    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

           LEGISLATION ADDRESSING NEW SOURCE REVIEW PERMITTING REFORM

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

                                    HEARING

                                   BEFORE THE

                          SUBCOMMITTEE ON ENVIRONMENT

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 16, 2018

                                   __________

                               Serial No. 115-129

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                    __________

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                        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....................................     4
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     5
        Prepared statement...........................................     7

                                   Witnesses

    William Wehrum, Assistant Administrator for the Office of Air and
      Radiation, U.S. Environmental Protection Agency................    10
        Prepared statement...........................................    12
        Answers to submitted questions...............................   130
    Sean Alteri, Director, Division of Air Equality, Kentucky
      Department of Environmental Protection.........................    39
        Prepared statement...........................................    41
        Answers to submitted questions...............................   134
    Paul Baldauf, P.E., Assistant Commissioner, Air Quality, Energy,
      and Sustainability, New Jersey Department of Environmental
      Protection.....................................................    46
        Prepared statement...........................................    48
    Ross E. Eisenberg, Vice President, Energy and Resources Policy,
      National Association of Manufacturers..........................    56
        Prepared statement...........................................    58
        Answers to submitted questions...............................   137
    Kirk Johnson, Senior Vice President, Government Relations,
      National Rural Electric Cooperative Association................    66
        Prepared statement...........................................    68
        Answers to submitted questions...............................   141
    Bruce Buckheit, Analyst and Consultant...........................    80
        Prepared statement...........................................    82
    Jeffrey R. Holmstead, Partner, Bracewell LLP.....................   103
        Prepared statement...........................................   105
        Answers to submitted questions \1\...........................   146

                               Submitted Material

    Statement of the American Forest & Paper Association.............   125
    Statement of the National Parks Conservation Association.........   128

    ----------
    \1\ The committee did not receive a response to Mr. Holmstead's
      submitted questions for the record by the time of printing.

           LEGISLATION ADDRESSING NEW SOURCE REVIEW PERMITTING REFORM

                                  ----------

                            WEDNESDAY, MAY 16, 2018

                      House of Representatives,
                           Subcommittee on Environment,
                               Committee on Energy and Commerce
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:15 a.m., in
    room 2322 Rayburn House Office Building, Hon. John Shimkus
    (chairman of the subcommittee) presiding.
        Members present: Representatives Shimkus, McKinley, Barton,
    Harper, Olson, Johnson, Flores, Hudson, Walberg, Carter,
    Duncan, Walden (ex officio), Tonko, Ruiz, Peters, Green,
    Dingell, Matsui, and Pallone (ex officio).
        Also present: Representative Griffith.
        Staff present: Samantha Bopp, Staff Assistant; Daniel
    Butler, Staff Assistant; Kelly Collins, Legislative Clerk,
    Energy and Environment; Wyatt Ellertson, Professional Staff
    Member, Energy and Environment; Margaret Tucker Fogarty, Staff
    Assistant; Jordan Haverly, Policy Coordinator, Environment;
    Mary Martin, Chief Counsel, Energy and Environment; Drew
    McDowell, Executive Assistant; Peter Spencer, Senior
    Professional Staff Member, Energy; Austin Stonebraker, Press
    Assistant; Hamlin Wade, Special Advisor, External Affairs; Jeff
    Carroll, Minority Staff Director; 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; Jourdan
    Lewis, Minority Staff Assistant; Alexander Ratner, Minority
    Policy Analyst; 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 Environment and the
    Economy will now come to order. The chair recognizes myself for
    5 minutes for an opening statement.
        At today's hearing, we are examining a discussion draft led
    by Mr. Griffith which reforms the New Sources Review program.
    The goal of this discussion draft is to add greater certainty
    to the New Source Review permitting process, making it easier
    for industry to modernize existing facilities and carry out
    environmentally beneficial projects.
        At a February hearing in this subcommittee, we learned that
    the uncertainty, complexity, and burdens associated with New
    Source Review permitting programs are deterring companies from
    properly maintaining and upgrading existing manufacturing
    plants, power plants, refineries, and industrial facilities.
    This is disappointing because it means we are missing out on
    opportunities to increase the Nation's industrial capacity to
    create more American jobs and to improve our environment.
        The discussion draft before us today reforms the New Source
    Review program by clarifying which types of facility upgrades
    require an owner to obtain a New Source Review permit.
    Historically, there has been a great deal of controversy and
    uncertainty surrounding this very issue. The main reason for
    this controversy is due to the fact that the New Source Review
    program uses a complicated annual emissions projection approach
    to determine whether a project triggers New Source Review.
        Projecting future annual emissions is a difficult and
    confusing process, requiring the consideration of many complex
    factors, such as future demand of the product being produced
    and a facility's future hours of operation. Because of this
    complexity, it is difficult for companies to know whether they
    are correctly projecting a facility's future annual emissions
    and in many instances companies are being targeted by EPA
    enforcement actions for having carried out these emission
    projects incorrectly. The end result of this regulatory
    confusion and enforcement risk is that many companies are
    choosing to not modernize and upgrade their existing facilities
    because they fear that these types of activities could trigger
    the New Source Review permitting process.
        In contrast, the New Source Performance Standards program
    under the Clean Air Act uses a much better test to determine if
    an emissions increase has occurred, known as the hourly
    emissions rate test. This hourly rate test has proven to be
    much less controversial, much easier to carry out, and only
    relies upon engineering design factors, not complicated future
    emissions projections. The hourly rate test simply looks at
    whether a project at an existing facility will increase the
    facilities ability to release emissions at a higher hourly
    rate.
        In order to provide more certainty to the New Source Review
    program, the discussion draft takes the hourly rate test used
    by the New Source Performance Standard program, applies that
    same test to the New Source Review program. I am doing that
    because I don't like to say NSPS and NSR all the time. This
    targeted reform to the New Source Review program would provide
    much-needed regulatory clarity and would make it easier for
    companies to properly maintain and modernize their facilities.
        Lastly, the discussion draft before us today includes
    provisions making it easier for owners to carry out pollution
    control projects, energy efficiency upgrades, and projects that
    keep facilities in good working order. The fact that the New
    Source Review program can be a barrier to projects that would
    result in better air quality is unacceptable. We have to remove
    the red tape that is discouraging companies from doing things
    like installing carbon capture technology or making manufacture
    equipment more fuel efficient. This discussion draft does
    exactly that.
        At our hearing this morning, we will first hear from EPA
    Assistant Administrator Wehrum who will explain the agency
    views on this discussion draft. And then we will hear from a
    second panel of witnesses consisting of state air regulators,
    industry witnesses, and Clean Air Act experts who will provide
    important perspectives on how this bill address New Source
    Review reform.
        With that, I'd like to thank Congressman Morgan Griffith
    for the good work he has done on this bill and I'd like to
    thank our witnesses for joining us this morning.
        And I have 5 minutes left, so I yield back my time and I
    will yield to the ranking member of the subcommittee, Mr.
    Tonko, for 5 minutes.
        [The prepared statement of Mr. Shimkus follows:]

                    Prepared statement of Hon. John Shimkus

        At today's hearing we are examining a discussion draft lead
    by Mr. Griffith, which reforms the New Source Review (NSR)
    program. The goal of this discussion draft is to add greater
    certainty to the NSR permitting process, making it easier for
    industry to modernize existing facilities and to carry out
    environmentally beneficial projects.
        At a February hearing in this Subcommittee, we learned that
    the uncertainty, complexity, and burdens associated with the
    NSR permitting program are deterring companies from properly
    maintaining and upgrading existing manufacturing plants, power
    plants, refineries, and industrial facilities. This is
    disappointing because it means we are missing out on
    opportunities to increase the nation's industrial capacity, to
    create more American jobs, and to improve our environment.
        The discussion draft before us today reforms the NSR
    program by clarifying which types of facility upgrades require
    an owner to obtain an NSR permit. Historically, there has been
    a great deal of controversy and uncertainty surrounding this
    very issue. The main reason for this controversy is due to the
    fact that the NSR program uses a complicated annual emissions
    projection approach to determine whether a project triggers
    NSR.
        Projecting future annual emissions is a difficult and
    confusing process, requiring the consideration of many complex
    factors, such as the future demand of the product being
    produced and a facility's future hours of operation. Because of
    this complexity, it is difficult for companies to know whether
    they are correctly projecting a facility's future annual
    emissions, and in many instances, companies are being targeted
    by EPA enforcement actions for having carried out these
    emissions projections incorrectly. The end result of this
    regulatory confusion and enforcement risk is that many
    companies are choosing to not modernize and upgrade their
    existing facilities because they fear that these types of
    activities could trigger the NSR permitting process.
        In contrast, the New Source Performance Standards (NSPS)
    program under the Clean Air Act uses a much better test to
    determine if an emissions increase has occurred known as the
    hourly emissions rate test. This hourly rate test has proven to
    be much less controversial, much easier to carry out, and only
    relies upon engineering design factors, not complicated future
    emissions projections. The hourly rate test simply looks at
    whether a project at an existing facility will increase that
    facility's ability torelease emissions at a higher hourly rate.
        In order to provide more certainty to the NSR program, the
    discussion draft takes the hourly rate test used by the NSPS
    program and applies that same test to the NSR program. This
    targeted reform to the NSR program would provide much needed
    regulatory clarity and would make it easier for companies to
    properly maintain and modernize their facilities.
        Lastly, the discussion draft before us today includes
    provisions making it easier for owners to carry out pollution
    control projects, energy efficiency upgrades, and projects that
    keep facilities in good working order. The fact that the NSR
    program can be a barrier to projects that would result in
    better air quality is unacceptable. We have to remove the red
    tape that is discouraging companies from doing things like
    installing carbon capture technology or making manufacturing
    equipment more fuel efficient; this discussion draft does
    exactly that.
        At our hearing this morning, we will first hear from EPA
    Assistant Administrator Wehrum who will explain the Agency's
    views on this discussion draft, and then we will hear from a
    second panel of witnesses consisting of State Air regulators,
    industry witnesses, and Clean Air Act experts, who will provide
    important perspectives on how this bill addresses NSR reform.
        With that, I'd like to thank Mr. Griffith for the good work
    he has done on this bill, and I'd like to thank our witnesses
    for joining us this morning.

       OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEW YORK

        Mr. Tonko. Thank you, Mr. Chair, and we have a magic clock
    this morning.
        I also want to thank EPA Assistant Administrator Wehrum and
    other witnesses who are joining us today for attending the
    hearing.
        First, Mr. Chair, I want to congratulate you on getting the
    nuclear waste bill through the House last week. This
    subcommittee has demonstrated it can get difficult things done
    in a bipartisan fashion. However, I am afraid the discussion
    draft we are considering today will not be added to that list.
    I am not interested in Clean Air Act amendments that will
    result in dirtier air.
        EPA's New Source Review program plays an important role to
    ensure that new and modified major sources utilize the best
    available pollution controls to limit emissions of criteria
    pollutants. But in recent months, EPA has issued a number of
    troubling Clean Air Act policy changes, including to the NSR
    program by memorandum.
        In December 2017, EPA announced that it will not second
    guess permit applicants' analysis on emissions projections nor
    enforce against applicants that provide invalid estimates. In
    January 2018, EPA withdrew the long-standing ``once in always
    in'' policy for major source MACT standards, and in March 2018
    the EPA decided to change the project emissions accounting
    formula that will allow facilities to ignore contemporaneous
    emissions increases. These are not new ideas. Some were tried
    over a decade ago by Administrator Wehrum during the Bush
    administration through the rulemaking process.
        Sadly, EPA's political leadership has spent its time
    reviving these policies rather than taking any proactive steps
    to actually reduce air pollution and, make no mistake, today's
    discussion draft is no different. The draft would make a number
    of changes to EPA's New Source Review program. The NSR program
    is probably the most important Clean Air Act program for
    controlling pollution from new sources. It might surprise some
    of my colleagues to learn that was a quote from Mr. Holmstead's
    testimony, who will be a witness on today's second panel. And
    to be fair to him, he also said the NSR program was not
    intended to be a key program for controlling emissions from
    existing facilities.
        Now, if we are being honest, we also must acknowledge that
    in the 1970s, Congress did not intend for existing facilities
    to be able to avoid installing pollution control technology for
    40 years. But that has been the case for many facilities across
    our country, which were grandfathered into the program until
    they underwent a major modification. The NSR modification rules
    attempted to ensure that, over time, existing sources add
    pollution controls when those facilities made investments and
    upgrades that increased emissions.
        Among other things, the discussion draft would change the
    definition of modification at an existing source to consider
    whether it would increase the maximum achievable hourly
    emissions rate rather than total annual emissions. This would
    permit facilities to make upgrades that do not increase hourly
    emissions but do enable the source to operate much more
    frequently, which will greatly increase overall pollution.
        We will hear that the NSR program is preventing facilities
    from undertaking efficiency and reliability upgrades. But we
    are failing our constituents if we do not acknowledge that
    operation of these facilities comes with a serious cost--
    harmful air pollution and oftentimes a lot of it. That,
    frankly, could be drastically reduced with pollution controls.
    Today, many old coal-fired power plants are entering end of
    useful life unless they undertake significant capital
    investments.
        Under the current NSR program, if these facilities make a
    major modification, the grandfathering is over and modern
    pollution controls would need to be installed. This has caused
    these facilities to call the program unworkable. The reality is
    they just do not like how it works. The discussion draft before
    us today would enable those old facilities, which have put off
    adopting modern pollution controls for decades, to continue
    polluting out air indefinitely.
        Just yesterday, the Center for Public Integrity reported
    that in 2017, nearly a quarter of the Nation's coal-fired power
    plants lacked pollution controls limiting emissions of sulfur
    dioxide and, on average, plants without scrubbers discharged
    more than twice the amount of SO2. One hundred and
    seven of the 145 coal plants without control technology for
    sulfur dioxide were built prior to 1978.
        We know how to reduce harmful air pollution, and I
    understand that businesses need time to transition and plan for
    the investments needed to install pollution controls. But many
    of these facilities have had four decades. The Clean Air Act
    has been successful because it is premised on making progress
    over time.
        Since the 1970s, we have made major strides in reducing air
    pollution. We have demonstrated that we can grow the economy
    while protecting public health. But allowing major polluters to
    extend their lives while avoiding installation of avoidable
    technology to prevent unnecessary pollution is unacceptable and
    runs counter to the bipartisan intent of the Clean Air Act. I
    believe we will not be able to find common ground based on the
    discussion draft under consideration today.
        Moving forward, I hope this subcommittee and EPA will
    abandon these notions and policy memos and get back to
    considering policies that will actually reduce air pollution
    and improve public health in our country.
        With that, Mr. Chair, I thank you and yield back.
        Mr. Shimkus. Gentleman yields back his time.
        The chair now recognizes the chairman of the full
    committee, Congressman Walden, for 5 minutes.

      OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. Thank you very much, Mr. Chairman, and to
    everyone just thank you for being here today.
        Today's legislative hearing represents another important
    step in this committee's work to advance reasonable updates to
    our environmental laws. Our goal has always been to ensure more
    effective environmental programs and also a more productive
    economy. A clean environment and a strong economy are not
    mutually exclusive.
        The draft legislation being developed under the leadership
    of Representative Morgan Griffith aims to address problems that
    have been identified in the Clear Air Act's New Source Review
    program, and I know he has a very specific example that he
    shared with us about how we need to modernize these laws. This
    legislation reflects the Committee's goal to implement reforms
    that will more efficiently preserve and improve air quality. It
    will also help responsibly reduce barriers to increasing
    productivity of manufacturers and industries in communities
    around our country.
        New Source Review was initially developed some 40 years
    ago. It's well past time for reform. Over the past several
    decades, the program has evolved in regulatory complexity,
    leading to time-consuming permit decisions, expensive
    regulatory requirements, and, frankly, litigation.
        We learned in testimony 3 months ago how costly and lengthy
    reviews associated with NSR permitting can lead businesses to
    forego making beneficial investments in existing facilities and
    these investments can include efficiency upgrades, pollution
    control projects and other environmentally beneficial changes
    to operations.
        This does not make sense. Decisions to not make such
    investments deprive communities of the benefits gained from
    environmental improvements, in addition to the increased jobs
    and economic activity that flow from this activity.
        We learned that even when facilities choose to run the NSR
    gauntlet with efficiency projects, the result is unnecessary
    expense and costly delay, with the required bureaucracy
    providing no additional environmental benefit. In addition,
    state and local permit authorities are tied up on the NSR
    matters instead of working on more pressing environmental
    reviews.
        I mentioned before the needless costs of poorly
    administered environmental regulations and the example of a
    proposed data center expansion in my district in Pineville,
    Oregon. That expansion ran headlong into permitting issues
    because of a dispute over a single air monitor, which made it
    unclear whether the expansion could go forward. It was only
    after the city of Pineville persuaded the EPA to add an
    additional air sampling location that the issue cleared and the
    expansion was able to go forward. That instance involved
    hundreds of millions of dollars in investments and hundreds of
    construction jobs.
        At our NSR hearing earlier this year, we learned of a case
    in the pulp and paper and packaging industry in which a
    facility was forced to make more than $100,000 in additional
    assessments and incurred substantial delay for a project that
    would actually reduce pollution.
        In another project, a paper mill sought to shut down two
    older and inefficient boilers and upgrade a large boiler to
    meet the same power needs more efficiently. But due to EPA NSR
    interpretations that ignored the replaced boilers, this project
    was subject to 18 months in costly red tape and scope
    adjustments, again, for a project that would not increase
    emissions.
        We should have an NSR program that presents clear standards
    for when reviews are necessary. This will lead to more
    efficient business decisions, more efficient permitting
    decisions, and more environmentally beneficial operations. We
    should have a program that works within the broader framework
    of state decision making concerning permitting and meeting
    clean air standards.
        I am looking forward to hearing from EPA's assistant
    administrator for Air and from our second panel, which includes
    state, industry, and legal perspectives. These discussions will
    go a long way in helping us perfect the discussion draft.
        So I want to thank Mr. Griffith. Morgan, thank you for your
    hard work on this specific piece of legislation. I think we are
    taking really important steps to both grow America's economy
    and improve our air quality and the environment. Doing this
    will ultimately benefit American workers, consumers, and others
    around the country.
        With that, Mr. Chairman, unless someone wants the remainder
    of my time, Mr. Griffith, do you want to make any comments?
    With the remaining minute I would so yield.
        [The prepared statement of Mr. Walden follows:]

                     Prepared statement of Hon. Greg Walden

        Today's legislative hearing represents another important
    step in this Committee's work to advance reasonable updates to
    our environmental laws. Our goal has always been to ensure more
    effective environmental programs and also a more productive
    economy. A clean environment and strong economy are not
    mutually exclusive.
        The draft legislation being developed under the leadership
    of Morgan Griffith, aims to address problems that have been
    identified in the Clean Air Act's New Source Review program.
    This legislation reflects the Committee's goal to implement
    reforms that will more efficiently preserve and improve air
    quality. It will also help responsibly reduce barriers to
    increasing productivity of manufacturers and industry in
    communities around the nation.
        New Source Review was initially developed some 40 years
    ago-and it is well past time for reform. Over the past several
    decades, the program has evolved in regulatory complexity,
    leading to time-consuming permit decisions, expensive
    regulatory requirements, and litigation.
        We learned in testimony 3 months ago how costly and lengthy
    reviews associated with NSR permitting can lead businesses to
    forego making beneficial investments in existing facilities.
    These investments can include efficiency upgrades, pollution
    control projects, and other environmentally beneficial changes
    to operations.
        This does not make sense: decisions to not make such
    investments deprive communities of the benefits gained from
    environmental improvements, in addition to the increased jobs
    and economic activity that flow from this activity.
        We learned that even when facilities choose to run the NSR
    gauntlet with efficiency projects, the result is unnecessary
    expense and costly delay--with the required bureaucracy
    providing no additional environmental benefit. In addition,
    state and local permit authorities are tied up on NSR matters
    instead of working on more pressing environmental reviews. I've
    mentioned before the needless costs of poorly administered
    environmental regulations in the example of a proposed data
    center expansion in Pineville, Oregon, in my district. That
    expansion ran headlong into permitting issues because of a
    dispute over a single air monitor, which made it unclear
    whether the expansion would go forward. It was only after the
    city persuaded EPA to add an additional air sampling location
    that the issue cleared and the expansion moved forward. That
    instance involved hundreds of millions of dollars in
    investments and hundreds of construction jobs.
        At our NSR hearing earlier this year, we learned of a case
    in the pulp, paper, and packaging industry in which a facility
    was forced to make more than $100,000 in additional assessments
    and incurred substantial delay-for a project that would
    actually reduce pollution.
        In another project, a paper mill sought to shut down two
    older and inefficient boilers and upgrade a larger boiler to
    meet the same power needs more efficiently. Due to EPA NSR
    interpretations that ignored the replaced boilers, this project
    was subject to 18 months of costly red tape, and scope
    adjustments-again, for a project that would not increase
    emissions.
        We should have an NSR program that presents clear standards
    for when reviews are necessary: this will lead to more
    efficient business decisions, more efficient permitting
    decisions, and more environmentally beneficial operations. We
    should have a program that works within the broader framework
    of state decision-making concerning permitting and meeting
    clean air standards.
        I'm looking forward to hearing from EPA's Assistant
    Administrator for Air, Bill Wehrum, and from our second panel,
    which includes state, industry, and legal perspectives. These
    discussions will go far in perfecting the discussion draft.
        I also want to thank Mr. Griffith for his hard work on the
    draft to date. He is taking important steps that will provide
    for economic expansion, while maintaining environmental
    protections. Doing this will ultimately benefit American
    workers and consumers around the Nation.

        Mr. Griffith. I thank you, Mr. Chairman, and I appreciate
    the kinds words. I will be discussing this but I think one
    thing we have to remember, as everybody else has pointed out,
    this is not just about the big businesses or the big electric
    plants. It's about small businesses as well, and I will detail
    how a medium-sized business in my district has been impacted on
    this and how silly it is when you're trying to deal with issues
    that have nothing to do with air pollution. You're just trying
    to make your factory better.
        Also, we sometimes ignore, and I thought it was interesting
    in Mr. Tonko's opening statement, he said, nobody intended for
    this to last for 40 years without people doing upgrades. The
    problem is the rule itself forced people not to do upgrades
    because they couldn't afford to completely redo the facility.
        How much cleaner would the air be if we'd have had
    reasonable rules in place from the get-go that would have let
    them slowly move forward a little bit at a time instead of
    having to eat the whole apple in one swallow?
        I yield back.
        Mr. Shimkus. The gentleman----
        Mr. Walden. And I yield back as well.
        Mr. Shimkus. The gentleman yields back his time.
        The chair recognizes the ranking member of the full
    committee, Congressman Pallone from New Jersey, for 5 minutes.
        Mr. Pallone. Thank you, Mr. Chairman.
        We are here this morning to discuss draft legislation to
    amend the New Source Review permitting program of the Clean Air
    Act and I am pleased that Paul Baldauf, the Assistant
    Commissioner for Air Quality, Energy, and Sustainability at New
    Jersey's Department of Environmental Protection, is here as a
    witness. Good to see you.
        The NSR program has existed since the 1970s but it's not
    been as effective in reducing air pollution as Congress hoped.
    Lax enforcement and the ability to exploit legal loopholes have
    helped or have allowed old facilities to game the system, and
    too often these facilities have been able to avoid installing
    modern pollution controls, which has left neighboring
    communities exposed to tons of dangerous pollution.
        And these pollution problems are not only local; they also
    impact downwind states like New Jersey. With all the pollution
    control technology development over the past 40 years, there is
    no reason for any facility to operate without modern pollution
    control equipment. The ultimate test for any legislation to
    reform the NSR program is simply this: Will it reduce air
    pollution? And by that test, this bill fails.
        There is no doubt this bill will increase pollution.
    Republicans are simply resurrecting previously rejected ideas
    promoted during the Bush administration by two of today's
    witnesses--Assistant Administrator Wehrum and Mr. Holmstead.
    Together, they have worked for years to undermine the NSR
    program. And when we enacted the NSR program, Congress
    recognized that existing facilities would need time to plan for
    and install pollution controls and that's why existing
    facilities were required to install new equipment when
    undergoing capital improvements, expansions, and life-extending
    renovations.
        But industries have spent years employing legions of
    attorneys with the sole mission of creating carve-outs in the
    NSR program for their clients just to avoid controlling their
    pollution. And so what happened? We ended up with the situation
    Congress tried to avoid--new facilities disadvantaged to the
    benefit of old polluting ones that have remained around well
    past their design life.
        The proponents of this bill claim it will fix this problem
    but it will not. Without a firm requirement that facilities
    reduce the levels of all the dangerous pollution they emit,
    they simply will be allowed to pollute more and that's what the
    language in this bill on maximum achievable hourly emissions
    rate is all about.
        Rather than closing loopholes in the NSR program, this
    draft bill expands them. It continues to disadvantage new
    facilities by allowing old facilities to operate without modern
    pollution controls. If these changes go forward, air pollution
    will only increase. Communities that have fought to reduce
    toxic air pollutants including benzene, mercury, and other
    dangerous chemicals will see pollution and their health
    problems increase, and that means more asthma attacks and more
    people getting cancer and heart disease and lung disease.
        And Congress never intended to grant a permanent license to
    pollute to any facility. But that is exactly what this
    legislation would achieve. The provisions in this bill will
    guarantee that no existing facility will be subject to the NSR
    program when it's modernized or expanded and it will ensure the
    public will be subject to greater pollution from these plants
    after they are modified.
        And no one has a choice about breathing. Each of us does it
    between 17,000 and 23,000 times every day. However, we can
    choose to limit air pollution so that each breath delivers the
    clean and healthy air we need. The NSR program can certainly be
    improved but not with this bill.
        It's long past time for old coal-fired generation and
    refineries to reduce their emissions and do their fair share to
    keep the air clean and safe to breathe.
        I don't know if anyone wants my minute or so. If not, Mr.
    Chairman, I will yield back.
        Mr. Shimkus. The chair thanks the gentleman and the
    gentleman yields back his time.
        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 of our witnesses for being here today
    and taking the time to testify before this subcommittee.
        Today's witnesses will have the opportunity to give opening
    statements followed by a round of questions from members.
        Our first witness panel for today's hearing includes the
    Honorable William Wehrum, Assistant Administrator for the
    Office of Air and Radiation, U.S. Environmental Protection
    Agency.
        We appreciate you all being here today. We will begin the
    panel and, Mr. Wehrum, you're now recognized for 5 minutes for
    your opening statement. Your full statement has been submitted
    for the record.

         STATEMENT OF THE HONORABLE WILLIAM WEHRUM, ASSISTANT
        ADMINISTRATOR FOR THE OFFICE OF AIR AND RADIATION, U.S.
                    ENVIRONMENTAL PROTECTION AGENCY

        Mr. Wehrum. Thank you, Chairman Shimkus, Ranking Member
    Tonko, and members of the subcommittee.
        I appreciate the opportunity to testify today on the New
    Source Review permitting program. Although the administration
    does not have an official position on the draft, I am very
    supportive of the committee's efforts to improve the NSR
    permitting program.
        I have long believed that the NSR permitting program stands
    as a significant barrier to the implementation of many projects
    that would improve facility and performance, enhance
    efficiency, and protect the environment. In addition, the
    program is unnecessarily complicated and confusing. The program
    can and should be improved.
        In accordance with the administration wide priorities for
    streamlining permitting requirements for manufacturing, we have
    undertaken an assessment of the agency's implementation of the
    NSR program.
        We quickly and, I would have to say, predictably identified
    several areas that are ripe for improvement. In December 2017
    and March of 2018, Administrator Pruitt issued memoranda to
    EPA's regional offices to provide greater clarity as to how
    certain NSR rules should be interpreted.
        The December memo focused on NSR permitting applicability
    provisions. That memo set forth EPA's interpretation of the
    procedures contained in the NSR rules for sources that intend
    to use projected actual emissions in determining NSR
    applicability and the associated pre- and post-project source
    obligations.
        The March memo set forth EPA's interpretation that in
    determining whether a proposed project will result in a
    significant emissions increase, which is the initial step that
    a source must take in determining whether the project will
    result in an overall significant net emissions increase, that
    any emissions decreases that are projected to occur as a result
    of the project also should be taken into account in this first
    NSR applicability step.
        We have done other things as well. In April of 2018, we
    issued a memoranda on so-called significant emissions levels,
    which are common sense provisions intended to simplify and
    expedite the permitting process and the analysis that's
    necessary to go along with the permitting process focus on air
    quality.
        In January of 2018, although this is not strictly an NSR
    issue, as has been mentioned already we issued clarifying
    guidance on the so-called ``once in always in'' policy under
    our air toxics programs. Regarding the subcommittee's
    discussion draft, the administration does not have an official
    position on the bill. But as I've said before, I personally
    strongly support the overall goals of the discussion draft.
        The principal focus of the discussion draft is on refining
    the definition of modification in the Clean Air Act, and that
    would go a long way towards simplifying application of the NSR
    program. It would make clear that a project undertaken in the
    existing stationary source will trigger NSR only when that
    project would result in an increase in the source's maximum
    design capacity to emit. That is, the project would result in
    an increase in a source's hourly emissions rate, which is how
    emissions increases have been determined under the New Source
    Performance Standard program since its inception.
        The bill would also resolve a long-standing and unfortunate
    anomaly in the NSR program, which is that the installation of
    pollution control equipment at existing sources by itself can
    trigger the onerous New Source Review program.
        I appreciate the opportunity to testify today. I support
    the Committee's effort to provide clarity for the regulated
    community that can finally allow the private sector to invest
    in more efficient manufacturing in this country and I welcome
    any questions you may have regarding the discussion draft for
    the agency efforts to improve the NSR program.
        Thank you again.
        [The prepared statement of Mr. Wehrum follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. The gentleman yields back the time and the
    chair thanks you and I'll now begin with the round of
    questioning with myself and I recognize myself 5 minutes for
    questioning.
        Mr. Wehrum, aside from your current role as Assistant
    Administrator for Air at EPA, you have a lot of experience with
    the New Source Review program both as a regulatory lawyer and
    working for EPA in past administrations.
        Given your experience, let me ask, from a big picture
    perspective, what is the role of the New Source Review in
    improving air quality?
        Mr. Wehrum. New Source Review program is one but only one
    of many tools that we have under the Clean Air Act to protect
    air quality.
        The NSR is different than many of the other programs that
    we implement because, it doesn't apply to you just because you
    exist, as many of our ambient air quality programs or air toxic
    standards do.
        It applies to you depending on what you do and that creates
    the real problems under the NSR program and as has been
    pointed--as I pointed out in my testimony and as several of the
    members here including yourself, Mr. Chairman, pointed out,
    because the applicability is based on what you do, then the
    program has an effect on decisions affected facilities make as
    to what projects they implement and which ones they don't, and
    in many cases I firmly believe--and I've been doing this for a
    long, long time now and I've seen it--that facilities choose
    not to implement common sense improvements to their facility
    that would improve efficiency, would improve productivity, in a
    lot of cases would improve environmental performance because
    those projects stand the possibility of triggering the NSR
    permitting program. So they just don't do them. That makes no
    sense whatsoever.
        Mr. Shimkus. We are talking today about the New Source
    Review permitting reforms that make it easier for existing
    sources to carry out efficiency improvements and other measures
    that would provide environmental benefits.
        Do you see the discussion draft reform approach as creating
    a large loophole that will lead to unhealthy emission
    increases?
        Mr. Wehrum. No, Mr. Chairman, not at all. I see the
    discussion draft as significantly improving the program and how
    it operates right now.
        As I pointed out in my testimony, primarily what the
    discussion draft would do is align the applicability process
    under New Source Review with the applicability process under
    the new source performance standard program.
        They are closely aligned. They are both programs that apply
    to new modified sources and, interestingly, they both rely on
    the very same statutory definition of modification and yet, for
    the past 30, 40 years the agency has used different definitions
    under the New Source Performance Standards program versus the
    New Source Review program to determine whether an emissions
    increase has occurred as a result of a project.
        So the primary benefit of the discussion draft is it would
    align the programs, make them simpler to implement, and I think
    significantly improve their implementation.
        Mr. Shimkus. The discussion draft's most significant policy
    change concerns a switch from the annual emissions projection
    test to an hourly emission rate test used under the New Source
    Performance Standards program to determine if a project will
    cause an emission increase.
        Would you speak to the benefits of reforming the New Source
    Review program to use an hourly emissions rate test? You kind
    of already did mention it but can you restate that?
        Mr. Wehrum. Yes, Mr. Chairman. I certainly will.
        I mentioned it in passing in my testimony, but the other
    significant problem with the New Source Review program is it's
    just confusing. It's very complicated. It's very confusing. It
    says something that, very sophisticated refinery operators,
    power plant operators, big companies that have a lot of
    resources on staff and available--have to hire people like me
    when I was in private practice to help them figure out how the
    program applies.
        That speaks volumes. So, in addition to eliminating the
    barriers to common sense projects I described before, I think a
    real value of the discussion draft would be it simplifies the
    program and gets people like me, a lawyer in private practice,
    before I rejoined the EPA, out of the equation and lets people
    on the plant floor do this.
        And I am sorry, I don't want to take up too much of your
    time, Mr. Chairman, but I started my career as a chemical
    engineer. I worked in chemical plants and I was responsible for
    implementing this permitting program.
        And I can tell you it's impenetrable to somebody like that
    and that's part of why I went into law, part of why I came to
    EPA because fixing this program is a very high priority.
        Mr. Shimkus. We are going to hear from two states in the
    second panel. Do you think this change will undermine states'
    efforts to ensure air quality?
        Mr. Wehrum. I do not, not one bit, Mr. Chairman.
        Mr. Shimkus. And why?
        Mr. Wehrum. Because this is but one of many, many elements
    of the Clean Air Act and all of these elements work together in
    concert. They each serve a purpose and the totality of the
    Clean Air Act requirements is what should be measured and not
    the function of each individual piece.
        So this is not going to result, in my judgment, in any
    significant reduction in the overall effectiveness of the act.
        Mr. Shimkus. I thank the gentleman, and now I yield back my
    time.
        The chair recognizes the gentleman from New York, Mr.
    Tonko, for 5 minutes.
        Mr. Tonko. Thank you, Mr. Chair, and Administrator Wehrum,
    thank you again for being here today.
        As I mentioned, many members have concerns about a number
    of EPA rulemakings, memos, and other regulatory actions that
    will have consequences for the Air Office. I particularly want
    to highlight the recently proposed strengthening transparency
    and regulatory science rulemaking, which will have significant
    impact on Clean Air Act regulations, including NAAQS. And a few
    days ago, the chair of the Science Advisory Board working group
    on EPA planned actions for SAB consideration issued a memo
    recommending that this proposal merits further review by the
    board.
        Obviously, you oversee a number of programs that rely on
    epidemiological studies and private health data so you are more
    than qualified to weigh in on this.
        Do you believe the Science Advisory Board should have
    conducted a review of the proposal before it was published in
    the Federal Register?
        Mr. Wehrum. No, Mr. Ranking Member, I don't think that's
    necessary at all.
        Mr. Tonko. Do you believe the Science Advisory Board should
    be asked to conduct the review now?
        Mr. Wehrum. Mr. Ranking Member, taking a step back, I think
    the overall concept and the goal of the transparency proposal
    is indisputable, which is to make sure that the science the
    agency relies upon is replicable and----
        Mr. Tonko. I understand that, but do you believe the
    Science Advisory Board should be asked to conduct a review now?
        Mr. Wehrum. And Mr. Ranking Member, the----
        Mr. Tonko. Yes or no.
        Mr. Wehrum. The importance of making sure----
        Mr. Tonko. Yes or no, sir.
        Mr. Wehrum [continuing]. The science is replicable--well,
    it's important to put this in context, Mr. Ranking Member,
    because you're--it's a basic scientific principle that science
    that--studies that scientists create, part of science is the
    ability of other scientists to replicate their work and either
    confirm the findings that were made or possibly refute----
        Mr. Tonko. Well, I am not hearing a yes that the advisory
    board should be asked to conduct a review now so I'll move on.
        Do you believe the Office of Air and Radiation should have
    been involved in the review of the proposals through a formal
    intra agency review process before it was published?
        Mr. Wehrum. Yes, and in fact, we were. We had a copy of the
    draft before it was----
        Mr. Tonko. Did----
        Mr. Wehrum [continuing]. Before it was proposed. We
    circulated it to our office directors and key staff and we had
    an opportunity to review and provide input.
        Mr. Tonko. Was that among political appointees only?
        Mr. Wehrum. No. No.
        Mr. Tonko. There were career staff involved?
        Mr. Wehrum. Yes.
        Mr. Tonko. Would you share the Air Office's comments on the
    rule with this subcommittee and the committee?
        Mr. Wehrum. I don't know what form they take but I'd be
    happy to do that.
        Mr. Tonko. Well, we'd ask that you share those comments
    with us, please. So that's a yes, you'll offer them?
        Mr. Wehrum. Yes, Mr. Ranking Member.
        Mr. Tonko. The SAB working group's memo notes the proposed
    rule appears to have been developed without a public process
    for soliciting input from the scientific community.
        A number of scientific organizations, state attorneys
    general, and members of Congress have called for an extension
    of the public comment period in order to more fully consider
    the impacts of the proposal. This is particularly important
    since the proposal sought comment on issues fundamentally
    related to its design.
        Do you believe this proposal warrants an extended public
    comment period in public hearings similar to what has been done
    for other consequential rulemakings?
        Mr. Wehrum. Well, OAR is responsible for lots of things but
    this rulemaking is not one that's actually in my office and I
    believe Administrator Pruitt is prepared to speak to that
    question in the hearing that he's participating in as we speak.
        Mr. Tonko. So would he support extended public comment
    periods and public hearings?
        Mr. Wehrum. I believe the administrator will speak to the
    issue and he'll speak for himself.
        Mr. Tonko. Do you have a sense that he would want to see
    more comment period and more public hearings?
        Mr. Wehrum. Well, what I would say is we have nothing to
    hide, which is a bit redundant. This is all about transparency.
    So it's important.
        I'll just speak for myself. The rulemaking process is
    enormously important. When we put out rules for public comment,
    that's a meaningful thing. It allows for us to get input and
    data and thoughts from affected folks and people who are
    knowledgeable on the issues. And so----
        Mr. Tonko. Thank you.
        Mr. Wehrum [continuing]. I know the administrator shares
    those views.
        Mr. Tonko. Thank you. Last week, Administrator Pruitt
    issued a memorandum on the NAAQS standard-setting process.
        Moving forward, EPA intends to act the Clean Air Scientific
    Advisory Committee to address several issues, including any
    adverse public health, welfare, social, economic, or energy
    effects.
        Did EPA consider soliciting feedback from the public SAB or
    the CASAC before this memo was released?
        Mr. Wehrum. We received input on a continuous basis in a
    variety of ways on how we do NAAQS reviews, on the NAAQS
    decisions that we make and the implementation decisions that we
    make. So----
        Mr. Tonko. Would that include soliciting comments from the
    public?
        Mr. Wehrum. We always solicit comments from the public when
    we set NAAQS standards and do implementation rules.
        Mr. Tonko. Mr. Chair, I yield back.
        Mr. Shimkus. The gentleman's time has expired.
        And Mr. Wehrum, can you pull your mic a little bit closer?
    I think----
        Mr. Wehrum. Yes.
        Mr. Shimkus. OK. And the chair now recognizes the gentleman
    from Texas, Congressman Barton, for 5 minutes.
        Mr. Barton. Mr. Chairman, could I pass and let you go to
    some members who've been here while I----
        Mr. Shimkus. That would be great.
        The chair recognizes the gentleman from West Virginia, Mr.
    McKinley, for 5 minutes.
        Mr. McKinley. Thank you, Mr. Chairman, and thank you, Mr.
    Wehrum, for being here.
        Mr. Shimkus. Come sit next to me. Get closer. It's OK.
        Mr. McKinley. Yes, I've heard that before.
        [Laughter.]
        And now they've already run off half a minute on me on this
    thing. Thank you. Thank you. Yes, there we go.
        I want to focus--I know a lot of the discussion is going to
    be about some of the other matters on NSR but I want to stay as
    focused as I could on energy and the coal-fired power plants
    and gas-powered power plants.
        And I am trying to reconcile the differences or the
    questions about the NSR versus--and grid reliability and
    ability of our electric grid, because we have had so many
    hearings about grid reliability, and over a dozen hearings we
    have had about grid reliability and the concerns we have,
    particularly when we hear from FERC--their comments about the
    concern of whether we are going to have enough power plants.
        So as a result of this uncertainty that I am trying to
    reconcile the differences between the two, I see how that many
    of our power plants are just simply saying because of the
    uncertainty that you referred to and our chairman has referred
    to, are just prematurely shutting down the power plant because
    they don't want to go through the process of upgrading a
    facility that may not be used for 12 months and be faced with
    something that would cost hundreds of millions of dollars.
        So they are concerned. I want to get to one issue here, if
    I could, just quickly with you. Would you agree that if a power
    plant replaced a part in maintenance with, essentially, the
    original part maybe 40 years ago, would it not be exempt from
    the NSR ruling if they are just going to replace in maintenance
    a part that was the original part that had just worn out?
        Mr. Wehrum. Congressman, there are a couple questions that
    would have to be asked and answered about that. One is would
    that project represent so-called routine maintenance and the
    very first part of the applicability process is if you're doing
    something----
        Mr. McKinley. I am just saying, Mr. Wehrum, it's a worn-out
    part that they are just--it's routine maintenance--we are going
    to replace that part.
        Mr. Wehrum. Right. So----
        Mr. McKinley. It may be a 40-year-old part.
        Mr. Wehrum. So what you described very well could be
    considered routine maintenance and that may be the beginning
    and the end of the applicability determination.
        Mr. McKinley. Thank you.
        So I want people to understand that what we are saying if
    Tonko is correct that 25 percent of our power plants don't have
    fundamental SOCs and NOx air controls, here the
    plant now wants to do some work on their plant to do that.
        They are going to go through a delay process that might be
    a year or more and the uncertainty that perhaps it might cost
    $100 million to $200 million dollars to do something when they
    just simply want to put in some new control devices.
        So, again, I am trying to understand. If you don't improve
    your air quality, you don't follow the NSR, because if I am
    just doing routine maintenance, I am OK.
        But if I try to improve the efficiency and the operation
    and the emissions of my plant, then I fall into something else.
        Does that make sense to you?
        Mr. Wehrum. Absolutely not, and you put your finger on one
    of the two key problems as I see with the New Source Review,
    which is it very much stands as a barrier to the implementation
    of projects that are necessary to maintain facilities, improve
    efficiency and, as I said earlier, in many cases improve
    environmental performance.
        And, as you pointed out, relatively minor projects in the
    grand scheme of the facility, an expansive view of NSR
    applicability could trigger the program and trigger the
    obligation to spend hundreds of millions of dollars on air
    pollution controls and as a result--I've seen it real live,
    first hand--companies decide not to go forward with those
    projects and they leave plants in a dilapidated condition and
    in a condition that's worse for the environment than it would
    be if they were able to continue to maintain it.
        Mr. McKinley. Not only worse, but doesn't it put us in a
    concern for reliability of the grid when we don't have these
    power plants available for implementation?
        Mr. Wehrum. Yes. So I think it's really important for EPA
    to stay in its lane. I am not a grid guy. I am an air guy, and
    I think part of the problem in the past with the EPA is it's
    tried to assume responsibility for things it's not responsible
    for.
        So I am going to take off my AA hat and put on my engineer
    hat and my common sense guy and just say yes, grid reliability
    is enormously important and there is a real live debate going
    on right now about all the coal plant retirements which are
    resilient.
        They have fuel onsite. They can operate for days and
    sometimes weeks without additional fuel delivery and that's
    very different than a natural gas-fired plant that if the
    pipeline delivery is disrupted for whatever reason there is no
    onsite storage and there is no generation.
        So there is a real live debate going on right now about the
    issues that you raise. I am not the expert but I think it's
    important to run that to ground.
        Mr. McKinley. Perhaps on the next panel. I want to continue
    that line of reasoning, questioning. So thank you. I yield
    back.
        Mr. Shimkus. Gentleman's time has expired.
        The chair recognizes the gentleman from Texas, Mr. Green,
    for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman, and welcome to our
    subcommittee.
        The New Source Review program has been an important program
    for protecting air quality in districts like I have. I have a
    very urban district in east Houston that--we have lots of
    industry in the district that brings in many high-paying jobs
    for our constituents.
        But Houston also struggles with meeting attainment levels
    under the Clean Air Act and I am worried that some of the EPA's
    recent moves would threaten many of the gains we have made in
    recent years in improving the air quality in Houston.
        Again, thank you for being here today. It's not always easy
    to get officials from our administration here to talk about
    legislation and I appreciate your involvement.
        In 1995, the EPA created the ``once in always in'' policy
    for regulation of hazardous air pollution, or HAPs. Many of
    these HAPs, like benzene, are produced by numerous plants in
    our district. Only ``once in always in'' industrial facilities
    that were determined to be major sources of HAPs were required
    to employ strong pollution controls under the maximum
    achievable control technology measure, or MACT.
        Under the previous policy, sources must apply MACT if they
    are emitting more than 10 tons per year for a single hazardous
    chemical or 25 tons per year for combined hazardous chemicals.
    And your January 25th guidance changed this policy now for
    major sources to be classified as area sources under the Clean
    Air Act if they were below this threshold.
        While I understand that many facilities have done a great
    job of reducing their emissions through upgrades and would not
    now fall under the major source classification when ``once in
    always in'' was created in the tonnage decision or was based on
    defining a major source not on what level of emissions were
    necessarily safe.
        Under the new policy, our district will see as much as 200
    more tons a year in emissions. Has the EPA done any of the new
    studies on what a safe level of emission is for the HAPs that
    prompted this decision?
        Mr. Wehrum. Well, thank you for your question, Mr.
    Congressman. There is a lot packed into what you just said.
        Mr. Green. I know. Well----
        Mr. Wehrum. So let me just----
        Mr. Green [continuing]. We all represent our districts.
        Mr. Wehrum. Oh, absolutely. So let me take a shot and you
    can tell me if I get to the point that you want.
        So the ``once in always in'' policy is a very important
    policy. We issued the memo that we did because, like the NSR
    program, we think that policy stood in the way of people doing
    common sense things to reduce emissions.
        So, for instance, prior to issuance of the policy, there
    was absolutely no incentive for any industrial facility to
    reduce emissions to lower the major source thresholds because,
    it's nothing but additional cost and expense for them and
    produces nothing in the way of regulatory benefit.
        So under the ``once in always in'' policy, if they take
    voluntary measures to reduce emissions further than the law
    requires and they take limits to below major source thresholds,
    then we will see emissions reductions and they see real
    regulatory relief and it's a win-win situation.
        Now, there are those who say look at--so what I just
    offered is the glass half full perspective, which I think is
    absolutely right. But there is a glass half empty perspective
    and there are those who say, oh no, there is going to be huge
    emissions increases associated with these people who are going
    to shuck off the standards that apply to them and then
    intentionally increase emissions all the way up to just under
    the major source thresholds.
        The studies that purport to show that are just shoddy, and
    I'll tell you, if we try to rely on those kind of studies in a
    rulemaking, we'd get laughed out of court.
        Mr. Green. Well, I only have a very short time. Has the EPA
    done any new studies on what a safe level of emissions for
    these HAPs that prompted the decision? Has the EPA done that
    study?
        Mr. Wehrum. Part and parcel of this toxics program that the
    policy applies to is a two-step program. Step one says we have
    to apply technology standards and step two says we have to
    follow up after a period of years with a risk assessment to
    make sure that there is no unacceptable remaining risk. So we
    are----
        Mr. Green. OK. The emissions from HAPs from these
    facilities are they classified as area sources considered a
    safe level, that you know of?
        Mr. Wehrum. I am sorry, Mr. Congressman. I don't understand
    the question.
        Mr. Green. OK. Well, you can get back.
        Have you done any estimates on the potential increase in
    emissions that this guidance will allow that----
        Mr. Wehrum. Yes. We took a very hard look and, as was
    pointed out earlier in this hearing, in my prior tenure at EPA
    during the Bush administration this is an issue we talked about
    and actually proposed a rule to make a change in the
    regulations to accomplish what we did in the memo just a couple
    months ago.
        And so we have abundant public comments that were received
    when that rule was proposed and we have taken a hard look at
    those public comments.
        There, honestly, is no way to comprehensively analyze
    because of the broad, broad applicability of these programs.
    But what we have done is looked at very targeted sectors based
    on comments that we have received and what we have seen is a
    preponderance of information indicating that we think
    ultimately this policy is going to produce emissions reductions
    and is not going to result in the hypothetical increases that
    many people are worried about.
        Mr. Shimkus. The gentleman's time has expired.
        Mr. Green. Mr. Chairman, I'll submit the rest of the
    questions. Thank you.
        Mr. Shimkus. And the chair now recognizes the gentleman
    from Texas, Mr. Barton, for 5 minutes.
        Mr. Barton. Thank you. Thank you, Mr. Chairman.
        Thank you, sir, for testifying. This is a very complicated
    issue. The average person doesn't understand the difference
    between a New Source Review or whatever else we are talking
    about here. But it's an important issue. So I am going to ask
    some questions, and I am not sure I understand myself what I am
    asking. But, hopefully, you will.
        Under current law, if an hourly emission per unit of output
    stays the same or goes down, is it possible to have an annual
    increase in emissions? So you change your process. You have
    equal or less emissions.
        But on this annual standard, would it be possible in such a
    case for the annual standard to be violated? I would think the
    answer would be no.
        Mr. Wehrum. Well, it is theoretically possible to not have
    an increase in hourly emissions but to have an increase in
    annual emissions. So that's theoretically possible.
        Mr. Barton. It is.
        Mr. Wehrum. And one of the primary criticisms of the
    discussion draft is that it may allow that to--you may not see
    a short term--the hourly measured short-term emissions. You may
    not see a short-term increase in emissions.
        But there is a hypothetical possibility to see a long-term
    in annual emissions.
        Mr. Barton. I would think it's not possible unless you
    increase the output.
        Mr. Wehrum. That's exactly right. Mr. Congressman, that is
    exactly right. You put your finger on it, and I think it's
    important to point out, and this must be kept in mind as work
    on the discussion draft goes forward, this is only one of many,
    many tools we have in the Clean Air Act toolbox.
        So I have said hypothetical possibility and I use that word
    intentionally because I believe it is just hypothetical and so
    let's just talk about power plants, and this program applies to
    way more than just power plants.
        So just look at power plants. There is the acid rain
    program. There are interstate transport requirements that
    apply. There are, in some cases, nonattainment requirements
    that apply. There are state-level requirements that apply.
    There are air toxic standards that apply. There is a plethora
    of emissions limitations that apply to these standards.
        So is it hypothetically possible you'll see an emissions
    increase with an hourly emissions test? Yes. But in reality,
    you can see that----
        Mr. Barton. Let's----
        Mr. Wehrum [continuing]. But it's hard to see because we
    are not operating in a vacuum. We are operating in a heavily,
    heavily regulated----
        Mr. Barton. Let's use a real-world example. ERCOT, down in
    Texas, is predicting that there could be--there is a
    possibility of rolling power outages this summer in Texas
    because the maximum generation for electricity, if you had the
    worst case scenario--105 in Houston, 105 in Dallas, 105 in
    Austin--I mean, just a hellacious hot summer all over the
    state--that we might not have the ability to handle that.
        So we try to get existing plants to generate electricity to
    expand so they can generate more electricity. OK. But their
    emission per unit of output, since they are going to use newer
    technology, you get more output than the old technology. But
    the overall emissions are going to go up because they are going
    to generate a lot more electricity. Would that trigger a New
    Source Review under existing law?
        You've got a potential shortage. You're trying to plan for
    that. You don't have time to build a brand new power plant so
    you're going to expand and existing one but use new technology.
        You get more output for the same level of emissions but the
    overall level of emissions will go up because you're going to
    generate 25 or 30 percent more output. So that would trigger a
    New Source Review?
        Mr. Wehrum. It could.
        Mr. Barton. Under new----
        Mr. Wehrum. Under current law, and one of the real benefits
    of the discussion draft is it would allow for the use of a so-
    called output-based measure of emissions increases.
        And so it would solve the problem you just described
    because it would recognize that in the situation you described
    we all want plants to run more and be more efficient because
    that is better for the environment.
        Mr. Barton. So my time is about to go out.
        Does the Trump administration support the discussion draft
    as it's currently drafted?
        Mr. Wehrum. The administration has not taken a position on
    the draft but, in my capacity--as I said, in my testimony, I
    strongly support what you're----
        Mr. Barton. You would recommend my support?
        Mr. Wehrum. Yes, Mr. Congressman.
        Mr. Barton. Thank you, Mr. Chair.
        Mr. Shimkus. The gentleman's time has expired.
        The chair now recognizes the gentlelady from Michigan, Mrs.
    Dingell, for 5 minutes.
        Mrs. Dingell. Thank you, Mr. Chairman.
        Chairman, I've got a number of questions for you today on
    ongoing policy changes at the EPA. I am going build on what my
    colleague, Mr. Green, was asking you.
        But I care very deeply about one of the activities that you
    were doing and that is the mid-cycle review on the fuel economy
    standards.
        First, given recent press reports, I thought there was a
    good meeting at the White House on Friday. But yesterday
    afternoon's Post made me think that that was not the case.
        Mr. Wehrum, I understand that Administrator Pruitt sat down
    with the President and a number of the CEO automakers last
    Friday to discuss automotive fuel economy and GHG emission
    standards.
        In that meeting, I understand the President directed
    Administrator Pruitt and Transportation Secretary Chao to reach
    out and negotiate a possible deal with California to ensure
    that we have one national program in this country for fuel
    economy and that GHG standards are maintained.
        I was happy to hear that. That's what the autos say that
    they need. California has said that they will work with
    everybody. But I am concerned that yesterday I heard that that
    was not the case--that you were not going to work with
    California, signaling the exact opposite of what we heard on
    Friday.
        It's troubling, because the auto industry needs stability.
    They need to know where they are going. Can you tell me what
    EPA is doing on this, please?
        Mr. Wehrum. Yes, Mrs. Congresswoman.
        I wasn't in the meeting with the President so I can't speak
    to what was said or what was not said. Like you and like
    everyone else, I got no reports about it. So I am not going to
    do a he said, she said about that.
        But I can tell you we are working very hard on a proposed
    rule. You know the administrator issued the determination not
    long ago saying he thinks a change needs to be made to the
    current standards in the 2021 and 2025 time frame, and we are
    hard at work on that in conjunction with NHTSA on a proposed
    rule that would suggest some possible changes based on the
    administrator's findings and Secretary Chao's similar concerns.
        Mrs. Dingell. But does EPA understand the importance to the
    auto industry of one national standard and that the importance
    of what was originally negotiated was having all players at one
    table and that if you care about jobs having two sets of
    standards so that they are producing one car for 14 states and
    another is not going to give the companies the certainty they
    need?
        Mr. Wehrum. I'll speak for myself and say absolutely. I
    understand the importance of that and what I would say is it's
    a priority of my office and I believe a priority of the
    administration to try to maintain one national program. And so
    I think to the degree the press reports are saying that's not a
    goal I would say that's wrong. But what I would say is we think
    changes need to be made and we have started a dialogue with the
    state of California. I've personally been involved in those
    conversations.
        We plan to continue that dialogue consistent with what the
    President said in last week's meeting and, in fact, as we speak
    are trying to set up the next discussion with our colleagues at
    CARB for Wednesday. They are going to be here this week for
    meetings and we are hoping to get together with them while they
    are here in town. So we have the dialogue underway. We intend
    to continue that dialogue and if we can find a way to maintain
    one national program we certainly want to do that. I know
    California wants to do it. I know the OEMs want to do it and we
    are going to try.
        Mrs. Dingell. I find that reassuring. I would love your
    personal commitment to keep trying to make that happen because
    we all care about the health of the auto industry.
        Mr. Wehrum. We are going to keep trying.
        Mrs. Dingell. Let me go quickly, because I am going to run
    out of time, and build on what my colleague, Mr. Green, was
    asking about in ``once in always in.''
        When Administrator Pruitt testified at a Senate Oversight
    hearing, he said that the decision to end ``once in always in''
    policy was made outside of your office.
        Is that accurate? Was the decision to rescind the ``once in
    always in'' policy made outside of your office? What was your
    role, if any, in the decision to rescind this policy?
        Mr. Wehrum. Well, I signed the memo. But anything I do is
    based on the authority of the administrator.
        So I can tell you that he was highly involved in the
    vetting. He was highly involved in setting the policy and I
    ultimately issued the memo. But it's a reflection of the
    agency's position.
        Mrs. Dingell. So I've got 25 seconds left and I'll probably
    ask you to do more of this for the record. But you were talking
    that you studied the issue but we haven't seen anything and we
    need to have more transparency about what the impact was going
    to be about when it was conducted, is it publicly available.
        We have got the Union of Concerned Scientists saying that
    there'll be an additional 155 tons of hazardous air pollutants
    per year. Can we make that data available that you've analyzed?
        Mr. Wehrum. Well, an important part of what we said when
    the memo came out is we intend to follow up the memo with the
    rulemaking so we can lock in our new policy as actually part of
    the codified regulations.
        So that will be an opportunity for everyone with an
    interest to look at our assessment, to look at our analysis,
    and to give us their comments as to whether they think it's
    right or not.
        Mrs. Dingell. Thank you.
        Mr. Shimkus. Gentlelady's time has expired.
        The chair recognizes the gentleman from Ohio, Mr. Johnson,
    for 5 minutes.
        Mr. Johnson of Ohio. Thank you, Mr. Chairman, and I'd like
    to start out by thanking you and Representative Griffith for
    your work on this really important bill and for holding this
    legislative hearing today. I am also appreciative of the EPA's
    work to date to inject some certainty and common sense into NSR
    permitting.
        It's now incumbent on Congress to further that certainty
    through advancing this discussion draft. As Mr. Johnson, with
    America's Electric Cooperatives, who will testify in the second
    panel, explains in his testimony, innovative technologies and
    systems to improve facilities are being left on the shelf
    because of current NSR processes, essentially undermining the
    goals and intent of the Clean Air Act. I think everyone here
    can agree that's an issue. The discussion draft we are looking
    at and discussing today will rectify that issue while
    addressing much-needed other reforms and I am supportive of
    these efforts.
        So, Mr. Wehrum, seeing that there is only one definition
    for the term modification in the Clean Air Act, why has the EPA
    interpreted this definition differently for the NSR program
    than it did for the NSPS program?
        Mr. Wehrum. That's hard to answer, Mr. Congressman. That
    decision was made a long, long time ago. The NSR program was
    first put in place just by regulation in the mid-70s and then
    followed up with a revised program after the law was changed in
    1977.
        But the fact is there has been a differently regulatory
    definition for a long, long time now and the idea of creating
    consistency between the two programs makes perfect sense.
        As I said earlier, there is a lot of overlap between the
    two programs. They are intended to accomplish a lot of same
    thing and creating that kind of consistency would improve
    understandability and implementation.
        Mr. Johnson of Ohio. Well, it seems to me that if Congress
    wanted the definition to be different it would have provided a
    separate definition for each program. That's the way I look at
    it.
        Mr. Wehrum. That seems logical, Mr. Congressman.
        Mr. Johnson of Ohio. OK. Thank you.
        State regulators and the EPA both play an important role in
    administering the NSR permitting program. In what ways are you
    seeking to improve this Federal-State interaction related to
    the NSR program?
        Mr. Wehrum. Well, you're right. The Clean Air Act, in many
    respects, is an exercise in cooperative federalism. We, at the
    Federal Government level, have a lot of responsibility.
        But Congress intended states to take a lot of
    responsibility themselves and, in fact right at the beginning
    of the Clean Air Act it says air pollution control at its
    source is the responsibility of the states under the Clean Air
    Act.
        So Administrator Pruitt takes that very seriously. I take
    that very seriously. Part of our concern with the program is it
    has been too Federal heavy, as a lot of what we do has been
    Federal heavy.
        And so in addition to improving the Federal program. Our
    intention is to make sure the states understand they have
    flexibility in what they do and how they do it under the NSR
    program.
        The things we do we think make good sense and would be real
    improvements and we hope states pick up those ideas. But if
    they have other ideas they want to implement we are going to be
    flexible because we should be flexible. That's how the law was
    intended to be implemented.
        Mr. Johnson of Ohio. Well, while it's not perfect I
    certainly applaud the efforts of the EPA to engage the states
    across the spectrum in policy making because I agree with you--
    I think that's important.
        Can you talk about the role of the policy office and
    enforcement offices at the EPA? Specifically, should the policy
    office or the enforcement office determine what defines a
    modification under NSR?
        Mr. Wehrum. As I like to say, they is us. I mean, the EPA
    is an entity and the EPA is part of a larger entity, which is
    the executive.
        So, as things currently stand, the responsibility of
    rulemaking sits with my office. But a responsibility for
    interpretation and implementation, in some cases, including
    NSR, sits in the enforcement office.
        So that was done intentionally during the Clinton
    administration for reasons but for a lot of reasons that
    doesn't make a lot of sense and, we have had a conversation in
    the way as to whether those delegations should be reassigned
    because a lot of people think and, frankly, I believe that
    people who write the rules should be the people who interpret
    the rules.
        Mr. Johnson of Ohio. In the last 30 seconds I've got, what
    are you doing to ensure that there is clear up-front guidance,
    which will reduce uncertainty about future enforcement
    penalties?
        Mr. Wehrum. Oh, boy. Well, I said earlier I need to stay in
    my lane. So enforcement penalties is not in my lane. That's a
    question that's best asked to the enforcement office assistant
    administrator.
        Mr. Johnson of Ohio. OK. All right.
        Mr. Chairman, I yield back.
        Mr. Shimkus. Gentleman yields back his time.
        The Chair recognizes the gentleman from California, Mr.
    Peters, for 5 minutes.
        Mr. Peters. Thank you, Mr. Chairman. Thank you, sir, for
    being here.
        As you well know, in 2011 the EPA entered into an agreement
    to settle a lawsuit brought by states and environmental groups
    in which EPA agreed to set standards for GHG emissions from new
    and existing fossil fuel-powered fired power plants under
    Section 111 of the Clean Air Act.
        The Supreme Court ruled that EPA must regulate greenhouse
    gases if EPA finds that they endanger the health and welfare of
    current and future generations.
        Following the Supreme Court's decision, EPA issued what is
    known as an endangerment finding. That finding requires the EPA
    to take regulatory action under the Clean Air Act to curb
    emissions of carbon dioxide, methane, and four other heat-
    trapping air pollutants from vehicles, power plants, and other
    industries.
        That ruling allows the EPA to regulate greenhouse gases as
    air pollutants covered by the Clean Air Act.
        This led to the clean power plan and essentially the
    endangerment finding gave EPA its mandate to regulate fuel
    economy standards for vehicles, permitting requirements for new
    construction, or the GHG regulation of vehicles and new
    stationary sources.
        So now that you're on the job, I wanted to ask you
    specifically do you believe that greenhouse gas emissions
    endanger the public health?
        Mr. Wehrum. Well, as I said in my confirmation hearing,
    there is a progression you need to go through to kind of get to
    where you are and one question is, is the climate changing and
    I think the answer is, clearly, yes.
        The second question is do manmade emissions contribute to
    that and I think the answer is, clearly, yes.
        The third question is, how much do manmade emissions
    contribute to that, and what I said in my confirmation hearing
    and what I continue to believe is I am not sure.
        And what I said then was, for the last 10 years before
    coming here I was an attorney in private practice and nobody
    ever hired me to go dive into the mountain of data that exists
    on climate and so there is a lot I had to learn and that's what
    I said 6 months ago.
        Mr. Peters. So right now, you have no opinion on whether
    greenhouse gas is a danger to the public health?
        Mr. Wehrum. Well, where I was going was I said I have a lot
    to learn and, I am putting my money where my mouth is and the
    climate protection division is, one of the divisions within my
    office and what I asked them, beginning a few months ago is to
    do a series of briefings on the state of climate science to
    help me better understand, what science is out there----
        Mr. Peters. Have you taken those briefings yet?
        Mr. Wehrum. We are in the process. I've done several and we
    have more to go. There is a mountain. There is a lot out there
    and----
        Mr. Peters. Has the staff indicated that they've changed
    their conclusions about this at all?
        Mr. Wehrum. Well, all decisions like that flow from the
    administrator. So that wasn't a staff decision. That was a
    decision by the administrator at the time.
        Mr. Peters. Has the administrator expressed to you whether
    he has an opinion on whether greenhouse gases endanger the
    public health?
        Mr. Wehrum. He has a process concern, at a minimum. His
    concern is the endangerment finding you describe was made
    without consideration of alternative views.
        Mr. Peters. I want to get to that in a minute. But I am
    asking his particular opinion on whether----
        Mr. Wehrum. Well----
        Mr. Peters [continuing]. What's the opinion of the
    administrator of whether greenhouse gases endanger the public
    health? Has he expressed that to you?
        Mr. Wehrum. Well, I am not going to speak for the
    administrator. But, again, to complete the thought, he's very
    concerned about process and believes--the way he talks about I
    think is the way to talk about it is, people with a different
    view haven't had a voice so far in this process and he's been
    trying to find a way to allow them to have some voice and----
        Mr. Peters. What's the schedule for that process? Do you
    know what his process is going to be?
        Mr. Wehrum. Well, there is no process in place and there is
    no schedule right now. So we have talked about it but we are
    not----
        Mr. Peters. Is it your intention or do you understand it to
    be the administrator to revisit the endangerment finding with
    respect to the greenhouse gases?
        Mr. Wehrum. We don't have any plans right now. As I said,
    we have talked a lot about the integrity of the process that
    led to that determination and so far we are focused on process
    and integrity and we haven't talked about outcome.
        Mr. Peters. I am totally willing to accept your answer
    except there is no process either. There is no answer on
    whether the administration believes that greenhouse gases pose
    a threat to human health and the environment.
        There is no answer. I don't get it from the administrator.
    I don't get it from you. Apparently, you haven't gotten it yet
    from your staff. And then everyone talks about a process, but
    there is no process either. There is no process for these
    voiceless oil and gas companies to get their voices heard.
        I am uncomfortable staying where we are but I am suspicious
    that that's not where you want to be.
        Mr. Wehrum. Well, what I would say is it's important to
    look at the broader context. Well, what I mean by that is
    Congresswoman Dingell asked me a question a second ago about
    car and truck standards that exist at least from an EPA
    standpoint because of greenhouse gas emissions.
        And my answer was we will work on a proposed rule to maybe
    change those standards. I didn't say we are working on a
    proposed rule to eliminate those standards and we are not going
    to do that.
        Mr. Peters. Just to conclude, there is no action right now
    to revisit the endangerment finding pursuant to greenhouse gas.
    Is that correct?
        Mr. Wehrum. That's correct.
        Mr. Peters. Thank you. I yield back.
        Mr. Shimkus. The gentleman yields back his time.
        The Chair recognizes the gentleman from Texas, Mr. Olson,
    for 5 minutes.
        Mr. Olson. I thank the Chair, and welcome, Mr. Wehrum.
        As you know, many projects we see being undertaken at large
    sites are designed to improve emissions. One of the best
    examples is from home, Texas 22.
        It's called the Petra Nova Project. That's a power plant
    owned by NRG. They have four coal generators and four natural
    gas generators.
        On their own, they had a goal to reduce greenhouse gas
    emissions. Their solution was to capture carbon emissions from
    the coal production and use the captured CO2 to
    increase oil production.
        Their capture right now the equivalent of 350,000 emissions
    daily from automobiles--a big amount of carbon captured by this
    one power plant.
        Its NRG--the capture system was designed by JX Nippon and
    the oil companies, Hilcorp, that has an old oil field that's
    about 75 miles southwest with a pipeline in existence that
    would get rid of that.
        I invite you to come down there, all my colleagues, to see
    what's working. It's the only one in the whole world that's
    actually viable for carbon capture.
        But that's unique. Can you talk about some of the other
    types of large-scale projects like Petra Nova that you have
    seen that make our air cleaner and what are you doing to clear
    the pathway for those guys to get through this bureaucracy and
    help us make our air cleaner?
        Mr. Wehrum. Mr. Chairman, I am not aware of any other
    ongoing projects like Petra Nova. I think it's a very unique
    facility--at least in the United States. I think there are some
    internationally.
        But I think enormous strides continue to be made in
    controlling air emissions generally and CO2
    emissions, more specifically. So that's a very unique
    technology doing a very unique thing. But when you set that
    aside and look at--just thinking about the world of power
    generation, tremendous progress has been made and continues to
    be made.
        And we have talked a little bit about the shift away from
    coal power into natural gas-fired and that's happening for a
    variety of reasons. But as a result of that alone there have
    been substantial reductions in emissions from the power sector
    nationwide over the past few years.
        So I think substantial progress has been made. Substantial
    progress will continue to be made and our job as an agency is
    to be smart about how we implement our program so that we
    accomplish good results but don't accomplish adverse results at
    the same time.
        Mr. Olson. Again, Petra Nova is just one example of what we
    can do with our technology right now.
        My question is are there other projects out there, big
    ones, that you're looking at that you can help them get through
    this bureaucracy, get that project online and make our air
    cleaner, like Petra Nova? Doing anything else out there in the
    country as a model that you're working on?
        Mr. Wehrum. And, again, the Petra Nova technology is very,
    very specific. But the answer to your broader question is on a
    daily basis we work with individual facilities who come to us
    seeking help and understanding how to interpret and apply our
    regulations.
        So we do applicability determinations. We do interpretive
    memos of the sort that we have been talking about. So we put a
    tremendous amount of time and effort into helping affected
    facilities, understand how the program applies and help them
    navigate or, as you said, navigate the complex programs that do
    apply.
        Mr. Olson. Thank you.
        Final question--you commented that the New Source Review
    process can be very complex and time consuming. It hurts my
    brain, it's so time consuming.
        Can you talk about why reducing complexity does not mean
    necessarily improving air quality? If we have reduced
    complexity, can we have reduced air quality? Or is it direct
    tie? How does it work? No complexity--have to get more complex
    or can we do less complexity cleaner air?
        Mr. Wehrum. Oh, I think we can have it all. You bet.
        Mr. Olson. There we go. I've got 52 seconds--a colleague
    want my time?
        Mr. Shimkus. Yield back.
        Mr. Olson. The chair will yield back.
        Mr. Shimkus. The gentleman yields back the time.
        The Chair recognizes the other gentleman from Texas, Mr.
    Flores, for 5 minutes.
        Mr. Flores. Thank you, Mr. Chair, and I appreciate the
    witness for being here today.
        We talked through several of the concerns about the NSR
    program this morning and one of the ones we haven't talked
    about is the penalties for lack of compliance.
        And it's my understanding that by statute the EPA may
    impose fines of more than $95,000 per day for Clean Air Act
    violations. Is that correct?
        Mr. Wehrum. I believe that's true.
        Mr. Flores. OK. So if the EPA believes that a facility
    should have gone through an NSR for a change at the facility it
    could threaten to fine that facility $95,000 for every day that
    the facility operated since that change was made? Is that also
    correct?
        Mr. Wehrum. That's correct, Congressman.
        Mr. Flores. OK. So in this case, just hypothetically, if
    the EPA identifies a change more than 3 years after the fact,
    this could involve fines of more than $100 million.
        Would you agree that this type of penalty and the
    uncertainty driven by the penalty serves as a disincentive for
    companies to carry out efficiency improvements?
        Mr. Wehrum. Well, Mr. Congressman, let me take a step back.
        Mr. Flores. Sure.
        Mr. Wehrum. I've said a couple times in this hearing it's
    really important for me to stay in my lane and I am responsible
    for program development and implementation but not for
    enforcement.
        So I have personal views on the questions you're asking but
    I think from an institutional standpoint they are best directed
    to the assistant administrator for the enforcement.
        Mr. Flores. But if you put yourself into the shoes of a
    company that's trying to improve their efficiency and they make
    a determination that they didn't need to do an NSR because they
    are trying to improve efficiency and to reduce their emissions,
    but then the EPA comes in after the fact and says, oh, here's a
    $100 million penalty, then the folks making the decision about
    whether or not to invest may elect to not invest at all because
    of the uncertainty regarding the fines that could happen to
    them.
        Mr. Wehrum. Mr. Congressman, so notwithstanding what I just
    said----
        Mr. Flores. I understand.
        Mr. Wehrum [continuing]. The point you're raising is, is
    there significant liability associated with possible violations
    with New Source Review, the answer is absolutely yes.
        You've been focusing in penalties, but penalties are one
    piece of the overall picture if there is an enforcement action.
    They can add up, as you say, over a period of years to a big
    number. But often the bigger number in the enforcement cases is
    the injunctive relief, which is the order to install air
    pollution controls and take other mitigation measures.
        So all of that together can turn into a very big number for
    a typical power plant, and your point is do affected facilities
    think about that as they are making decisions about how to
    implement projects and the risks that may come with that, and
    the answer is absolutely, positively, yes.
        Mr. Flores. Right. And that sort of leads to the next
    question is does it make sense that a company making a small
    investment or a change in an existing facility should be
    required by the NSR program to spend hundreds of millions of
    dollars on new state of the art pollution control equipment if
    they were just trying to improve efficiency, reduce emissions
    already.
        Mr. Wehrum. Right. And that doesn't make sense at all.
        Mr. Flores. OK. Also, some equipment manufacturers report
    that there is little demand for energy efficiency products that
    they are selling because companies are unwilling to retrofit
    old equipment with newer technologies due to the concern about
    triggering an NSR.
        This is the whole purpose of the hearing and that is how
    can we reform the NSR program so that companies certainly won't
    be penalized for doing activities that actually reduce
    pollution.
        And that gets us into the discussion draft and I think
    you've said that you support the direction we are going in the
    discussion draft.
        Mr. Wehrum. Yes, Mr. Congressman. I think it would mark
    real improvement.
        Mr. Flores. OK. Thank you. I yield back.
        Mr. Shimkus. Gentleman yields back the time.
        The chair now recognizes the gentleman from Georgia, Mr.
    Carter, for 5 minutes.
        Mr. Carter. Thank you, Mr. Chairman.
        Thank you, Mr. Wehrum, for being here. I appreciate you
    being here.
        I wanted to change our focus. I know we are here to talk
    about NSR but there is the subject that is very important to me
    that I brought up in a number of meetings with Secretary Pruitt
    that I'd like to ask you about.
        And that is about marine engine waivers for pilot boats.
    That's something that's very important. I have two major
    seaports in my district. They are struggling with this issue.
        I brought it up, as I said, to EPA staff and to Secretary
    Pruitt when he's been before our committee. Not only do I want
    to change the subject but I want to change the tone because I
    want to say thank you. You've responded, and I would ask that
    you convey my thanks to Secretary Pruitt as well.
        He committed, last time he was here, that he would
    personally look into this, and he did, and I want to thank you
    for that. And my confidence has been restored and I appreciate
    it very much, so kudos to EPA for this.
        I want to ask you, because what happened is that three
    staff members were sent out to one of the engine manufacturers
    to look at this and to study in and see what a problem it was
    and, particularly, for the high-speed commercial vessels
    between 45 and 80 feet, which is what we use in the Savannah
    Harbor and what is very important to us.
        And we feel like we are the tip of the spear here because
    we are kind of the first ones that have had to deal with this.
    So we are trying to get it resolved as quickly as we can and
    it's very important because if we don't have those pilot boats
    out there, business stops and commerce is business for us down
    there.
        And I wanted to ask you, the staff that visited the boat
    manufacturer indicated that they were going to be putting
    together a report.
        Have they come back with any initial findings yet or any
    feedback that you might be able to share with us?
        Mr. Wehrum. They have not, but they were just out there
    last Thursday. So they haven't had much time to----
        Mr. Carter. I understand. I hate to be impatient but they
    are bearing down on me and this has, in all honesty, been going
    on a while--because we have heard that it may take up to 2
    years and that is simply not acceptable. That's just not going
    to work.
        Mr. Wehrum. Well, we are moving expeditiously, Congressman.
    I've talked with my staff on a number of occasions about this
    issue. I understand exactly what's going on.
        Mr. Carter. Thank you.
        Mr. Wehrum. It was important for our folks to get some
    boots on the ground out at the engine manufacturers. So we were
    happy to have that opportunity and we plan to press forward as
    quickly as we can.
        And, I think as you know, it may not be a few weeks kind of
    thing. It may be a few months kind of thing just because we may
    have to revise our rules to accommodate what's going on.
        Mr. Carter. Well, let me ask you this.
        Mr. Wehrum. May was the key word there----
        Mr. Carter. OK. I understand.
        Do you not normally put waivers in your rules like that
    with anticipation that there will be exceptions to those rules?
        Mr. Wehrum. We do sometimes. But usually when we know there
    is an issue to be resolved. This was something we didn't see
    coming. So there is nothing in the rule that says, there is a
    way to--well, there may not--again, may is the key word.
        Mr. Carter. I understand.
        Mr. Wehrum. We are trying to find a way.
        Mr. Carter. Well, two more things real quick. First of all,
    I would just ask your commitment to keep this on the front
    burner and to please go back and if you can provide my staff
    with any information we would certainly appreciate it.
        Mr. Wehrum. Absolutely.
        Mr. Carter. And secondly, if you see any other regulatory
    hurdles that we are going to have to overcome if you'll please
    let us know about those as well.
        Mr. Wehrum. Will do.
        Mr. Carter. And then, finally--and I'll yield after this--
    again, please convey my sincere thanks to the secretary for
    acting on this and fulfilling his commitment.
        Mr. Wehrum. We will do that.
        Mr. Carter. Thank you, and I yield back, Mr. Chair.
        Mr. Shimkus. Gentleman yields back his time.
        The chair recognizes the gentleman from South Carolina, Mr.
    Duncan, for 5 minutes.
        Mr. Duncan. Thank you, Mr. Chairman.
        I want to begin by saying that I am supportive of Mr.
    Griffith's efforts to improve and reform the NSR permitting
    program.
        In my opinion, the NSR program in its current form seems
    like a counterproductive policy that disincentivizes companies
    from pursuing projects that would increase efficiency and
    mitigate environmental pollution.
        And I would say that frustration with the American people
    and federal bureaucracies and the speed of permitting, whether
    it's this or whether it's getting a Class III license with ATF,
    it permeates the whole government the frustration of the
    American people.
        They expect our government to be more efficient and I think
    that's what the purpose of Mr. Griffith's efforts are--to make
    government and at least the EPA and its permitting process a
    little more efficient.
        So I agree with your remarks, Administrator Wehrum, that we
    need to simplify the program and provide clarity to companies
    regulated by this.
        I want to talk about some of the confusion on how much
    construction companies are allowed to do prior to obtaining an
    NSR permit. I do not believe that this is addressed in the
    discussion draft.
        Can you speak to this a little bit? What can construction
    companies do prior to getting approval?
        Mr. Wehrum. This is another example of why the NSR program
    drives people crazy. So it's a preconstruction permit program,
    which means you need to have the permit in hand before you
    begin constructing the permitted activity.
        So that sounds simple but it's complicated in practice
    because what is the permitted facility? You go out and pour a
    foundation--is that part of the facility? You go out and if you
    build roads, security gates, is that part of the permitted
    facility? You go out--if you're building a boiler, wouldn't you
    buy the boiler and put it in place? So a judgement has to be
    made as to what point in the physical construction process is
    the point that marks the beginning of the regulatory process.
        The EPA has spoken to that many times in the past but it's
    a subjective thing, not an objective and there is no bright
    line here and EPA has made several case-specific
    determinations.
        I said in my opening remarks and in my written testimony,
    we have begun what I believe to be an aggressive process of
    identifying problems with rules and opportunities for
    improvement in the rules and the issue that you've raised is
    one of those things that's on our radar right now.
        What we want to do is encourage investment in facilities,
    allow for projects to go forward in anticipation of getting the
    permits that are necessary.
        So the permits shouldn't stand as an unnecessary obstacle
    to common sense activity. And I think we could put a finer
    point on this issue and it's something that we intend to do,
    going forward.
        Mr. Duncan. And I appreciate that. Let me ask, how much
    technology is used? I applied for a big game permit for my son
    online. Got a notification we got accepted. I can dial up a
    buoy in the Charleston Harbor and find out what the weather
    conditions are.
        Is the agency using the technology to find out what the air
    quality emissions are at a plant in Easley, South Carolina, and
    whether they are in attainment or not, or a construction
    project that may be expanding an operation there, looking at
    current air quality and I guess the whole application process
    online with feedback from the agency.
        How are you guys using technology and what can you do
    better?
        Mr. Wehrum. We are trying very hard to keep up. Technology
    and the air quality monitoring and information management areas
    is growing by leaps and bounds. So substantial improvement is
    being----
        Mr. Duncan. Are all these monitors transmitting to
    Washington or wherever the field office is our is somebody
    having to drive their pickup truck out there and pull that
    data?
        Mr. Wehrum. A little bit of both. A little bit of both.
        Mr. Duncan. Little bit of both?
        Mr. Wehrum. Yes. So, the answer to your question is we have
    room for improvement and we are trying--I have a whole office
    down in North Carolina that's focused on emissions measurement
    technology and I can tell you this is very much a focus of
    ours.
        Mr. Duncan. What do you need from Congress to help make
    that happen? To help make the technology into the 21st century?
        Mr. Wehrum. I don't think there are barriers under the law
    for us right now. I think what we need to do just as an
    institution is be smart about using our resources and be smart
    about keeping up with the technologies and we are committed to
    doing that.
        Mr. Duncan. OK.
        Mr. Chairman, I don't have anything further. I yield back.
        Mr. Shimkus. The gentleman yields back his time. The chair
    now recognizes the gentleman from Virginia, Mr. Griffith, who's
    been patiently waiting, for 5 minutes.
        Mr. Griffith. Thank you very much, Mr. Chairman. I greatly
    appreciate it and I want to thank you, the E and C staff and
    everyone who has helped get this bill to this critical point in
    the process and I do appreciate it.
        And I appreciate you, Administrator Wehrum, for being here
    as well today. The current EPA has made New Source Review
    reform a priority. I share this priority and appreciate your
    comments on my legislation today.
        I've heard from folks in my district as well as industries
    here and in the previous hearing how complicated and burdensome
    this program is and it was singled out multiple times in the
    Department of Commerce's report on regulatory burdens for
    domestic manufacturing.
        That being said, I have a story in my own district which I
    think brings home the need for this reform. It doesn't cause a
    lot of pollution nor any pollution at all. What we have is a
    manufacturer of furniture, and when touring that manufacturer
    of furniture who was--it was Vaughan-Bassett Company that was
    the subject of ``Factory Man,'' the fight of John Bassett to
    keep American furniture going when it looked like China and the
    Asians were going to chase us out of the marketplace and he did
    a great job.
        But I am touring his factory and there is a conveyer belt
    that runs down and runs back and there is nothing out there,
    and they built ramps to get back over it again on the other
    side. And I said to him at the time, 5 or 6 years ago when I
    was first touring, and I said, ``What's this here for?'' ``Oh,
    we got some regulation. If we change it, we have to redo
    everything. So we have this conveyor belt that goes out to
    nowhere and comes back. And it's not efficient, but we don't
    want to deal with it.''
        In checking to make sure it was New Source Review before I
    came to this hearing, we checked on this last week. They had to
    check with their regulatory guy who handles all this because
    they are not really sure. They just know they can't touch it.
    Goes to nowhere. Adds time to the production of the pieces of
    furniture. They don't use what the original purpose was but
    they have to keep the conveyor belt going. That affects their
    factory, and let me detail from the book how I know it affects
    their factory.
        So he's getting heavy competition from the Chinese and he's
    going to have to do something about it. He's taken apart one of
    the pieces they are doing to see what they are doing more
    efficiently than what he's doing in his factory, and it states
    in this book by Beth Macy, ``In his sweat-stained golf hat,
    John Bassett stood atop a conveyor belt and told his workers he
    had no intention of closing the factory. Bassett asked his
    workers to not only work faster but also suggest ideas for
    factory floor improvements. What he didn't want to hear, what
    he never wants to hear, was the phrase, 'It can't be done.' If
    something was wrong with a machine and it was slowing
    production down, the workers should personally let him know.''
        That conveyor belt is slowing down that process. That
    conveyor belt means his factory is less efficient. He gets
    fewer pieces of furniture out every day than it might otherwise
    be able to do. That conveyor belt is a part of the problem and
    the New Source Review keeps him from changing that conveyor
    belt because they are afraid that EPA will whisk in on changing
    that conveyor belt and make them comply with every new standard
    that's come about since whenever it was they put their process
    in place. Instead of being able to make small improvements
    along the way or even change this conveyor belt, they can't get
    it done because this regulation is too burdensome, so
    burdensome they had to even go check with the regulatory guy to
    find out for sure that that was the rule that caused the
    problem, and it was.
        I am not going to tell Mr. Bassett it can't be done. We
    need to change this rule and I appreciate your help in that
    regard.
        So you disagree with anything I've just said?
        Mr. Wehrum. I do not.
        Mr. Griffith. And I appreciate that.
        We have heard a lot about electric generation and other
    things today, and I've just told you this story.
        But whatever it is, can you speak to what the EPA is doing
    on its own? I think the bill is the best way to do it but
    what's the EPA doing on its own to try to reform the NSR?
        Mr. Wehrum. So a couple comments.
        First of all, thank you very much for what you're doing,
    Mr. Congressman. As you know, I've spent a lot of time on this
    program in my career. It's a very high priority of mine to make
    it better and I appreciate your efforts.
        I think your example highlights an important aspect of NSR,
    which is it applies to everybody who emits stuff, not just
    power plants, not just petroleum refineries.
        So a big reason why we need to improve the program is for
    the furniture makers of the world and the brick plants of the
    world and the small businesses and the small entities and
    facilities that grapple with this on a daily basis.
        We at EPA are working very hard within the authority we
    have to improve the program through rule changes and
    interpretations and policy memos and we are going to continue
    to try as long as I am here.
        Mr. Griffith. Well, and I am glad that we agree that narrow
    and targeted NSR is necessary but that we need to make some
    reforms.
        And with that, I yield back.
        Mr. Shimkus. Gentleman's time has expired.
        The chair thanks Mr. Wehrum for being here and being
    patient and answering our questions, and seeing that there are
    no other members wishing to ask you questions, we will dismiss
    you and impanel the second group.
        [Pause.]
        OK. Thank you all for being here. You all saw the first
    panel so we will recognize each one of your for 5 minutes for
    an opening statement.
        Your full testimony is submitted for the record and we will
    start with Mr. Sean Alteri, Director, Division of Air Quality,
    Kentucky Department of Environmental Protection.
        Sir, you are recognized for 5 minutes.

    STATEMENTS OF SEAN ALTERI, DIRECTOR, DIVISION OF AIR EQUALITY,
    KENTUCKY DEPARTMENT OF ENVIRONMENTAL PROTECTION; PAUL BALDAUF,
        P.E., ASSISTANT COMMISSIONER, AIR QUALITY, ENERGY, AND
        SUSTAINABILITY, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL
       PROTECTION; ROSS E. EISENBERG, VICE PRESIDENT, ENERGY AND
     RESOURCES POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS; KIRK
    JOHNSON, SENIOR VICE PRESIDENT, GOVERNMENT RELATIONS, NATIONAL
    RURAL ELECTRIC COOPERATIVE ASSOCIATION; BRUCE BUCKHEIT, ANALYST
      AND CONSULTANT; JEFFREY R. HOLMSTEAD, PARTNER, BRACEWELL LLP

                        STATEMENT OF SEAN ALTERI

        Mr. Alteri. Thank you.
        Good morning, Chair Shimkus, Ranking Member Tonko, and
    members of the subcommittee.
        My name is Sean Alteri and I currently serve as the
    director of the Division for Air Quality in Kentucky. I am
    honored to testify today and share a state's perspective
    relative to New Source Review.
        As an air quality regulator, I applaud your efforts to
    address elements of the New Source Review permit program. The
    New Source Review permit program is necessary to protect public
    health and carry out the congressional declaration of purpose,
    which is to ensure that economic growth will occur in a manner
    consistent with the preservation of existing clean air
    resources.
        To effectively administer the New Source Review program,
    permitting authorities must be provided with regulatory
    certainty. During this February's New Source Review hearing,
    Chairman Shimkus correctly noted that there are over 700
    guidance memos and documents related to New Source Review.
    Under Kentucky law, unlike the Federal Government, the cabinet
    is prohibited from regulating by policy and guidance.
    Codification of EPA's New Source Review guidance memos will
    provide regulatory certainty to the permitting authorities as
    well as the regulated community.
        Regarding the proposed reform legislative discussion paper
    included with this hearing, the narrow scope of the language
    further defined modification highlights issues related to
    routine maintenance, repair, and replacement. Pursuant to
    Section 111 of the Clean Air Act, a physical change to an
    emissions unit or a change in the method of operation
    constitutes a modification and it may subject the facility to
    New Source Review. Due to potential New Source Review
    requirements and the applicability of New Source Performance
    Standards, facilities have, unfortunately, foregone efficiency
    improvements that could provide significant environmental
    benefits.
        In an effort to reduce significant delays in permitting,
    the proposed amendment to the definition of modification does
    not apply to projects that implement the efficiency measures.
    The proposed amendment also addresses projects that are
    designed to restore, maintain, or improve the reliability or
    safety of the source and limits the emissions increases to the
    maximum achievable hourly emission rate demonstrated in the
    last 10 years.
        These proposed amendments will provide the timely issuance
    of permits. Permitting energy efficiency projects effectively
    will be critical when EPA issues a clean power plant
    replacement rule and states are mandated to reduce its
    CO2 emission rates from its existing electric-
    generating units.
        In addition, the proposed legislative text also clarifies
    the term construction under the New Source Review program and
    when a modification should be subject to New Source Review as a
    major modification. The proposed statutory text clarification
    eliminates confusion as to when NSR applies.
        Currently, the most difficult aspect of permitting a major
    emitting facility under NSR is the air dispersion modeling.
        Last March, I testified before this subcommittee and
    expressed the need for EPA to fully develop and codify
    implementation requirements at the same time the EPA revises a
    national ambient air quality standard. H.R. 806 proposed to
    extend the review time of a NAAQS to a period of 10 years,
    which would allow EPA to resolve the technical deficiencies of
    the NAAQS evaluation and provide regulatory certainty to
    permitting authorities. Specifically, air dispersion modeling
    requirements necessary to evaluate the consequences of any
    decision to permit increased pollution in an area must be
    promulgated at the same time the EPA revises a national ambient
    air quality standard.
        As an example, EPA revised the national ambient air quality
    standard for particulate matter less than 2.5 microns in July
    of 1997. However, due to technical issues and limitations
    associated with the inventories as well as the modeling
    techniques, EPA applied the PM 10 surrogate policy until March
    23rd, 2010. EPA's inability to promulgate clear regulatory
    requirements unnecessarily led to several Title V permit
    objections.
        And to reiterate, EPA must promulgate implementation
    requirements at the same time it promulgates a new or revised
    national ambient air quality standard to avoid costly
    unnecessary delays.
        Another example is the 2010 revision to the SO2
    standard. Although the sulfur dioxide standard was revised in
    2010, the EPA promulgated amendments to the modeling techniques
    in February of 2017. These amendments addressed significant
    unresolved technical limitations of the models. As a result of
    the regulatory uncertainty, several projects were not able to
    conduct the necessary evaluations required by the New Source
    Review program and thus limiting the potential for economic
    growth and development.
        In closing, state, tribal, and local permitting authorities
    must be provided with regulatory certainty throughout the New
    Source Review permitting process. The regulatory certainty is
    necessary to carry out our statutory obligations, which include
    providing for economic growth and development.
        And thank you for the opportunity to participate in today's
    hearing and I look forward to any questions you may have
    regarding my testimony.
        [The prepared statement of Mr. Alteri follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. Thank you.
        The chair now recognizes Mr. Paul Baldauf, professional
    engineer, assistant commissioner, Air Quality, Energy, and
    Sustainability, New Jersey Department of Environmental
    Protection.
        Sir, you're recognized for 5 minutes.

                       STATEMENT OF PAUL BALDAUF

        Mr. Baldauf. Thank you, Chairman Shimkus, Ranking Member
    Tonko, and members of the committee for the opportunity to
    testify today.
        My name is Paul Baldauf. I am the Assistant Commissioner
    for Air Quality, Energy, and Sustainability at the New Jersey
    Department of Environmental Protection.
        I have 30 years of engineering and management experience
    related to environmental protection. I would like to take the
    opportunity today to provide a state perspective on the
    regulatory challenges associated with our mission to protect
    and improve air quality. As we all understand, air pollution
    has no respect for state borders. Individual states with
    effective and robust regulatory programs have little influence
    to encourage upwind states to similarly control their
    emissions. The Environmental Protection Agency must lead to
    ensure a level playing field with all entities held to the same
    emission standards. Any discussion of New Source Review
    permitting reform must focus on emissions reduction. Amendments
    to the NSR process that have the potential the increase
    emissions cannot be tolerated and these amendments will cause
    New Jersey to fall out of attainment to the National Ambient
    Air Quality Standards.
        New Jersey is the most densely populated state in the
    Nation with a long history of air quality challenges. New
    Jersey has made major improvements in air quality over the last
    two decades. Today, New Jersey is attaining all the NAAQS
    except the 70 parts per billion ozone. About half of the air
    pollution responsible for causing ozone in New Jersey comes
    from outside of New Jersey. The NSR program and the cost-
    effective control technologies that exist to reduce emissions
    have been critical to the improvements of New Jersey's air
    quality. If the proposed changes are adopted, emissions from
    out-of-state sources are likely to increase, not only for ozone
    but for other air pollutants including particulates and air
    toxics. Governor Murphy has set numerous ambitious climate
    change goals such as 100 percent clean energy by 2050 in New
    Jersey. States will be unable to attain the air quality
    benefits from clean energy if upwind states continue their
    current levels of emissions.
        Adverse health effects--adverse health impacts can come
    from both short-term and long-term exposure to air pollution.
        Maintaining the current NSR program and its associated
    requirements to reduce emissions with plant upgrades will not
    only improve the ability of states to attain or maintain NAAQS
    but will result in greater air toxic reductions. Co-benefit
    reductions are frequently called out in rulemaking as a
    secondary benefit. Annual emissions of mercury and hexavalent
    chromium, a known neurotoxin and a known carcinogen,
    respectively, both of which are trace elements in coal, would
    also increase with associated ton per year increases of other
    pollutants. Mercury and hexavalent chromium are closely
    associated with coal power plants and any increase, short term
    or long term, will have detrimental effects on the environment
    and public health.
        The proposed amendments would alter when a source would be
    subject to NSR in two key ways--first, a project that increases
    the efficiency of a unit, regardless of whether the project
    also increases the annual emissions of the unit, would be
    exempted from NSR and its associated emission reductions. While
    increasing efficiency may be desirable, the increase in
    emissions associated with the change should be evaluated for
    their impacts.
        Second, the proposal would eliminate the requirement to
    evaluate the project for increases in annual emissions. This
    could result in major sources expanding the annual capacity of
    a plant, increasing the number of hours it operates each year
    without the inclusion of modern air pollution controls or the
    replacement of older equipment with modern, more efficient
    equipment and associated lower air pollution.
        These amendments would allow it to continue to keep
    operating at the same level of hourly emissions indefinitely,
    even though cost-effective technologies exist to reduce
    emissions, undermine the continuous emissions reductions we've
    achieved over the last 40 years. Without the required air
    quality evaluation, there would be no way of knowing if the
    existing source operation was having adverse effects to the
    airshed and a source's useful life could be extended
    indefinitely with no consideration for reducing air pollution
    leading to continued operation with old and inefficient
    equipment. These annual emission increases would negatively
    impact annual air quality standards. States such as New Jersey
    would find it challenging to remain in attainment within NAAQS
    if the NSR program eliminated the requirement to evaluate a
    project for increases in annual emissions.
        NSR amendments, as proposed, could result in extension of
    the life of older power plants with modifications that result
    in small improvements to energy efficiency while causing
    significant increases in annual emissions of air contaminants,
    including carbon dioxide, sulfur dioxide, nitrogen oxide,
    particulates, mercury, and other hazardous air pollutants. That
    would be inconsistent with the Clean Air Act, which requires
    its sources to install best available control technology,
    lowest achievable emission rate, and maximum achievable control
    technology when modifying equipment facilities including energy
    efficiency modifications that would increase emissions of
    applicable air contaminants.
        Thank you again for the opportunity to appear today and to
    convey New Jersey's perspective on the importance of the NSR
    program.
        I welcome any questions you may have.
        [The prepared statement of Mr. Baldauf follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. Thank you very much.
        The chair now recognizes Mr. Ross Eisenberg, Vice
    President, Energy and Resources Policy, National Association of
    Manufacturers.
        You're recognized for 5 minutes.

                      STATEMENT OF ROSS EISENBERG

        Mr. Eisenberg. Thank you, and good morning, Chairman
    Shimkus, Ranking Member Tonko, members of the subcommittee.
        Thank you for the opportunity to be here today to talk
    about manufacturers' continued dedication to reducing air
    emissions.
        The manufacturing sector is cleaner, more efficient, and,
    frankly, more responsible than we have ever been. This is not
    merely lip service. About 94 percent of the manufacturers
    listed on the Fortune 500 have in place a sustainability plan
    and they are keeping to it. Now, this commitment has yielded
    extremely positive results in terms of air emissions. Since
    1970, the manufacturing sector has reduced its emissions of
    nitrogen oxides by 53 percent, carbon monoxide by 70 percent,
    sulfur dioxide by 90 percent, coarse particulate matter by 83
    percent, and VOCs by 47 percent. Fine particulate matter, PM
    2.5, is down by 23 percent since its peak for manufacturers in
    1999 and greenhouse gases are down by 10 percent over the past
    decade. The industrial sector actually produces less greenhouse
    gas emissions than it did in 1990, which is considerably
    different than the broader economy.
        We appreciate the opportunity to testify today on a draft
    bill that would clarify the degree of physical or operational
    change to an emissions source that would constitute a
    modification under NSR. The NAM supports this bill because it
    would remove barriers that have prevented manufacturers from
    investing in efficiency projects and installing modern
    pollution control equipment at their facilities.
        The purpose of NSRs for requiring industrial facilities to
    install modern pollution control equipment when they are built
    or when they're making a change that it results in significant
    increase of emissions. In practice, however, NSR does stand in
    the way of the technologies that the statute was supposed to
    promote. I realize this is well-worn territory here and one
    that EPA has for years tried to fix.
        But I believe the need today is even greater than it was
    before. First of all, there is near universal adoption, as I
    said, across the manufacturing sector--the sustainability plans
    that are driving continued targets and continued progress. It's
    spurring a continuing need on shop floors to do things
    differently and make those technology upgrades.
        Secondly, there is the recently enacted tax reform package
    which, because of things like full expensing and other things,
    now provides an interesting little window for manufacturers to
    justify making these investments in more efficient emissions-
    friendly technologies.
        And then, finally, there's, honestly, the regulatory
    reality--that there are significant new laws like MATS and
    boiler MACT that require--requiring and demanding cleaner and
    more efficient electricity generation. And if you believe, as
    we do at the NAM, that the EPA should fill the void left by a
    repeal of the Clean Power Plan with a replacement regulation,
    you're still going to need to fix NSR at some point to make
    that work.
        A significant portion of the existing gas turbine and steam
    turbine fleet could benefit from equipment upgrades to improve
    their efficiency and operational flexibility, particularly
    given that many are now being used in a different fashion
    because of the onset of renewable energy and the way that the
    grid operates. These upgrades for gas and steam turbines will
    ensure higher grade efficiency and lower emissions in
    supporting renewable energy use.
        However, NSR has stood in the way of customer adoption of
    these technologies. For example, an NAM member company that
    manufactures gas turbine upgrade technology could improve the
    vast majority of those in-service turbines by 2.5 percent and
    reduce their total CO2 emissions by 6.5 percent.
    They report their customers are choosing not to install this
    equipment simply because it triggers NSR.
        An inability to define what is routine maintenance has
    resulted in NSR notices of violation being issued for
    environmentally beneficial projects. The Utility Air Regulatory
    Group has cited more than 400 instances in which a regulated
    entity took on a project to improve the efficiency of a power
    plant only to face notices of violation or citizen suits over
    violating NSR. Same thing happens at industrial facilities. Our
    members have had trouble with projects involving switching from
    coal to gas or from number six fuel oil to low-sulfur
    distillate oil.
        Despite the obvious emission benefits of this, these
    projects have periodically triggered NSR because they--because
    of collateral emissions for carbon monoxide and VOCs, which
    becomes a barrier to undertaking the project.
        One of our members estimates that there's 100 million tons
    of CO2 that could be possibly reduced by deploying
    the full suite of available turbine upgrades into power plants.
    If these were to happen, we are talking about the equivalent of
    more than 20 million cars being taken off the road. That's 10
    percent of the entire automobile fleet. And that's just for the
    power plant sector. The same technologies would work for
    turbines and industrial facilities as well. Many of these
    upgrades have been impeded because they may, honestly,
    potentially trigger NSR.
        The draft legislation that is the subject of the hearing
    today would create flexibility in the definition of
    modifications so that these heat rate improvements and
    efficiency upgrades would not be deterred by NSR.
        It would eliminate a situation where a piece of this new
    modern equipment would trigger it because it generates
    collateral emissions of another pollutant and, most
    importantly, it would unlock a potentially massive market for
    the installation of energy efficient technologies that would
    drive our already impressive emissions reductions down even
    further.
        No matter our political, personal, or employment
    background, we all share the same goal, which is to permanently
    reduce pollution. We believe this bill will get us to that end
    goal by reducing barriers to the installation of efficient and
    environmentally beneficial technologies.
        Thank you.
        [The prepared statement of Mr. Eisenberg follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. The Chair thanks the gentleman.
        The Chair now recognizes Mr. Kirk Johnson, Senior Vice
    President, Government Relations, National Rural Electric
    Cooperative Association.
        You're recognized for 5 minutes. Thank you.

                       STATEMENT OF KIRK JOHNSON

        Mr. Johnson. Thank you, Chairman Shimkus, Ranking Member
    Tonko, members of the subcommittee. It's a pleasure to be with
    you here. Thank you very much for the invitation.
        I am here representing 900 rural electric cooperatives,
    representing 47 states across the country. We, collectively,
    power rural America but we do much, much more than that. We are
    the engines of economic development across much of rural
    America and we are very proud of our history of doing that,
    doing things that other companies would not do.
        Mr. Eisenberg referenced Fortune 500 companies. We are not
    Fortune 500. We are purely Main Street and that's who we
    represent. Being consumer owned means we have our consumers'
    best interests at heart 24 hours a day, seven days a week, 365
    days a year. We employ 71,000 people across the country. We
    serve 88 percent of the counties across the country. One of
    every eight people gets their electricity from a rural electric
    cooperative nationwide. That's 42 million Americans.
        We have a different generation portfolio than much of the
    rest of the industry at retail. Overall, 41 percent of our
    power comes from coal, 26 percent comes from natural gas, 17
    percent comes from wind, hydropower, solar, and other renewable
    resources, and 15 percent comes from nuclear. But we generate
    just 5 percent of the power generated in the country and we
    sell at retail 13 percent.
        So the remaining balance of the power that we provide at
    retail comes from other sources. But of the power that we self-
    generate, 61 percent comes from coal--that's down from 80
    percent in 2003--26 percent comes from natural gas--up from 7
    percent in 2003--10 percent from nuclear.
        We don't self-generate much by way of renewables because
    the tax credits to incentivize those renewables are available
    to the taxpaying utilities, the investor-owned utilities, but
    not to--not to us. So we generally get that power through
    purchase power agreements.
        We've made significant reductions in our emissions profile
    over the past 15 years. Between 2009 and 2016, SO2
    emissions are down 66 percent, NOx emissions are
    down 24 percent, and CO2 emissions are down 8
    percent.
        Let's talk about New Source Review, the subject of this
    hearing. We have been seeking reforms to the NSR program for
    two decades now and we think the time is now to act.
        Representative Barton said this is a complicated issue.
    He's absolutely right. When I first heard about New Source
    Review, I thought it was a one-hit wonder 1990s boy band name.
    But it certainly is not that. It's something that actually
    impedes our ability to make progress on running our power
    plants as efficiently as we can and it certainly has a role in
    protecting the air quality of the country.
        Well, we need to remember that the goal of the Clean Air
    Act is not to ensure that power plant X or power plant Y has a
    piece of equipment X or piece of equipment Y on it. The goal
    and purpose of the Clean Air Act is to protect the air quality
    of this country so that people can breathe well. As a child, I
    had asthma. I know what it feels like not to be able to breathe
    and none of us want that situation in our country anywhere in
    our country, and that's why we continue to make these reforms.
        But the driving forces behind the emissions reductions
    coming from the electric cooperative sector and the electric
    utility sector overall don't just come from the NSR program. In
    fact, that's probably a very limited role. Under the other
    rules we have to follow, under the MATS rule, the CSPAR rule,
    our Title V permits, all of those are what keep our emissions
    on a downward trajectory, coupled with changes in the economy.
    So we should not and must not look at NSR in a vacuum and we
    must look at the overall effort that is under the Clean Air Act
    and whether we are making that progress or not.
        On NSR reform, we see NSR as a barrier to making common
    sense efficiency improvements in our power plants and there are
    circumstances in today's power sector that are changing that
    are making it even more difficult for us to do that.
        Coal-based power plants didn't used to cycle up and down.
    Now they're being required to cycle up and down to follow
    renewable resources, especially in the Great Plains, and I know
    great examples in my home State of North Dakota. That cycling
    up and down puts more wear and tear on those power plants and
    the need to maintain those power plants then is even more
    central to keep that power flowing to the places that they're
    going, even as we are building up more renewables in those
    areas.
        So being able to address that in today's world. What was
    considered routine maintenance maybe 20 years ago may be
    different than what is routine today because of some of those
    changes in the power sector and the rules of the road need to
    recognize that.
        So we are seeking those common sense reforms such as those
    contained in Congressman Griffith's draft bill. All we are
    asking and all we've ever asked is for clear rules of the road.
    We will follow them. We will make sure that we accomplish the
    objectives that are laid out in the Clean Air Act. But if we
    don't have clear rules of the road, we become very risk averse
    and we leave opportunities on the shelf that can improve the
    performance of the electric power sector, keep our consumers'
    costs down while continuing to meet all the clean air goals of
    this country.
        Thank you for the opportunity to be here, Mr. Chairman, and
    I look forward to your questions.
        [The prepared statement of Mr. Johnson follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. Thank you very much.
        Now I would like to recognize Mr. Bruce Buckheit, and the
    title is analyst and consultant. Maybe I can have that title
    someday. That sounds pretty cool. Simple.
        You're recognized for 5 minutes.

                      STATEMENT OF BRUCE BUCKHEIT

        Mr. Buckheit. Chairman Shimkus, Ranking Member Tonko, and
    distinguished members of the subcommittee. Yes, that's an easy
    title to come by when you work out of your house.
        As Senior Counsel for the Department of Justice and then as
    Director of EPA's Air Enforcement Division, I've investigated
    and enforced and, most important, settled NSR cases starting in
    1984 including leading the enforcement initiative against the
    coal-fired power plants for their NSR violations.
        And so my view of the world is not the 50,000-foot high
    altitude overview. My experience is in the trenches, working
    with the plant managers and their counsel and others to parse
    the difference between these sort of theoretical arguments and
    the real world realities of what they need to do to keep their
    plants going and how these programs actually work on the
    ground.
        And so that's my focus over the next couple of minutes is
    how do these things actually work on the ground. Before I go
    there, I just want to touch on one point and that is that
    Congress did intend in the 1977 amendments that over time,
    gradually, the existing sources that were grandfathered would
    lose that grandfathered status. They expected plants to modify
    and have to put on controls and that would end a competitive
    advantage that those old uncontrolled plants would have over
    new plants that have to spend hundreds of millions of dollars
    to put on controls and those controls add operating costs that
    continue thereafter.
        So the overall intent was to level the playing field over
    time. Let me touch on some of these arguments that are floating
    at the 50,000-foot level that aren't true on the ground. First
    of all, it's been said that the NSR rules prevent operators
    from making repairs needed to improve safety. That is not true.
    Ongoing maintenance occurs all the time. There is no plant
    manager that I ever came in contact with who would tell you
    that he would defer a project needed for safety because of some
    potential Clean Air Act rule. The current rules actually
    encourage ongoing maintenance because if you let your plant
    decline hugely and then you do a project, you have a risk of
    liability. If you do your ongoing maintenance year in year out
    to maintain your plant in a good state, you don't trigger NSR.
        The issues respecting the complexity in the NSR permitting
    process--first of all, NSR permitting for existing sources is
    extremely rare. Other than a handful of plant expansions in
    some industrial settings, these permits are simply not needed
    with any frequency and so don't pose a substantial burden. I am
    not aware of any power plant that has ever gone through an NSR
    permitting process, OK, for anything other than expanding the
    size of the unit. The reason for this is simple. If you don't
    increase emissions, you don't need an NSR permit. You have a
    number of other options rather than going through the full NSR
    permitting process. It includes incorporating a limit in your
    operating permit so that you do the project but your emissions
    are capped. You can also avoid NSR by decreasing emissions
    elsewhere in your facility to offset the emissions from the
    project. And thirdly, you can do incremental pollution
    controls, such as the use of slightly lower sulfur coal to
    offset any minor increases without having to go, you know, the
    route of the $100 million pollution controls.
        And further--last point here--is that if a project actually
    improves the efficiency of a unit, emissions go down. You burn
    less coal to make the same amount of electricity or the same
    number of widgets.
        And so all of this focus on energy efficiency, I think, is
    overblown. With the power plants, the issue is life extension
    programs--programs where not routine maintenance but replacing
    large chunks of the plant--an equivalent to replacing the
    engine in the car, not just changing the spark plugs, and it
    was those sorts of projects and case law that stems from 1988
    that got us at EPA involved in the forcing of these provisions.
        Today, roughly, half of the existing coal-fired plants
    don't have state-of-the-art controls for SO2 and
    three-quarters of them don't have full controls for
    NOx. This is the best most economic place to get
    your emissions reductions, not the small factories and not from
    individuals.
        I see I am out of time so I will say thank you to the
    Chair.
        [The prepared statement of Mr. Buckheit follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. Thank you very much.
        And then I will turn to Mr. Jeffrey Holmstead, partner of
    Bracewell LLP--testified numerous times before this committee--
    recognized for 5 minutes.

                     STATEMENT OF JEFFREY HOLMSTEAD

        Mr. Holmstead. Thank you very much for giving me the chance
    to be here today. I hope, during the questions, I can maybe
    address a couple of things.
        Where I don't necessarily agree with my friend, Bruce, and
    explained why--and EPA's theory by which they prevent energy
    efficiency projects and a rather strange theory about how you
    calculate emissions increases, but I want to focus on something
    different during my oral statement. I just have a minute.
        Look, we are talking about just one of the many programs
    that regulate emissions from manufacturing plants and power
    plants. New Source Review, and despite the name we are not
    talking about how it applies to new sources. We are only
    talking about how it applies to existing sources.
        In their testimony, Mr. Buckheit and Mr. Baldauf both
    focused primarily on power plants and how they believe the NSR
    program should work to reduce SO2 and NOx
    emissions from these plants.
        The problem is that the NSR program has been in place for
    more than 40 years and it has never worked that way. As Bruce
    said, very few power plants--in fact, unless they expand their
    capacity, they don't voluntarily go through NSR and even if the
    program worked the way that they want it to, you would not get
    overall reductions in power emissions because we have cap and
    trade programs in place. So if one facility goes through NSR
    and installs controls, that doesn't reduce the total number of
    allowances that plants are allowed to emit.
        You might be surprised to hear that there are actually 14
    different Clean Air Act programs that regulate these very same
    emissions that we are talking about--SO2 and
    NOx emissions from power plants. Thankfully,
    although the NSR program has essentially done very little to
    reduce emissions from these plants, other programs have been
    very effective.
        My friend Bruce, Mr. Baldauf, did not discuss any of these
    other 14 programs. Based on their testimony, you might be left
    with the misimpression that the NSR program is the only way to
    require power plants to reduce their emissions. They appear to
    believe that if we just leave the NSR program alone, all power
    plants will be forced to install what Mr. Buckheit calls the
    full modern suite of controls that he would like them to have.
        So even though all these plants have been covered by the
    NSR program for decades, in some cases more than 40 years, we
    just need to give the NSR program a little more time.
        But when Congress passed the 1990 Clean Air Act amendments,
    it gave EPA much more effective programs that were specifically
    designed to reduce emissions from power plants and these
    programs have been remarkably effective.
        One of these programs, the acid rain program, as some of
    you remember, was the centerpiece of the 1990 amendments. It
    was specifically designed to reduce SO2 and
    NOx emissions from power plants and it seems odd
    that if Congress expected the NSR program would force all those
    plants to install emission controls, it seems odd that it would
    have spent so much time and effort developing the acid rain
    program.
        Here are just a few things that I hope you will keep in
    mind. The Clean Air Act was passed in 1970. The NSR program
    came into place a few years later. Between 1970 and 1990 when
    the amendments were passed, SO2 emissions from U.S.
    power plants decreased by about 9 percent. NOx,
    during that same period when they were covered by NSR and only
    NSR, NOx emissions actually increased by 30 percent.
        Now, since 1990 when Congress passed the acid rain program
    to reduce emissions from power plants and also gave EPA
    authority to impose other cap and trade programs when further
    reductions were needed, here is what has happened. Since 1990,
    SO2 emissions from power plants have been reduced by
    more than 92 percent--more than 92 percent from almost 15--
    almost 16 million tons to 1.3 million tons. Since 1990,
    NOx emissions from power plants have fallen by about
    83 percent. What regulatory programs have been responsible for
    these reductions?
        Well, according to EPA's own analysis, it's not the NSR
    program. EPA itself says that these reductions have come
    because of a series of cap and trade programs, and I don't have
    time to go through them but there's been four that have been
    put in place by successive administrations, a Democrat and
    Republican. The NSR program does make it harder and more
    expensive for facilities to maintain their plants and make them
    more efficient. The NSR program is long and can often be very
    costly. I know of several companies that have teams of
    engineers and lawyers who devote their time to figuring out how
    they can maintain their plants without triggering NSR.
        I have sat in rooms where companies have evaluated projects
    that would make their plants more efficient and then decided
    not to do them because of concerns that they would trigger NSR.
        Look, these policies are very complicated and I am grateful
    that we are having this discussion. I sincerely hope that this
    committee will show that Republicans and Democrats can work
    together to remove unnecessary regulatory burdens.
        The bill being considered today would do just that and I
    hope that you will give it serious consideration.
        Thank you.
        [The prepared statement of Mr. Holmstead follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Shimkus. Thank you very much.
        I will now recognize myself for the round of questions. I
    recognize myself for 5 minutes and I want to start with Mr.
    Alteri.
        The discussion draft seeks to make it easier for companies
    to carry out energy efficiency and pollution control projects.
        Would accelerating efficiency improvements and pollution
    control adoption even on just existing sources be a net benefit
    for meeting clean air standards?
        Mr. Alteri. Yes.
        Mr. Shimkus. Let me go to Mr. Eisenberg. In your testimony
    you described how the National Association of Manufacturers'
    member companies are struggling to sell gas turbine upgrade
    technologies because customers are not willing to buy and
    install equipment that would trigger New Source Review
    permitting.
        That being the case, would you agree that New Source Review
    is slowing innovation and the adoption of newer technologies?
        Mr. Eisenberg. I would agree.
        Mr. Shimkus. Very simple answers.
        Would today's discussion draft make it easier for companies
    to install newer and cleaner equipment at existing facilities?
        Mr. Eisenberg. We believe it would, and it's a massive
    potential market. I mean, as I said during my oral remarks,
    that one particular manufacturer, just looking at its own
    turbine, said it could be somewhere on the order of over a 100
    million tons of CO2 potential reduced if everyone
    were to upgrade the steam turbine and gas turbine efficiency
    upgrades that they make available.
        Mr. Shimkus. And I think you made a good point with our tax
    bill that was passed--the expending provision. We are seeing it
    throughout, really, the country--a great increase in capital
    for new development and expansion and stuff like that. So this
    would segue very well into the ability of modernizing,
    retrofitting facilities, refineries, and even small furniture
    makers.
        Mr. Eisenberg. That's absolutely true and the idea wasn't
    mine. It came from a member of ours who said hey, let's change
    the internal rate of return on a project we were thinking about
    undertaking, and now we can do it and it's beneficial to the
    environment. So we are going to look more into that ourselves,
    too.
        Mr. Shimkus. Great. Thank you.
        Mr. Holmstead, concerns have been raised that the
    discussion draft reforms would enable existing facilities to
    collectively produce higher annual emissions.
        Even if hourly emission rate at the facility goes down, how
    do you respond to this concern?
        Mr. Holmstead. It's just not true. These facilities are
    covered by many, many other different programs that would--that
    would assure that emissions continue to decrease over time.
        So anybody who claims that this bill would increase
    emissions is just wrong.
        Mr. Shimkus. Yes. We have a pretty good record, I think, on
    the subcommittee of trying to find that middle ground. This
    one's going to be a little bit tougher, I assume.
        And it's really over this debate about the question that I
    just posed is I think that my friend's concerns are that
    emissions are going to go up.
        I think you make a good point--there's a lot of other air
    standards out there that are going to make sure that that
    doesn't happen.
        Mr. Buckheit, riddle this for me, will you? Is there a lot
    of other clean air rules and regs that'll prohibit that from
    increasing?
        Mr. Buckheit. With all due respect to my good friend Jeff,
    we've had these debates for decades. There are a lot of other
    programs there, none that would specifically address this
    issue.
        It is only the NSR program that will prevent each of these
    plants that we've been talking about from increasing annual
    emissions, and it's not all about power plants but it's mostly
    about power plants. Refineries and the like--they tend to run
    87/60 full time year round and so the hours of operation are
    not the issue for them so much. But and so reducing it--there's
    already an embedded hourly test for them.
        If you increase your hourly emissions you're going to
    increase your annual emissions. This is more about the power
    sector where because of forced outages they can't run for 3
    weeks a year and then they make the plant more reliable and
    they run those 3 weeks a year.
        Mr. Shimkus. Well, my time's almost expired. I want to go
    to Mr. Alteri.
        Do states and other permitting authorities have other tools
    besides New Source Review to control existing facilities'
    annual emissions?
        Mr. Alteri. We do, and I think you really have to look at
    the nexus between the National Ambient Air Quality Standards.
    Previously, the standards were on an annual basis.
        Now they're hourly basis, and really, it is imparative that
    the maximum hourly emission rate is limited and not allowed to
    violate those standards.
        Mr. Shimkus. And that's what Congressman Griffith in his
    bill is attempting to do--marry a successful standard with what
    is viewed out there as an unsuccessful. Would you agree?
        Mr. Alteri. I would, and you have the New Source
    Performance Standards also that play a role.
        Mr. Shimkus. Great. Thank you very much. My time is
    expired.
        The chair now recognizes the ranking member, Mr. Tonko, for
    5 minutes.
        Mr. Tonko. Thank you, Mr. Chair.
        It's been suggested that short-term such as hourly emission
    rates are more meaningful from an environmental perspective,
    since the number of NAAQS are based on short time frames.
        Mr. Buckheit, I want to ask you what you think about that
    assertion and let me perhaps put it in the context of
    communities that are in that range of those facilities.
        Do these communities located near these facilities, which
    may be dealing with unsafe levels of particulates or other
    pollutants, benefit from maintaining an hourly emissions rate
    even if it causes a significant increase in overall pollution?
        Mr. Buckheit. It's kind of both, Congressman. There are
    some local impacts, particularly for the 1-hour SO2
    standard where if you're near a power plant such as the
    facility in Alexandria here, you can have certain weather
    conditions where you will get unhealthy levels on a short-term
    basis.
        The larger public health issue is chronic exposure to PM
    2.5, which is annual or multi-year exposures to lower levels.
    That is the more consequential form of air pollution--most
    consequential form of air pollution in this country.
        Mr. Tonko. Thank you.
        And Mr. Buckheit, you said that NSR permits for existing
    power plants are very rare. I believe that was the term you
    used.
        Why do you think that permits are rare? Is it because
    they're costly, over burdensome, or easily avoided?
        Mr. Buckheit. I would say easily avoided is the right
    answer.
        Mr. Tonko. And your testimony mentioned that the courts
    have weighed in on the so-called routine maintenance exemption
    in the past, and to make it clear, it was only for legitimate
    maintenance and not large capital projects.
        Is it fair to say there's been a strategy over the years by
    these facilities to find loopholes that might enable them to
    make modifications without needing to undergo NSR program
    requirements?
        Mr. Buckheit. Yes. The case you're referring to,
    Congressman, is the Webco case back in 1988, which the courts
    enforced a decision under the Bush I administration where
    replacing these large projects would not be considered routine
    maintenance.
        Thereafter, a number of those lobbying law firms in town
    continue to press the notion that you could do anything or
    almost anything and call it routine maintenance and the number
    of the large utilities followed that advice, did projects
    without offsetting, without any of the other legal routes to
    avoid NSR permitting and without going through NSR permitting
    and that was the basis of our enforcement initiative back 10
    years--1998 and thereafter.
        Mr. Tonko. Thank you.
        Can you give us a sense of the current operating status at
    facilities that have been putting off these major
    modifications? Generally speaking, are they in need of
    significant investments in order to keep running?
        Mr. Buckheit. Well, our fleet is getting pretty old--our
    coal fleet. Most of the coal-fired power plants came online in
    1972 and before, and more and more the maintenance budgets have
    been cut at the plants as cost becomes an issue and competition
    in the electric market with natural gas and others become an
    issue.
        So I can forecast that as these plants--they're now 60
    years old, then coming on 70 years old and then coming on 80
    years old. There's going to be a time when engineering is going
    to force them to replace these components all over again.
        Mr. Tonko. So if the modification definition is expanded to
    allow projects designed to ``restore, maintain, or improve the
    reliability or safety of the source,'' would that essentially
    cover any investment needed for life extension projects?
        Mr. Buckheit. Yes. You could fundamentally replace the
    plant.
        Well, you can't go all the way there because then you might
    trigger some part of the NSPS rule. But you could spend 20, 30,
    40 percent of the cost of the new plant replacing these very
    large components without having to put on controls.
        Mr. Tonko. And, finally, do you believe this discussion
    draft is just the latest attempt to create new loopholes to
    enable these sources to avoid some of the NSR program's
    requirements such as installing pollution controls?
        Mr. Buckheit. This is the current wave. It happens every 8
    years or so.
        Mr. Tonko. OK. Thank you for your response and, Mr. Chair,
    I yield back.
        Mr. Shimkus. Gentleman yields back his time.
        The Chair now recognizes the gentleman from West Virginia,
    Mr. McKinley, for 5 minutes.
        Mr. McKinley. Thank you, Mr. Chairman.
        Mr. Holmstead, if I could direct perhaps my comments to
    you.
        Earlier, I think you were in the room when we were asking
    the previous speaker whether this idea of routine maintenance,
    because I had had conversations with some utility companies
    that have considered replacing the fins on their boiler as
    routine maintenance and that's apparently been deemed that is a
    routine maintenance type of work.
        So if that's the case that they can maintain their existing
    boiler, which is probably inefficient because it's 40 or 50
    years old, and then I go back to what Congressman Tonko and I
    have been working on now for 3 or 4 years getting research
    money to upgrade our and improve our turbine efficiency, here
    we have an opportunity to either replace the fins due to
    turbidity or erosion or whatever that might have caused and
    keep the efficiency low or we can use the research that we've
    paid for to implement a new technology, a new boiler, in that
    and improve the operation of that plant.
        But in so doing, that potentially triggers and likely
    triggers an NSR, and then you have to keep into consideration
    that from the February testimony we had here that you can go
    back as long as--there's 700--I think, Mr. Allen, you said
    this, 700 documents that have to be filed to comply. But in
    Region 9, the average approval is 777 days to get that
    approval.
        You may find it's over 2 years to get an answer of whether
    or not you're going to be in compliance with the NSR.
        How would you react to that? Am I reasonable about what's
    the incentive for people to improve the efficiency of their
    plant if it may take 2 and a half years to get the approval?
        Mr. Holmstead. Well, you have highlighted a big problem,
    that in a series of cases EPA has argued that if you improve
    the efficiency of a power plant you trigger NSR.
        So it might be in your interest to invest in something that
    would reduce your CO2 emission rate. It would reduce
    the emission rate of other pollutants.
        But here's the theory that Bruce has propounded in several
    cases. If you make your plant more efficient you will reduce
    the operating costs. So the cost of producing a megawatt hour
    will go down. That will make you more competitive than other
    plans so your plant will run more often, will run more hours.
    So the claim is that if you make your plant a little bit more
    efficient you might have a lower operating cost. Therefore, you
    would run more hours. Therefore, you can't make your efficiency
    improvement unless you go through this NSR process that can
    take, for a coal-fired power plant, 2 years. It would be the
    blink of an eye, and you might have to install brand new
    controls that would cost several hundred million dollars.
        So how many companies are actually going to make a decision
    to become more efficient if those are the consequences?
        Mr. McKinley. Thank you.
        I yield back.
        Mr. Shimkus. Gentleman yields back his time.
        The chair now recognizes the gentleman from Michigan, Mr.
    Walberg, for 5 minutes.
        Mr. Walberg. Thank you, Mr. Chairman. Thanks to the panel
    for being here.
        Mr. Eisenberg and Mr. Johnson, I've got a question I would
    like to ask you here.
        Due to the positive impacts of the recently enacted tax
    reform bill, many companies are looking to make greater
    investments in new construction projects and facility upgrades.
    I've seen it in my district in plenty of sites.
        What effect does NSR have on a company's ability and
    willingness to pursue new projects or upgrade existing
    facilities?
        I will go with Mr. Eisenberg first.
        Mr. Eisenberg. Thank you, Congressman.
        So it's a barrier. It's a barrier that is in the way of a
    pretty amazing window that we are seeing on the ground in real
    time--manufacturers taking on new projects because of tax
    reform.
        I appreciate that this has been a coal-dominant discussion.
    But for us, I want to make clear that it is very much about
    manufacturing.
        We asked our members at the beginning of last year, tell us
    what you care about in the regulatory space that we should be
    working on, and this issue was number one in the environmental
    space.
        So, when I talk about NSR I hear from aerospace and defense
    and steel and aluminum and cement and pulp and paper and
    chemicals. These are the folks that are doing those things on
    the ground that you just mentioned because of tax reform and
    other things that real or perceived have to deal with NSR and
    need a clear signal that NSR is a problem.
        To borrow a phrase from another context, the first step to
    solving a problem is admitting you have a problem.
        Mr. Walberg. Yes.
        Mr. Eisenberg. We have a problem, and we really hope that
    Congress and EPA will help us fix it.
        Mr. Walberg. Mr. Johnson. Thank you.
        Mr. Johnson. Thank you, Congressman.
        In the not for profit sector, the tax bill has not had as
    big of an impact on us but we are constantly looking for ways
    to improve the economics and the efficiency of the power plants
    that we run to generate electricity to keep our costs down for
    the electricity in much of rural America and that's just a
    constant effort by all of our generation and transmission
    cooperatives to do that, and NSR is a barrier.
        We have had a number of our member cooperatives who have
    indicated they've considered undertaking projects and have
    decided not to do that because of the uncertainty of the NSR
    permitting program. But they have undertaken other projects.
    We've installed lots of pollution control equipment and Mr.
    Buckheit's testimony implied that older units have not added
    pollution control equipment. That is just not the case. The
    utility industry has invested over $100 billion on pollution
    control equipment to reduce those emissions and make the
    accomplishments that have been documented here.
        So we are constantly looking for those opportunities this
    is in fact a barrier and the bill would help remove that
    barrier.
        Mr. Walberg. And, of course, you have that symbiotic
    relationship with business and manufacturing that goes with it.
    You have to be prepared for it and I've seen those upgrades at
    a great expense in my district as well in the utilities.
        Mr. Johnson. A big part of what we do is try to make sure
    the economies of our communities are strong and that we are
    investing in businesses and bringing those jobs to our
    communities.
        Mr. Walberg. OK. Let me follow up with both of you. Does
    the NSR program create an incentive for manufacturers and
    utilities to operate their plants exactly as they were built,
    and secondarily, so what challenges is this creating?
        Mr. Eisenberg. So yes, and not every time but by and large
    it does create a perverse sort of incentive to only replace
    your equipment with the vintage of the equipment that was from
    when it was first manufactured.It doesn't really make any sense
    in the grand scheme of things. Certainly, technology develops
    and gets better and manufacturers have an interest in
    installing that.
        NSR is a barrier and I've had countless companies say,
    look, the timeline that we needed to get through to upgrade
    this boiler or do this or do that, NSR, my fear of waiting 2
    years to get a permit and maybe having to litigate it isn't
    worth that expense. I can't justify it to my board and my CEO.
        So it is a barrier. It is not the only barrier but it is
    one that we hope we can fix.
        Mr. Johnson. And Congressman, the utility sector--not to be
    evasive, but there are lots of things we have to consider when
    making determinations about how to improve plants, what to go
    through.
        This is but one of those, but it is one that slows things
    down, doesn't speed things up.
        Mr. Walberg. Yes. To have a drag on your process is just
    that and we take as many drags away from it then it works
    better.
        So thank you. I yield back.
        Mr. Shimkus. The gentleman yields back his time.
        The chair recognizes the gentleman from Georgia, Mr.
    Carter, for 5 minutes.
        Mr. Carter. Thank you, Mr. Chairman, and thank all of you
    for being here. We appreciate your presence here today and the
    work that you're doing.
        Mr. Johnson, I will start with you. In your testimony, you
    talked about the current system and how flawed it is for
    companies and organizations that are wanting to do the right
    thing and trying to do the right thing and how easy it is for
    them to receive enforcement actions.
        How important is it for us to change the metric that's used
    to determine emissions from the annual emissions rate to an
    hourly rate?
        Mr. Johnson. Going to the hourly emissions rate would
    harmonize the rules between the NSR and the NSPS programs.
        So it would make some internal consistency. It would give
    our members much more clarity about what the rules of the road
    are and then they can make informed decisions about what they
    would to do to improve the efficiency of their power plants or
    do other maintenance activities because they would know what
    that clear line is between routine maintenance and what a major
    modification is.
        Giving them that clarity would speed their processes, cut
    our costs, while maintaining the environmental performance of
    the plant----
        Mr. Carter. Have you communicated that to the EPA? Do they
    ever ask for any input or----
        Mr. Johnson. We went through a process during Bush II
    administration. Mr. Holmstead was at EPA at the time, trying to
    clarify rules of the road on New Source Review.
        Ultimately, that was not successful. We've asked for
    legislative clarifications, as I've testified, we've been
    looking for some clarity in this program for 2 decades and now
    is a good a time to act as any.
        Mr. Carter. Wow. Do you have any examples of any plants and
    they just had to shut down as a result of the NSR being
    triggered?
        Mr. Johnson. I can't point to at this moment a particular
    plant that closed because of NSR, per se. But where we've had
    plants that have closed or reduced their operations has been
    due to a multitude of factors and there have been times when
    plants have considered making, say, turbine upgrade projects or
    other improvements that improved the efficiency of the plant,
    that, as I said, they declined to do because of the uncertainty
    of the NSR process, its timeline, the litigation that would
    follow from that, and ultimately our members tend to operate in
    a small C conservative business manner to try to keep those
    costs down and avoid risks when possible.
        Mr. Carter. OK. Thank you.
        Mr. Alteri, Chairman Shimkus has mentioned in our February
    meeting that--and when we were talking about the New Source
    Review there were over 700 guidance memos.
        How do you sieve through all that? That's got to be
    unbelievable.
        Mr. Alteri. It surely is. EPA does a nice job out of Region
    7 of trying to capture all of those applicability determination
    through an index. But there's also ongoing litigation that we
    have to be aware of because, ultimately, they decide.
        But, again, in Kentucky we are prohibited from regulating
    by policy and guidance and it should be noted that kind of the
    basis for what all NSR permitting actions are taken are through
    the 1990 puzzle book and it is still in draft form.
        And so we just want EPA to give us the certainty that when
    we make a decision that it's a final decision and then the
    companies can make the adjustments and the changes without fear
    of ongoing litigation.
        Mr. Carter. Let me ask you, from your perspective, if we
    were to shift to an hourly emissions rate would that help?
        Mr. Alteri. Well, again, the idea is that you're going to
    make that unit as efficient as possible and, to Mr. Buckheit's
    point is that it would be utilized more in increased emissions.
        But now with the 2010 standards for NOx and
    SOCS, they're 1-hour standards and that's what the health-based
    standards are. They're not annual-based standards any longer.
        So I think it makes sense to focus on the hourly emission
    rates.
        Mr. Carter. Good. Good.
        Thank you all, again, for being here and, I hope you will
    not be discouraged. I hope you will continue work. I want to
    think it's a new day at EPA and that they're more receptive and
    more input from you. So thank you for what you're doing.
        Mr. Chairman, I will yield back.
        Mr. Shimkus. The gentleman yields back his time.
        The chair now recognizes again the very patient author of
    the legislation, Mr. Griffith from Virginia, for 5 minutes.
        Mr. Griffith. Thank you very much. If we could get the map
    put up on the board.
        Mr. Eisenberg, I've told the story earlier about the
    conveyor belt to nowhere because they didn't want to mess with
    the conveyor belt because--and maybe they're wrong.
        But the confusion and the concern about NSR is a problem.
    In response, we heard from Mr. Baldauf that they were concerned
    about New Jersey's mercury and other chemicals going up, and I
    knew I had this map somewhere in the back and if you can read
    it--and if we need the bigger one we can bring it out--but
    that's a listing of the mercury deposited in the United States
    from foreign sources and you can see New Jersey is in the 40 to
    45 to 50 percent range of foreign sources.
        Am I not correct that a large amount of that comes from
    manufacturing and electrical generation in Asia and other--I
    see Florida's got a high percentage so I would assume some of
    it may be from Central America, too.
        Wouldn't that be correct, yes or no?
        Mr. Eisenberg. That would be correct, and not just on
    mercury but other pollutants as well.
        Mr. Griffith. And so when we have situations where the
    confusion in the United States is a manufacturer of furniture
    can't change the conveyor to nowhere because he's no longer
    putting the lacquer on at that end of the conveyer belt, that
    tends to make our Asian competitors more competitive, does it
    not, when they're manufacturing goods?
        Mr. Eisenberg. It does.
        Mr. Griffith. And in fact, I would submit--and I want to
    know if you agree--that in some ways, by having rules that
    don't make sense we actually might increase the mercury being
    deposited from foreign sources in New Jersey that Mr. Baldauf
    is worried about, aren't we?
        Mr. Eisenberg. Well, certainly, if we are not promoting
    more efficient generation and more efficient technologies, yes.
    It would only exacerbate the problem.
        Mr. Griffith. But usually we are trying to be more
    efficient but we've got this rule in the way.
        Mr. Holmstead, I don't know if you can answer this question
    or not, and if not if you can get back to me later--I think
    it's interesting, as I've been listening to the discussion.
        My understanding is is that the Obama administration EPA,
    which was very aggressive on a lot of these issues--a lot of
    these issues never tried to take the New Source Review rule and
    implant that into the New Source Performance Standards. Am I
    not correct on that?
        Mr. Holmstead. No, that is right.
        Mr. Griffith. And if the New Source Review rule was so much
    better, because we heard from Mr. Johnson earlier, the language
    is the same in the bill but it's been interpreted differently.
    And if that was so much better, I would have thought they would
    have done that.
        Now, the hourly emissions rate test utilized by the New
    Source Performance Standards program and included in this
    legislation provides an objective measure based on the
    facility's design and we've heard that it's easily determined
    by facility operators.
        Why is it easier to calculate and what is so complicated
    about the current emission project process?
        Mr. Holmstead. So the hourly emission rate is really the
    capacity of the plant and people who design the plant, people
    who buy that equipment, that's what they care about.
        That's an objective number, and I am not aware that there's
    ever been an issue whether that was triggered under the NSPS.
        People do trigger it sometimes which means that they have
    to meet more efficient standards. With the annual test, Mr.
    Buckheit said something that's very revealing.
        So if you have a plant that in some time over the last 5
    years had a forced outage, so you had a part that broke down
    and you had to shut down your plant for a day, even half a day,
    if you replace that part, then under the theory of--that EPA
    has taken in these cases, you increase your emissions because
    it was shut down for 24 hours or 8 hours, during some period
    and now that that part's not going to break down, the theory is
    well, you're going to increase your annual emissions.
        Some courts, but not all, have accepted that, and that's
    one of the other problems. We have different NSR rules around
    the country based on decisions by circuit courts on some of
    these theories.
        Mr. Griffith. So, basically, if you're more efficient,
    that's bad from the viewpoint of those that don't want to----
        Mr. Holmstead. Or----
        Mr. Griffith [continuing]. Or if you're just not closed
    down some----
        Mr. Holmstead. Or more reliable.
        Mr. Griffith. Or more reliable.
        Mr. Holmstead. Right. So if you're more reliable then you
    can operate more hours and that should trigger NSR.
        Mr. Griffith. And whether we are dealing with manufacturing
    or we are dealing with electric generation or refining, we
    actually want those people to be more reliable, don't we?
        Mr. Holmstead. I would think so. But we also want them to
    reduce their pollution where we can and we have all these other
    tools.
        We are not waiting for them to trigger some program. We are
    saying, here's how you need to reduce your pollution and we are
    going to focus on it.
        Mr. Griffith. I think you pointed out earlier there are 14
    overlapping programs with the NSR. Is that accurate?
        Mr. Holmstead. Well, for the power sector there's at least
    14 other programs that regulate the very same pollutants from
    the same plans.
        Mr. Griffith. Kind of makes it hard for folks to comply
    when you have got all these overlapping and sometimes confusing
    regulations, isn't it?
        Mr. Holmstead. Well, it's good for Clean Air Act lawyers.
        Mr. Griffith. Yes, sir. I can appreciate that. As a lawyer,
    I am not sure I would be upset about that part of it but I hate
    it for the American people.
        I yield back.
        Mr. Shimkus. The gentleman yields back his time.
        Before I do the closing document, I was asked by the
    minority--I am going to ask unanimous consent to allow Mr.
    Baldauf to at least respond to the air transport issue, if you
    would like, since the State of New Jersey was mentioned in my
    colleague's comment.
        Is that correct? Is that what you wish.
        Mr. Baldauf. Sure. So, generally, the transport issue just
    has to do with the simple fact that, you know, as a state we
    are probably almost in the top couple cleanest energy-
    generating states in the country.
        But the reality is no matter how clean your in-state
    generation is, if there's no control on the upwind states, you
    have the same amount of pollution, unfortunately, for your
    citizens as the other states do.
        One of our focus is on NSR. There's been talk about all the
    tools in the toolbox. Well, at the end of the day, these
    grandfathered facilities have remained unchanged for 40 years.
    So those other tools don't seem to be helping.
        I agree that the NSR rules are flawed. They're complicated,
    and I do think they need to be revised. But they need to be
    revised in such a way to make sure these grandfathered
    facilities reduce emissions and not increase emissions.
        Mr. Shimkus. Well, I thank you very much and you're welcome
    to give us some input on--we do try to get to some type of
    compromise.
        We'd sure like to get this fixed. This might be a bridge
    too far but we could give it a try, right, Congressman
    Griffith?
        Mr. Griffith. Absolutely.
        Mr. Shimkus. So with that, seeing no other further members
    wishing to ask questions, I would like to thank you all for
    being here again today.
        Before we conclude, I would like to ask unanimous consent
    to submit the following documents for the record: a joint
    letter from the American Forest and Paper Association and the
    American Wood Council.
        We also have a letter from the National Parks Conservation
    Association. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Shimkus. In pursuant to committee rules, I remind
    members that they have 10 business days to submit additional
    questions for the record and I ask that witnesses submit their
    responses within 10 business days upon receipt of the
    questions.
        Without objection, the subcommittee is adjourned.
        [Whereupon, at 12:48 p.m., the committee was adjourned.]
        [Material submitted for inclusion in the record follows:]
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