[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
NEW SOURCE REVIEW PERMITTING CHALLENGES FOR MANUFACTURING AND
INFRASTRUCTURE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 14, 2018
__________
Serial No. 115-100
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
30-134 WASHINGTON : 2019
COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, CaliforniaL RUIZ,
RICHARD HUDSON, North Carolina California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Environment
JOHN SHIMKUS, Illinois
Chairman
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
Vice Chairman Ranking Member
JOE BARTON, Texas RAUL RUIZ, California
TIM MURPHY, Pennsylvania SCOTT H. PETERS, California
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
GREGG HARPER, Mississippi DIANA DeGETTE, Colorado
PETE OLSON, Texas JERRY McNERNEY, California
BILL JOHNSON, Ohio TONY CARDENAS, California
BILL FLORES, Texas DEBBIE DINGELL, Michigan
RICHARD HUDSON, North Carolina DORIS O. MATSUI, California
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
C O N T E N T S
----------
Page
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Paul Tonko, a Representative in Congress from the State of
New York, opening statement.................................... 3
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Witnesses
Stuart Spencer, Associate Director, Arkansas Department of
Environmental Quality, Office of Air Quality, on Behalf of the
Association of Air Pollution Control Agencies.................. 9
Prepared statement........................................... 12
Answers to submitted questions............................... 163
Kevin Sunday, Director of Government Affairs, Pennsylvania
Chamber of Business and Industry............................... 22
Prepared statement........................................... 24
Answers to submitted questions............................... 174
Paul Noe, Vice President Public Policy, American Forest and Paper
Association and American Wood Council.......................... 38
Prepared statement........................................... 40
Answers to submitted questions............................... 177
Emily Hammond, Glen Earl Weston Research Professor of Law, The
George Washington University Law School........................ 63
Prepared statement........................................... 65
Answers to submitted questions............................... 185
John D. Walke, Clean Air Director, Natural Resources Defense
Council........................................................ 72
Prepared statement........................................... 74
Answers to submitted questions............................... 188
Jeffrey R. Holmstead, Partner, Bracewell LLP..................... 104
Prepared statement........................................... 106
Answers to submitted questions............................... 208
Submitted Material
United States Environmental Protection Agency memorandum, 2005
\1\............................................................ 133
Article entitled, ``EPA's New Source Review Program: Time for
Reform?'' Environmental Law Institute, 2017.................... 148
----------
\1\ The attachment to this document can be found at: https://
docs.house.gov/meetings/IF/IF18/20180214/106852/HHRG-115-IF18-
20180214-SD007.pdf.
NEW SOURCE REVIEW PERMITTING CHALLENGES FOR MANUFACTURING AND
INFRASTRUCTURE
----------
WEDNESDAY, FEBRUARY 14, 2018
House of Representatives,
Subcommittee on Environment,
Committee on Energy and Commerce
Washington, DC.
The subcommittee met, pursuant to call, at 2:00 p.m., in
room 2123 Rayburn House Office Building, Hon. John Shimkus
(chairman of the subcommittee) presiding.
Members present: Representatives Shimkus, McKinley, Olson,
Johnson, Flores, Hudson, Cramer, Walberg, Carter, Walden (ex
officio), Tonko, Ruiz, Peters, Green, McNerney, Dingell,
Matsui, and Pallone (ex officio).
Staff present: Mike Bloomquist, Deputy Staff Director;
Allie Bury, Legislative Clerk, Energy/Environment; Kelly
Collins, Staff Assistant; Wyatt Ellertson, Research Associate,
Energy/Environment; Margaret Tucker Fogarty, Staff Assistant;
Jordan Haverly, Policy Coordinator, Environment; A.T. Johnston,
Senior Policy Advisor, Energy; Ben Lieberman, Senior Counsel,
Energy; Mary Martin, Deputy Chief Counsel, Energy &
Environment; Dan Schneider, Press Secretary; Austin
Stonebraker, Press Assistant; Hamlin Wade, Special Advisor,
External Affairs; Jean Fruci, Minority Energy and Environment
Policy Advisor; Caitlin Haberman, Minority Professional Staff
Member; Rick Kessler, Minority Senior Advisor and Staff
Director, Energy and Environment; Alexander Ratner, Minority
Policy Analyst; Andrew Souvall, Minority Director of
Communications, Outreach and Member Services; C.J. Young,
Minority Press Secretary; and Catherine Zander, Minority
Environment Fellow.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. The Subcommittee on the Environment will now
come to order. The chair recognizes himself for 5 minutes for
an opening statement.
Today's hearing examines the impact of the EPA's new source
review air permitting program, commonly referred to as NSR.
Congress created this preconstruction permitting program
with the goal of protecting air quality by ensuring that the
use of appropriate pollution control devices on new and
modified source of emissions such as power plants, factories,
and industrial facilities.
As you can imagine, the NSR permitting program reaches
across several industry sectors and has far-reaching impacts on
America's economy and global competitiveness. For these
reasons, it is incredibly important for us to ensure that the
preconstruction permitting program is working effectively and
efficiently.
Unfortunately, history shows that there are too many
instances where New Source Review Program is anything but
effective and efficient.
As we will hear from many of our witnesses today, over time
the NSR program has become more costly and time consuming which
not only slows economic growth but also hinders the nation's
ability to modernize infrastructure.
Under the existing NSR program, it can take multiple years
and millions of dollars to obtain the preconstruction air
permits required to begin construction on a new facility. This
significant time delay and cost burden makes it more difficult
and less likely for owners to invest in new projects and
facilities.
Not only is the NSR process costly and time consuming, it
is also complex and uncertain. Right now, on the EPA's Web site
there are nearly 700 posted guidance documents that an
applicant may need to be aware of when seeking a
preconstruction permit.
Companies must hire teams of lawyers just understand the
requirements and processes established under the NSR program.
The end result of this complexity is that companies are afraid
of incorrectly interpreting NSR requirements and violating the
rules that they are hesitant to pursue projects that require an
NSR preconstruction permit.
In other words, the NSR program is holding back needed
investment in the nation's infrastructure, industrial capacity,
and manufacturing capabilities.
One particularly frustrating effect of the NSR program is
that it discourages owners from carrying out projects that
would improve the environmental performance of their
facilities.
For example, if a company wants to perform efficiency
upgrades to install new pollution control technology, they
typically have to obtain a preconstruction permit through the
NSR program.
However, because the NSR program is so burdensome, many
owners are choosing to avoid the NSR process and facility
upgrades altogether and are instead continuing to operate
older, less efficient, and dirtier facilities.
Clearly, there are significant problems and shortcomings
with how the NSR program is being carried out today. The goal
of this hearing is to identify and understand the challenges
connected to the NSR program so that we can begin considering
potential reforms to improve the program.
To assist our work, we will hear today from witnesses who
can explain the challenges faced by manufacturers and industry
seeking to expand operations.
We will hear from a state regulator who can explain the
role NSR program plays in protecting local air quality and we
will also hear from NSR policy experts who can discuss options
for how to reduce unnecessary NSR permitting burdens.
I am confident that through targeted changes to the NSR
program we can not only reduce the unnecessary burden imposed
upon industry but also maintain and enhance the NSR program's
important protections for the environment and public health.
[The prepared statement of Mr. Shimkus follows:]
Prepared statement of Hon. John Shimkus
Today's hearing examines the impact of the EPA's New Source
Review air permitting program, commonly referred to as NSR.
Congress created this preconstruction permitting program with
the goal of protecting air quality by ensuring the use of
appropriate pollution control devices on new and modified
sources of emissions, such as power plants, factories, and
industrial facilities.
As you can imagine, the NSR permitting program reaches
across several industry sectors and has far reaching impacts on
America's economy and global competitiveness. For these
reasons, it is incredibly important for us to ensure that the
preconstruction permitting program is working effectively and
efficiently. Unfortunately, history shows that there are too
many instances where the current NSR program is anything but
effective and efficient.
As we will hear from many of our witnesses today, over time
the NSR program has become more costly and time-consuming,
which not only slows economic growth but also hinders the
nation's ability to modernize infrastructure. Under the
existing NSR program, it can take multiple years and millions
of dollars to obtain the preconstruction air permits required
to begin construction on a new facility. This significant time
delay and cost burden makes it more difficult and less likely
for owners to invest in new projects and facilities.
Not only is the NSR process costly and time-consuming, it
is also complex and uncertain. Right now on the EPA's Web site,
there are nearly 700 posted guidance documents that an
applicant may need to be aware of when seeking a
preconstruction permit. Companies must hire teams of lawyers
just to understand the requirements and processes established
under the NSR program. The end result of this complexity, is
that companies are so afraid of incorrectly interpreting NSR
requirements and violating the rules that they are hesitant to
pursue projects that require an NSR preconstruction permit. In
other words, the NSR program is holding back needed investment
in the nation's infrastructure, industrial capacity, and
manufacturing capabilities.
One particularly frustrating effect of the NSR program, is
that it discourages owners from carrying out projects that
would improve the environmental performance of their
facilities. For example, if a company wants to perform
efficiency upgrades or install new pollution control
technology, they typically have to obtain a preconstruction
permit through the NSR program. However, because the NSR
program is so burdensome, many owners are choosing to avoid the
NSR process and facility upgrades altogether, and are instead
continuing to operate older, less efficient, dirtier
facilities.
Clearly there are significant problems and shortcomings
with how the NSR program is being carried out today. The goal
of this hearing is to identify and understand the challenges
connected to the NSR program so that we can begin considering
potential reforms to improve the program.
To assist our work, we will hear today from witnesses who
can explain the challenges faced by manufacturers and industry
seeking to expand operations. We will hear from a state
regulator who can explain the role the NSR program plays in
protecting local air quality and we will also hear from NSR
policy experts who can discuss options for how to reduce
unnecessary NSR permitting burdens.
I am confident that through targeted changes to the NSR
program, we can not only reduce the unnecessary burden imposed
upon industry, but also maintain and enhance the NSR program's
important protections for the environment and public health.
And with that, I'd like to yield--so I will turn to the
minority--are you ready to go? I would like to recognize the
ranking member of the subcommittee, Mr. Tonko, for 5 minutes.
OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mr. Tonko. Thank you, Mr. Chair, and thank you to our
witnesses for being here today.
Today's hearing will examine EPA's new source review
permitting program. As we have discussed on many occasions in
this subcommittee, under the Clean Air Act, EPA is required to
set health-based national ambient air quality standards, or
NAAQS, for six criteria pollutants.
As more medical and scientific evidence has come to light,
NAAQS have been adjusted accordingly to ensure they continue to
be protective of our health.
Since the passage of the Clean Air Act, our nation has
experienced the drastic reduction in these air pollutants, all
while our economy has grown tremendously.
It is beyond dispute that air pollution has serious health
and economic consequences. When people are sick, hospitalized,
and miss school are work we are a less productive society.
The new source review program plays an important role to
ensure that new and modified major sources use the appropriate
pollution controls to limit emissions of criteria pollutants.
This includes the best available controlled technology and
locations with relatively clean air known as prevention of
significant deterioration to ensure these areas continue to
maintain healthy levels of air quality.
For areas in nonattainment of a NAAQS this includes the
lowest achievement emissions rate along with appropriate
offsets from other existing sources. This is known as
nonattainment new source review.
The Clean Air Act has been successful because it is
premised on making progress over time. We have made major
strides in reducing pollution as our understanding of the
health risks posed by dirty air has become more sophisticated.
That is why I was pleased to see EPA's Web site recognized
February as American Heart Month. EPA has some useful heart
health statistics such as heart disease and stroke are the
first and fourth leading causes of death in the United States.
Air pollution can affect heart health and can trigger heart
attacks and strokes that cause disability and death. One in
three American adults has heart or blood vessel disease and is
at higher risk from air pollution.
It is critical that we acknowledge and educate people on
the role air pollution plays in exacerbating heart disease,
asthma, and other respiratory illnesses.
So while EPA's Web site has taken steps to connect the dots
between air pollution and threats to Americans' health, the
actions by Administrator Pruitt and Assistant Administrator
Wehrum have been troubling.
On December 7th, Administrator Pruitt issued a memorandum
with a new approach to implementation and enforcement of the
new source review program.
EPA will no longer review the permanent applicant's
emissions projections nor will the agency enforce against an
applicant that provides invalid estimates.
In some cases, this lax attitude on enforcement will have
consequences in downwind states, far away from the original
permitting authority.
And while not the subject of today's hearing, another data
point from January 25th, Assistant Administrator Wehrum
reversed EPA's longstanding once in always in policy for major
source MACT requirements.
Both decisions will review--will result, rather, in greater
air pollution, and the new source review task force seems to be
little more than a brainstorming session on how to evade air
pollution controls rather than actually building a public
record on how the program might be improved.
Progress over time means ensuring we don't backslide and,
sadly, I believe the direction of this EPA will cause us to do
just that.
My district and many great towns and cities across this
country were built by manufacturers. But when many of those
facilities were built, we didn't fully understand the
consequences of dirty air. We didn't know that one in three
American adults has heart or blood vessel disease and is at
higher risk from air pollution.
We know better today. Our health and environmental
safeguards should reflect that. We shouldn't have to ask our
constituents to bear all the costs of air pollution, especially
not when they are--when there are effective and well understood
pollution controls.
I would urge EPA's leadership to stop going down this path
and consider how the--how to best improve and preserve air
quality.
So again, I thank you. I thank the witnesses for being here
and helping us better understand some of the potential changes
to the new source review program.
And with that, Mr. Chair, I yield back.
Mr. Shimkus. Gentleman yields back his time.
The chair now recognizes the chairman of the full
committee, Mr. Walden for Oregon, for 5 minutes.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the gentleman and appreciate the
witnesses being here today. We look forward to your testimony.
As we all know, the purpose of the Clean Air Act is, and I
quote, to protect and enhance the quality of the nation's air
resources, to promote the public health and welfare and the
productive capacity of its population, closed quote.
So in today's hearing, we will highlight the necessity to
ensure the rules to protect and improve air quality, promote
both of these core objectives.
Effective clean air regulations should allow the nation to
continue to expand its manufacturing and industrial capacity.
But these goals are undermined when regulatory requirements no
longer reflect practical reality.
As a result, American communities are deprived of both
continued environmental improvements and economic prosperity.
The new source review permitting process serves as a case in
point.
Permitting requirements under EPA's NSR program have
evolved in complexity and confusions as the program began in
the 1970s and as a result complex preconstruction planning
requirements present unnecessary delays and impediments to the
expansion of manufacturing and industrial facilities.
As we will hear in the testimony today, the complexity of
the NSR process permitting time delays and regulatory
uncertainty create powerful incentives to forego needed project
upgrades even in areas that meet current air quality standards.
And for other communities NSR complexity raises costs and
otherwise harms the prospects for economic expansion and
increased environmental benefits.
In fact, the burdens associated with NSR can lead to
communities losing the emissions benefits offered by more
efficient modern technologies.
Prineville, Oregon--that's in my district. Home to data
centers for Facebook and Apple. Recently, a proposed data
center expansion ran headlong into a permitting issue because
of potential backup generator emissions.
A single air sampling location, just one, and restrictive
air quality rules made it unclear whether or not the expansion
could go forward. It was only after the city persuaded the EPA
to add an additional sampling location that they were then able
to resolve the issue.
That instance involved hundreds of millions of dollars in
investments and hundreds of construction jobs. Multiply that by
the thousands of projects waiting to take off around the
nation--around the nation in response to our reformed tax
structure and the urgency of addressing NSR problems becomes
apparent.
I would also say that when you're dealing with companies
the capital and intellectual capacity of Facebook and Apple
they are probably better positioned to challenge some of these
issues.
The witnesses today, you all bring a range of perspectives
on the NSR permitting process. We appreciate your willingness
to help us understand the challenges of the current process and
what we can do to improve upon it.
Our goal is to develop responsible targeted reforms that
will provide for economic growth while maintaining the
environmental protections we all agree are important. Doing
this will ultimately benefit all American workers and
consumers.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
The purpose of the Clean Air Act is ``to protect and
enhance the quality of the Nation's air resources to promote
the public health and welfare and the productive capacity of
its population.''
With today's hearing, we will highlight the necessity to
ensure the rules to protect and improve air quality promote
both core objectives.
Effective clean air regulations should allow the nation to
continue to expand its manufacturing and industrial capacity.
But these goals are undermined when regulatory requirements no
longer reflect practical reality. As a result, American
communities are deprived of both continued environmental
improvements and economic prosperity.
The New Source Review permitting process serves as a case
in point. Permitting requirements under EPA's NSR program have
evolved in complexity and confusion since the program began in
the 1970s. As a result, complex pre-construction planning
requirements present unnecessary delays and impediments to the
expansion of manufacturing and industrial facilities.
As we will hear in testimony this morning, the complexity
of the NSR process, permitting time delays, and regulatory
uncertainty, create powerful incentives to forego needed
project upgrades, even in areas that meet current air quality
standards.
And for other communities, NSR complexity raises costs and
otherwise harms the prospects for economic expansion and
increased environmental benefits. In fact, the burdens
associated with NSR can lead to communities losing the
emissions benefits offered by more efficient modern
technologies.
Prineville, Oregon in my district is home to data centers
for Facebook and Apple. Recently, a proposed data center
expansion ran headlong into permitting issues because of
potential backup generator emissions. A single air sampling
location and restrictive air quality rules made it unclear
whether the expansion could go forward. It was only after the
city persuaded EPA to add an additional sampling location that
they were able to resolve the issue.
That instance involved hundreds of millions of dollars in
investments and hundreds of construction jobs. Multiply that by
the thousands of projects waiting to take off around the nation
in response to our reformed tax structure and the urgency of
addressing NSR problems becomes apparent.
The witnesses today will bring a range of perspectives on
NSR permitting to help us examine the challenges with the
current process. I'm hopeful we can begin to identify practical
reforms to ensure that the NSR program serves its environmental
planning purpose while still allowing for economic expansion
and infrastructure modernization.
Our goal, is to develop responsible, targeted reforms that
will provide for economic growth, while maintaining
environmental protections. Doing this will ultimately benefit
all American workers and consumers.
I know Mrs. Blackburn is hoping to have a little time but
she is not here. So with that, I will yield back.
Mr. Shimkus. The gentleman yields back his time.
The chair now recognizes the ranking member of the full
committee, the gentleman from New Jersey for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
We are here today to discuss one of the Clean Air Act's
oldest and most debated programs, the New Source Review
program. It's based on a simple principle--any new facility
that emits pollutants should not increase local air pollution
above levels that are safe to breathe.
The NSR program ensures that we have growth in the economy
and not in pollution. In December, Administrator Pruitt issued
a memorandum altering longstanding NSR policy using an active
case as justification for the change.
The case was U.S. vs. DTF Energy Company, or DTE Energy
Company, and the December memo actually reads as if it were
prepared by DTE's legal team. I can't say that comes as a
complete shock to me since Bill Wehrum, the man Administrator
Pruitt put in charge of the office that drafted the memo, was
previously part of DTE's legal team.
The new policy is as suspect as the process used to
initiate it. It will gut enforcement of the NSR program to the
benefit of certain companies at the expense of the public
health and companies that have cleaned up their act. The eight-
page memo lays out a policy that invites polluters to skirt the
law and dump tons of harmful pollution on our communities.
Essentially, it's a recipe instructing polluters how to
cook the books and get out from under the need for a permit
under the NSR program.
And this is certainly not a perfect program, but it has
helped reduce harmful air pollution and improve public health,
especially for people living in the communities close to these
facilities. All of these gains will erode rapidly if we stay on
the course this administration is following.
Too many old facilities have already used loopholes to game
the system and avoid cleaning up the pollution. Certainly there
are challenges to those existing facilities. But the Clean Air
Act never intended for them to be exempt from the NSR program
forever.
Also, it's important to remember that pollution control is
zero sum game. Therefore, under Administrator Pruitt's NSR
scheme, states and localities will have to make those that have
played by the rules achieve greater pollution reduction in
order to offset the excess pollution created by businesses that
EPA is essentially allowing to go unregulated.
And that's particularly outrageous to those of us who
represent downwind states. We are tired of having to compensate
for the lack of pollution control in neighboring states.
The EPA should not be making life easier for polluters. The
agency should do its job and ensure that lax implementation and
enforcement in one state doesn't burden others.
Now, Republicans argue that we need to ease the NSR program
to expand manufacturing and infrastructure. But new
manufacturing facilities aren't being held back by clean air
requirements.
Weakening the Clean Air Act is not going to create jobs.
The fact is that the so-called NSR program improvements being
suggested today by my Republican friends are not new ideas.
They are just a bunch of toxic old policies bundled up in a
heart-shaped box as a Valentine's Day present to polluters.
Industry has been trying to get out from under this program
for a long time and it looks like Scott Pruitt and the
Republicans are working hard to try to grant their wish.
But make no mistake, the Valentine's Day gift from Pruitt
and Republicans gives polluters all the roses and sticks the
public with the thorns. We would reject these policies that
will harm the public health.
Unless someone else wants my time on my side, I'll yield
back, Mr. Chairman.
Mr. Shimkus. The gentleman yields back the balance of his
time.
Do you have a new writer?
Mr. Pallone. I don't know. I----
Mr. Shimkus. That was pretty good.
[Laughter.]
Mr. Pallone. --I thought it was pretty good, myself.
We now conclude with members' opening statements. The chair
would like to remind members that pursuant to committee rules,
all members' opening statements will be made part of the
record.
We want to thank all our witnesses for being here today and
taking the time to testify before the subcommittee. Today's
witnesses will have the opportunity to give opening statements
followed by a round of questions from the members.
Our witnesses--panelists for today's hearing will include,
from my left to right, Mr. Stuart Spencer, who is associate
director, Office of Air Quality, Arkansas Department of
Environmental Quality, testifying on behalf of the Association
of Air Pollution Control Agencies; Mr. Kevin Sunday, director
of government affairs, Pennsylvania Chamber of Commerce
Business and Industry; Mr. Paul Noe, vice president, public
policy, American Forest and Paper Association and American Wood
Council; Emily Hammond, Glen Earl Weston research professor of
law, the George Washington University Law School; John Walke,
clean air director, Natural Resources Defense Council; and a
friend of ours from years past, Jeffrey Holmstead, who is a
partner at Bracewell.
So with that, we'd like to begin our testimony and we will
begin with Mr. Spencer. Your entire record is in the file. You
have 5 minutes and you can begin.
STATEMENTS OF STUART SPENCER, ASSOCIATE DIRECTOR, ARKANSAS
DEPARTMENT OF ENVIRONMENTAL QUALITY, OFFICE OF AIR QUALITY, ON
BEHALF OF THE ASSOCIATION OF AIR POLLUTION CONTROL AGENCIES;
KEVIN SUNDAY, DIRECTOR OF GOVERNMENT AFFAIRS, PENNSYLVANIA
CHAMBER OF BUSINESS AND INDUSTRY; PAUL NOE, VICE PRESIDENT
PUBLIC POLICY, AMERICAN FOREST AND PAPER ASSOCIATION AND
AMERICAN WOOD COUNCIL; EMILY HAMMOND, GLEN EARL WESTON RESEARCH
PROFESSOR OF LAW, THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL;
JOHN D. WALKE, CLEAN AIR DIRECTOR, NATURAL RESOURCES DEFENSE
COUNCIL; JEFFREY R. HOLMSTEAD, PARTNER, BRACEWELL LLP
STATEMENT OF STUART SPENCER
Mr. Spencer. Thank you.
Good afternoon, Chairman Shimkus, Ranking Member Tonko, and
distinguished members of the subcommittee. I appreciate the
invitation to join you today to discuss the important issue of
New Source Review reform.
I am here in two capacities. First, I am here as an
associate director of the Arkansas Department of Environmental
Quality. Our Office of Air Quality staff includes
epidemiologists, engineers, ecologists, chemists, biologists, a
meteorologist, and a lawyer in the primary branches of
compliance, permits, policy, and planning in asbestos and
enforcement.
Our primary mission is to protect and improve air quality
in Arkansas while fostering responsible economic expansion
opportunities.
Second, I am here as the president of the Association of
Air Pollution Control Agencies, or AAPCA. AAPCA is a consensus-
driven organization comprised of 45 state and local air
agencies.
The AAPCA board of directors is made up of the air
directors from our 20 geographically diverse member states
including states with representation on this subcommittee.
As AAPCA's president, I serve on the board of the directors
along with air directors from states as diverse as Wyoming,
Maine, South Carolina, and Arizona, and despite the miles
between our state borders, we have common goals and missions.
Today, I will be addressing a few common themes in regard
to NSR reform. The first thing is practical application.
Environmental regulations should encourage necessary repair
in replacement projects and should incentivize projects that
improve the safety of operations increase energy efficiency or
reduce the emissions of regulated air pollutants.
The second theme is clarity. This includes removing
undefined terms and exemptions such as routine maintenance and
nonroutine modification from the NSR rules and guidance and
replacing them with clear definitions.
A prime example would also be refining the term
modification to truly mean a substantial change. An ambiguous
or muddy rule inhibits planning due to its lack of certainty
and therefore stifles growth and innovation.
This leads me to my final theme, modernization. NSR is
outdated and cumbersome. The documents that comprise the NSR
rules in the guidance take up at least two file boxes if
printed out in hard copy form.
The time to reform was yesterday so I am glad we are having
this conversation today.
With those themes in mind, I will speak first as the
associate director of ADEQ. The Office of Air Quality
implements all programs delegated by EPA Region 6 to the state
of Arkansas.
Under the leadership of one of your former colleagues and
now governor of Arkansas, Asa Hutchinson, and ADEQ Director
Becky Keogh, Arkansas has committed to protective permitting.
This practice is essential to achieving our goals of
maintaining our status as the natural state, protecting public
health and the environment in our communities and promoting and
sustaining economic growth.
The Arkansas NSR program follows the federal program. ADEQ
believes that the NSR rules should be clear and concise to
allow companies to achieve compliance and ensure that both ADEQ
and our regulated community have a well-defined understanding
of what is required by the program.
Arkansas believes that changes to the NSR program would
support its efforts to ensure that our regulated community and
the companies in our communities are in compliance with the
rules and do not become subject to enforcement actions based on
rule interpretations that are either not well defined or
continue to evolve.
For these reasons, we appreciate that EPA intends to tackle
NSR reform again. The 2002 NSR reform rule was helpful but it
did not go far enough to clarify the program and provide
certainty to regulators and the regulated community.
So based on these points that I've made, any efforts to
modernize and reform NSR reform--NSR, particularly the upcoming
EPA-directed NSR task forum discussions should address the
following issues.
Number one; revise the emission increase test under NSR to
match the hourly test under New Source Performance Standards--
our NSPS program.
This would eliminate and streamline many of the issues with
the current program. Many of the other changes could be avoided
or simplified if NSR applicability was based on an increase in
maximum achievable emission rates rather than annual tons.
Next, clarify the factors to be considered in determining
whether a project is a routine maintenance repair or
replacement activity.
Next, create an exemption from NSR for efficiency projects.
The current program is a disincentive to companies undertaking
projects to make their operations more efficient.
Next, codify the information in EPA Administrator Scott
Pruitt's December 7th, 2018 memo that EPA will not second guess
a facility's emissions projections and clearly identify the
circumstances when an emissions projection will be subject to
review.
Next, clarify the definition of a source in order to ensure
that geographically separate sources are not artificially
combined or aggregated to create a single major source for NSR
purposes.
And finally, clearly identify what types of projects should
be considered as changes in the method of operation.
Thank you for your time again today and I am available to
answer any questions upon request.
Thank you.
[The statement of Mr. Spencer follows:]
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Mr. Shimkus. Thank you. Excellent.
I now turn to Mr. Kevin Sunday. You are recognized for 5
minutes.
STATEMENT OF KEVIN SUNDAY
Mr. Sunday. Good afternoon, Mr. Shimkus, Mr. Tonko, and
members of the committee.
My name is Kevin Sunday, director of government affairs
with the Pennsylvania Chamber of Business and Industry. It's an
honor to appear before you today to discuss the challenges our
members have had when it comes to complying with New Source
Review requirements.
Our nearly 10,000 member companies are of all sizes and
across all industry sectors. We, as an organization, seek
stewardship of our nation's land, air, and water and we seek to
provide thoughtful and balanced ways in which we can continue
to reduce our environmental impacts and grow the economy.
Thanks to tax reform and the prolific supply of our natural
resources in nuclear, coal, gas, oil, and renewables we have
before us a generational opportunity to invest in our
workforces, our infrastructure, and our future.
And we applaud the members of the House of Representatives
and the United States Senate who took a bold stand for growth
and sent the Tax Cut and Jobs Act to the president's desk for
his signature last year, and we thank our senator, Pat Toomey,
for his leadership in getting that bill through the Senate.
In the short time since that bill was enacted, employers
across the country have announced plans to increase hiring and
wages, and it is expected that in the near term consumer
spending and economic growth will increase considerably, as
much as 4 percent on an annualized basis according to the
Atlanta Fed.
As the economy grows, capital is going to be repatriated
and rates on employers come down. Manufacturers and businesses
have a generational opportunity to secure global competitive
advantage by reinvesting into their facilities, enhancing their
sustainability profiles, and expand to capture a share of the
growing economy, provided, of course, that regulatory
obligations do not present unnecessary hurdles.
What energy means to Pennsylvania and the region is
significant. We are part of an endeavor called Forge the
Future, which forecasts $60 billion in state GDP and 100,000
new jobs because of energy assets.
The Appalachian region at large including Pennsylvania,
Ohio, West Virginia, and Kentucky could become a petrochemical
and plastics manufacturing hub and, according to the American
Chemistry Council, more than $28 billion in economic expansion
and more than 100,000 new jobs could be created should the
region capitalize on an ethane storage project and secure the
construction and operation of several petrochemical plants.
However, these projects too must wind through the
permitting process to become reality. Our manufacturers in
Pennsylvania have reported that the current NSR process is an
impediment to investing in the efficiency of their operations
and improve their ability to compete abroad.
Because of the costs associated with crossing NSR
thresholds, companies have shelved projects that would have
reduced their emissions and their operating costs.
Disputes between state and federal regulators over the
interpretation and application of regulatory criteria have
resulted in sizeable legal and engineering costs and left
projects in limbo for months if not years.
Lenders will not sign off on financing until the revolving
door of lawsuits from third party groups over the perpetually
changing universe of BACT and LAER control stops spinning.
Economic growth and environmental progress depend upon a
well functioning and rational regulatory system and the NSR
program as it is being administered show signs of being
neither.
From a land use perspective alone, it's illogical that we
would have a regulatory program that would encourage building
entirely new facilities, oftentimes outside the U.S., when
existing mothballs--when existing plants are being mothballed
and retired that could have been upgraded. And how much has the
closure of large-scale manufacturers in this country led to the
flat electricity demand that has so troubled the power
generation and utilities sectors.
So that's why we applaud EPA Administrator Scott Pruitt and
his team at EPA for the December 7th memo that clarifies how
NSR requirements should be interpreted and applied.
That's a crucial first step to reform of the program and we
look forward to additional progress on that front.
The National Federation of Independent Businesses yesterday
came out and said a record number of small businesses believe
now is a good time to expand.
We believe we can ill afford to waste this opportunity in
front of us by leaving up barriers to growth. We have the
opportunity to make our regulatory process more efficient,
allow our companies to invest, and reduce their environmental
footprint and waste less of our natural resources.
And if we don't capitalize on that opportunity, that's a
failure. It's bad for business and it's bad for the
environment.
Instead, let us pursue stewardship of our natural resources
and secure economic growth in a thoughtful responsible manner
and that starts with NSR reform.
Thank you.
[The statement of Mr. Sunday follows:]
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Mr. Shimkus. The chair thanks you.
The chair now recognizes Mr. Paul Noe. You're recognized
for 5 minutes.
STATEMENT OF PAUL NOE
Mr. Noe. Chairman Shimkus, Ranking Member Tonko, and
distinguished members of the committee, on behalf of the
American Forest and Paper Association and the American Wood
Council, I want to thank you for the opportunity to be here to
discuss the challenges posed by EPA's NSR program for the
forest products industry and to provide our perspectives on how
it can be improved.
This is consistent with the twin purposes of the Clean Air
Act, which is to promote public health and welfare as well as
the productive capacity of our nation.
Unfortunately, NSR is an outdated, inefficient, and slow
regulatory approach that currently just doesn't work very well
for existing sources and it's impeding modernization and growth
in the U.S. manufacturing sector.
It just doesn't make sense to discourage upgrading plants
already subject to a myriad of other regulatory requirements or
to block beneficial projects using best controls simply due to
unrealistic air quality modelling and assumptions.
Our country has made great strides in improving air
quality, largely under other programs. To borrow from my friend
and former EPA general counsel Don Elliott when he testified
before Congress 15 years ago on the need for NSR reform, quote,
``NSR is slow, costly, and ineffective, and those are the
kindest things that one can say about it. It is the least
successful of all the programs under the Clean Air Act.''
The reality is that energy efficiency and modernization
projects for existing sources are delayed, modified, or
thwarted by complex NSR interpretations that have accumulated
and evolved over time.
The program requires expensive but unrealistic air
modelling that frequently delays projects and can cost $100,000
or more to complete. Unreasonable permitting delays tie up
investment capital and undermine the economic benefits from
expansion projects.
There are many ways EPA could improve the permit process
but let me focus on two key points. First, consistent with this
statute, EPA should focus the NSR program on larger projects
that really have a greater potential to impact air quality.
Changing the NSR applicability criteria could reduce
unnecessary workload on permitting agencies and create business
certainty and positive incentives without jeopardizing air
quality.
For example, currently the NSR regulations use a two-step
calculation process to determine of a project is subject to
NSR. The emissions increases from a project are calculated
first to see if they are significant before any decreases are
subtracted.
This step one then step two analysis is complicated,
expensive, and time consuming. By simply allowing increases and
decreases to be netted projects with emissions below
significant levels could proceed.
Second, once a project truly does trigger a higher level of
scrutiny, EPA ought to use realistic assumptions and analytic
tools, including probabilistic air quality modelling
approaches.
This is needed now more than ever because there is little
room for error. This is because in recent years EPA has lowered
the national ambient air quality standards close to background
levels.
This has left little room for permits, even in attainment
areas. In the past, when NAAQS for PM or SO2 or nitrogen
dioxide were higher, if you looked at that versus the ambient
level in emissions from the nearby sources and the facilities
exposures, there was enough room or head room, as we call it,
for a permit.
The problem seriously exacerbated by many of EPA's current
policy approaches and modelling tools which significantly over
predict impacts from facilities, especially when a series of
unrealistic assumptions are compounded.
So it's critical that the modelling results reflect the
reality of local air quality.
For example, EPA's current modelling guidelines have an
expansive interpretation of where the general public must be
protected from nearby plant emissions.
Rather than focussing on where people actually are, it is
assumed that ambient air is anywhere a person theoretically
could be such as by illegally trespassing at the facility or
where the general public in reality could not be, such as
standing on a railroad or a road that runs through the
facility.
Overly conservative modelling analysis can lead to
unverifiable and nonexistent concentration estimates that cause
costly changes or cancellations of beneficial projects, even
though real-world exposure to the general public around these
locations is minimal, improbable, or even impossible.
Therefore, EPA should issue new guidance to update its
policies for placing receptors considering natural, manmade, or
jurisdictional barriers.
Although forest products mills typically are located in
attainment areas with better quality, they face problems as
soon as NAAQS are issued because they're immediately effective
and EPA has compounded the confusion and delay by not providing
implementation and modelling guidance until after the NAAQS are
issued.
I don't believe Congress intended this confusion and delay
when it enacted the act and I believe the U.S. is the best
place in the world for a robust manufacturing sector. We have
the best workers in the world.
We have created entrepreneurs and innovators. We have
abundant resources. We have a strong free-market democracy and
we have regulatory agencies that are capable of leading the
world on sustainable regulation.
Thank you, Mr. Chairman.
[The statement of Mr. Noe follows:]
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Mr. Shimkus. The gentleman's time is expired.
The chair now recognizes Emily Hammond. You're recognized
for 5 minutes.
STATEMENT OF EMILY HAMMOND
Ms. Hammond. Thank you, Chairman Shimkus, Ranking Member
Tonko, and distinguished members of the subcommittee.
One year ago almost to the day, I testified before this
subcommittee about the many health and environmental benefits
of clean air protections and I cautioned against efforts to
roll back progress achieved over decades of hard work.
Today, I urge you to scrutinize recent actions by EPA that
amount to nothing short of an abnegation of the agency's
statutory responsibilities and I emphasize once more that human
lives and our economy are at stake.
The Clean Air Act is a technical and complex statute but
two of its basic policies are straightforward. First, it is
meant to clean up dirty air.
Second, it aims to keep clean air clean. By keeping in mind
these first principles, it's easy to see what's wrong with
EPA's current approach.
New Source Review makes sure that new or modified sources
of air pollution use the right technology so that in areas
where poor air quality harms human health, we can improve over
time.
And in areas where air quality meets human health
standards, New Source Review guards against creating a new
public health problem with new uncontrolled air pollution.
But on December 7th of this past year, the same day that
EPA Administrator Scott Pruitt testified to this subcommittee
that EPA should not issue guidance documents, he issued a
guidance document that promises to polluters that EPA won't
check the work of those major polluters when they decide
whether New Source Review is necessary.
This approach opens a gaping hole in the statutory design
and it violates fundamental principles of good governance and
legitimacy.
The president, Administrator Pruitt, and members of
Congress have all spoken against the perils of overreach when
agencies make major policies through nondemocratic procedures.
Yet, the December 7th guidance does just that. When an
agency adopts a policy so blatantly contrary to its mandate and
does so without any public input, that action lacks legitimacy.
In the words of the Supreme Court in Heckler v. Chaney, the
agency has consciously and expressly adopted a general policy
that is so extreme as to amount to an abdication of its
statutory responsibilities.
This institution should hold EPA to task, not give it cover
to make our air dirtier. And what is at stake? The lives of
people across our country and the benefits of economic growth.
You will hear a lot from industry about the costs of clean
air protections and the supposed impediments clean air poses to
economic growth. But they won't tell you about the attendant
benefits because the numbers are so compelling.
Between 1970 and 2011, aggregate emissions of air
pollutants dropped 68 percent while the U.S. gross domestic
product increased 212 percent.
During that same period, private sector jobs increased by
88 percent. Our population has increased. We have used more
energy. We have built more infrastructure, all while improving
our environment.
Consider as well that major regulations issued by EPA
undergo a rigorous cost-benefit analysis. EPA is required to
follow Office of Management and Budget accounting principles
and assess both the costs and the benefits of regulations.
Many researchers have concluded that these constrained
analyses vastly understate the benefits of environmental
regulations. So the values I am about to describe should be
understood as very conservative.
Even with this caveat, the results are compelling. A 2011
peer-reviewed study showed that the benefits of the 1990 Clean
Air Act amendments and implementing regulations exceed the
costs by a factor of more than 30 to 1.
The 2011 study also revealed that EPA's Clean Air Act rules
saved over 164,000 lives in 2010 and are projected to save
237,000 lives in 2020.
These same rules saved millions of days of lost work and
missed school and will continue to do so. Further, since EPA
began regulating lead as a criteria pollutant under the NAAQS
program, the median concentration of lead in the blood of
children between one and 5 years old has decreased 93 percent.
These numbers speak for themselves and they demonstrate
that those who would roll back clean air protections have set
up a false choice. Clean air and economic growth do indeed go
hand in hand.
Thank you.
[The statement of Ms. Hammond follows:]
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Mr. Shimkus. The chair thanks the gentlelady.
And now the chair recognizes, and I mispronounce the last
name--Mr. Walke. You're recognized for 5 minutes. I apologize
for that.
STATEMENT OF JOHN D. WALKE
Mr. Walke. You got my first name right so that's good.
Thank you.
Thank you, Chairman Shimkus, Ranking Member Tonko, and
distinguished members. My name is John Walke and I am clean air
director and a senior attorney for the Natural Resources
Defense Council.
Any so-called reform to the Clean Air Act's New Source
Review program first should answer one simple question--will it
let industry pollute more.
In my experience, unfortunately, the answer to that
question is usually yes. That is the case for changes to New
Source Review safeguards that industries comment--that industry
commenters are seeking from the Trump administration.
That is also the case for changes sought in testimony by
other witnesses at today's hearing apart from Professor
Hammond's. Many of the requested changes would let industry
pollute more by significantly higher amounts and in the process
evade pollution controls and pollution offsets.
Insufficient political attention and concern are being
given to the problems with a tax on clean air safeguards. In a
2017 Gallup poll, 67 percent of Americans favor setting higher
emission standards for industry. In that same poll, 69 percent
of Americans favor stronger enforcement of federal
environmental regulations.
New Source Review is a Clean Air Act preconstruction
permitting program that imposes cleanup requirements only when
industries--industrial facilities significantly increase air
pollution.
I urge you to remember that pollution increase trigger
during today's hearing. Attempts to evade NSR applicability
translate into the ability to increase air pollution
significantly without control.
Taking evasion that would allow huge air pollution increase
is reflected in two bills referred to this committee--H.R. 3127
and H.R. 3128.
Several witnesses endorse the bill and the approach
contained therein, which would allow huge air pollution
increases so long as a source did not increase its capacity to
pollute only by exceeding an extraordinarily high maximum
hourly emissions rate plucked from its past history.
One of the problems here is comparable to saying police
should never fine drivers to be speeding if they don't exceed
the maximum speed they have ever driven.
The second problem is even worse. By weakening the law so
extremely, to ask only whether a polluting facility exceeded
its maximum capacity to pollute, this concept would allow
massive enormous increases in actual emissions of harmful air
pollution in the real world.
Americans care about increases in actual pollution that
worsens air quality and harms their health, not whether a plant
exceeds its polluting capacity.
For the parents of a child being rushed to the ER due to an
asthma attack caused by massive pollution increases from a
nearby plant, it is not solace to tell them that the higher
pollution levels that choked their daughter's breathing did not
result from the plant exceeding its maximum hourly emission
rate.
How bad could these pollution increases be? Well, under the
Bush administration when Mr. Holmstead worked there, EPA's
enforcement office calculated the weakening effect of a maximum
hourly emissions rate approach.
In just one power plant example, the plant increased its
toxic sulfur dioxide pollution by 13,000 tons per year without
exceeding this maximum rate. That is 327 times higher than the
level that the law considers significant and subject to control
today.
My testimony identifies an astonishing number of coal-
burning power plants that still lack air pollution--modern air
pollution controls today or that are uncontrolled and these two
bills and the approaches sought by some of the members of this
panel would make that even worse by allowing emissions
increases of thousands and even increases in excess of 10,000
tons.
No acceptable NSR reform should give an affirmative answer
to the question posed at the top of this testimony--will it let
industry pollute more.
This committee should reject any appeals for reform that
would let industries pollute more by significantly higher
amounts and in the process evade are pollution controls and
pollution offsets in areas already experiencing unsafe air
quality.
Americans deserve better.
Thank you.
[The statement of Mr. Walke follows:]
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Mr. Shimkus. The chair thanks the gentleman.
The chair now recognizes Mr. Holmstead for 5 minutes.
Welcome back.
STATEMENT OF JEFFREY R. HOLMSTEAD
Mr. Holmstead. Thank you. Thank you for inviting me to be
here today.
As some of you know, for almost 30 years I've focused my
professional career on the Clean Air Act as a White House
staffer, as head of the EPA Air Office, and as an attorney in
private practice.
I think even that my good friend John Walke here would
concede that I know a lot about the various programs that apply
to major manufacturing and energy facilities.
But some of you may not be quite so aware--you might be
surprised to know that there are many different Clean Air Act
programs that regulate the very same pollutants from the very
same facilities.
For example, SO2 and NOx emissions from coal-fired power
plants would seem to be the pollutants of greatest concern.
These pollutants from these plants are regulated under at least
14 different Clean Air Act programs--yes, 14--the acid rain
program, the NOx SIP Call, MATS, NSPS, regional haze program,
the 110(a)(2)(d) good neighbor provision, Section 126, CSAPR,
BART, the SO2 NAAQS, the NO2 NAAQS, the Ozone NAAQS, the PM2.5
NAAQS, and NSR.
If I had said the full names of these programs instead of
the acronyms, I would have used up all of my time. Over the
last 25 years, serious regulators and researchers have learned
that good regulatory design makes an enormous difference and
they will tell you that of these programs, some of them are
much more effective than others.
Because of all of the overlapping regulatory programs, our
society--you and I and all the people you represent--are paying
much more than we need to pay for preserving and improving air
quality.
If we take advantage of the lessons that we have learned
over the last 25 years and we use the most effective approaches
for reducing air pollution, we can achieve the same air quality
goals that we have today at a much lower cost.
Today, we are talking about just one Clean Air Act program.
As the name implies, New Source Review, this is an important
program for regulating emissions from new sources.
But over the last 20 years as EPA has tried to expand it to
capture as many existing sources as possible, NSR has become a
convoluted, burdensome, and completely unnecessary mess.
As someone who has worked on Clean Air Act policy for
almost three decades, I can say with confidence that the NSR
program as it applies to existing facilities is the least
successful and most counterproductive of the dozens of programs
created under the Clean Air Act.
To the extent it provides environmental benefits, those
same benefits can be preserved by reforming the program in a
thoughtful way and by relying on other much more effective
programs that regulate the same pollutants from the same
facilities.
The critique offered by my friend here from NRDC is more
than a bit over the top. I did a Word search last night and
found 10 different places in his testimony where he says that
the reforms being proposed by Congressman Griffith would allow,
quote, ``massive or enormous increases in harmful air
pollution,'' 15 places where he says the bills would allow
facilities to evade pollution controls, and 11 places where he
used the words reckless or irresponsible to refer to the
proposed reforms.
Statements like this are just plain silly and they are
demonstrably untrue. They ignore the fact that every single
existing facility that is covered by the NSR program is also
regulated by multiple other Clean Air Act programs--in the case
of coal-fired power plants by as many as 13 other programs that
regulate the very same pollutants.
Even--and I can guarantee you this--even if the NSR program
disappeared completely tomorrow, there would not be a massive
increase in air pollution.
In fact, there would not be any increase in air pollution
at all and we would see, because of the many other programs
that regulate the same pollutants from the same facilities, air
pollution would continue to decrease as it has since 1990.
As I explain in my written statement, the reforms being
proposed by Mr. Griffith would simply reintroduce some common
sense into the NSR program and make sure that it does what it
was intended to do--ensure that when a new industrial facility
is built or an existing facility is significantly expanded,
modern pollution controls will be used to minimize its
emissions and, two, ensure that the NSR program does not make
it hard for companies to keep their facilities in good working
order and where possible to reduce the operating costs of these
facilities by making them more efficient.
Again, I thank you for inviting me here today. I hope we
can have a serious discussion about Clean Air Act policy and I
look forward to answering any questions that you might have.
[The statement of Mr. Holmstead follows:]
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Mr. Shimkus. And I thank the gentleman for his testimony
and thank you all, and you all were very punctual to the--to
the dot almost and that's going to be helpful.
I recognize myself 5 minutes for the--for the opening round
of questions, and Mr. Holmstead, you answered by question about
how many different tools are there out there. So I don't need
to ask that one.
Mr. Spencer, first, just to clarify your role for the
record, you are--you are the responsible authority in your
state for implementing air quality standards which includes New
Source Review permitting. Is that correct?
Mr. Spencer. Correct. Yes.
Mr. Shimkus. And to perform your job you rely upon
engineers, scientists, and an attorney, I think you said in
your----
Mr. Spencer. I wanted to clarify. Yes, we do have one in-
house in the Office of Air Quality.
Mr. Shimkus. But you also have engineers and scientists
and----
Mr. Spencer. Epidemiologists, meteorologists, chemists,
biologists.
Mr. Shimkus. Given your experience, do you believe the New
Source Review reforms you describe in your testimony will
create a gap in protection or will result in declining air
quality standards for your state, and let me add one other--
will it allow industry to pollute more?
Mr. Spencer. No and no, and I would like to acknowledge
something that Mr. Holmstead said. It's important to recognize
the projects or the programs that are working in tandem with
each other. We have several different--we have our NAAQS SIPs
that are state implementation plans that we prepare and submit
to EPA that are--that indicate and acknowledge that we'll be
protective of those individual criteria pollutants.
We have our regional haze plans that we submit and, as Mr.
Holmstead indicated, those are specific to controlling
particularly NOx, SO2, and PM 2.5.
So there are a number of different programs which we
implement that stack up on each other to ensure that we have
protective programs.
Mr. Shimkus. So let me go to Mr. Noe. I was struck by the
example you shared where it took--and I use this many times,
this example, when I've talked about this program for 20 years
now--the--when it took a paper mill owner 18 months to obtain a
New Source Review preconstruction permit for a project to
replace two older inefficient boilers with a single larger
energy efficient boiler, which uses less energy, and I want to
underline this because it's in response to one of the other
panellist's statements--did not result in an emissions
increase.
So to you, Mr. Noe, does it really make sense that an owner
has to receive a preconstruction permit just to install newer
more environmentally beneficial technology, especially
considering how long it takes to obtain a permit?
Mr. Noe. What we would like, Mr. Chairman, is for projects
that are going to have decreases associated as well as
increases, just net the increases and decreases at the start.
So if there's not really a significant net increase, why go
through this onerous process and delay? If I could, I would
like to give you another example where a company was going to
do something that would decrease emissions but because of this
way in which EPA does the math, this two-step process, it was
slowed down and you basically took a longer time to get less
emissions.
This was a wood products facility that essentially wanted
to use better emissions control, reroute its exhaust from a
unit to better emissions control. It had to do a $100,000
study.
There was months of delay. The agency ultimately concluded
this was a good thing. But there was a delay in getting a
beneficial project done and more emissions because of the delay
from NSR.
Mr. Shimkus. And I think your response was following up on
my second question about affecting the development of and
implementation of newer and cleaner technologies. So I don't'
need to ask that.
Let me go to you all, if I have time. A report conducted by
Resources for the Future showed that from 2002 to 2014 the
average time to obtain a prevention of significant
deterioration--an NSR permit--throughout the country was 420
days.
More specifically, in certain states, during that time
period the average permit time was 770 days. Do you think--and
if you can get yes or no or as short as possible--do you think
that is reasonable for an owner to wait one or two years on
average just to obtain a preconstruction permit?
Mr. Spencer.
Mr. Spencer. No. I can say that the permit backlog and
permit issuance time frames were very important to our
administration--to this current administration and we've seen
that ----
Mr. Shimkus. Quickly. Quickly. Quickly.
Mr. Spencer. Yes. So no, that's not a reasonable time
frame.
Mr. Shimkus. Thank you.
Mr. Sunday?
Mr. Sunday. No.
Mr. Shimkus. Mr. Noe?
Mr. Noe. Agreed.
Mr. Shimkus. Ms. Hammond?
Ms. Hammond. I agree that efficiency is important to an
agency but I think taking the time is worth it to do it right.
Mr. Shimkus. OK.
Mr. Walke?
Mr. Walke. I am not here defending delays. I am opposing
pollution increases. So no.
Mr. Shimkus. OK.
Mr. Holmstead?
Mr. Holmstead. There's no reason for it to take that long.
Mr. Shimkus. Thank you very much.
My time is expired. The chair now recognizes the ranking
member of the subcommittee, Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
New York has done a lot to clean up air pollution in our
state but we are still facing problems that blow in from the
West. We need the New Source Review program to work.
We have to make progress on air quality together as a
nation because cleaning up the air is a common responsibility
and we all have to do our part.
Mr. Walke, I am very concerned about the implications of
Administrator Pruitt's December 7th memo for state enforcement
of the New Source Review program.
I have a number of questions for you related to that memo.
In your experience both as an EPA employee and as a
representative for various interests on clean air issues, would
you say that it is usual or unusual for the administrator of
EPA to issue a memo that announces the agency's intent not to
enforce a statute, regulation, or other legal requirement?
Mr. Walke. Extraordinary, and I've never seen it before.
Mr. Tonko. So we go with unusual there.
I have the 1984 enforcement office's memo related to
issuance of assurances of no enforcement that you mentioned in
your testimony.
To your knowledge, has the policy in this 1984 memo issued
during President Reagan's administration ever been rescinded or
replaced?
Mr. Walke. No, it has not.
Mr. Tonko. Are there provisions of the Clean Air Act or
within the NSR regulations that expressly provide EPA with
discretion to not enforce the requirement for a facility to
provide credible estimates of their projected actual emissions
in the NSR program?
Mr. Walke. No, and to the contrary, Mr. Pruitt contravened
the EPA regulations.
Mr. Tonko. Is there any credible argument that loosening
the criteria for estimating projected actual emissions or
foregoing enforcement of this NSR regulation would be in the
public interest and therefore justify issuing an assurance of
no enforcement as discussed in this memo?
Mr. Walke. None whatsoever. Those emissions increases are
what harm the public and Mr. Pruitt has granted amnesty to
industries that get it wrong including badly wrong.
Mr. Tonko. Administrator Pruitt has made much of his
dedication to cooperative federalism. But this memo appears to
do the opposite.
Doesn't EPA's declaration that the agency will not pursue
enforcement in these situations undercut states that want to
enforce New Source Review standards?
Mr. Walke. Yes. Many states will choose not to grant
amnesty and the last paragraph of the memo is really coercive
federalism--threatening states that don't buckle under to
withdraw their program approval. Again, it's very unusual.
Mr. Tonko. Thank you.
Your written testimony refers to a cryptic warning in the
memo to states that--to states to toe the line. Would you
elaborate on that, please?
Mr. Walke. Sure. So states administer the NSR program
approved by EPA and states don't have to follow EPA's decisions
to grant enforcement discretion or, in this case, outright
amnesty across the board.
Mr. Pruitt's memo seems to anticipate that and says in the
very final paragraph in what's not even a very subtle veiled
threat that EPA has the ability to withdraw its approval from
states that don't conform to the understanding of the program
that EPA has.
And a memo like this, this is clearly a threat of coercive
federalism to remove approval from states that don't follow
this amnesty approach.
Mr. Tonko. Thank you.
As administrator of this agency, Mr. Pruitt is supposed to
uphold and enforce the law, not subvert it. This program is
supposed to clean up the air and bring older facilities up to
modern pollution standards.
The people that I represent need a functioning program. For
us, cooperative federalism means that EPA is a partner in
enforcement, not a partner in sidestepping the law and creating
more pollution.
Ms. Hammond, is there anything you want to add about the
December 7th memo? Do you think if a polluter believes EPA will
not check their work it incentivizes applicants to
underestimate their emissions projections?
Ms. Hammond. Absolutely. It incentivizes the kind of gaming
that we've seen throughout the entire history of this program.
Over and over again we see polluting industries, especially old
dirty coal, looking for loopholes and this just opens that
wider.
Mr. Tonko. EPA's leaders often speak about the rule of law.
That phrase takes an outsized role in the EPA's latest budget
request.
For Mr. Walke or Ms. Hammond, can you help us understand
how EPA is upholding its rule of law commitment by shirking its
responsibilities to enforce the Clean Air Act as outlined in
the administrator's December 7th memo?
Mr. Walke. Well, the president's budget now twice has
proposed historically high cuts to EPA's enforcement program.
Thankfully, Congress did not follow suit the first time.
I hope they will not this time. But what we have seen is an
enforcement amnesty memo issued by the administrator himself
that does not contain the name of any enforcement official on
it, and as I detail in my testimony there's some very serious
concerns about the process that resulted in that amnesty.
Mr. Tonko. Ms. Hammond, anything?
Ms. Hammond. Yes. Just the further point that when an
agency uses a guidance document to set binding policy, that
evades the rule of law set forth in the Administrative
Procedure Act. So we have that further problem as well.
Mr. Tonko. Thank you.
Mr. Chair, I yield back and thank you for your----
Mr. Shimkus. Gentleman yields back his time.
The chair now recognizes the vice chair of the
subcommittee, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
I've been listening to testimony about this for now seven
years in Congress and I think one of the conclusions I am
hoping we will come to is that the--something's broken, because
we are hearing some strong push back from both sides.
But I am--I feel like a couple of you up there are
unwilling to recognize that the system may need some
modification. Is that fair to say, Mr. Walke?
Mr. Walke. No, sir.
Mr. McKinley. You don't think it needs modification?
Mr. Walke. We are happy to discuss modifications that don't
result in pollution increases. But that's what's before this
committee.
Mr. McKinley. Well, no one's talking about increasing
pollution ----
Mr. Walke. I was answering your question, Congressman.
Mr. McKinley. That's what I just--and thank you on that.
But, you know, I just feel that in many respects the previous
administrations have used--have weaponized the EPA's rule on
NSR and it's delayed, cost grief and--I spent my career in the
engineering field and many of them in power plants getting
these permits and I saw the delay, the delay and delay and the
costs that were associated with those, and it was unnecessary.
But I believe their--the intent was to try to slow walk the
project so it didn't happen.
So I am first trying to recognize or get people to--the
system, it's broken. It needs modification. Been talking about,
I think, Mr. Holmstead, you said 15 years ago they were talking
about making modifications to it.
I don't know why we haven't during this--is this just
because we've got people with their head in the sand? There's a
problem here associated with this issue and we need to have an
adult conversation instead of saying no and trying to focus on
a distraction that none of us in the engineering field or in
the energy generation want to have this problem or increased
emissions.
But I am afraid that what's going to happen is that we are
going to close down more and more of our power plants and as a
result--with this delay and the fear of the unknown of our
power plants and we are going to reach into that issue that
we've been talking about for now the last two years has been
about grid reliability and resiliency.
When we have more and more--since the Polar Vortex of 2014,
we've had 82 coal-fired power plants shut down. I know during
this last winter that many of our gas and coal-fired power
plants were under advisory about that there was maybe a shut
down because of the lack of supply, particularly in gas.
So I am very concerned that we are continuing to focus on
something where we should be able to cooperate and get
something accomplished.
So, Mr. Holmstead, I've seen you just be very frustrated
with this. You and I have had numbers of conversations about
this.
Can you give us some direction or advice? Because I applaud
what Morgan Griffith is trying to do is to have an adult
conversation and address this issue.
So, Mr. Holmstead, do you have some thoughts about how?
Because I thought Mr. Spencer laid out a good plan. I thought
Sunday did as well on that. But what's your perspective? What
should we be doing to resolve the differences?
Mr. Holmstead. I think we should just be having an honest
conversation about how all of the Clean Air Act programs work
together. I can't tell you how many times someone who's
criticized a reform says that, you know, you're tearing at the
heart of the Clean Air Act.
As far as I know, the Clean Air Act must have 30 different
hearts because no matter you try to reform, you know, you're
tearing at the heart of the Clean Air Act.
Look, there are--air pollution control is enormously
important. The benefits of controlling air pollution are very
significant.
No one is talking about increasing pollution. There's no
such thing as a massive increase that would occur even if we
eliminated it.
Come on, let's have a serious conversation about this and
that's the frustrating part. Let's be honest with each other
about how these programs work and how some of them don't.
Mr. McKinley. Thank you.
Speaker--Chairman, I yield back.
Mr. Shimkus. Gentleman yields back his time.
The chair now recognizes the ranking member of the full
committee, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
My questions are of Mr. Walke and I am going to continue
where my colleague, Representative Tonko, left off. I have also
serious concerns about Administrator Pruitt's December 7th
memo.
In your written testimony, you discuss a number of concerns
with the memo and I want to explore that you did not mention in
your written testimony.
I understand that several circuit courts have now rendered
decisions that limit EPA's authority to enforce New Source
Review violations by upholding a statute of limitation of 5
years from the time the first violation occurs.
Is that correct? Yes or no.
Mr. Walke. Yes.
Mr. Pallone. The December 7th memo states that EPA will not
take enforcement actions against any facility operator in
relation to preconstruction permit requirements under the New
Source Review program and these requirements include estimating
projected actual emissions, determining whether they need a
permit or not, and any other actions that are required before a
construction project is initiated and completed.
Administrator Druitt justifies this in part by initiating a
policy that defers consideration of enforcement actions until
the agency sees the actual emissions ``during the 5- or 10-year
record keeping or reporting period after,'' the project in
question has been completed and the facility resumes operation.
So, Mr. Walke, am I correct in my concern that deferring
enforcement to this post-construction period places any
enforcement action past the 5-year statute of limitations being
upheld by the circuit courts? Again, yes or no.
Mr. Walke. Absolutely. Yes, you are--have a right to be
concerned.
Mr. Pallone. Thank you.
So it appears that Administrator Pruitt has ensured that
the agency will never act because the time period for action
designated in the memo will always be beyond the statute of
limitations.
Any action taken by the agency deferred until this time
period would very likely be overturned by the courts. So Mr.
Walke, again, do I have that right, yes or no?
Mr. Walke. One hundred percent right.
Mr. Pallone. OK. It doesn't seem likely to me that these
circuit court decisions would be unknown or overlooked by the
administrator or by Mr. Wehrum, the Air Office chief who came
on board at the agency about one month before this memo
appeared. What do you think about that? That's not a yes or no.
Mr. Walke. I can guarantee you Mr. Wehrum is aware of those
cases.
Mr. Pallone. OK. So the next thing is, look, the bottom
line is the policy Mr. Pruitt is pushing in the December 7th
memo is inconsistent with the law, in my opinion, and clearly
will allow any facility owner that wants to get around the NSR
program to do so and that's terrible public policy and will
commit us to many more tons of harmful pollution and, in my
opinion, it should be rescinded immediately.
So I just have a few more questions on this memo and its
relationship to the policy memo from the Reagan administration
mentioned by Mr. Tonko.
Hasn't it been longstanding established EPA policy and
direction to all agency personnel not to give either written or
oral assurances to regulated parties that EPA will not take an
enforcement action if a violation occurs?
Mr. Walke. Yes, and Mr. Pruitt's memo directly contradicts
a memo dating to the Reagan administration that lays out very
specific criteria for no action assurances that he did not
follow.
Mr. Pallone. OK. However, I am aware that there are cases
in which EPA has provided assurances of no action to regulated
parties.
But these are in special narrowly-tailored circumstances
and with limited time periods often associated with emergencies
such as in the aftermath of a catastrophic storm like Hurricane
Maria, for example.
So is that correct?
Mr. Walke. Yes. They are very short lived, directed to
specific companies, and not broad grants of amnesty like Mr.
Pruitt's memo.
Mr. Pallone. All right.
So does the DTE Energy case or any other situation
described in this memo fit within the narrow circumstances that
warrant an enforcement holiday?
Mr. Walke. It does not fit within EPA's policy.
Mr. Pallone. All right. So Mr. Walke, I have another
question related to the administrator December 7th memo. The
memo appears to create a new exclusion for emissions increases
based on a facility operator's intent to manage emissions
increases once a project is completed.
Now, how is such emissions management to be measured, if
that's the case?
Mr. Walke. We never know because they don't have to self-
report. If it's done after 5 years, EPA cannot enforce. It's
completely trusting the source with a promise that EPA will not
second guess whatever they decide.
Mr. Pallone. So if a facility operator intends to manage
emissions but then does not manage them, how would this failure
be documented? Could EPA enforce this policy?
Mr. Walke. EPA would never know about it. It won't be
documented because the memo doesn't require it and, indeed, the
EPA will probably never find out about it and the emissions
increases will go uncontrolled.
Mr. Pallone. All right.
Thank you so much. Thank you, Mr. Chairman.
Mr. Shimkus. Gentleman yields back his time.
The chair recognizes the gentleman from Texas, Mr. Flores,
for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman. I appreciate the panel
and their enlightened testimony today.
Mr. Spencer, I am going to start with you. You support the
administration's recent guideline memo on NSR permitting which
clarifies that the EPA will not second guess a facility
reconstruction emissions analysis.
And so explain for me--for the committee what was the
problem with the second guessing and why this memo is helpful
for states' work on NSR permitting.
Mr. Holmstead, I will follow up with you on this as well.
Mr. Spencer. I think that the clarification was needed and
it doesn't necessarily create a blanket exemption from the
responsibility that facilities have.
I think that there should be some accountability such as if
there is an error in a calculation that's clear if their
companies use a wrong significant emissions threshold. And so
there are backstops for that kind of empirical data to be
provided that would ensure that the calculations that have been
submitted by the company are in fact accurate.
Mr. Flores. OK.
Mr. Holmstead, do you have any additional comments?
Mr. Holmstead. Yes. This whole situation shows that--why
this--why this program is so broken. Here's what happened.
The company used a very sophisticated modelling technique
that has been approved by, you know, other regulators to
estimate its future emissions and it showed that there wouldn't
be an emissions increase.
EPA brought an enforcement action and they said you didn't
do it right--you should use this methodology. Methodology that
EPA enforcement officials wanted to use always showed every
project would cause an emissions increase.
So you have these two different ways of projecting out 5
years into the future and it's so subjective and we have so
much litigation over it that's why we just need to use the
simple engineering technique of saying look, what is your--what
is your hourly emission rate.
That's what we do in other programs. That's knowable,
that's ascertainable, and instead we have these kind of
ridiculous fights, and what makes this particularly ridiculous
is that case was brought more than 5 years ago.
So we now have 5 years of data showing that the plant
actually decreased its emissions. But EPA is insisting that
they should have predicted an increase and we know that
whatever EPA was--turned out to be wrong because emissions have
actually gone down.
Mr. Flores. OK. That leads me to into my next--a follow-up
question for you and Mr. Noe and Mr. Sunday.
An important component of the NSR program focuses on how an
owner must calculate the anticipated emissions increase
associated with the potential project which determines whether
or not an owner is required to obtain an NSR reconstruction
permit.
So my questions are this. Did the NSR program's rules on
emission accounting typically result in a calculated emissions
value that accurately reflects the true emissions increase?
Do you want--do you want to waive off to somebody else?
Mr. Holmstead. No. I would just say there is not an
approved EPA method for predicting and that's one of the
problems.
And because every circumstance is so different and because
future emissions depends so much on things that are completely
out of the control of the plant owner it's kind of a fool's
errand to be saying that you can predict with accuracy what
your emissions are going to be next year and year after.
And we ought not to be putting people in the position to do
that and one of the problems is there is no approved method for
doing this.
Mr. Flores. Now, does--do you think that the current NSR
emissions projections are overestimating the actual change in
emissions?
Mr. Holmstead. Certainly, the current approach is better
than the way it used to work. But, again, it creates all kind
of uncertainty and problems and it ought to be fixed.
Mr. Flores. OK.
Mr. Noe, do the NSR program's rules on emissions accounting
typically result in a calculated emissions value that
accurately reflects a true emissions increase?
Mr. Noe. My sense is not and----
Mr. Flores. Oh, microphone. I am sorry. Yes.
Mr. Noe. My sense, Congressman, is no and we'd like a
simpler way to do the math that allows you to move quickly if
you don't have a significant emissions increase.
Mr. Flores. OK.
Mr. Sunday, same question.
Mr. Sunday. No. In general, our facilities are obligated to
account for emissions that they're never going to produce.
Mr. Flores. OK. All right.
I yield back the balance of my time. Thank you.
Mr. Shimkus. Gentleman yields back his time.
The chair now recognizes the gentleman from California, Mr.
McNerney, for 5 minutes.
Mr. McNerney. Well, I thank the chairman.
Mr. Walke, sometimes it's hard to see the negative
consequences of deregulation, especially if they sound
reasonable.
In this case, industry recommended that to improve the NSR
program, we should allow owners of a facility to avoid the
requirements of the NSR program if they improve facility energy
efficiency or if they invest in a project for pollution
prevention or pollution control simply on those bases.
What's wrong with that argument?
Mr. Walke. Congressman, you have to look behind the labels.
We all support energy efficiency projects that decrease
emissions. Mr. McKinley said so.
But these energy efficiency projects, the way the label is
misused will allow and result in emissions increases. That's
the only way that the New Source Review requirements apply.
The same is true for the pollution control project label.
If they just reduced emissions, NSR requirements would not
apply. Instead, they increase emissions.
So the labels are very important and the requirements only
apply when pollution increases. They do so in both examples
that you provided as used by industry.
Mr. McNerney. I think that was pretty clear. Thank you.
Mr. Walke. Thank you.
Mr. McNerney. Ms. Hammond, it's clear that the Clean Air
Act has driven innovation and the U.S. economy has continued to
grow and innovation has continued to thrive.
Is there any evidence that the cost of pollution controls
are so high that we've seen massive layoffs and loss of
revenue?
Ms. Hammond. The studies that I am aware of suggest that do
the extent companies do have to change their business plans
because of Clean Air Act controls, it's not that.
It's market conditions that they're responding to and,
indeed, that's the case with coal, most certainly. And in fact,
with New Source Review we are often talking about these very
old, very dirty coal-fired power plants and what you don't hear
is that in most jurisdictions these power plants can recover
the cost of pollution control technology from their ratepayers.
So they're not even asking shareholders to bear those costs.
Mr. McNerney. So is there any evidence that current
regulations have caused a reduction in economic growth?
Ms. Hammond. No, and in fact, the opposite is true.
Mr. McNerney. Well, industry claims that the NSR program
has stifled innovation and discouraged investment in
technologies, new factories, and renovations that would deliver
significant benefits.
Is there any evidence for that claim?
Ms. Hammond. No, and in fact, pollution control technology
is itself a business and there are many small businesses that
benefit from developing those technologies.
So you can also add that to the list of more generalized
economic benefits that we see.
Mr. McNerney. Geez, you're getting ahead of me. I was going
to bring that up.
Manufacturing gets left out of the conversation. American
domestic manufacturing does get left out of the conversation--
manufacturers that produce pollution control equipment.
And a report from 2013 states that the market for these
systems was expected to grow to $78 billion a year by 2019 and
a 2017 report expects the market to grow to $92 billion by
2022, and more than 75 percent of that growth is overseas and
continues to grow as other countries invest in pollution
control equipment, and these are medium to small-sized private
businesses located throughout the country.
Would you anticipate the economic impact of these companies
and their employees to be if the air quality protections are
deregulated and unenforced?
Ms. Hammond. Indeed, they will suffer in that case.
Mr. McNerney. So do you believe, based on facts and
economic realities, that there is a choice between
environmental control and regulation on the one hand and
economic prosperity on the other hand?
Ms. Hammond. No. It's a false choice. They go together. We
see over and over again the clean air is good for the economy.
It's good for health. People can go to school. They can work.
We prosper with clean air.
Mr. McNerney. OK.
Mr. Holmstead, I am going to throw you a bone here. You
talked about good regulatory design. What do you mean by that?
Mr. Holmstead. I mean trying to find the most effective,
the most cost-effective ways of reaching our air pollution
goals.
Mr. McNerney. Is there an academic model for good
regulatory----
Mr. Holmstead. Yes. There are academic studies that look at
all kinds of regulatory programs and in particular--I will say
this. The way we have regulated cars and fuels has been very
successful. That's probably been the most successful part of
the Clean Air Act.
But if you look at these so-called stationary sources, the
programs that have been most cost effective, where we have the
highest rates of compliance, are these cap and trade programs
where an overall cap is set.
That really started with the acid rain program. There's
been a number of programs that are built upon that--the NOx SIP
Call, the Care Program, CSAPR, state programs, and those
programs are very cost effective and very effective at reducing
pollution.
Mr. McNerney. So we shouldn't just deregulate everything?
Mr. Holmstead. No, no, no. No one's----
Mr. McNerney. And that's what I--what I hear a lot.
Mr. Holmstead. No, no, no. No.
Mr. McNerney. Not from you, necessarily.
Mr. Holmstead. So I think what we need to do is just let's
figure out the most cost effective ways of achieving our air
pollution goals. That's what I--I mean, I agree about all the
benefits of reducing air pollution. Let's just do it in the
most cost effective way.
Mr. McNerney. OK. Thank you.
I yield back, Mr. Chairman.
Mr. Shimkus. I apologize to my Republican colleagues for
letting my Democratic colleague go so long.
But the chair now recognizes the gentleman from Michigan,
Mr. Walberg, for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman. Thanks to the witness
team here as well. Appreciate your involvement.
Mr. Noe, you have highlighted a couple of improvements to
the NSR and PSD programs in your testimony. Given your
description of how broken the program is, are there any other
reforms you think are critical to streamlining the permitting
process while protecting the environment, which we all agree
on?
Mr. Noe. Thank you, Congressman.
I think there's a couple I want to mention quickly. First
of all, EPA presumes that emissions from multiple projects at a
plant over several years should be aggregated when determining
significance for NSR applicability.
They believe the projects are connected economically if
they serve the basic purpose of the plant even if they incur
many years apart or undertaken for very different business
reasons and by themselves are minor.
Once those emissions are added together, NSR can
potentially be triggered with its heavy burdens and delays and
we believe the EPA should only add together emissions from
projects that are truly linked. So that's one example.
A second is EPA's PSD modelling guidelines historically
have required excessively conservative assumptions about
dispersion model inputs that frequently result in gross over
estimates of a project's air quality impacts and regulatory air
quality models have the capability to calculate ambient air
concentrations based on variable emissions background and
modern probabilistic tools and meteorological conditions.
So rather than assuming, for example, that the facility is
going to be running at maximum levels, all the other nearby
sources are going to be running 24/7 at maximum potential level
and that they ought to look at the distributions of the
emissions in a probabilistic way.
And EPA can address this rapidly-developing permit gridlock
by having more flexible policies that actually reflect the
realistic emissions and the realistic modelling.
Mr. Walberg. Rather than always the worst case scenario?
Mr. Noe. Yes, sir.
Mr. Walberg. What other Clean Air Act obligations does the
forest products industry face?
Mr. Noe. You know, we have a whole bunch of regulations
that we are covered by. Jeff gave you some examples with power
plants.
For us, let me just give you some of the major ones. So for
hazardous air pollutants, EPA's MACT program has targeted pulp
and paper operations, wood product driers and presses,
industrial boilers and coating operations where emissions have
reduced as much as 92 percent.
For criteria pollutants that are regulated by the NAAQS,
those criteria pollutants have been dramatically reduced
through a regulatory action such as the NOx SIP Call regional
haze program and state efforts to implement the NAAQS through
state implementation plans.
For example, our SO2 emissions are down by over 50 percent
since the year 2000.
Mr. Walberg. OK. Thank you.
Mr. Holmstead, you were involved at the EPA in the early
2000s, have, as you said, three decades of experience on NSR
reform.
As a former EPA official, speaking from that experience,
why has EPA over the past 28 years had so much difficulty
finalizing NSR guidance documents?
Mr. Holmstead. Well, I think some of the controversy you
have seen here gives you a hint at why that is.
Mr. Walberg. I am not egging you on. I am just----
Mr. Holmstead. No. But, you know, part of the problem here
is that this NSR program has become primarily an enforcement
program. We refer to it as a permitting program but when it
comes to existing sources, it's become the program where EPA
puts almost all of its money when it comes to enforcement. A
huge percentage of the budget for EPA enforcement and DOJ
enforcement goes to NSR.
They love this program because they believe that if they
just look long enough they can find NSR violations wherever
they look and they don't want to give up that weapon because if
we actually made the program more sensible so it really was a
fair and predictable regulatory program you wouldn't be able to
bring all these lawsuits.
And that--I mean, I am being pretty candid here but that I
think is the main reason why we haven't been able to reform the
program.
Mr. Walberg. Kind of target rich.
To the extent court decisions and litigation have
contributed to this, what's the cure to ensure regulatory
certainty?
Mr. Holmstead. Boy, if we could just have some narrow
thoughtful legislative reforms, I mean, that's the best way to
take care of it.
Mr. Walberg. To get the job done and do it in the least
restrictive but most efficient way?
Mr. Holmstead. Yes, sir.
Mr. Walberg. OK. Thank you. I yield back.
Mr. Shimkus. Gentleman's time is expired.
The chair now recognizes the gentleman from Texas, Mr.
Olson, for 5 minutes.
Mr. Olson. I thank the chair, and welcome to our six
witnesses. A special welcome to you, Mr. Noe. I am a fellow
paper guy. My dad got a Ph.D. in paper chemistry from the
Institute of Paper Chemistry when it was in Appleton, Wisconsin
in 1967--a long, long time ago.
He spent over 30 years working for Champion International,
now became International Paper. He worked at mills in Ohio,
North Carolina, Alabama, and Texas.
And your association has members all across America. As to
the members of Region 6--Texas, Arkansas, New Mexico, Oklahoma,
and Louisiana by their new regional administrator, Ann Idsal,
and she has already said that she sees major differences
between the regions in terms of enforcement of some of these
things involving the NSR.
My question is, as you deal with EPA's regional differences
in the offices, do you see these differences and how they
impact your members of your association?
Mr. Noe. Yes, Congressman. We--our members do see these
differences and, you know, there is, unfortunately, a lot of
confusion with the NSR program.
I can't tell you how complicated it is and, honestly, I've
literally been in discussions with some of the best lawyers you
could find anywhere and people get into debates and I've seen
examples where none of them can figure it out and they maybe
defer to one in the room.
I mean, this is just not how our government should work
where things are that complicated and where the law might be
different based not only on what region in the country you're
in but who actually is the person dealing with your permit.
That's just not the way a democracy ought to work. That's not
the way a good regulatory process should work.
Mr. Olson. So there's lots of uncertainty in that process,
correct?
Mr. Noe. Yes, sir.
Mr. Olson. Another question--a crucial step in any
construction project, probably the most crucial step is to
obtain necessary financing--the money.
Have you members had a hard time getting project financing
due to uncertainty like multiple standards in multiple regions
of the EPA and time delays caused by the NSR process?
Mr. Noe. I think any time there's regulatory uncertainty
that creates business uncertainty. It creates risk. So it does
impede projects from going forward.
Mr. Olson. Mr. Sunday, how about you? Difficulty getting
permitting process with all the financial stuff as well?
Mr. Sunday. Yes. If you're going into the debt markets or
to do private financing, the lender is not going to give the
revenue or capital until all appeals are settled.
And so what we've seen is perpetual litigation by third
party groups where the permit goes through the process. There's
a challenge. They go through the court. Now the universe of
controls is different. Lender is still not giving the capital.
We go through the litigation again. So it really hangs up the
process because we can't get that clear path to yes.
Mr. Olson. One question for you, Mr. Spencer. In your
testimony, you describe some of the issues with the NSR in
terms of enforcement.
Specifically, you said, and I quote this, ``It's important
to reorient policies toward pursuit of actual violations that
create emissions increases,'' end quote.
I assume the NSR was involved with pursuing actual
violations and you say we have to reorient that process. Can
you explain that more--elaborate on why you made that
statement?
Mr. Spencer. Yes. Thank you, Congressman.
I have been dying to say bizarre NSR all day long. So I got
that into the record.
I wrote down a few phrases here--unintended consequences,
perverse incentives, absurd results--and those are terms I've
heard more in my practice with Clean Air Act regulations and
enforcement than I've heard in my entire career.
And so I think what you're looking at is something that Mr.
Holmstead alluded to earlier. When you have a facility that has
engaged in an emissions projection but the reality of the
situation is that time had advanced since that projection was
made and there has been no actual increase.
And so as a state regulator, when we exercise our
enforcement ability, we are looking for actual events--actual
emission violation events.
Mr. Olson. One final question. From your perspectives, does
EPA's memo of December 7th improve the reorientation of the
NSR? Is that what you tried to do? I am sorry, the NSR.
Mr. Spencer. Yes. I would agree with that.
Mr. Olson. OK.
And Mr. Chairman, I yield back the balance of my time.
Mr. Shimkus. The gentleman yields back.
The chair now recognizes the gentleman from Georgia, Mr.
Carter, for 5 minutes.
Mr. Carter. Thank you, Mr. Chairman.
Mr. Noe, I too--I grew up in the South where paper mills
are plentiful. In fact, my dad worked in a paper mill. He
didn't have a degree.
He was just a laborer. He worked in a paper mill for over
35 years and the best thing he ever did for me after my
freshman year in college was to put me to work on a broke
beater. Do you know what a broke beater is?
Mr. Noe. I--I am not sure.
Mr. Carter. Well, it's at the end of the process. It's
where all the excess paper goes and you----
Mr. Noe. The broke comes out. Yes.
Mr. Carter. Yes, and you just take it and you assemble it
and you put it back and then you recycle it, per se. But I can
tell you that it was as close to hell as I've ever been.
[Laughter.]
I have never been that close. But it may--I could not get
to school quick enough. I could not get back to school and
study hard quick enough, I will tell you that. It was a life
lesson.
Air quality was important to us. People would visit us and
they would say, ``What's that smell?'' And we'd say, ``That's
money you smell,'' because that's what it was for us.
But it is important and I understand that. But I want to
try to understand. Tell me what project netting is. What
essentially is that?
Mr. Noe. So, basically, what we want to make sure we have
is a system when we do the math and we look at a project to see
if it results in a significant emissions increase. If it does,
then by all means, let's go through the heightened scrutiny.
Let's put on best controls if that's indeed the case.
But when we do the math, let's look at the increases and
decreases together so we don't wind up getting the project
gummed up in the works, delayed, spend hundreds of thousands of
dollars on consultant studies just to get to the obvious answer
that when there's not a real significant emission increase we
should be putting into NSR. We ought to go forward with the
project because these beneficial projects.
And one point I would like to make is, you know, I think
one thing that's being lost is when a regulatory program
inhibits efficiency improvements at one facility. It's doing
that all around the country for a bunch of them.
So when we have demand X to meet, we are going to do it as
a nation in a more inefficient and higher-polluting way. When
we can get these efficiency improvements in by nature we are
going to have not only less CO2 but other pollutants as well.
Mr. Carter. OK. You know, I've heard the process. Tell me--
tell me how we reform the process. Tell me what we'd do
differently from what we are doing now that makes it practical
and sensible because that's what we all want to get to.
Mr. Noe. Sure. And some of the things I've mentioned these
are things EPA can do either through guidance or through rule
making. There are some things Congress can do. Mr. Holmstead
mentioned some of them.
Ones I would like to highlight is we would like to ensure
that clean units have legislative support. So, in other words,
an emission unit that's been through the permitting process, to
have best controls put on it--that that ought to be only an
increase in the units permitted allowable emissions would
trigger NSR.
For pollution control projects, those need legislative
support and they're excluded under the New Source Performance
Standards program. It makes sense to do the same thing in the
NSR program, we believe.
Mr. Carter. Right. Right.
Well, Mr. Noe, I want to--I want to thank you and I want to
thank you for what the paper industry did for me and for my
family.
It provided us a living.
Mr. Noe. Well, Congressman, if I could just briefly thank
you and Mr. Olson and I am glad to hear you have a connection
to the industry. Our workers are up here visiting many of your
offices this week.
Mr. Carter. Yes, they are.
Mr. Noe. I hope you get to meet them. And you know these
are very proud hardworking people----
Mr. Carter. Absolutely.
Mr. Noe. --and they're not asking for anything from any of
you other than the right to compete in this country. They can
beat anyone in the world as long as they are given a playing
field that's workable.
No one is here asking you to take controls off projects
that ought to have emissions controls. We just don't want the
delay and the unnecessary red tape that is gumming up our
modernization.
Mr. Carter. Thank you, Mr. Noe.
Mr. Chairman, I yield back.
Mr. Shimkus. Gentleman yields back his time and the chair
now recognizes the gentleman, if he's ready, the gentleman from
Texas. Do you want me to go to--all right. The gentleman is
recognized for 5 minutes.
Mr. Green. Thank you, Mr. Chairman. I am thanking you and
the ranking member for holding the hearing today on the New
Source Review and I would also like to thank our panellists.
I come from an area--a very urban area in Houston. We have
issues. We have 5 refineries and more chemical plants than I
can count.
This is a question for, I think, everyone on there. Many
stakeholders have noted that the substantial delays for air
permits under the New Source Review program delays two years or
even longer.
My question is are the delays for issuing the permits the
fault or the EPA or the state agencies that are administering
the program?
Mr. Spencer. Since I am with a state agency I am going to
say it's EPA's fault.
[Laughter.]
No, I think that, as we've indicated in our testimony,
certainty adds to the process of being able to issue timely
permits. So the more certainty we have and clearing up the
muddied guidance documents, applicability determinations, court
cases, the better, and more efficient permits we can issue.
Mr. Green. Anybody else?
Mr. Noe. We'd like to say, Congressman, what we'd like to
see happen to streamline the process is just make sure that we
get the--sort the wheat from the chaff. The truly significant
projects with significant increases ought to go through NSR.
They ought to put on controls.
But for these minor projects, why gum them up in the works
with these consultant studies that take all this time and money
and delaying these projects from going forward?
So we'd like to streamline the process. I believe EPA could
do that.
Mr. Walke. Congressman, the permits in this country are
issued primarily and overwhelmingly by the states, and it's
the--it's, frankly, a lack of resources and capacity at the
state level that's responsible for most of the permitting
delays.
There was a good Houston Chronicle article about a week or
two ago in which a Texas regulator said exactly that about
issuing air permits in Texas.
Now, the Trump administration yesterday just proposed a 33
percent cut to the state and tribal air grants, which are the
moneys from Congress responsible for issuing permits in a
timely fashion.
So we've got cross purposes and I expect that our friends
at AAPCA and the National Association of Clean Air Agencies
would like to see Congress fully fund them so they can issue
permits on time. We all want to see that.
Mr. Green. I was involved in a permit a few years ago
because right now we are seeing in east Harris County,
particularly along the Gulf Coast, expansion of chemical plants
just because of the low price of natural gas, and the delay in
the permits were a combination. And I would call EPA and say,
oK, tell me what's going on. It was for Exxon Mobil in
Baytown--huge expansion of their chemical facility--jobs and
everything else.
And so sometimes it's both sides. It's both the Feds and
the--because at that case it delayed it a little bit because
there was--I didn't know the EPA, Mr. Chairman, had an appeals
process within their agency and when I was told by the deputy
EPA administrator he said, oh, we got a good result--I mean, we
got a good brief and it'll go to this group.
I said, ``Well, who are they? I want to do a letter to
them.'' And he said, ``Oh, no, they're all EPA
administrators.'' I said, ``Well, how long will that happen?''
He said, ``It will take a few months,'' and it took six months
to get through that EPA appeals board. So, you know, which
didn't do anything to it. Just delayed it six months.
Why are there long waits for air permits in industry-
friendly states like Texas? Could delays from the state
agencies be a result of the budget cuts? And I think you
answered that.
Earlier this week, President Trump's 2019 budget proposed a
25 percent cut in EPA and reduced the EPA's workforce by over
3,000 employees and I think it's already answered that if you
believe these cuts in EPA will improve air permitting times, I
don't know if you can do it with less--do it faster with less
people. Is that possible?
Mr. Walke. I don't see how it's humanly possible, and
you're right, that it's EPA and states contributing and the
Trump budget proposes cuts to both.
Mr. Green. OK.
Thank you, Mr. Chairman. I yield back.
Mr. Shimkus. The gentleman yields back his time.
The chair now recognizes the very patient, although he's
not a member of the subcommittee, Mr. Griffith, for 5 minutes.
Mr. Griffith. Mr. Chairman, I am just very appreciative to
be here as we discuss this issue, which is very near and dear
to my heart.
I will say that I appreciated somebody saying that what we
need is narrow thoughtful regulatory reform. I believe that was
you, Mr. Holmstead, and I am attempting that with my bills and
open to suggestions and, you know, I am looking in my file
here--all kinds of changes and rewrites and so forth, and
that's what we are trying to do is just have a narrow
thoughtful regulatory reform that works right.
And it comes about because, as some people say, you know,
there's a lot of people out there that want to see this thing
work. We all want clean air.
Mr. Noe mentioned his industry. They were out in the
hallway. I had to step out right at the beginning just to say
hi because I have probably a couple thousand employees at West
Rock at two different facilities in my district and it's
important.
Likewise, I thought we'd touched on maybe part of the
problem in Ms. Hammond's comments earlier when she was talking
about putting on controls at coal-fired power plants and she
said the plants can--agencies or the power companies can pass--
and I am going to--I hope I get it right but it's pretty
close--can pass the cost on to the ratepayers so it doesn't
cost their shareholders anything.
That's the problem. It's the ratepayers who get it. And so
I received--I thought it was interesting--exactly two weeks ago
I received a series of texts from a friend of mine in the
district and it said, ``Just opened my AEP bill.''
She gives me the numbers and I calculated it. It's 70
percent higher than what she said her highest bill was last
year. She goes on to say, ``We can handle it but many are
suffering. Do you think we can get it turned around?'' Big
subject on Facebook. Everyone is panicking.
So when we do regulations that--you know, maybe it doesn't
affect the shareholder. But most of my constituents in
southwest Virginia aren't shareholders. They're ratepayers, and
it's easy to sit here in Washington where people have big
incomes and say, well, we are just going to pass this on to the
ratepayer.
But when you're dealing with a lot of folks who have modest
means, we can handle it. I can handle it. This lady who wrote
me can handle it. But many in my district are suffering and we
have to come up with reasonable reform that makes sense, where
we don't open up for pollution but we do make sense.
And I am going to give you another example. I got a
furniture manufacturer in my district and I haven't been there
in a couple years now so maybe they fixed it somehow.
But Mr. Noe mentioned earlier about the confusion on the
law, and he had a loop in his conveyer belt that was about half
the size of this room and there was nothing there. It was just
a big loop.
And he said, ``I bet you wonder why we have that,'' and I
said, ``Yes, I do.'' And he said, ``It's because if we change
this--this was once a part of our paint system and if we change
it, we have to get permission from the EPA in advance. So we
built these ramps to go over it and we just leave it there and
it just runs off here into the middle of nowhere and back.''
That's what we are trying to fix. It is--you know, that's
the one I can understand best. Some of you all can talk about
all the different controls and different improvements at the--
at the big power plants.
But I know that it also deals with things like conveyer
belts and the end result if we don't get it right, and we
haven't, is a 70 percent increase and the people back home
having to pay for their electricity.
All right. Got that off my chest. I appreciate you all's
patience on that.
I do think that we can work together to get this done. Mr.
Holmstead, you had some concerns that you raised earlier and I
understand in the written testimony that Mr. Walke claims that
when you were head of the EPA Air Office back in 2002 the Bush
administration weakened the clean air regulations at issue here
to insert loopholes and exemptions that let industry increase
harmful air pollutants significantly and evade any modern
pollution controls. Would you like to respond?
Mr. Holmstead. Thank you.
What you just read indicates part of the problem here, and
just in terms of the honesty of the debate.
So that was a quote from my friend's testimony who said
that the Bush administration weakened them to insert loopholes
and exemptions that let industry increase harmful pollution
significantly and evade any modern pollution controls.
I don't know how anyone can say that. That was 2002. You go
on EPA's Web site. You do a search and you see where emissions
have gone since 2002 and all of these pollutants that we are
talking about have been reduced by about 35 percent since 2002.
So we did do some important reforms that I think made the--
made the program better. We didn't let industry increase
harmful pollution significantly.
We tried to do things in a thoughtful way, and that's part
of the problem here.
Mr. Griffith. And I appreciate that and I appreciate the
opportunity to be with you all today and appreciate everybody's
testimony.
And what I appreciate most is that two of you who
completely disagree--Mr. Holmstead and Mr. Walke--are sitting
side by side and that's the way it's supposed to be in America.
We can disagree. We can have battles of ideas. But we don't
have to be completely disagreeable or get so angry that we
can't sit at the table together.
Thank you for that and appreciate your testimony. I yield
back.
Mr. Shimkus. The gentleman yields back his time.
Seeing no further members wishing to ask questions for the
first panel I would like to thank you for being here and
joining us today.
Before we conclude, I would like to ask unanimous consent
to submit the following documents for the record.
We have a letter on the EPA's NSR program. We have this
article, ``EPA's New Source Review Program: Time for
Reform?''--Mark Fraas, John Graham, and a guy named Jeff
Holmstead.
[The information appears at the conclusion of the hearing.]
And pursuant to committee rules, I remind members they have
10 business days to submit additional questions for the record
and I ask the witnesses to submit their responses within 10
business days upon receipt of the questions.
Without objection, the subcommittee is adjourned and I
would encourage my colleagues to get downstairs for our markup.
[Whereupon, at 3:54 p.m., the committee was adjourned.]
[Material submitted for inclusion in the record follows:]
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