, 
we have worked on these issues with a broad, bipartisan 
coalition of stakeholders, including labor unions, coal 
operators, businesses, and consumer groups. Notably, 
stakeholders across the political spectrum in West Virginia--
from coal miners to energy companies to elected officials from 
both parties--are united in opposition to EPA's illegal Plan, 
which will have devastating impacts upon our State. Opposing 
this illegal Plan remains one of the top priorities for my 
Office, and that will continue to be the case.

    Senator Capito. Thank you.
    Now, I have just been informed that the vote has been 
called, so hold on here, let me see what we prefer to do.
    [Pause.]
    Senator Capito. OK, we are going to go vote, so we will 
stand and recess and return. We should be here shortly. Thank 
you for your patience.
    [Recess.]
    Senator Capito. That was pretty quick, I think, and we will 
resume the hearing.
    I would like to welcome Hon. Scott Pruitt, who is the 
Attorney General from the State of Oklahoma. Welcome.

  STATEMENT OF HON. SCOTT PRUITT, ATTORNEY GENERAL, STATE OF 
                            OKLAHOMA

    Mr. Pruitt. Good morning, Chairwoman Capito, Ranking Member 
Carper, Chairman Inhofe, and members of the subcommittee. It is 
a joy to be with you this morning. It is good to be with my 
dear colleague and friend from West Virginia. I appreciate the 
invitation to discuss the legal ramifications of the EPA's 
proposed Clean Power Plan.
    This is an issue of major importance to States across the 
Country like Oklahoma.
    Quite simply, Madam Chairwoman, the EPA does not possess 
the authority under the Clean Air Act to do what it is seeking 
to accomplish in the so-called Clean Power Plan.
    The EPA, under this Administration, treats States like a 
vessel of Federal will. The EPA believes States exist to 
implement the policies the Administration sees fit, regardless 
of whether laws like the Clean Air Act permit such action.
    In their wisdom, Congress gave States a primary role in 
emissions regulation, noting in the statement of policy of the 
Clean Air Act that ``air pollution control at its source is the 
primary responsibility of States and local governments.''
    That statement respects the constitutional limits on 
Federal regulation of air quality and the reality that States 
are best suited to develop and implement such policies.
    States are able to engage in a cost-benefit analysis to 
strike the necessary balance between protecting and preserving 
the environment, while still creating a regulatory framework 
that does not stifle job growth and economic activity. The 
States are partners with the Federal Government, as the 
chairwoman noted in her comments, with the Federal Government 
regulating such matters.
    Therefore, the Clean Air Act hinges on cooperative 
federalism by giving States the primary responsibility and role 
for regulation while providing a Federal backstop if the States 
should fail to act.
    When the EPA respects the role of the States, the 
cooperative relationship works well. When the EPA exceeds the 
constraints placed upon the Agency by Congress, the 
relationship is thrown out of balance and the rule of law and 
State sovereignty is affected adversely.
    The Clean Power Plan proposal throws the cooperative 
relationship between the States and the Federal Government off 
balance.
    The EPA claims the proposal gives States flexibility to 
develop their own plans to meet the national goals of reducing 
carbon dioxide emissions. In reality, the Clean Power Plan is 
nothing more than an attempt by the EPA to expand Federal 
agency power at the expense of States energy power generation.
    The Plan requires each State to submit a plan to cut carbon 
dioxide emissions by a nationwide average, the attorney general 
indicated earlier, by 30 percent by the year 2030.
    In Oklahoma, 40.5 percent of our energy production comes 
from coal-fired generation and 38 percent comes from natural 
gas. Oklahoma, notably, ranks fourth in the Country in 
generating electricity through wind.
    This begs the question: How does the EPA expect States like 
Oklahoma, and the top four in the Country in generating 
electricity through renewables, to meet the goals of the Clean 
Power Plan? There are only so many ways Oklahoma can achieve a 
30 percent reduction demanded by the EPA. The Plan, therefore, 
must be viewed as an attempt by the EPA to force States into 
shuttering coal generation and eventually other sources of 
fossil fuel generated electricity.
    Additionally, the proposed Rule, through its building block 
four, would require States to use demand-side energy efficiency 
measures that would reduce the amount of generation required. 
However, States are limited to emission standards that actually 
can be achieved by existing industrial sources through source-
level, inside-the-fence measures.
    The proposal's attempt to force States to regulate energy 
consumption and generation throughout their jurisdictions, in 
the guise of reducing emissions from fossil fuel-fired plants, 
violates Section 111(d)'s plain text requirement that the 
performance standards established for existing sources by the 
States must be limited to measures that apply at existing power 
plants themselves, inside the fence.
    EPA's approach converts the obscure, little-used Section 
111(d) into a general enabling act, giving EPA power over the 
entire grid from generation to light switch. By going beyond 
source-level, inside-the-fence-line measures, EPA's proposal 
would expand 111(d), and specifically the underlying statutory 
term ``best system of emission reduction'' into a whole new 
regime of regulation, one that regulates not only pollutant 
emission by sources, but the State's entire resource and energy 
grid.
    To meet the objectives of the EPA's proposed rule, States 
would be forced to rework their energy generation market. To 
account for the loss of coal-fired generation, States will be 
forced into changing their energy mix in favor of renewables. 
States will be also forced to alter existing regulatory 
framework which would threaten energy affordability and 
reliability for consumers, industry, and energy producers.
    Finally, there is a substantial concern that the EPA, 
before the Clean Power Plan is even finalized, will issue a 
uniform Federal implementation plan that will be forced upon 
those States that don't acquiesce to the unlawful Clean Power 
Plan.
    Such a move by the EPA would be the proverbial gun to the 
head of the States, demanding the States to act as the EPA sees 
fit or face punitive financial situations for their States.
    Madam Chairwoman, I can say with great confidence that if 
the EPA does in fact move forward with the uniform FIP, the EPA 
will be challenged in court by Oklahoma and other like-minded 
States.
    I am not one who believes the EPA has no role. The Agency 
has played a very important role historically in addressing 
water and air quality issues that traverse State lines. 
However, with this rule, the Agency is now being used to pick 
winners and losers in the energy market by elevating renewable 
power at the expense of fossil fuel generation.
    No State should comply with the Clean Power Plan if it 
means surrendering decisionmaking authority to the EPA, a power 
that has not been granted to it by this Congress. States should 
be left to make decisions on the fuel diversity that best meets 
their generation needs.
    States like Oklahoma care about these issues because we 
breathe the air, drink the water, and want to preserve the land 
for future generations, and we have developed a robust 
regulatory regime that has successfully struck a balance 
between maintaining and preserving air and water quality, while 
still considering the economic impact of such regulations.
    Madam Chairwoman, States like Oklahoma are simply opposed 
to the Clean Power Plan because it is outside the authority 
granted to the EPA by the law. We only ask that the State 
authority under the Clean Air Act be respected and preserved, 
and the decisions on power generation and how to achieve 
emissions reductions be made at the local level rather than at 
the Federal level.
    I again appreciate the opportunity to speak with you today 
and discuss these important matters. Thank you.
    [The prepared statement of Mr. Pruitt follows:]
    
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      Response to a Question for the Record--Hon. E. Scott Pruitt

    Senator Whitehouse:

    Question. Please describe any communications you have had 
with any element of the fossil fuel industry regarding the 
substance of your testimony before the EPW Committee for this 
hearing.

    Response. My office did not have any contact with any 
outside groups regarding the substance of my testimony to this 
Committee and its honorable members.

    Senator Capito. Thank you.
    Our next witness is Mr. Roger Martella. He is a Partner at 
Sidley Austin and he was formally the General Counsel at the 
USEPA. Welcome.

 STATEMENT OF ROGER MARTELLA, JR., PARTNER, SIDLEY AUSTIN, LLP

    Mr. Martella. Thank you, Madam Chair, Ranking Member 
Carper, Chairman Inhofe. Thank you for the opportunity to 
appear before this committee once again. It is a great honor.
    EPA has yet to finalize the Existing Source Performance 
Standard, but that hasn't stopped the lawyers from submitting 
thousands of pages of legal arguments to the Agency, both in 
passionate support of the rulemaking and in vehement opposition 
of it. I have added to that mix a little bit today with some 
written testimony that I shared with you, but what I thought I 
would do is digest those scores of arguments into what I think 
are going to be the two overarching issues that the court is 
going to consider when it ultimately reviews the final rule.
    The first is picking up on a point from Senator Carper in 
his introduction, that if we look at how the courts have 
responded to climate change issues since 2007, since 
Massachusetts v. EPA, we have had a lot of direction in the 
last few years from the Supreme Court, the D.C. Circuit, the 
Ninth Circuit; and what the courts have told us is that they 
take climate change extremely seriously. Regardless of what I 
might think about it, what anyone here might think about it, 
the courts have expressed that they view climate change as a 
paramount policy concern and they have been highly deferential 
not only to EPA, but to the States, when they have engaged in 
creative mechanisms to use old and outdated tools to address 
the modern challenge of climate change. So I agree with that 
proposition. The courts have been recognizing that and they 
won't look at this in a political vacuum or a policy vacuum; 
the courts will consider that when they review the rule and the 
goal of what the EPA is trying to do here.
    Now, having said that, the other countervailing 
consideration from the other side will be the unprecedented 
nature of what EPA is trying to do with its existing authority 
under the Clean Air Act, and what I am talking about 
specifically, of the many legal issues, the one that I think is 
going to get the most attention from the court is something you 
have probably heard about several times by now, EPA's approach 
to regulate sources beyond the fence line of those sources, and 
it basically works like this: if my pen here is my coal-fired 
power plant, for the 45 years in the history of the Clean Air 
Act, the EPA has always set a standard for this coal-fired 
power plant based on the technology that could be achieved at 
this source, on what this coal-fired power plant could do.
    But now EPA is saying in order to address climate change, 
that is going to limit us. We can only get so many emissions 
from the coal-fired power plant, so we have to look beyond the 
fence line; we have to look at natural gas facilities, we have 
to look at renewable energy, nuclear energy, the energy 
efficiency of buildings like this. And that will enable us, for 
the first time, to achieve greater reductions in greenhouse 
gases than what we can get from this coal-fired power plant.
    Now, back to my first point. The court may think that is a 
noble goal, but at the same time it is going to be thinking 
also about the legal precedent of this beyond-the-fence-line 
approach for the first time in 45 years of the Clean Air Act; 
and it has really three precedential ramifications. The first 
is the practical ramification. As the two generals have spoken 
today, is the enormous expansion of authority to make EPA not 
only a regulator of the environment, but really the most 
significant regulator of energy at the national level. In order 
to get those greenhouse reductions, it has to include in its 
regulatory authority nuclear facilities, renewable energy 
facilities, energy efficiency in countless buildings. So it is 
expanding its authority to the entire energy market in a way 
that really Congress should be speaking to and Congress should 
be authorizing, as opposed to looking at inherent authority.
    The second ramification is a legal one, and the courts are 
going to be concerned about the legal precedent here, that this 
is a departure from the Clean Air Act's historic approach 
focusing on sources, on the case law that has been consistent 
in EPA's past application. Never before in 45 years has EPA 
gone beyond a source and gone beyond the fence line. In the 
case law and the couple times it has tried to do so has shut 
that down.
    And then the third concern for the courts is going to be 
the precedential nature of this on other sectors. If EPA is 
affirmed with this approach, this beyond-the-fence-line 
approach here, as it starts to regulate greenhouse gases from 
other sectors down the road, there is really going to be almost 
no limit to how it can look beyond an individual source to 
bring in other sources and, by the way, also hold other sources 
that are not currently subject to Clean Air Act regulation, 
like a nuclear facility, like this building and energy 
efficiency, bring them into EPA's regulatory regime.
    While I have said the Supreme Court has endorsed EPA's 
climate change rules, there is an asterisk there. Less than a 
year ago, the Supreme Court did say, in partially affirming 
EPA, but partially reversing EPA, that EPA cannot look to the 
Clean Air Act to engage in sector-wide economic regulation; and 
that came out just 4 days after this Rule that the Supreme 
Court said we will not allow EPA to use the Clean Air Act to 
regulate lots of small sources and engage in sector-wide 
regulation of the economy. It is unfathomable how the justices 
that were concerned in that instance with EPA regulation 
wouldn't be concerned with this regulation.
    The last thing I just wanted to mention briefly is the harm 
that we are going to see in the interim, during judicial 
review. It takes about 4 years for courts to review cases like 
this if it goes to the Supreme Court, and, again, the generals 
have spoken to some of the harms going to the State. I do want 
to point out, any single rule, everybody is always going to 
allege harm. But this is fundamentally distinctive because of 
the ways I think Attorney General Pruitt and Morrisey have 
talked about, the ways States have to fundamentally restructure 
and reorganize their entire system of regulating energy, 
creating energy infrastructure, and also developing laws, 
enacting laws that promote renewable portfolio standards, 
energy efficiency programs, and so on. So this is fundamentally 
distinct in terms of the harm that is going to be realized in 
the short-term from other environmental rulemakings.
    Thank you again for this opportunity.
    [The prepared statement of Mr. Martella follows:]
    
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    Senator Capito. Thank you very much.
    Our next witness is Ms. Kelly Speakes-Backman. She is a 
member of the Maryland Public Service Commission and she is 
also the Co-Chair of the Regional Greenhouse Gas Initiative. 
Welcome.

  STATEMENT OF KELLY SPEAKES-BACKMAN, MARYLAND PUBLIC SERVICE 
         COMMISSIONER, CHAIR, BOARD OF DIRECTORS, RGGI

    Ms. Speakes-Backman. Thank you. Good morning. Thank you for 
inviting me to speak today. It is truly an honor.
    Since the issuance of the Clean Power Plan, proponents and 
opponents alike have been engaged in many discussions about 
what the next steps are. Reiterating a sentiment expressed by 
one of my dear fellow panelists, one of the most significant 
questions for States right now is how do I comply.
    I respectfully submit to you, from the perspective of a 
State that already has boots on the ground on this issue, not 
only can States comply with the Clean Power Plan, but we can do 
so in a way that generates economic benefits and supports grid 
reliability.
    Furthermore, I ask in return can we, as States, afford not 
to comply with the Plan?
    Rather than looking at this in the contexts of a Federal 
implementation plan and what that would mean look like, I 
encourage the legal experts and legislators to view this 
situation from a State regulator's perspective.
    As noted in the recently released Quadrennial Energy 
Review, severe weather is the leading cause of power 
disruptions, costing the U.S. economy from $18 billion to $33 
billion a year. And as a rate utility regulator, I have the 
statutory obligation to ensure reliable and affordable 
electricity. In a restructured market I need more tools at my 
disposal than what is available to me from within the fence 
line of a power plant in order to meet those requirements.
    Modernizing the electricity grid is critical and it 
requires multi-state collaboration to implement cost-effective 
infrastructure improvements. The proposed Plan is an impetus 
for us States to access our grid and to face the reality of an 
already shifting fuel mix. Adding carbon pollution reductions 
is a metric for States to consider.
    The RGGI States have continued for 7 years now, and coming 
up on 28 auctions, to successfully implement the Nation's first 
fully operational carbon market. The RGGI program, initiated by 
a bipartisan group of Governors and developed collaboratively 
by economic and environmental regulatory bodies, caps emissions 
by first determining a regional budget of carbon dioxide 
allowances and then distributing a majority of those allowances 
through the regional auctions at market prices, and finally 
capturing that value for reinvestment into strategic energy 
programs.
    Although we have collaborated for the better part of a 
decade, the region remains surprisingly diverse. We comprise 
three different separate electricity regions, different 
political and economic landscapes, and dissimilar generation 
profiles. Maryland, for example, is 44 percent coal.
    It is a little bit surprising for those who look into the 
RGGI region and think of us all as northeastern States. But we 
have learned to balance that and we have learned to diversify 
our fuel mix. We have gone, from 2005 to 2013, from 56 to 44 
percent coal, demonstrating that it is actually possible for a 
State with a significant coal generation profile to reduce our 
carbon dioxide emissions. The carbon intensity of the whole 
RGGI region's power sector has decreased at twice the rate of 
the rest of the Country.
    So you will find more statistics in my written testimony 
that attest to the economic and environmental benefits for our 
region and for my State. The benefits informed our perspective 
of the RGGI States as we voiced support for the framework of 
the Clean Power Plan and recommended revisions to ensure that 
early action is recognized and that State targets are 
verifiable, transparent, equitable, and enforceable.
    Regional mass-based programs like RGGI are advantageous in 
part because they closely align with the nature of the grid 
already and they allow for transparent and verifiable tracking 
and compliance systems. Recent analysis even from our own 
regional transmission organization, PJM, calculated higher 
compliance costs for States that go it alone, underscoring the 
cost-effectiveness of regional plans. States that work together 
can implement a regional emission budget across a larger 
geographic boundary and they can find the least cost solutions 
across a larger selection of options.
    To add some perspective on the timing, just a really quick 
one on that. The power sector has already responded effectively 
in the RGGI region to environmental regulations in less time 
than the EPA provides the rest of the Country as part of the 
Clean Power Plan. In fact, measures supported by RGGI 
investments have advanced reliability goals in the region in 
just 7 years. In contrast, States have 15 years to meet the 
final compliance goals. We have reduced our carbon dioxide 
emissions from power plants by 40 percent, while our region's 
economy grew by 8 percent over that same timeframe.
    Finally, we have accumulated some pretty good lessons as a 
participant in RGGI that we hope will be instructive to other 
States. No. 1, we formed intra- and interagency relationships 
through cooperative effort, which allows us to do a lot more 
for a lot less. The regional mechanism has stimulated quite 
some good stakeholder engagements as many of the compliance 
entities span multiple jurisdictions and appreciate the 
regional consistency. The third is that consistency doesn't 
mean that we have to have identical programs. Each State has 
its own programs based on its own policy and needs.
    And, last, I think the most important lesson is that 
participation in a mass-based regional compliance effort will 
likely provide our States the most flexibility moving forward. 
Using this mass-based construct, the cap is the only 
enforceable mechanism, and that cap is enforced by our 
individual State regulators. So States retain jurisdiction over 
their individual energy efficiency and renewable energy 
programs; they are not subject to the Federal implementation. 
And we can continue to offer these initiatives to mitigate the 
cost of compliance for ratepayers.
    So thank you. We look forward to working with you and 
answering questions.
    [The prepared statement of Ms. Speakes-Backman follows:]
    
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    Senator Capito. Thank you.
    And our final witness is Ms. Lisa Heinzerling, who is a 
Professor at Georgetown University. Welcome.

STATEMENT OF LISA HEINZERLING, PROFESSOR, GEORGETOWN UNIVERSITY

    Ms. Heinzerling. Thank you and thank you for inviting me to 
appear before you today to discuss the legal implications of 
EPA's carbon dioxide rule.
    Many dramatic legal arguments have been raised against 
EPA's proposal. Opponents of EPA's proposal have claimed that 
the proposal is unconstitutional under any one of a number of 
novel theories. They have also argued that the whole proposal, 
or significant aspects of it, are unlawful under the Clean Air 
Act. We have heard several such arguments already this morning.
    In my view, the constitutional and statutory arguments that 
have been raised against EPA's proposed rule collapse upon 
close inspection.
    For example, constitutional principles of federalism are 
not violated by EPA's proposal. Under EPA's proposal, States 
have a choice. They may devise their own plans to meet the 
State-specific targets EPA will set or they may let EPA devise 
a plan for them. This is the very same choice States have had 
for 45 years under the Air Quality Standards Program of the 
Clean Air Act. It is not an unconstitutional choice.
    Nor does EPA's proposal violate the doctrine forbidding 
delegations of legislative authority to the Executive. EPA is 
interpreting statutory provisions of less than ideal clarity, 
using its best judgment to offer an interpretation that gives 
some force to the provisions enacted by Congress. The opponents 
of EPA's rule argue that if EPA interprets the statute the 
right way, the way they favor, it raises no non-delegation 
issue. But, they say, if EPA interprets the statute the wrong 
way, the way they don't like, this violates the non-delegation 
doctrine.
    In 2001, in a case called Whitman v. American Trucking 
Association, Justice Scalia, writing for a unanimous Supreme 
Court, rejected this exact theory, the theory that an agency 
can cure or create a non-delegation problem by adopting a 
particular interpretation of a statute.
    If the Clean Air Act presents EPA with an unconstitutional 
choice between apparently conflicting provisions, which it does 
not, the remedy would be to strike those provisions down, not 
to require the adoption of the interpretation that opponents of 
this rule prefer.
    EPA's proposal also does not violate the Clean Air Act. 
Much has been made of the two different 1990 amendments to 
Section 111(d), both passed by Congress and both signed into 
law by President George H.W. Bush. EPA has long offered an 
interpretation of Section 111(d) that aims to take something 
from each of these amendments.
    Under EPA's construction of the amendments, EPA may not, 
under Section 111, regulate the same hazardous air pollutants 
from the same sources under both that section, Section 111, and 
Section 112. This interpretation makes perfect sense and 
respects the larger structure of the Clean Air Act, which 
pervasively leaves room for regulation in the event new threats 
from air pollution come to the fore.
    EPA's proposed consideration of a wide range of emissions 
reduction measures and setting State targets, including 
renewable portfolio standards and demand-side energy 
efficiency, is also consistent with the broad authority given 
to it by Section 111(d). In contrast to what we have heard this 
morning already, this kind of approach is not unprecedented. 
EPA has long, for conventional air pollutants, allowed 
compliance via renewable energy standards and energy efficiency 
programs.
    And here it is worth thinking about what the claim is. The 
claim is that, in essence, there is too much flexibility 
afforded by the Plan. It is worth noting here the Office of 
Management and Budget of the White House, in 2003, noted that 
the Clean Air Act had the largest quantified health benefits of 
any Federal regulatory program. The latest EPA study of costs 
and benefits of the Clean Air Act found in a central estimate 
that the Clean Air produces $30 worth of benefits for every 
dollar-worth of costs. The ratio is 30 to 1 under a central 
estimate. Under a high estimate of benefits, it is 90 to 1.
    This doesn't happen by accident. This kind of program, this 
kind of statutory implementation happens as a result of firm, 
but sensible interpretation of broad statutory provisions. It 
is mystifying to me that opponents of the Clean Power Plan are 
criticizing EPA for exhibiting the same good sense and 
flexibility that has served the Clean Air Act and this Country 
so well for 45 years.
    [The prepared statement of Ms. Heinzerling follows:]
   
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    Senator Capito. Thank you.
    Appreciate everybody's testimony, and I will begin with 
questions.
    Attorney General Morrisey, let me ask you a question. We 
obviously have a difference of opinion here. The Supreme Court 
recently said that it is skeptical ``when an agency claims to 
discover in a long extant statute an unheralded power to 
regulate a significant portion of the American economy.''
    I guess my question is how long has 111(d) existed and has 
it ever been used outside the fence line to overhaul an entire 
sector?
    Mr. Morrisey. Ms. Chairman, this actually is literally an 
unprecedented effort on the part of the EPA to regulate, and we 
have looked very closely and we have never seen a proposal 
quite like this both in terms of its scope and its willingness 
to regulate outside the fence, but also the legal theory that 
is being advanced here by the Administration. If you go back to 
1970 and then you go up all the way to modern day, to today, 
you are looking at nothing that has ever occurred quite like 
this. Now, there have been some select efforts to rely on 
111(d) in very limited circumstances, but nothing ever 
approaching this magnitude.
    And the other critical point is that from 1990 no Federal 
agency, no one has ever questioned that if you were to regulate 
under 112, that the literal text would ultimately preclude the 
State-by-State emission targets that are being set under 
111(d). So we think that this is really an unprecedented 
approach.
    And we would also add that what the Administration is 
trying to do here is rely on a typo, a conforming error, if you 
will, in order to breathe life into one of the most sweeping 
regulations in our Country's history. If you look to advance 
something that has this great an impact on the American 
economy, at a minimum, there should be clear authority and not 
a reliance on this typo.
    Senator Capito. Mr. Martella, you mentioned in your 
statement, I believe, that EPA had never gone that far in terms 
of this fence line issue. Could you respond to that question as 
well?
    Mr. Martella. Thank you, Madam Chair. That is correct. 
There have been a number of occasions where EPA, in the past, 
has looked at something called a bubble concept, and that 
sounds like exactly what it is, that you can sometimes bring in 
the notion that something is more than just a stack, and you 
bring in other sources of that bubble. There are two cases that 
address that, and both rejected the bubble concept, and those 
weren't even in the Section 111(d) context. So the little bit 
we have seen of this in the courts has been negative and 
pessimistic on that.
    In terms of your question on Section 111(d), EPA has 
engaged in five Section 111(d) rulemakings since 1990. In each 
single case it has always stayed strictly within the fence 
line, the analogous fence line, it has never gone outside of 
it. So there is a lack of precedent from the Agency and a 
consistent source of case law that would suggest that 
everything has to be within the fence, and, frankly, that is 
the clear reading of the statute as well.
    Senator Capito. Thank you.
    Attorney General Pruitt, the proposed rule is clearly on 
shaky grounds, and I believe Mr. Martella said 4 years before 
we would actually maybe get a firm legal interpretation of it 
being finalized. So what happens if States start implementing 
the final rule, only to have the courts strike the rule down? 
What do they do? Are people going to start signing contracts 
and breaking ground? What kind of scenario does that present in 
your mind?
    Mr. Pruitt. Madam Chairwoman, I think it is a great 
question, because what has not been discussed this morning is 
the short time line that the EPA is likely going to propose 
when they finalize the rule next month. It is our understanding 
that it is going to be a 1-year compliance period for States to 
submit a State implementation plan, and by any estimation that 
is a very ambitious time line. As such, I think what is 
happening across the Country is respective Departments of 
Environmental Quality at the State level feel as though they 
are being pressured, intimidated to comply with a rule that 
perhaps is not consistent with the statutory construction, 
which is the purpose of our discussion here today. I am very 
concerned about the time line.
    And I would add, to Roger's comment earlier, you know, we 
have to keep in mind, in fact, one of my fellow panelists is a 
public utility corporation; she regulates this at the State 
level. The regulation of energy generation is a police power of 
the States that has historically been recognized as such 
through court cases, and for there to be any intervention into 
that police power, there is a rule of statutory construction 
that Congress speak explicitly, clearly, unambiguously to the 
authority of the Agency to invade that police power that has 
been recognized under the law. And I think by virtue of the 
discussion here today even among the panelists there is 
disagreement about whether this statute clearly provides that 
type of authority.
    Senator Capito. Another quick question. And I think your 
Governor has said that she will not be doing a State 
implementation plan, is that correct?
    Mr. Pruitt. There was an executive order recently issued by 
the Governor indicating that the DEQ is not empowered to submit 
an invalid plan to the EPA.
    Senator Capito. And I believe in West Virginia, Mr. 
Attorney General, that the State legislature weighed in on 
this. Could you talk about that just for a minute?
    Mr. Morrisey. Yes. Just recently, a couple months ago, the 
State legislature changed the law so that for the State of West 
Virginia to submit a State implementation plan the legislation 
would have to ratify it. That is different from the previous 
law, which would leave all that authority to the Governor.
    Senator Capito. All right. Thank you.
    Senator Carper.
    Senator Carper. Thank you, Madam Chair.
    Senator Inhofe may recall me telling this story before, but 
it bears, I think, repeating. Ten or so years ago I was 
involved in an effort with Senator George Voinovich and others 
to try to find agreement on multi-pollutant legislations 
dealing with sulfur dioxide and mercury and CO2, and 
as part of that process I remember meeting with a bunch of 
utility CEOs from all the Country and we spent about an hour or 
so together talking about how we might proceed. And at the end 
of the conversation this one old fellow who was with a utility 
from someplace down South, I don't remember just where, but he 
said to me these words, he said, look, Senator, here is what 
you need to do. You need to tell us what the rules are going to 
be. You need to give us some flexibility and a reasonable 
amount of time and get out of the way. That is what he said. 
Tell us what the rules are going to be, give us some 
flexibility, a reasonable amount of time, and get out of the 
way.
    And I would just say, if I could, for Ms. Heinzerling, 
think about that conversation and what that fellow said to me 
that day. How does it relate to what we are looking at here 
that the EPA is trying to accomplish?
    Ms. Heinzerling. I think it fits it exactly, Senator; that 
is, this Plan sets out what States are to do, gives them 
targets to meet, gives them the flexibility to choose the way 
they want to meet those targets. In this respect, it is strange 
and surprising to me that States are already saying that they 
would prefer to have the Federal Government set their plans. 
But it gives them that kind of flexibility to set their own 
plans to meet the targets, and then it gives them the times to 
do it. The time lines in this rule are notably long. We are 
looking out to 2030 for a final compliance with the structure 
of this Plan. So I think your story fits this rule perfectly.
    Senator Carper. Good.
    Ms. Backman, I think you were saying that Maryland has had 
a fairly heavy reliance on coal in the generation of 
electricity, and I think what you said was that you reduced 
over, I don't know, over the last 7 or 8 years, your two 
emissions by roughly 40 percent?
    Ms. Speakes-Backman. Yes, sir.
    Senator Carper. And you are part of this regional coalition 
with Delaware and a bunch of other States. In my last job that 
I had as Governor, I loved the idea of having flexibility. If 
the Feds wanted me to do something, I would say give me a menu 
of options that I would have. I understand there are, like, at 
least four options here that States can use, and this term of 
beyond-the-fence-line is an option that is sort of 
unprecedented. As I recall working on multi-pollutant 
legislation a number of years ago, we were anxious to see what 
kind of options that were outside the fence line.
    How could we help it with respect to CO2? How 
could we help by going to no-till? How could we help with 
respect to encouraging folks to plan switch class and other 
crops like that, so the idea of going out of the fence line, it 
just seems to me, as my dad would say, that just seems like 
common sense.
    Ms. Backman, talk to us about this flexibility, the idea of 
actually more flexibility not just by going out of the fence 
line, but actually by doing these regional solutions. How is 
having a regional solution helped Maryland? And we have 
Oklahoma, a producer of wind. God bless you. We are doing that. 
But if they were in a regional compact of some kind, could they 
actually get some help, as I am sure Maryland and Delaware 
have?
    Ms. Speakes-Backman. Absolutely. And thank you for the 
question. I will step back just a second and say that EPA has 
made unprecedented outreach to the utility regulators of the 
Nation through the National Association of Regulatory Utility 
Commissioners, and three things that we asked for across the 
board and three things we could all agree on, even if the NARU 
commissioners don't agree on everything. My good friend, 
Chairman McKinney, at the time, these were the things that we 
agreed on: that we wanted flexibility, that we wanted 
affordability, and that we wanted reliability. And I think the 
EPA's Clean Power Plan gives us all of those.
    Now, we have chosen to use all four of these building 
blocks in reducing carbon emissions from our RGGI region, but 
it is not necessarily necessary to do all four of those 
building blocks. And you are not limited to those four building 
blocks. The EPA has clearly set out a plan in setting up the 
goal, very separately from what the compliance plans will be, 
that you may use outside-the-fence-line solutions, and that 
includes energy efficiency and demand response that has 
actually helped us with reliability. It includes changing fuel 
sources from 56 percent coal to a much wider mix of fuel 
availability for our generation, which actually helps with 
reliability. So we have been able to meet multiple policy goals 
for our States that include reliability, affordability, and 
reducing carbon by reaching outside the fence.
    Now, that said, we still only regulate State-by-State we 
regulate in our RGGI construct at the power plant line. We are 
not going in and regulating through RGGI the energy efficiency 
programs of each State. Each State regulates their own. I, as a 
utility regulator, actually help to make those decisions.
    Senator Carper. Thank you.
    Ms. Speakes-Backman. Thank you.
    Senator Carper. My time has expired.
    Madam Chair, we have a simultaneous meeting going on in 
Finance on tax reform. I need to slip over there for a while. I 
will be back, though. This is a great hearing. Thank you.
    Senator Capito. Thank you.
    Senator Carper. Thank you all.
    Senator Capito. Senator Inhofe.
    Senator Inhofe. Thank you, Madam Chair.
    I listened to different people here and I get different 
ideas, and since I am a rare thing, I am not an attorney--most 
of the members of the Senate are--it seems to me that the 
practical application of EPA's proposal would require the 
States to pass new laws to revise existing regulatory systems, 
and I think of this and I think what is wrong with this 
picture. Should it be the role of an administrative agency to 
be forcing States to take this kind of action?
    And then, second, General Pruitt, is this consistent with 
the Clean Air Act, or how does that factor into it?
    Mr. Pruitt. Well, thank you, Mr. Chairman. I think, as we 
have discussed today, there is a question that keeps coming up 
in my mind. If this is such a flexible arrangement that is 
offered the States, if this is really within the bounds of 
cooperative federalism, why is it that the EPA presently is in 
the process of developing a uniform Federal implementation plan 
that they are going to put on the shelf to then say to the 
States unless you act a particular way, unless you act a 
particular way, unless you act consistent with the Rule, this 
is what you are going to get.
    That, to me, does not sound like cooperation. That does not 
sound like partnership. That sounds like the proverbial gun to 
the head of making States act a particular way, and it is 
consistent with the comments, Mr. Chairman, that I offered in 
my opening statement.
    This EPA looks at State implementation plans and says you 
can introduce and adopt a State plan so long as it embodies 
Federal will, so long as it embodies that which we want to 
happen on a State-by-State basis. And when States disagree, 
that is when these Federal implementation plans are forced upon 
the States. I don't think there is much discretion to the State 
of Oklahoma. As I indicated in my comments, we are already in 
the top four States in the Country in generating electricity 
through renewables and wind. But yet this EPA is expecting the 
State of Oklahoma to reduce their CO2 footprint by 
over 30 percent. The question is how, but for shuttering coal 
generation in the State of Oklahoma. That is a concern 
practically and it is a concern legally.
    Senator Inhofe. Well, looking at it as a non-attorney, you 
look at the Tenth Amendment, which refers to reserving power to 
the States. Do you think this is consistent with the Tenth 
Amendment?
    Mr. Pruitt. Well, I think this case, and I would add this 
to the comments earlier from the fellow panelists. I don't 
think it is terribly novel for us to have a dispute or a case 
about statutory construction. I indicated that it is a 
traditional police power to regulate power generation. And for 
the Federal Government to intervene or to invade that, the 
statute has to be explicit and clear and unambiguous; and I 
think by virtue of our discussion today it is demonstrative 
that that is not the case.
    So, Senator, I think it is less about the Tenth Amendment, 
less about States' rights under the Tenth Amendment, and more 
about statutory construction and whether the EPA possesses the 
authority that you gave it to regulate in this area.
    Senator Inhofe. Mr. Martella, do you have any comments 
about that?
    Mr. Martella. I would agree with that. If I could mention 
this theme of flexibility that has come up during our 
discussion, I don't think there is anybody who would dispute 
flexibility is a good thing. We all want flexibility. But I 
think there is a little bit of an apples to oranges situation 
going on. I apologize, but I have to go back to my pen.
    So if this is my coal-fired power plant, and if you are 
staying inside the fence line, EPA may say for coal-fired power 
plant you are currently emitting 2100 tons of CO2 
per megawatt hour. We are going to reduce you to 2,000 tons. 
That is inside the fence line. What EPA is saying, though, is 
we are going to look at nuclear and renewable and energy 
efficiency and these other things, and because we are looking 
outside the fence line, we are going to bring you down to 1200 
pounds of CO2 per megawatt hour, to the point this 
coal-fired power plant has to shut down.
    What we are saying or what I am saying is EPA has to set 
the standard. Set the standard inside the fence line. If there 
is flexibility on how you meet that standard, that is fine, but 
you can't look outside the fence in setting the standard. So we 
don't dispute, I don't dispute that flexibility is a good 
thing, but the distinction is the flexibility doesn't come in 
in setting the standard, it comes in on the compliance side.
    Senator Inhofe. OK, that is a good comment.
    General Morrisey, we will probably have another round of 
questions and I might get to that building block 3 question 
that I want to pose to you, but I know people in West Virginia 
and I know what is happening there right now. Even though this 
Rule has not gone into effect, what has happened to some of 
your coal plants, some of your utilities in your State already 
as a result of the threat?
    Mr. Morrisey. Well, Mr. Chairman, it is clear in West 
Virginia that the harm is already occurring. In fact, as we 
were preparing for the lawsuit that we filed last year against 
the EPA, one of the principal arguments that we made is that, 
unlike many of the other traditional rules that are subject to 
notice and comment, this proposed rule is actually causing real 
tangible harm in the States and also it is affecting power 
plant operations currently. If you go and look at our 
litigation, we have at least eight declarations from very 
experienced environmental regulators who talk about the cost of 
trying to comply with this rule.
    The other point that I would raise is that the timeframes 
associated with this proposal are hyperaggressive. You had a 
proposed rule that was issued June 2014, a final rule scheduled 
to be issued sometime this summer, and then while the 
regulators are suggesting that they may need many years in 
order to try to even come up with a plan, they have been given 
1 year. That is a very real problem.
    But there are real costs being expended by the States and 
also I believe that this Administration is not particularly 
interested in whether the rule is finalized so long as the 
marketplace actually moves away for them. If coal-fired power 
plants have to be retired much quicker than baseline, then they 
are going to accomplish their goal even if this regulation 
never is upheld in the courts.
    Senator Inhofe. Thank you, General Morrisey. I do want to 
follow up on this. I will wait until the second round.
    Senator Capito. Senator Markey.
    Senator Markey. Thank you, Madam Chair. Madam Chair, I 
would ask that two articles by Jody Friedman and Richard 
Lazarus be included in the record. They provide a very clear 
and thorough explanation of the constitutionality of the EPA's 
Clean Power Rule.
    Senator Capito. Without objection.
    Senator Markey. Thank you so much.
    [The referenced documents follow:]
   
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    Senator Markey. We are in a big moment. Pope Francis is 
about to issue an encyclical on climate change. The College of 
Cardinals did a very dangerous thing, they named a Jesuit who 
taught chemistry as the Pope. So Pope Francis believes, 
actually, that science is the answer to our prayers and we have 
to look at the smartest ways that we can deal with this to 
reduce the danger that growing greenhouse gases is going to 
pose to God's creation, the planet. And I think it is important 
for us, then, to find ways to accomplish that goal.
    So back in 1990 we worked on the Clean Air Act. I was on 
the committee to draft it and put that law on the books, and I 
added, actually, an energy efficiency section to the Clean Air 
Act to give more flexibility to the administrator at the EPA, 
George Bush's EPA administrator. And there were ways that 
utilities could comply with their acid rain requirements by 
undertaking activities beyond what was occurring at their power 
plants, and I can assure you that my intent and that of my 
congressional colleagues was to encourage utilities to look at 
the energy system in total to find ways of reducing sulfur 
pollution in the air.
    So Ms. Heinzerling, one objection that has been raised 
about the Clean Power Plan is that utilities might have to go 
beyond the fence of their power plants to achieve their 
emission targets. In addition to the acid rain program that I 
just mentioned, are there other examples of using energy 
efficiency renewables or other beyond-the-fence activities 
under the Clean Air Act?
    Ms. Heinzerling. Yes. Very early on, something like 35 
years ago, EPA issued a rule that included washing of coal 
before it was burned as a compliance mechanism for dealing with 
the Clean Air Act. It was something that wasn't within the 
source, it wasn't a typical end-of-the-pipe kind of measure. In 
regulating interstate pollution or interstate conventional air 
pollutant under the Clean Air Act, EPA has for many years 
included renewables in energy efficiency as potential 
compliance mechanisms.
    If I may just extend this example just a bit further 
afield, but I think it illustrates that you are talking about, 
if you look at the program under the Clean Air Act, under 
Section 202 to regulate mobile sources, you might, if you 
looked at that quickly, you might think that is the classic 
end-of-the-pipe measure. And yet if you look at EPA's most 
recent rules on greenhouse gas emissions for mobile sources, 
EPA has, in the terms used today, gone beyond the fence line. 
They included flexibilities in their rules that made the rule, 
I think, a marvel of modern regulation. They included 
consideration of the footprint of the vehicle and the air 
conditioning refrigerants used in the vehicle, and flex fuel 
vehicles. So if you look not just at the pollution regulation 
that we have been talking about, of stationary sources, but 
beyond that under the Clean Air Act, it has, I think, become 
standard to look for flexibilities.
    Senator Markey. I agree with you, and that was the intent 
of the 1990 Act, it was to give more flexibility, it was to use 
a different model; and I think that is what this proposed Rule 
is going to do as well, it is going to say to each State, move 
in a way that accomplishes the goal, but we are going to be 
very flexible.
    Let me ask you this question. The constitutionality of 
EPA's approach to setting public health standards has been 
challenged before. The Supreme Court upheld EPA's approach in a 
9-to-nothing opinion in Whitman v. American Trucking in 2001. 
In 2011, the Supreme Court ruled that EPA has the authority to 
set standards for carbon pollution under Section 111(d) in an 
8-to-nothing opinion in American Electric Power v. Connecticut. 
And during the oral arguments in that case the counsel argued, 
on behalf of AEP, said to the Court we believe that the EPA can 
consider, as it is undertaking to do, regulating existing, non-
modified sources under Section 111 of the Clean Air Act.
    Ms. Heinzerling, is there really any constitutional 
question about EPA's approach or their legal authority to 
regulate carbon pollution under Section 111 of the Clean Air 
Act?
    Ms. Heinzerling. No, I don't think so. I think the 
constitutional issues have been a distraction. I think they 
have been used to make people worry that maybe there is lurking 
a real constitutional issue, so we better interpret this 
statute narrowly. But the constitutional arguments, I think, 
are flimsy. And the statutory authority under the Clean Air 
Act, as I have said, I think is clear.
    Senator Markey. Beautiful. Thank you.
    Thank you, Madam Chair.
    Senator Capito. Thank you.
    Senator Barrasso.
    Senator Barrasso. Thank you very much, Madam Chairman.
    Attorney General Pruitt, good to see you again. Oklahoma is 
a fossil fuel producing energy State. Attorney General 
Morrisey, the State of West Virginia, like the State of 
Wyoming, is a coal State. All of our States are particularly 
hit by the slew of proposed EPA rules aimed squarely at the 
fossil fuel industry and the folks that work in that industry.
    I would like to highlight a letter from the Governor of my 
home State of Wyoming, Governor Matt Mead, to EPA Administrator 
Gina McCarthy on April 28th of this year, and I ask that the 
Governor's letter be entered into the record, Madam Chairman.
    Senator Capito. Without objection.
    Senator Barrasso. Thank you.
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    Senator Barrasso. In this letter, the Governor highlights a 
recent study by the Center for Energy Economics and Public 
Policy at the University of Wyoming entitled, The Impact of the 
Coal Economy on Wyoming. It was published in February of this 
year.
    I would ask also that this study be entered into the 
record.
    Senator Capito. Without objection.
    Senator Barrasso. Thank you.
    [The referenced document follows:]
    
    
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    Senator Barrasso. The Governor states about the study that 
the study determined the single largest threat to Wyoming's 
coal industry is EPA's Clean Power Rule. In fact, the study 
says that 111(d) climate regulation has the potential to 
drastically decrease Wyoming coal production. Production coal 
output under the most favorable production circumstances 
decreases by 32 percent of the 2012 production by the year 
2025.
    The study goes on to say even the best case impact modeling 
of the 111(d) scenario suggests a loss of over 7,000 jobs 
across the State by 2025 relative to the employment in 2012. It 
also says overall proposed carbon regulations result in a 
predicted decline in the State's combined coal and natural gas 
revenues of between 36 percent and 46 percent by 2030.
    So our State is finding that this Rule will cost thousands 
of good paying jobs, will drastically slash State revenue that 
pays for college scholarships, schools, medical emergency 
services, road safety programs, environmental protection 
programs, water quality services, veteran services, other vital 
services. Wyoming children, seniors, veterans, fish and 
wildlife, they don't deserve, I believe, this dramatic cut in 
revenue by the EPA.
    So I find this is recklessly irresponsible, where the costs 
are so clear and devastating, and the benefits are theoretical 
or unknown. So my question to the two of you is this: Are these 
statistics and findings similar to what you are seeing and you 
are concerned about in your States? And how will essential 
services, State services for children, seniors, as well as the 
environment, be impacted both in Oklahoma, as well as in West 
Virginia?
    Mr. Morrisey. Sure. So I think you raise a number of very 
important issues. We have obviously received a great deal of 
feedback from coal operators, from power plants, from coal 
miners in the State of West Virginia about the devastating 
impact of these rules. But there are a couple other 
implications as well.
    For instance, West Virginia, as its tax base, relies very 
heavily on coal severance revenues. If you were to look at a 
chart and examine some of the revenues that come into each of 
the counties from 2011 to now, you will start to see a very 
rapid decline. Just recently we have seen news publications 
about a number of people that were laid off in the counties 
because the coal severance tax revenue had declined.
    The regulations here have far-reaching implications well 
beyond coal operators. The fact is for every job that you have 
related to coal directly in West Virginia, there are probably 
seven jobs that tie in indirectly. It has a fundamental impact 
on our economy, and that is just one of the many reasons why 
our office has been focused so much on this, because it would 
be an absolute travesty to finalize a rule that ultimately has 
a real likelihood of being struck down in the courts.
    Senator Barrasso. So the regulations have a direct impact 
on the people and the quality of life of the people in your 
State.
    Mr. Morrisey. Without a doubt. I mean, as you are looking 
at these issues, there are always a wide variety of reasons 
that give rise to a particular decision by a power plant 
operator or a mine operator to change employment status, but 
regulatory burdens is always very high on that list.
    Mr. Pruitt. And, Senator, if I could add to General 
Morrisey's comments. Though we do not have a robust coal 
economy, we do actually have coal in the State of Oklahoma, we 
are vertical in our energy diversity, I think what is lost in 
the debate at times is the impact on consumers, those that will 
be consuming electricity in the future. In the State of 
Oklahoma, between coal and natural gas, 78 percent of our 
electricity is generated. As I indicated in my opening comment, 
15 percent of our electricity is generated through the wind.
    The choices available to the State of Oklahoma to comply 
with this mandate from the EPA of reducing CO2 by 
over 30 percent, it puts us in the position of having to make 
decisions about the shuttering of coal generation, which, as I 
indicated, makes up over 40 percent of our electricity 
generation. That is going to increase costs substantially to 
consumers; this one rule.
    To give you an example, in the Clean Air Act there is 
something called the regional haze statute, as you know, 
section of the Clean Air Act. That one rule alone, between PSO, 
Public Service Company of Oklahoma, and OG&E in the State of 
Oklahoma have seen 15 to 20 percent increases in their 
generation of electricity with just one rule. When we combine 
all these others, it is going to be, obviously, substantially 
more than that in the future for consumers in the State of 
Oklahoma.
    Senator Barrasso. So these regulations would directly hurt, 
hurt the people of Oklahoma.
    Mr. Morrisey. Some of the folks that can least afford it.
    Senator Barrasso. Thank you.
    Thank you, Madam Chairman.
    Senator Capito. Thank you.
    Senator Whitehouse.
    Senator Whitehouse. Thank you very much, Madam Chairman. 
This is an interesting hearing because the questioners on the 
Republican side and the attorneys general who are present are 
all from States that have the characteristic that Attorney 
General Pruitt just described, i.e., they have a robust coal 
economy. And clearly we have a practical problem in that the 
burning of coal for electric generation creates some very, very 
dangerous consequences; but they are not fairly distributed. So 
where there is a robust coal economy, this creates one kind of 
problem.
    In Rhode Island, where our oceans are up 10 inches against 
the shore where our fishermen are seeing fisheries disappear, 
where houses that have been there for generations are falling 
into the ocean, we have a very different set of problems. And I 
think it is important, if we are going to address this, that 
we, on the one hand, recognize that there may very well be 
economic effects within coal economies from trying to unburden 
ourselves of the environmental consequences of coal burning; 
and we are, I think, very willing to work with you to mitigate 
those consequences.
    But we can't allow those consequences to take us to a point 
where we deny that the problem exists. That is just 
irresponsible and factually wrong, and ultimately, I think, 
potentially really quite disgraceful to the institutions that 
we all serve.
    So let me ask you first, Attorney General Pruitt, you said 
that one of the problems with the EPA regulation was that this 
issue should be left to the local level. Please tell me what 
Oklahoma is doing at the local level to address carbon 
pollution and climate change.
    Mr. Pruitt. Senator, if I could, in response to your 
question, also say that I did not make a reference to the coal 
economy in the State of Oklahoma. We do not have a robust coal 
economy. In fact, our percentage of generation of electricity 
attributable to coal is 40 percent, which is less, I think, 
than perhaps Maryland, as it was referenced earlier.
    Senator Whitehouse. Well, I wrote it down as you said it, 
and it was robust coal economy. But if that wasn't correct, 
then I apologize and I stand corrected. The record will be what 
the record is.
    Mr. Pruitt. But I think what Oklahoma has done is engage in 
a very much a balancing effort between diverse fuel sources, 
from renewables at 15 percent of generated electricity to 40 
percent in coal.
    Senator Whitehouse. Why? How does climate change roll into 
that calculation?
    Mr. Pruitt. Well, our focus through public utility 
corporation decisionmaking, as well as my focus as attorney 
general, is not to engage in policy debate about whether 
climate action is occurring or not.
    Senator Whitehouse. Why not?
    Mr. Pruitt. It is to look at the statute to determine 
whether the EPA is engaging in a process that is consistent 
with the authority that you have given the EPA.
    Senator Whitehouse. But why would you be willing to look at 
the consequences of the regulation on, for instance, the coal 
economy, but not be willing to look at the consequences of this 
regulation on environmental protection? Why is that the debate 
that you think you need to stay out of when you are willing 
actively to get into the debate on the other side? That doesn't 
seem balanced.
    Mr. Pruitt. Again, Senator, I think my comments were 
referring to the decisionmaking, the discretion that the State 
is engaged in as far as balancing generation of electricity 
between coal and fossil fuels.
    I would also say to you it is Congress that should be 
jealous about protecting its role and what it has told agencies 
what they can and cannot do. It is Congress that has set up the 
framework that we are talking about this morning between 111 
and Section 112.
    Senator Whitehouse. Well, we passed the statute that it is 
following, and I am comfortable that they are following it. So 
I am not actually jealous at all; I think they are doing 
exactly what Congress intended. So I am very comfortable with 
that.
    What I am concerned about, we heard from Senator Barrasso 
here, from Wyoming, a very important coal State, that the 
benefits of this rule are theoretical or unknown. They are not 
theoretical or unknown. They are very clear. They are very 
specific. And there are people who are very knowledgeable about 
it.
    If I could use the remainder of my time to quote one very 
well known scientist on this who says, ``We know precisely how 
fast CO2 is going up in the atmosphere. We have made 
a daily measurement of it since 1957. We have ice core data 
before that. We know without any question that it has increased 
by almost 40 percent since the industrial revolution, and that 
that increase is due to human activity, primarily fossil fuel 
burning and, secondarily, bad use in agriculture. There is no 
debate about that.''
    He continues, ``There are lots of scientific uncertainties, 
but the fact that the planet's warming and the fact that 
CO2 is a greenhouse gas, and the fact that is 
increasing in the atmosphere and that it increased in the 
atmosphere due to humans, about those things there is no 
debate.''
    And that is a statement of Dr. Berrien Moore III, who is 
the Dean of the University of Oklahoma's College of Atmospheric 
and Geographic Sciences. And I think we need to be a little bit 
fairer about these hearings if we are going to get to a 
suitable result.
    My time has expired and I yield back.
    Senator Capito. Thank you.
    I think I would like to ask another question, make another 
statement. I believe the chairman of the full committee and 
Senate, certainly, if you are here still, we will go through 
another round.
    I would just react a little bit to some of the comments 
that were made in terms of the constitutionality and the legal 
authority that we are looking at here. I think we all need to 
be mindful that this can swing both ways in different 
administrations. Just because this time I think the 
constitutional overreach is too much and is something that 
bears terrific scrutiny, it is not to say that in another 10 
years another administration, that Senator Whitehouse would be 
thinking the same thing because of the direction it is going. 
So I think this is extremely important to look at the legal 
implications.
    Also, the comment was made that there was tremendous 
outreach to the State regulators, and I would reinforce what I 
said in my opening statement, and that I have said before this 
committee before and actually testimony was in front of the 
committee, that the primary administrator in charge of this at 
the EPA wouldn't even come in to the State, our State, to hear 
about the seniors whose prices of electricity are going up, the 
miners who have lost their jobs, the manufacturers who are 
going out of business who are concerned about the price. So I 
think maybe there has been outreach, but there hasn't been 
enough outreach, in my opinion, to the regular folks that are 
really being heavily impacted in those States, where I live.
    I am going to ask really quickly a question to Mr. 
Martella. We have heard a lot about whether the--I am getting 
back into the legal authority on the four building blocks. What 
legal authority, if any, does the EPA have under the Clean Air 
Act to impose disposal requirements on natural gas-fired power 
plants? Because that is one of their building blocks.
    Mr. Martella. So thank you for asking that question, and 
the question about the building blocks two, three, and four, 
the dispatching the renewable energy, the energy efficiency.
    Senator Capito. I am going to ask the same question about 
all of them, so just wrap it in there.
    Mr. Martella. OK, maybe I can give you the same answer to 
all of them. They sync up with your question about 
constitutionality, cooperative federalism in this relationship 
we are hearing from all the witnesses on the relationship 
between the Federal Government and the States. I would like to 
answer it in this one way, and it is something that Professor 
Heinzerling said in her written testimony. A lot of people make 
analogies to the ESPS and the NOx program, which is 
something this committee is very familiar with. People say, 
well, EPA has always been able to implement the NOx 
program; the Supreme Court has endorsed it. Professor 
Heinzerling said this is not materially different than that.
    But it is materially different, and I think this is the 
answer to your question. In the NOx program, 
Congress has specifically authorized EPA to regulate 
NOx pollutants, and it has authorized EPA to 
delegate that authority to the States. So there are two things 
that are different there. At the outset, there is no doubt that 
Congress has delegated this authority to EPA, and Congress has 
said you can give this authority to the States or you can take 
it back.
    The fundamental distinction with the Clean Power Plan, when 
we talk about blocks two, three, and four, is EPA saying we now 
want States to implement a renewable portfolio standard, or 
dispatching system, or an energy efficiency system; and the 
distinction here is there is no debate that Congress has never 
authorized EPA itself to run a renewable portfolio standard in 
West Virginia, or a dispatching system in Oklahoma, or an 
energy efficiency program in Rhode Island. So Congress itself 
has never given that authority to EPA. EPA cannot, therefore, 
delegate that authority further to the States.
    That is just kind of a summary way that I think brings 
together these themes of cooperative federalism, constitutional 
issues, and the flexibility questions that have come up so far 
today.
    Senator Capito. So just so I understand specifically, you 
are saying that in the area of NOx, that there is 
specific legislative authority for the EPA to go into the 
direction that they have gone.
    Mr. Martella. That is correct. That has been well settled; 
the Supreme Court has addressed that several times and it is 
very clear what Congress set up this cooperative federalism 
system there. Again, if a State decides, if my colleague here 
from Oklahoma decides not to implement the EPA NOx, 
Congress has specifically said, well, EPA has the authority in 
the first instance. If Oklahoma decides not to implement a 
renewable portfolio standard, Congress has never authorized EPA 
to implement that renewable portfolio standard.
    Senator Capito. Thank you.
    Attorney General Morrisey, how many States did you say 
joined in the case that you just recently brought?
    Mr. Morrisey. Well, right now we have 15 States, which 
includes both attorneys general and Governors; and obviously in 
the D.C. Circuit there were three cases that came together and 
were consolidated. We led the State effort and then there were 
other industry efforts as well.
    Senator Capito. Would you characterize the 18 States as 
ones similar to West Virginia, Wyoming, Oklahoma, energy 
producing States, or are they just heavily reliant on coal, or 
is it all over the board?
    Mr. Morrisey. My sense is that these are strong energy 
producing States, but I would note that this is a bipartisan 
coalition. The State of Kentucky is also on board with our 
lawsuit as well, so we have obviously been reaching out to more 
and more States because we believe that even non-coal producing 
States or energy producing States should care fundamentally 
about whether this 111(d) Rule gets finalized because of some 
of the legal implications.
    Senator Capito. Thank you.
    Senator Whitehouse.
    Senator Whitehouse. Thank you very much, Chairman.
    Attorney General Morrisey, is climate change a problem 
anywhere in the world?
    Mr. Morrisey. Well, Senator, my role is to serve as the 
chief legal officer of the State of West Virginia.
    Senator Whitehouse. That is a pretty simple question.
    Mr. Morrisey. So I am not going to make an argument today 
about climate change and whether the temperature is evolving, 
because regardless of the policy merits of anyone's proposal, 
policies have to be implemented in a lawful manner, and that is 
one of my main obligations as the attorney general of the State 
of West Virginia.
    Senator Whitehouse. Well, let me just ask Attorney General 
Pruitt, is climate change a problem anywhere in the world?
    Mr. Pruitt. Senator, I think that the process matters that 
the EPA engages in to address these issues.
    Senator Whitehouse. I get that. But I didn't ask you a 
process question; I asked you a question about whether climate 
change is a real problem anywhere in the world.
    Mr. Pruitt. I think the question about climate action plan 
of the President, climate change, is something that is a policy 
consideration of this Congress. If you want EPA to address that 
in a direct way, you can amend the Clean Air Act to provide 
that authority and the statutory power to do so, so that the 
States can know how to conduct themselves in a way that is 
consistent with statutory construction.
    Senator Whitehouse. So, to be clear, neither of the 
attorneys general present will concede that climate change is a 
real problem anywhere in the world.
    Mr. Pruitt. Senator, I think it is immaterial to 
discussions about the legal framework of the Clean Air Act.
    Senator Whitehouse. Immaterial or not, I get to ask the 
questions, so it is material to my question.
    All right, let's go on to something else.
    We have talked a lot about kilowatt hour cost, and I would 
like to make a point, which is that the price of electricity in 
Rhode Island, my home State, was 15.2 cents per kilowatt hour. 
That compares to 9.67 cents per kilowatt hour in Oklahoma and 
it compares to 9.52 cents per kilowatt hour in West Virginia. 
However, because of Rhode Island's investment in efficiency and 
a whole variety of programs particularly through RGGI, which 
has been mentioned earlier, that have been able to bring our 
usage down, Rhode Islanders paid only $91.48 per month for 
electricity, compared to $110.47 in Oklahoma and $106.44 in 
West Virginia.
    Will both of the attorneys general from West Virginia and 
Oklahoma concede that the real impact to a consumer is the 
dollar amount that they have to write on the check that pays 
the bill?
    Mr. Morrisey. Well, Senator, I think where you are going 
right now, some of the details in terms of how electricity 
prices may vary across the State is a policy question. In West 
Virginia we have heard deep concern from power plant operators, 
from coal operators about what the impact will be on 
electricity prices, so we have seen that in the context of 
other proposed regulations that have gone through.
    But I think it is important to reiterate right now to 
choose a policy objective and try to advance it through 
unlawful means is something that everyone in this body should 
reject.
    Senator Whitehouse. Can I go back to the question that I 
actually asked? Isn't the economic effect of a policy made real 
in a consumer's life by the amount of the check that they 
actually write, rather than a per kilowatt hour cost?
    Mr. Morrisey. I think Senator, most people look at the 
amount that they are paying when they get in the bill; they 
don't analyze the economic effect.
    Senator Whitehouse. That is right.
    Attorney General Pruitt, you agree?
    Mr. Pruitt. I think, Senator, that what is important for 
utility companies across the Country is to have choices, 
flexibility in the diversity of the portfolio to generate 
electricity.
    Senator Whitehouse. I agree with all that, but my question 
was quite specific, and that is when you are a utility 
consumer, in terms of the economic effect on you, what really 
matters is the amount of the check you write, correct?
    Mr. Pruitt. And the long-term economic effect of shuttering 
coal generation or fossil fuel generation in this Country, 
long-term, will be substantial on consumers.
    Senator Whitehouse. Well, you didn't answer my question; 
you segued into your lobbying on behalf of coal. But the answer 
to the question is yes or is it no, that the real difference is 
made by what the bill is?
    Mr. Pruitt. Senator, I maintain that the State of Oklahoma 
is experiencing an increase in cost to consumers because of the 
EPA's heavy hand of eliminating fossil fuels from the energy 
mix.
    Senator Whitehouse. Well, I would suggest to you that you 
try what Rhode Island did, because our costs are higher than 
you, but our bills are lower than yours because we actually 
took the trouble to invest in a significant way in energy 
reduction and efficiency.
    With that, my time has expired.
    Senator Capito. Senator Inhofe.
    Senator Inhofe. Thank you, Madam Chairman.
    We have been talking about this since 2002, and I can 
remember down on the Senate floor they tried to pass a similar 
thing that this regulation would do, but pass it by 
legislation; and I saw what happened. In fact, that first bill 
was the McCain-Lieberman bill; and McCain was a Republican. We 
decisively defeated that bill and every bill since that time. 
Senator Markey is not here now. He actually had a bill up also. 
Now, that has happened.
    This discussion about the science is settled, the science 
is settled, the science is settled, every time something comes 
up where the science isn't settled, all they talk about is that 
science is settled because they don't want to elaborate on 
that. I want to make a part of the record an article a couple 
weeks ago in The Wall Street Journal called The Myth of Climate 
Change 97 Percent.
    This whole thing, they keep saying 97 percent of the 
scientists. This totally diffuses that. It would take me too 
long to read it, so I will put it into the record without 
objection.
    Senator Capito. Without objection.
    [The referenced article follows:]
    
    
       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Inhofe. Talk about some of the scientists. I know 
Richard Lindzen. I have talked to him. He was quite upset back 
when then-Vice President Al Gore was using this politically for 
his career. Richard Lindzen is an MIT professor who is 
recognized as being one of the top professors around in the 
climate and the very thing that we are talking now, and people 
ask him the question why is it that people are so concerned 
about regulating CO2. He said it is a power grab. He 
said, and these are his words, regulation of carbon is a 
bureaucrat's dream. If you regulate carbon, you regulate life.
    So this whole idea that the science is settled, the science 
is settled is just flat not true.
    Now, I know that people have 12 years of their life wrapped 
up in this issue as the only issue of our time; they don't like 
to recognize this fact, but, nonetheless, this is a problem. In 
fact, I will do this from memory because I have said it so many 
times. You go back and you see these cycles that take place in 
the world. In 1895 we went into the first cold spell that has 
been really talked about, it was about a 30-year cold spell; 
and that's when they first said another ice age is coming and 
all of that, trying to get people alarmed. Because the world is 
always coming to an end when this happens.
    Then in 1918 we went into a warm spell that lasted about 30 
years, and that was the first time you heard global warming. 
That was 1918. That was a long time ago.
    Then 1945 they changed and it started going into a cold 
spell.
    Now, this is the interesting thing about these 30-year 
cycles; and it goes right up until today: the year that we had 
the greatest surge in emissions of CO2 was right 
after the second World War, you guys know this, it was 1945; 
and that precipitated not a warming period, but a cooling 
period.
    These are realities. I can remember speeches I made on the 
floor in response to things that my good friend from Rhode 
Island has said when I talk about what is the reality of what 
is going on today.
    So we are going to hear more of this and I know that there 
is an effort now to have this bureaucratic thing that, in my 
opinion, it doesn't have what it is supposed to have. The only 
thing I want to get back in and get the response from both 
attorneys general is a matter of what we have been talking 
about, flexibility. Senator Markey talked about it, Ms. 
Heinzerling talked about it. The EPA often talks about the 
flexibility and would say that the EPA simply is hiding behind 
the flexibility while, in reality, forcing States to figure out 
how to make the least economically devastated decisions.
    So I would just ask the two of you does the Clean Power 
Plan provide States with any real flexibility? Every witness 
has talked about flexibility.
    Mr. Morrisey. I think if you look at this concept of 
flexibility, it is a false concept. The reality is that States 
are having an enormous amount of pressure applied to them to 
develop a State implementation plan within 1 year. Based upon 
the declarations that we receive from many of the States, 
people really don't think that is possible; that the goals of 
this proposal are so severe that States are not going to be 
able to come into compliance. So when you look at the proposal 
the way it is constituted, I don't think it is fair to say that 
it is flexible.
    But our argument has always been regardless of whether 
people think that is desirable from a policy perspective, the 
law actually doesn't even allow the EPA to go outside the fence 
to develop that kind of flexible approach.
    The final point I would also make is that if you look at 
the predicate rule that is required before finalizing the 
111(d) Rule that is for new source performance standards, that 
obviously does not rely on outside-the-fence technology. When 
they develop their best system of emission reductions, it is 
much more narrow.
    Senator Inhofe. General Pruitt.
    Mr. Pruitt. I think that my colleague, my fellow panelist 
here, Roger, addressed it well earlier. Flexibility with 
respect to how plans are adopted is something the States 
endeavor to possess and have, but flexibility with respect to 
performance standards, inside-the-fence versus outside-the-
fence, that is what we are really facing here. The EPA has 
taken an approach of forcing performance standards upon the 
State of Oklahoma that outside-the-fence, they are providing 
less options in the future as far as how to comply.
    Senator Inhofe. Thank you, Madam Chairman.
    Senator Capito. Thank you.
    Senator Carper.
    Senator Carper. Thanks much.
    If I could, I am not a lawyer either. I studied economics, 
got an MBA, but I am not a lawyer, and I don't understand some 
of this discussion when we get into these technicalities. But I 
do know this: I have seen us pass legislation when I was in the 
House with Senator Inhofe and in the Senate where we were 
putting the same bill, conflicting approaches to the same 
issue. In some cases we were just unable to resolve our 
differences, so we put both in and say somebody else will 
figure this out. I think, in a way, when I saw this discussion 
around Section 111(d) of the Clean Air Act, it reminded me of 
that kind of behavior.
    I am looking at your testimony, Lisa, where you say based 
on the text of Section 111(d) alone, EPA has persuasively 
defended its proposed view that the statute is ambiguous and 
that its interpretation is reasonable. These are the criterion 
for the Chevron deference and EPA has met them.
    Explain this so I can understand. I think I do, but we have 
these two amendments, one dropped out of the Code, but now I am 
told it still is in another life. Explain this to us, please.
    Ms. Heinzerling. So, Congress, in 1990, passed two 
different amendments to Section 111(d). One seemed to look to 
pollutants; one seemed to look to sources. But as EPA has 
explained, as I note there, they are not entirely clear, either 
one of them standing alone, and the combination is not entirely 
clear coming together. So what EPA has tried to do is try to 
take from each amendment something, and what it said is you 
cannot regulate the same pollutants from the same sources under 
both programs, Section 111 and 112.
    That is the kind of judgment, as you are suggesting, that 
agencies make all the time. There are many times when statutes 
aren't entirely clear. They may contain provisions that are in 
contention with each other, and agencies resolve them. And this 
usually is a straightforward application of what I call there 
as Chevron deference, which is a case in which the Supreme 
Court said that if a statute is not clear, if policy judgments 
are left to the agency to make, then the agency gets deference 
to a reasonable interpretation of the statute.
    And here I think the text allows EPA's interpretation. I 
would also say, in light of the comments earlier about the 
problem of global warming, just imagine if the EPA said, no, we 
will take the interpretation that does not allow us to regulate 
the sources of greenhouse gases that emit the most greenhouse 
gases in this Country, and to attack the problem of climate 
change by doing that; we are going to pick the interpretation 
that does not permit us to do that. That would be quite 
strange.
    Senator Carper. Yes, it would.
    Question if I could, Ms. Backman, please. I want to go back 
to the issue of whether the science of climate change is 
settled law. Just very briefly, do you think it is or do you 
think it is not?
    Ms. Speakes-Backman. I am sorry, could you repeat that?
    Senator Carper. The question on whether the science of 
climate change is indeed settled law. Do you believe it is? Do 
you believe it is not?
    Ms. Speakes-Backman. Well, Senator, I am also not a lawyer, 
and I am not a climate scientist, but I do choose to believe 
the overwhelming majority of climate scientists who say it is 
real and say it is caused by humans. So now we need to act. And 
I can tell you also that there is a cost to action, but there 
is also a cost to inaction. And I can tell you, as one who is 
responsible for consumers, electricity consumers who depend on 
reliable, affordable energy, that certain ways to help the 
system include renewable energy, include energy efficiency, 
include demand reduction to help with those reliability issues 
and to help with the resiliency of our system.
    Senator Carper. OK, that is fine. Just hold it right there.
    One last question, if I could, for Lisa. Are EPA's proposed 
carbon standards supported by the three Supreme Court decisions 
in Massachusetts v. EPA and American Electric Power v. 
Connecticut and Utility Air Regulatory Group v. EPA? Thanks 
very much.
    Ms. Heinzerling. Yes.
    Senator Carper. Tell us more.
    Ms. Heinzerling. Yes. Massachusetts v. EPA, of course, held 
that greenhouse gases are air pollutants within the meaning of 
the Clean Air Act. I think much of what we hear against EPA's 
Clean Power Plan is an attempt to re-litigate that case, to 
tell us that carbon dioxide is not really an air pollutant, it 
is not dirty somehow, so, therefore, it is not regulable under 
the Clean Air Act. That case clearly holds that these 
pollutants are regulable under the Clean Air Act.
    American Electric Power is interesting because it relied on 
regulation under Section 111(d) in holding that there was no 
so-called Federal common law, court made law of global warming 
pollution. That is significant because if this regulation goes 
by the boards, then all the reasons for that common law come 
back to force.
    And the last, the Utility Air Regulatory Group, it seems to 
me that case can be understood most generally first as a 
victory for most of EPA's greenhouse gas program that was at 
issue there and, second, it asked EPA to look section-by-
section and make sure that regulation under a particular 
provision of the Clean Air Act made sense for particular 
pollutants. That is exactly what EPA has done here.
    Senator Carper. Madam Chair, I would just say this is a 
good panel, and I commend you and our staffs for pulling them 
together.
    Thank you all for coming. If I ever go to law school, I 
would like you to be my professor.
    Senator Capito. Thank you very much. I would like to thank 
the panel and thank the Senators.
    Senator Whitehouse. Will there be questions for the record 
allowed?
    Senator Capito. Yes. We will leave the record open for 2 
weeks and you can submit questions for the record.
    Senator Whitehouse. Very well. We will do that.
    Senator Capito. Thank you all very much. Appreciate it. 
Appreciate your patience when we had to leave.
    This hearing is adjourned.
    [Whereupon, at 11:52 a.m. the committee was adjourned.]
    [An additional statement submitted for the record follows:]

                 Statement of Hon. Benjamin L. Cardin, 
                U.S. Senator from the State of Maryland

    I want to welcome Maryland Public Service Commissioner, and 
Chair of the Regional Greenhouse Gas Initiative, Kelly Speakes-
Backman to the Committee and thank her for her service and 
willingness to testify before the Committee. Commissioner 
Speakes-Backman has served on the Maryland PSC for 4 years and 
has spent more than 20 years working on energy, sustainability, 
and environmental business strategies.
    She is a tremendous asset to RGGI for which I am proud 
Maryland is an active participant. Through her work on the PSC, 
the Maryland Energy Administration and RGGI, she has helped 
Maryland take steps to reduce its carbon footprint while 
maintaining affordable and reliable energy and helped grow new 
and exciting business opportunities in the State.
    Thank you for being here.
    With bi-partisan support, Congress passed the Clean Air Act 
that President Richard Nixon signed into law on the last day of 
the year in 1970. The Clean Air Act came about in response to 
devastating air pollution that made it nearly impossible to see 
the sky during certain times of the year in cities like Los 
Angeles, New York and my home town of Baltimore.
    After almost 45 years, the Clean Air Act has effectively 
helped clean up the air in most major cities. The proof is in 
the decline of bad-air days we experience in the Mid-Atlantic 
and Northeast during the hot summer months. It used to be that 
in the DC-Baltimore metropolitan areas during the 1970s, 1980s 
and 1990s, anytime the temperature reached into the 90s we'd 
inevitable have ground level ozone levels so high that the 
National Weather Service would issue ``red alerts'' for air 
quality.
    The Clean Air Act is working. The number of ``red alert'' 
and ``orange alert'' days have been in decline, despite our 
region experiencing some of the hottest summers on record since 
the start of this century. Not to mention that our nation's 
economy has expanded exponentially under the Clean Air Act.
    I'd like to address a legislative proposal that recently 
passed the House allowing States to opt out of the Clean Air 
Act. When EPA promulgates rules to reduce smog causing 
pollutants like NOx and SOx, Members of 
Congress may complain about the stringency of the requirements, 
but Congress has never entertained legislation allowing upwind 
polluters to opt out of the regulations designed to protect 
their neighbors' air quality and public health. Yet the 
approach of excusing responsibility of States from contributing 
to addressing a national problem is precisely what is moving 
through Congress and that the majority leader is writing 
letters to Governors urging them to do.
    EPA's authority to regulate CO2 under the Clean 
Air Act has been affirmed by the Supreme Court in two landmark 
Clean Air Act cases. When the commonwealth of Massachusetts, 
among other States, took EPA to court over a petition of 
certiorari for abdicating its responsibility to regulate 
greenhouse gases under the Clean Air Act, the court, in 
Massachusetts v. EPA (2007), found in favor of Massachusetts.
    The Clean Air Act defines ``air pollutant'' as ``any air 
pollution agent or combination of such agents, including any 
physical, chemical, biological, radioactive . . . substance or 
matter which is emitted into or otherwise enters the ambient 
air.'' On remand from Massachusetts v. EPA, EPA found that six 
greenhouse gases, emitted from the combustion of carbon based 
fuels, ``in the atmosphere may reasonably be anticipated both 
to endanger public health and to endanger public welfare.''
    The Court prescribed EPA conduct an endangerment finding 
process to determine how greenhouse gases ``cause, or 
contribute to, air pollution which may reasonably be 
anticipated to endanger public health or welfare.''
    In 2009, EPA conducted its endangerment finding, it was 
subject to public comment, there were several public hearings, 
thousands of public comments were received and eventually the 
Endangerment Finding was finalized. Without surprise the 
Endangerment Finding was challenged.
    The U.S. Chamber of Commerce and The National Manufacturing 
Association, under a coalition named ``The Coalition for 
Responsible Regulation,'' brought the challenge in a 
consolidated court case. This group also challenged the Light 
Duty Truck Rule: a rule developed to harmonize regulations to 
reduce GHGs and improve fuel economy in small trucks; and the 
Tailoring Rule: which set GHG thresholds for regulating GHGs 
under New Source Review Prevention of Significant 
Deterioration.
    In Coalition for Responsible Regulation v. EPA, the 
petitioners sought judicial review of EPA's determination in 
the U.S. Court of Appeals, D.C. Circuit. On June 26, 2012, the 
court issued an opinion which dismissed the challenges to the 
EPA's endangerment finding and the related GHG regulations.
    The three-judge panel unanimously upheld the EPA's central 
finding that GHGs such as CO2 endanger public health 
and are likely responsible for the global warming experienced 
over the past half-century.
    Prior to the D.C. Circuit's ruling in CRR v. EPA, the 
Supreme Court heard another case of importance and influence 
regarding carbon pollution. In American Electric Power Company 
v. Connecticut (2011) was a unanimous SCOTUS decision which 
held that corporations cannot be sued individually for GHGs 
emissions under Federal common law, because the Clean Air Act 
delegates the management of GHGs emissions to the EPA. This is 
important because it further lays the groundwork for nationwide 
regulation of carbon pollution.
    Most recently, on June 23, 2014, the Supreme Court once 
again upheld and affirmed EPA's responsibility to regulate 
carbon pollution under the Clean Air Act.
    This specific challenge was to EPA's authority to regulate 
stationary sources, precisely what the Clean Power Plan does. 
The Supreme Court, in a decision where Justice Scalia wrote the 
majority opinion and all justices concurring with at least some 
portions of decision, affirmed EPA's legal authority to 
regulate GHGs under its existing Clean Air Act authorities.
    The bottom line is that this Committee is not the Supreme 
Court. The final arbiter on the legality of the Clean Power 
Plan is the Supreme Court, and based on the rulings in the case 
law that preceded, instructed and informed EPA's proposed Clean 
Power Plan it would seem very likely that the Supreme Court 
will uphold this rule.
    The statutory authority granted under the 1970 Clean Air 
Act, and three Federal court decisions including two Supreme 
Court decisions, laid the legal groundwork for a commonsense 
approach to regulating carbon pollution under Section 111(d) of 
the Clean Air Act.
    Sec. 111 authorizes EPA to establish baseline performance 
standards for power plants, which in the case of this rule we 
are talking about achieving a 30 percent net reduction in 
carbon pollution from power plants, using 2005 as the baseline, 
by 2030.
    Moreover, the rule is flexible in how these ``performance 
standards'' are met by applying these standards broadly across 
each State's fleet of power plants, rather than demanding these 
reductions from each individual power plant.
    This approach to regulation puts States in control of how 
their fleet of power generation facilities will meet these 
reduction targets. The performance standard is applied across 
all power generation facilities, including carbon intensive 
facilities like coal power plants, and zero emission power like 
nuclear, hydro and wind.
    Through this rule, solutions can be sought outside the 
fence, it may be possible for States to meet these standards 
through increased in-state development of renewable energy and 
improved energy efficiency standard, without having to shut 
down or drastically change the operations of its coal power 
plants.
    States will be in control of how they will meet these 
standards and there are a wide variety of tools in the toolbox 
for States to use to meet these standards.
    Using RGGI as its model and approach for compliance with 
the rule, RGGI generates more than $200 million annually in 
revenues for Maryland, meaning compliance with this rule will 
continue to bring needed revenues into the State. Moreover, 
electricity rates have stabilized in Maryland providing price 
certainty for ratepayers which would be unchanged so long as 
Maryland remains a RGGI State. Last, MD's regulated community 
understands and appreciates the regulatory certainty the RGGI 
has provided.
    That's why our State's largest electricity generator has 
submitted comments that support the goals of the proposed 
rules, while at the same time suggest how the rule may be 
improved to better accommodate nuclear power generation.
    I applaud Exelon's constructive participation and approach 
to the rulemaking process. I'm proud that Maryland's energy 
companies, like Constellation/Exelon are making investments to 
reduce the carbon output of its power generation fleet in 
Maryland and in the other States they are operating in.
    These early adopters made the correct investments and 
assumptions about where regulation was headed all based on 
information that everyone in the power generation sector had 
available.
    The actions taken by Maryland's power sector and State 
regulators show an understanding of how important addressing 
climate change is to Maryland. After all, it makes good 
business sense in Maryland for power providers to do their part 
to reduce the causes of climate change, because 70 percent of 
the State's population live in the coastal regions of the 
State.

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