[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
                           
                           

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      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:]
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    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:]
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    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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