[House Report 118-17]
[From the U.S. Government Publishing Office]


118th Congress   }                                          {   Report
                          HOUSE OF REPRESENTATIVES
 1st Session     }                                          {   118-17

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


TO REQUIRE THE ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION AGENCY TO 
 AUTHORIZE THE USE OF FLEXIBLE AIR PERMITTING WITH RESPECT TO CERTAIN 
      CRITICAL ENERGY RESOURCE FACILITIES, AND FOR OTHER PURPOSES

                                _______
                                

 March 23, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mrs. Rodgers of Washington, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1131]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 1131) to require the Administrator of the 
Environmental Protection Agency to authorize the use of 
flexible air permitting with respect to certain critical energy 
resource facilities, and for other purposes, having considered 
the same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Committee Action.................................................     3
Committee Votes..................................................     4
Oversight Findings and Recommendations...........................     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     8
Congressional Budget Office Estimate.............................     8
Federal Mandates Statement.......................................     8
Statement of General Performance Goals and Objectives............     8
Duplication of Federal Programs..................................     8
Related Committee and Subcommittee Hearings......................     8
Committee Cost Estimate..........................................     9
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     9
Advisory Committee Statement.....................................     9
Applicability to Legislative Branch..............................     9
Section-by-Section Analysis of the Legislation...................     9
Changes in Existing Law Made by the Bill, as Reported............    10
Minority Views...................................................    11

                          PURPOSE AND SUMMARY

    H.R. 1131, a bill to require the Administrator of the 
Environmental Protection Agency to authorize the use of 
flexible air permitting with respect to certain critical energy 
resource facilities, and for other purposes, was introduced by 
Rep. John Joyce (R-PA) and Rep. Rick W. Allen (R-GA) on 
February 21, 2023. H.R. 1131 would require the Environmental 
Protection Agency (EPA) Administrator to review and, as 
necessary, revise regulations concerning the Flexible 
Permitting Rule under the Clean Air Act, to authorize flexible 
permitting for owners and operators of critical energy resource 
facilities, as defined in the bill. Participation in this 
process enables owners and operators of the facilities to 
receive advance approvals from Clean Air Act permitting 
authorities by preparing in advance for potential increased 
operations to meet changes in market demand, avoiding future 
delays to enable market-responsive operations.

                  BACKGROUND AND NEED FOR LEGISLATION

    As recently as 1990, the United States was the world's 
number-one producer of minerals. By 2018, the United States had 
fallen to 12th overall in global non-fuel minerals 
production.\1\ A 2022 Department of Energy (DOE) assessment of 
critical energy resource supply chain risks notes that China's 
control of key materials in renewable energy is ``across the 
board,'' with China in control of ``80% of rare earths 
production and refining that are key for components in 
technologies such as direct drive generators in wind turbines, 
and China also controls 61% of global lithium refining key for 
battery storage and electric vehicles. China also controls 100% 
of the processing of natural graphite used for battery 
anodes.''\2\
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    \1\See testimony of Michelle Michot Foss before the Subcommittee on 
Environment and Climate Change hearing ``Building a 100 Percent Clean 
Economy: Opportunities for and Equitable, Low-Carbon Recovery,'' 
September 16, 2020. (https://docs.house.gov/meetings/IF/IF18/20200916/
111008/HHRG-116-IF18-Wstate-MichotFossM-20200916-U1.pdf)
    \2\See Department of Energy ``America's Strategy to Secure the 
Supply Chain for a Robust Clean Energy Transition,'' February 2022, p. 
13)
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    The severity of this overdependence on other countries for 
critical minerals was brought to the public's attention by the 
report released during the Trump administration, which found 
the United States relies on imports for 31 of the 35 critical 
minerals necessary for the U.S. defense and economy.\3\ For 14 
of the listed critical minerals, the United States relies 
completely on imports from other countries; having no U.S. 
production at all. As indicated in the above DOE assessment, 
recent Biden administration reviews confirm U.S. vulnerability.
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    \3\See Testimony by the Honorable Mark W. Menezes at the Joint 
Energy, Climate, and Grid Security Subcommittee and Environment, 
Manufacturing, and Critical Materials Subcommittee Legislative Hearing, 
``Unleashing American Energy, Lowering Energy Costs, and Strengthening 
Supply Chains,'' February 7, 2023. (energycommerce.gov)
---------------------------------------------------------------------------
    Against this backdrop, Congress has taken action\4\ to 
support research and development, incentives, and interagency 
planning relating to critical minerals and materials, to reduce 
dependence on foreign supplies as demand increases for 
minerals- and materials-heavy energy resources.
---------------------------------------------------------------------------
    \4\See, for example, critical mineral research and development 
provision in the Energy Act of 2020, the development of an interagency 
task force and other incentives in the Infrastructure Investment and 
Job Act, as well as the Inflation Reduction Act tax incentives. 
Legislation.
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    Given the importance of encouraging actual operations of 
refining and processing of critical energy minerals and 
materials for this effort, existing laws and regulations should 
be updated to ensure they accommodate domestic operations.
    As former DOE Deputy Secretary Mark Menezes has testified 
before the Committee:

          Since 2009, EPA has allowed the use of its ``Flexible 
        Air Permitting Rule.'' EPA promulgated this rule ``to 
        promote flexible air permitting (FAP) approaches that 
        provide greater operational flexibility and, at the 
        same time, ensure environmental protection and 
        compliance with applicable laws.'' EPA, however, limits 
        FAP's use. Thus, in order for the United States to 
        accelerate its development of critical energy 
        resources, a bill is necessary to require the EPA to 
        allow FAP's use by the owner or operator of a critical 
        energy resource facility. This bill will facilitate the 
        development and deployment of energy resources 
        necessary to accelerate the production and deployment 
        of materials necessary for the energy transition to a 
        more decarbonized economy.''\5\
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    \5\Ibid.

    The Committee finds that H.R. 1131 would provide important 
updates to existing Clean Air Act programs to help the 
development and growth of domestic operations of critical 
energy resource facilities, particularly those facilities 
necessary to process critical minerals and materials vulnerable 
to supply disruptions, while ensuring operations comply with 
all applicable Clean Air Act requirements. The Committee finds 
H.R. 1131, by directing the EPA Administrator to consider use 
of flexible permitting specifically for critical energy 
resource facilities and to ensure regulations would facilitate 
market responsive operations of these facilities, will enable 
these facilities to make rapid changes to respond to market 
demands, save resources for state permitting agencies and help 
strengthen competitiveness of domestic resource producers. The 
Committee finds that H.R. 1131 represents the kind of practical 
reforms necessary to secure American critical energy resources.

                            COMMITTEE ACTION

    On February 7, 2023, the Subcommittees on Energy, Climate, 
and Grid Security and Environment, Manufacturing, and Critical 
Materials held a joint hearing entitled, ``Unleashing American 
Energy, Lowering Energy Costs, and Strengthening Supply 
Chains,'' on 17 pieces of legislation, including H.R. 1131. The 
Subcommittees received testimony from:
           The Honorable Mark Menezes, Former United 
        States Deputy Secretary of Energy, Department of 
        Energy;
           The Honorable Bernard McNamee, Former 
        Commissioner, Federal Energy Regulatory Commission;
           Jeffrey Eshelman, II, President and Chief 
        Executive Officer, Independent Petroleum Association of 
        America;
           Katie Sweeney, Executive Vice President and 
        Chief Operating Officer, National Mining Association;
           Raul Garcia, Legislative Director for 
        Healthy Communities, Earthjustice; and
           Tyson Slocum, Director of the Energy 
        Program, Public Citizen.
On February 28, 2023, the Subcommittee on Environment, 
Manufacturing, and Critical Materials met in open markup 
session and forwarded H.R. 1131, without amendment, to the full 
Committee by a record vote of 13 yeas and 6 nays. On March 9, 
the full Committee on Energy and Commerce met in open markup 
session and ordered H.R. 1131 favorably reported, without 
amendment, to the House by a record vote of 26 yeas and 20 
nays.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. The following reflects the record votes taken during 
the Committee consideration:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee held a hearing and made findings that 
are reflected in this report.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 1131 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII, at the time this 
report was filed, the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974 was not available.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to provide 
flexible permitting under the Clean Air Act to enable market-
responsive operations.
    The goal of the bill is to increase American energy 
production and restore energy leadership by authorizing the use 
of flexible air permitting with respect to certain critical 
energy resource facilities.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 1131 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

              RELATED COMMITTEE AND SUBCOMMITTEE HEARINGS

    Pursuant to clause 3(c)(6) of rule XIII,
    (1) the following hearings were used to develop or consider 
H.R. 1131:
    On January 31, 2023, the Committee on Energy and Commerce 
held an oversight hearing, entitled: ``American Energy 
Expansion: Strengthening Economic, Environmental, and National 
Security''. The Committee received testimony from:
           The Honorable Paul Dabbar, Former U.S. 
        Undersecretary of Energy, Department of Energy;
           Donna Jackson, Director of Membership 
        Development, National Center for Public Policy 
        Research, Project 21;
           Robert McNally, President, Rapidan Energy 
        Group; and
           Ana Unruh Cohen, Ph.D., Former Staff 
        Director, U.S House Select Committee on the Climate 
        Crisis.
    (2) The following related hearing was held:
    On February 7, 2023, the Subcommittees on Energy, Climate, 
and Grid Security and Environment, Manufacturing, and Critical 
Materials held a joint hearing entitled, ``Unleashing American 
Energy, Lowering Energy Costs, and Strengthening Supply 
Chains,'' on 17 pieces of legislation, including H.R. 1131. The 
Subcommittees received testimony from:
           The Honorable Mark Menezes, Former United 
        States Deputy Secretary of Energy, Department of 
        Energy;
           The Honorable Bernard McNamee, Former 
        Commissioner, Federal Energy Regulatory Commission;
           Jeffrey Eshelman, II, President and Chief 
        Executive Officer, Independent Petroleum Association of 
        America;
           Katie Sweeney, Executive Vice President and 
        Chief Operating Officer, National Mining Association;
           Raul Garcia, Legislative Director for 
        Healthy Communities, Earthjustice; and
           Tyson Slocum, Director of the Energy 
        Program, Public Citizen.

                        COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974. At the time this report was 
filed, the estimate was not available.

       EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 1131 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Flexible Air Permits for Critical Energy Resource Facilities

    Section 1 provides that the Administrator of the 
Environmental Protection Agency shall review and, as necessary 
revise regulations concerning the Flexible Permitting Rule 
under the Clean Air Act, to authorize flexible permitting for 
owners and operators of critical energy resource facilities and 
facilitate flexible, market-responsive operations of these 
facilities, and defines critical energy resources and critical 
energy resource facilities.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                             MINORITY VIEWS

    We oppose H.R. 1131, a bill that would compel the 
Administrator of the Environmental Protection Agency (EPA) to 
authorize the use of Clean Air Act (CAA) flexible air permits 
for all ``critical energy resource facilities.'' H.R. 1131 is 
unnecessary, as EPA and states can already issue flexible air 
permits, when appropriate. Directing the EPA Administrator to 
unilaterally grant flexible air permits to every facility that 
the Secretary of Energy deems ``critical,'' regardless of 
situation or previous track record, creates a massive loophole 
in the CAA and puts public health and the welfare of 
communities at risk.

                               BACKGROUND

    Title V of the CAA requires all states to develop operating 
permit programs, requiring each industrial facility that is a 
``major source'' of air pollution to obtain an operating 
permit.\1\ These permits are legally-enforceable documents 
designed to improve compliance by clarifying what facilities 
must do to control air pollution, and detail federal and state 
air pollution control requirements that apply. State and local 
permitting authorities have primary responsibility for issuing 
most Title V permits, while EPA regional offices issue permits 
in certain circumstances.
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    \1\Environmental Protection Agency, Operating Permits Issued under 
Title V of the Clean Air Act (www.epa.gov/title-v-operating-permits) 
(accessed Mar. 21, 2023).
---------------------------------------------------------------------------
    In 2009, EPA finalized a rule to promote the use of 
flexible air permits with the goal of providing greater 
operational, market-responsive flexibility while ensuring 
environmental protection and compliance with applicable CAA 
requirements.\2\ A flexible air permit contains approaches that 
allow the regulated source to make certain types of operational 
changes without the need for further review or approval by the 
permitting authority. These permits are considered and granted 
by states and EPA on a case-by-case basis, and include 
specifications and conditions for each facility based on its 
unique operational and regulatory circumstances. Based on a 
series of extensive pilot programs that informed the 2009 rule, 
EPA found that flexible air permitting approaches would be 
relevant for a variety of industries, including: aerospace 
manufacturing, automobile manufacturing, industrial organic 
chemicals, chemical processes, converted paper and paperboard 
products, magnetic tape manufacturing, petroleum refining, 
other coating operations, paper mills, pharmaceutical 
manufacturing, printing and publishing, pulp and paper mills, 
semiconductors, and specialty batch chemical processes.\3\
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    \2\Environmental Protection Agency, Operating Permit Programs; 
Flexible Air Permitting Rule, 74 Fed. Reg. 51417 (Oct. 6, 2009) (rule).
    \3\Id.
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    H.R. 1131 is a legislative solution in search of a problem. 
The proponents claim it is necessary to give ``critical energy 
resource facilities'' the opportunity and flexibility to 
promptly respond to market demands through operational changes. 
This argument fails to recognize that a wide variety of 
facilities, specifically those related to energy production, 
are already eligible for flexible air permits, if appropriate.

                           SUMMARY OF THE ACT

    Section 1(a) would require the EPA Administrator to 
authorize the use of flexible air permitting for any so-called 
``critical energy resource facility.'' This language 
demonstrates a failure to recognize the role states play in 
issuing flexible air permits, and the importance of thoughtful 
review by permitting authorities. Section 1(a) would compel the 
EPA Administrator to run roughshod over state and local 
permitting authorities, granting flexible air permits with no 
regard for each facility's specific situation.
    The use of flexible air permits certainly makes sense in 
specific situations, however, that's not always the case. This 
blanket flexible air permit approach empowers bad actors to 
skirt pollution control requirements, as demonstrated by past 
abuses of the flexible air permits at facilities like the 
former Limetree Bay Refinery in the U.S. Virgin Islands.\4\ 
Democratic Committee members offered amendments to address the 
issue of bad actors qualifying for flexible air permits, to 
protect the environment and public health of the communities 
living near these facilities. Every Republican Committee member 
voted against an amendment excluding facilities that have 
previously violated the Clean Air Act from being eligible for 
flexible air permits.
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    \4\Environmental Protection Agency, EPA Withdraws Plantwide 
Applicability Limit Permit for Limetree Bay Refinery in the U.S. Virgin 
Islands, Will Review Clean Air Act Requirements for the Facility (Mar. 
25, 2021) (press release).
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    Section 1(b) defines ``critical energy resource'' as ``. . 
. any energy resource that is essential to the energy sector 
and energy systems of the United States, and the supply chain 
of which is vulnerable to disruption,'' as determined by the 
Secretary of Energy. The bill does not define, provide 
parameters, or metrics for the Secretary to use in making such 
determinations, essentially allowing the Secretary to deem 
almost anything a ``critical energy resource,'' ``essential to 
the energy sector and energy system of the United States,'' and 
``vulnerable to supply chain disruptions.'' The bill fails to 
include any public review, or accountability measures related 
to the Secretary's determinations. And putting the Secretary of 
Energy in charge of determining which flexible air permits EPA 
and states are allowed to require, sets a troubling precedent.
    Due to the all-encompassing definition of ``critical energy 
resource,'' essentially any category of industrial facility 
could be considered a ``critical energy resource facility,'' 
and would automatically be eligible for a flexible air permit. 
Based on these definitions, EPA would be compelled to grant a 
flexible air permit without due process, for the following 
facilities: solid waste incinerators, hazardous waste 
combustors, Portland cement manufacturers, mercury cell chlor-
alkali plants, secondary lead smelters, carbon black 
production, chemical manufacturing, primary copper smelting, 
secondary copper smelting, nonferrous metals area sources 
(zinc, cadmium, and beryllium), glass manufacturing, and gold 
mine ore processing and production, among others.
    Since H.R. 1311 grants the Secretary of Energy enormous 
latitude to determine what qualifies as a critical energy 
resource, this list demonstrates the wide range of polluting 
industrial categories that could be granted flexible air 
permits, regardless of their regulatory history or operational 
needs.

                               CONCLUSION

    We oppose H.R. 1131. As drafted, this bill would force the 
EPA Administrator to put public health and the welfare of 
communities surrounding so-called critical energy resource 
facilities at risk by granting blanket air permits, even to 
facilities that have previously violated the CAA. H.R. 1131 
will not ``cut red tape'' as the Majority claims. It is a clear 
handout to polluters at the expense of vulnerable communities 
that will be harmed by the bill's erosion of basic 
environmental safeguards.
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                        Frank Pallone, Jr.,
                  Ranking Member, Committee on Energy and Commerce.

                                  [all]