[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

THE AMERICAN ENERGY INITIATIVE, PART 7: DISCUSSION DRAFT OF H.R. ___,
THE JOBS AND ENERGY PERMITTING ACT OF 2011

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

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

MAY 13, 2011

__________

Serial No. 112-47

Printed for the use of the Committee on Energy and Commerce

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COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan
Chairman

JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky EDWARD J. MARKEY, Massachusetts
JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
MARY BONO MACK, California BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
SUE WILKINS MYRICK, North Carolina DIANA DeGETTE, Colorado
Vice Chairman LOIS CAPPS, California
JOHN SULLIVAN, Oklahoma MICHAEL F. DOYLE, Pennsylvania
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas CHARLES A. GONZALEZ, Texas
MARSHA BLACKBURN, Tennessee JAY INSLEE, Washington
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia ANTHONY D. WEINER, New York
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

(ii)
Subcommittee on Energy and Power

ED WHITFIELD, Kentucky
Chairman
JOHN SULLIVAN, Oklahoma BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois
GREG WALDEN, Oregon JAY INSLEE, Washington
LEE TERRY, Nebraska JIM MATHESON, Utah
MICHAEL C. BURGESS, Texas JOHN D. DINGELL, Michigan
BRIAN P. BILBRAY, California EDWARD J. MARKEY, Massachusetts
STEVE SCALISE, Louisiana ELIOT L. ENGEL, New York
CATHY McMORRIS RODGERS, Washington GENE GREEN, Texas
PETE OLSON, Texas LOIS CAPPS, California
DAVID B. McKINLEY, West Virginia MICHAEL F. DOYLE, Pennsylvania
CORY GARDNER, Colorado CHARLES A. GONZALEZ, Texas
MIKE POMPEO, Kansas HENRY A. WAXMAN, California (ex
H. MORGAN GRIFFITH, Virginia officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

C O N T E N T S

----------
Page
Hon. John Sullivan, a Representative in Congress from the State
of Oklahoma, opening statement................................. 5
Prepared statement........................................... 6
Hon. Cory Gardner, a Representative in Congress from the State of
Colorado, opening statement.................................... 6
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 7
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 8
Hon. Michael C. Burgess, a Representative in Congress from the
State of Illinois, opening statement........................... 9
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 10

Witnesses

Gina McCarthy, Assistant Administrator, Office of Air and
Radiation, U.S. Environmental Agency........................... 12
Prepared statement........................................... 14
Answers to submitted questions............................... 104
Brian T. Turner, Assistant Executive Officer for Federal Climate
Policy, California Air Resources Board......................... 41
Prepared statement........................................... 43
Answers to submitted questions............................... 110
Ali Mirzakhalili, Director, Division of Air Quality, Delaware
Departent of Natural Resources and Environmental Control....... 53
Prepared statement........................................... 55
Answers to submitted questions............................... 113
Bob Meyers, Senior Counsel, Crowell & Moring..................... 64
Prepared statement........................................... 66
Lynn Westfall, Executive Vice President, Turner, Mason & Company. 78
Prepared statement........................................... 80

Submitted Material

Discussion draft................................................. 2
Article entitled, ``Offshore Drilling: Shell confident Obama
admin will grant Alaska permits,'' Greenwire, May 11, 2011..... 102

THE AMERICAN ENERGY INITIATIVE, PART 7: DISCUSSION DRAFT OF H.R. ------
, THE JOBS AND ENERGY PERMITTING ACT OF 2011

----------

FRIDAY, MAY 13, 2011

House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:00 a.m., in
room 2322, Rayburn House Office Building, the Honorable John
Sullivan presiding.
Present: Representatives Sullivan, Shimkus, Terry, Burgess,
Gardner, Olson, McKinley, Rush, Inslee, Green, Capps, and
Waxman.
Staff Present: Charlotte Baker, Press Secretary; Anita
Bradley, Sr. Policy Advisor to Chairman Emeritus; Maryam Brown,
Chief Counsel, Energy and Power; Garrett Golding, Leg. Analyst,
Energy; Cory Hicks, Policy Coordinator, Energy & Power; Ben
Lieberman, Counsel, Energy & Power; Andrew Powaleny, Press
Assistant; Lyn Walker, Coordinator, Admin/Human Resources; Alex
Yergin, Legislative Clerk; Alison Cassady, Minority Senior
Professional Staff Member; Greg Dotson, Minority Energy and
Environment Staff Director; Caitlin Haberman, Minority Policy
Analyst; and Alexandra Teitz, Minority Senior Counsel,
Environment and Energy.
Mr. Sullivan. The committee will come to order. I recognize
myself for an opening statement for 5 minutes.
Today's hearing is the seventh in a series of our American
Energy Initiative. It is also the second hearing in which we
will examine a discussion draft entitled The Jobs and Energy
Permitting Act of 2012, which has been authored by our
colleague, Mr. Gardner of Colorado.
[The discussion draft follows:]

[GRAPHIC] [TIFF OMITTED] T0929.001

[GRAPHIC] [TIFF OMITTED] T0929.002

[GRAPHIC] [TIFF OMITTED] T0929.003

OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OKLAHOMA

Mr. Sullivan. Our first hearing on the discussion draft
enabled the committee to receive testimony from the entire
Alaskan congressional delegation, citizens, and State officials
in Alaska, two clean air experts, and a University of Alaska
economist. In that first hearing we were unable to secure a
witness from the U.S. Environmental Protection Agency, but
today we have an Assistant Administrator, Gina McCarthy, from
the Office of Air and Radiation, as well as other State
government officials with unique perspectives on the draft
legislation. We are glad to host these witnesses and look
forward to the discussion.
While our witness panel today is different from the one on
April 13th, the facts in Alaska remain the same as they were 4
weeks ago. Up to 27 billion barrels of oil and 122 trillion
cubic feet of natural gas are estimated to reside in Alaska's
offshore fields. Beginning in 2005, the Federal Government
initiated lease sales in an attempt to get this oil and natural
gas to the U.S. consumers, but instead exploration companies
have yet to drill a single hole in the Beaufort and the Chukchi
Seas--I never can say that--after EPA's regulatory roadblocks
have delayed any activity for nearly 5 years.
This is an unprecedented process for drilling in America's
coastal waters. Many permits in the Gulf of Mexico are issued
in a matter of weeks and at most a matter of months. No
bureaucratic delays in the Federal Government concerning
offshore drilling come anywhere close to the 5 years drilling
companies have experienced with the EPA. Indeed, this process
is slower than anywhere else in the world, and it is negatively
impacting our energy security.
The seemingly endless jungle of red tape created by the
Environmental Appeals Board would almost be funny if it weren't
so sad. With gasoline prices mounting another destructive
attack on the American economy, unrest in the Middle East and
North Africa reminding us how vulnerable we are to supply
shocks, and declining throughput in the Trans Alaska Pipeline
System posing a threat to pipeline safety and the Alaska
economy, one would think getting Arctic production online would
be an imperative for the U.S. Government.
On that last point, every one of the witnesses at our last
hearing agreed the shutdown of the TAPS would be disastrous to
the State of Alaska and the U.S. energy security. I simply do
not see how we can prevent such an event from taking place if
we do not open new areas of production in the Alaskan North
Slope.
The discussion draft circulated by Mr. Gardner is a
commonsense modification to the Clean Air Act that will right
the ship at the EPA so new American sources of energy will come
on line in an environmentally responsible manner. It will end
the unnecessary bureaucratic quagmire and ensure communities on
the Alaskan North Slope will be protected from air pollution
associated with offshore drilling.
With that, I yield the balance of my time to Mr. Gardner to
speak further on the draft legislation.
Mr. Gardner.
[The prepared statement of Mr. Sullivan follows:]

Prepared Statement of Hon. John Sullivan

Today's hearing is the seventh in our series on
the American Energy Initiative. It is also the second hearing
in which we will examine a discussion draft entitled the ``Jobs
and Energy Permitting Act of 2011'', which has been authored by
our colleague Mr. Gardner of Colorado.
Our first hearing on the discussion draft enabled
the committee to receive testimony from the entire Alaskan
congressional delegation, citizens and state officials in
Alaska, two Clean Air Act experts, and a University of Alaska
economist. In that first hearing, we were unable to secure a
witness from the U.S. Environmental Protection Agency. But
today, we have Assistant Administrator Gina McCarthy from the
Office of Air and Radiation as well as other state government
officials with unique perspectives on the draft legislation. We
are glad to host these witnesses and look forward to the
discussion.
While our witness panel today is different from
the one on April 13, the facts in Alaska remain the same as
they were 4 weeks ago. Up to 27 billion barrels of oil and 122
trillion cubic feet of natural gas are estimated to reside in
Alaska's offshore fields. Beginning in 2005, the federal
government initiated lease sales in an attempt to get this oil
and natural gas to U.S. consumers. But instead, exploration
companies have yet to drill a single hole in the Beaufort and
Chukchi Seas after EPA's regulatory roadblocks have delayed any
activity for nearly 5 years.
This is an unprecedented process for drilling in
America's coastal waters. Many permits in the Gulf of Mexico
are issued in a matter of weeks, and at most, a matter of
months. No bureaucratic delays in the federal government
concerning offshore drilling come anywhere close to the 5 years
drilling companies have experienced with the EPA. Indeed, this
process is slower than anywhere else in the world, and it is
negatively impacting our energy security.
The seemingly endless jungle of red tape created
by the Environmental Appeals Board would almost be funny if it
weren't so sad. With gasoline prices mounting another
destructive attack on the American economy, unrest in the
Middle East and North Africa reminding us how vulnerable the we
are to supply shocks, and declining throughput in the Trans-
Alaska Pipeline System (TAPS) posing a threat to pipeline
safety and the Alaskan economy, one would think getting Arctic
production online would be an imperative for the U.S.
government.
On that last point, every one of the witnesses at
our last hearing agreed the shutdown of TAPS would be
disastrous for the State of Alaska and U.S. energy security. I
simply do not see how we can prevent such an event from taking
place if we do not open up new areas of production on the
Alaskan North Slope.
The discussion draft circulated by Mr. Gardner is
a common-sense modification to the Clean Air Act that will
right the ship at EPA so new American sources of energy will
come online in an environmentally-responsible manner. It will
end the unnecessary bureaucratic quagmire and ensure
communities on the Alaskan North Slope will be protected from
air pollution associated with offshore drilling.
With that, I yield the balance of my time to Mr.
Gardner to speak further on his draft legislation.

OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO

Mr. Gardner. Thank you, Mr. Chairman, for holding this
hearing today, and to Administrator McCarthy for being here,
and the witnesses, thank you very much for your time.
I think everyone in this room can agree that we have got to
do something about high gas prices, and that is a big part of
what this hearing and the American Energy Initiative is about,
along with energy security and ensuring that the American
economy can withstand turmoil in the Middle East and any
potential disruption to our oil supply from abroad. We can all
agree we want to do that. Even the President has said he wants
to achieve energy security and do something about gas prices.
What I don't understand is the lack of action being taken
by the administration on something that is so important to the
American people and so vital to the strength of our economy in
general, and that is part of the reason I plan to introduce the
Jobs and Energy Permitting Act of 2011.
This bill doesn't relate just to Alaska. It has to do with
every American who is forced to suffer through pain at the
pump. Exploration in Alaska will generate Federal revenue and
create tens of thousands of jobs for the rest of the country,
while lowering gas prices at the same time.
The President recently said there is no silver bullet that
can bring down gas prices right away, and I would agree with
him. However, I do not believe that the administration is using
all the tools it has at its disposal to even begin to reduce
the amount we are paying right now.
My bill, however, would take a major first step in doing
so. It would end the practice of stalling air permits from
being administered after the EPA has approved them. That is
exactly what has happened. In the case of the Shell permit we
are all discussing, the EPA administered the permit and then
got caught up in a mess of reviews and appeals; and 5 years
later they still aren't grilling off the coast of Alaska.
We moved the permitting process along with removing the
ability of the Environmental Appeals Board to hold up air
permits for offshore OCS rigs. It is absolutely astonishing
that the Department of Interior can issue a permit in less than
a month in many cases, while the process in Alaska can take
years simply because of this one unelected board, a board with
no parallel at the Department of Interior.
We have got to act now to help relieve the pain at the
pump, and I hope we can move forward on this legislation. Delay
is inexcusable.
Thank you, Mr. Chairman.
Mr. Sullivan. Thank you.
And now I would like to recognize the ranking member, the
gentleman from Illinois, Mr. Rush, for 5 minutes.

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Rush. Thank you, Mr. Chairman, and thank you all the
witnesses for being present here today.
Mr. Chairman, today marks the second hearing on the so-
called Jobs and Energy Permitting Act of 2011 which would amend
Section 328 of the Clean Air Act that addresses air pollution
from Outer Continental Shelf, OCS, drilling activities.
Fortunately, Mr. Chairman, in today's hearing we will hear
from the EPA directly to clear up any misunderstanding or
confusion on the current permitting process and also to hear
how this bill would affect that process if it were to become
law. The staffs of the majority and minority have been meaning
to try to work out a bipartisan compromise on this bill, and I
hold out hope that we will be able to move forward in a
collaborative way.
I have said on several occasions that I am not opposed to
streamlining the permitting process, provided that we allow for
appropriate community input and we do not weaken the air
quality controls that the licensing process was implemented to
correct.
One of my main concerns with this bill is the impact of
eliminating the local administrative appeals process and moving
the entire appellate process all the way here to Washington, DC
I find it particularly worrisome that this bill would eliminate
the right of administrative appeals for everyone except the
drilling company. It seems to me that forcing State and local
stakeholders to travel all the way to the U.S. Court of Appeals
here in Washington in order to air their grievances will
provide an unreasonable burden on less-affluent communities and
stakeholders.
I am also eager to hear from the EPA on a provision in the
bill that will allow the drilling companies to look only at how
the drilling would affect our air quality on shore, ignoring
any potential impacts to air quality between the drilling rig
and the shoreline.
Additionally, I have some concerns over exempting support
investments from a VAC team back and permission of significant
deterioration of PSD permitting requirements and the effect
this may have on local air quality. I look forward to hearing
from these witnesses on the impact these provisions may have on
air quality standards.
While I understand that my colleagues on the other side of
the aisle want to help Shell begin drilling in Alaska's
Beaufort and Chukchi Sea regions, it is important that we do
not enact legislation that will have significant consequences
in the lower 48, whether intended or unintended. And, right
now, as the bill is drafted, there are still significant
concerns on this side of the aisle, and this bill will do
exactly that. In fact, I read that Shell representatives met
with the Obama administration officials earlier this week, and
they were ensured that they will receive the necessary permits
to begin exploration in Alaska fairly soon. So hopefully this
issue can be settled without an act of Congress intervening on
behalf of a single corporation, and I look forward to hearing
from our witnesses and our experts on this important issue.
And, with that, I yield back the balance of my time.
Mr. Sullivan. Thank you, sir.
I now recognize the gentleman from Illinois, Mr. Shimkus,
for 5 minutes.

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Shimkus. Thank you, Mr. Chairman.
Assistant Administrator, welcome. We spent time on the
phone with Congressman Costello, Congressman Whitfield, and
myself on the Prairie State Campus.
It is good to see Laura back there, hiding in the back. We
miss seeing her up here, but hopefully you are putting her to
good use.
A couple of things. I want to submit for the record this
article that came out May 9th. I know my ranking member, Mr.
Rush, always teases me about the coal miner poster that I put
up all the time.
Well, this is a good story: Coal Plant to Hire 200 More
Workers. And, actually, the first paragraph says, about half of
the 300 miners and coal miner operators who have been hired at
the Prairie State Energy Campus in rural Washington County are
at work in the new mine and another 200 employees will be hired
to operate the new power plant and corporate offices.
So I want to submit that for the record.
That goes into the discussion that we have had before.
Prairie State has a 1,600 megawatts supercritical new power
plant. It is about 75 percent completed. It was moved based
upon the premise of under care. Because of the court case, we
are moving to the transport rule. And we have had some positive
discussions. They are not completed, and I appreciate that
effort that we are doing to try to get some clarity.
But the real concern is there is not going to be enough
credit under the transport rule, where this 1,600 megawatt new
power plant, which is I think where everybody wants to go,
newer technology, cleaner technology--I am not a climate change
guy, but I am the toxic emission side of the air. And this is
by far, unless you talk about gasification, the direction we
want--this is what we want to incentivize. Our calculations say
that, because of it, they may be only able to turn the plant on
about 30 percent, if the credits that we think will get passed
on to the power plant gets passed on.
Obviously, this is a public power plant. It is not an evil,
corporate, for-profit entity. It has got local municipalities,
local regional power companies, municipalities, counties, and
the like. So I hope we can continue to have those discussions
and conversations, especially with the stakeholders. And those
stakeholders also consist of, of course, members of organized
labor who are helping to build this new power plant.
So, with that, I also am very supportive of us moving
forward in a timely manner to give certainty to people who are
investing a lot of capital to get a decision of whether we can
move forward on more oil and gas exploration recovery. So thank
you for appearing.
I would like to yield the remainder of my time to my
colleague from Texas, Mr. Burgess.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS

Mr. Burgess. I thank the gentleman for yielding.
Administrator McCarthy, again, welcome back to our
committee. I am way over here on the far right. As far to the
right from Mr. Waxman as I can get.
I want to thank you for coming back to our committee, and I
know we have had several discussions and may even bring up some
of the things that we have discussed in the past.
But this morning we are focused on the fact that our
Nation's path to energy security appears to be veering grossly
off track, and that appears to have occurred over the last 2
years. This administration has done everything, literally
everything in its power to hamper the growth of the energy
sector of our economy, preventing domestic production of
thousands of resources literally underneath our feet.
Under the guise of safety, the Department of Interior,
along with the EPA's blessing, has slow-walked permitting for
thousands of sites on Federal lands and offshore that could,
could, put us on the path to lowering our dependence on foreign
oil.
Although much of America's attention has been focused on
the Gulf of Mexico recently, the Arctic region has seen a
severe hindrance to permits to drill in areas where the water
depth can be as shallow as 150 feet, nowhere close to the 5,000
foot depth where the deepwater drilling incident occurred in
the Gulf. Yet these permits off the Alaska coast are being held
up because of the events taking place at deepwater sites. In
areas of the globe with only a handful of people, the EPA is
holding up permits due to so-called human health risks.
These are dangerous and costly delay tactics, and they must
stop. We know this country has an untold amount of natural
resources but for bureaucratic red tape we could be producing.
This subcommittee has already heard testimony that oil and
gas jobs pay more and are longer lasting than the so-called
green jobs, which are temporary. This administration is
preventing people from getting back to work producing domestic
energy.
I look forward to hearing the testimony of all of our
witnesses today, and I certainly look forward to producing
legislation that will help us move this permitting process
forward and allow companies to begin hiring Americans and
producing American energy from American resources.
I yield back, Mr. Chairman.
Mr. Sullivan. Thank you, Mr. Burgess.
And I recognize now the gentleman from California, Ranking
Member Waxman, for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Waxman. Thank you, Mr. Chairman.
I want to begin by thanking you for holding today's
hearing. We held a hearing last month on how air quality
permits are issued for oil and gas activities on the Outer
Continental Shelf. Today's hearing will let us hear from EPA
and State officials--thepeople who administer the current air
quality protections--about this issue.
These are the air quality experts who carry out the Clean
Air Act and would have to implement any changes we make. Their
views are critical to informed decision making, and I hope we
listen closely to their advice.
In our first hearing we heard testimony from Shell Oil
about the problems they encountered obtaining an air permit in
Alaska. I agree with our chairman that the permitting process
in Alaska has taken too long and that appropriate
clarifications in the Clean Air Act could be helpful.
It is important to recognize, however, that Shell's
experience in Alaska doesn't reflect the vast majority of OCS
permitting experience. California has been successfully
carrying out its program for almost 20 years, and the
California process is not broken.
My concern is that, while the draft bill that the
subcommittee is considering may help fix some problems in
Alaska, it is not an appropriate solution for California, and
some provisions would have harmful effects on the whole
program. According to the testimony we will hear today, the
current draft bill would undermine California's air quality
protections and actually make it harder for California to issue
defensible permits and impose substantial cost burdens on the
State.
That makes no sense. I refuse to believe that we can't
address some of the specific problems Shell points to without
creating much bigger problems elsewhere.
That is why I have offered to work with the majority on
this legislation to come up with a proposal that would address
specific problems without breaking what is working well. I
can't support the bill in its current form. But I do think we
could reach agreement on something that would address the
concerns Shell has raised.
As the committee considers this legislation, there are a
few key areas that are particularly troubling.
First, I don't think that encouraging more litigation makes
any sense. But that is what the bill does by largely
eliminating administrative appeals and forcing almost everyone
to go straight to court.
The current administrative review process at EPA's
Environmental Appeals Board is faster, simpler, and far less
costly than going to court. You don't need to hire a lawyer.
The board can skip oral arguments, and if it allows for oral
argument it is done through video conferencing. The EAB's
permit decisions are rarely challenged and almost always upheld
by the appellate courts. In fact, this process works so well
that the legislation preserves administrative appeals but only
for the permit application.
If an administrative process is good enough that Shell
wants to keep it for its appeals, it is only fair that we keep
it for everyone else. Equal access to justice is a fundamental
principle of our system. I am surprised the majority would even
consider abrogating that.
It also makes no sense to force all of these local
permitting cases to be heard in Washington, DC. A long-standing
system and extensive case law governs how judicial value is to
be determined. The Clean Air Act judicial review provisions are
consistent with these principles, sending local and regional
matters to the Court of Appeals for the appropriate circuit.
But this proposal would carve out a special exception for a
narrow class of cases.
Finally, the committee should distinguish between changes
necessary to clarify and streamline the process and changes
that are really aimed at weakening air quality protections.
Shell told us they don't want to weaken the law; they just want
to know what they have to do. If that is the case, we could
certainly provide clarifications and speed up the process
without weakening air quality protections. But many of the
changes in the law proposed to be made by the current draft
have the effect of weakening protections. If the goal here is
really to let Shell and other oil companies get out of Clean
Air Act requirements, that is something I would strongly
oppose.
I look forward to exploring these issues in today's hearing
and once again thank the chairman for proceeding with today's
hearing itself. I yield back the balance of my time.
Mr. Sullivan. Thank you, Mr. Waxman.
Now we are going to move to our panelists, and our first
panelist today----
Mr. Barton. Mr. Chairman, is time expired for all opening
statements?
Mr. Sullivan. Yes, sir.
Mr. Barton. It is? Great.
Mr. Sullivan. Sorry about that.
We move to our first panelist. It will be Ms. Gina
McCarthy, Assistant Administrator, Office of Air and Radiation,
U.S. Environmental Protection Agency.
We welcome you here today. Thank you so much for coming.
And you are recognized for 5 minutes.

STATEMENT OF GINA MCCARTHY, ASSISTANT ADMINISTRATOR, OFFICE OF
AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

Ms. McCarthy. Thank you very much, Mr. Sullivan, Ranking
Member Rush, members of the subcommittee. I appreciate the
opportunity to testify on the discussion draft of the Jobs and
Energy Permitting Act of 2011.
The President's blueprint for a secure energy future
recognizes the importance of producing domestic oil safely and
responsibly while also taking steps to reduce our dependence on
oil by leveraging cleaner alternative fuels and greater energy
efficiency. We have already made progress towards these
objectives. Last year, America produced more oil than we had
since 2003.
We also announced groundbreaking fuel efficiency standards
for cars and trucks. Over the life of the vehicles, these
standards will conserve 1.8 billion barrels of oil and save
thousands of dollars for the owners of these vehicles.
Applications for OCS permits have increased in the last few
years, largely as a result of exploratory drilling activities,
particularly in the Arctic. Permitting these activities can be
complex due to a variety of drilling equipment and support
vessels as well as the challenges of operating in a climate
that is very different than the Gulf of Mexico.
The President's blueprint established an across-agency team
to facilitate a more efficient offshore permitting process in
Alaska, while ensuring that safety, health, and environmental
standards are fully complied with. EPA participates in this
team.
My comments on the bill are grounded in the
administration's support for a commonsense approach to OCS
development that balances the need to explore for and produce
energy with the need to protect public health in the
environment and the surrounding areas.
Most importantly, I am concerned that the draft bill would
mute voices of concerned citizens about matters that affect
their communities. For example, currently, if a group of
subsistent fishermen were concerned that an EPA permit didn't
adequately address the effect of the health of air pollution
from nearby drilling rigs, they could appeal the decision to
the Environmental Appeals Board. They would not be required to
hire a lawyer. They wouldn't have to attend oral arguments.
They could participate through video conference. They would
know that their concerns are being heard by experts.
The bill would, instead, force appeals into a court system
and one that is not even the closest U.S. Court of Appeals.
Alaska fishermen would either need to hire a DC Attorney or fly
a local attorney all the way to DC.
The board's decision may be challenged in court, which may
lead you to assume that the board's review prolongs the permit
process. But experience really tells us otherwise. The board is
cheaper, faster, and a more expert substitute for the Federal
Court. On average, the board decides PSD appeals in just over 5
months from the filing of the appeal, much faster than judicial
cases are resolved.
And in almost all cases a board decision resolves the
dispute, avoiding protracted Federal Court review. Since 1992,
only four of the board's 100 PSD permit decisions have been
reviewed by a Federal Court, and not one of them has been
overturned. It is unclear how it would serve the public's
interest to increase Federal Court litigation in DC. And
deprive the citizens of a cheaper, faster way of resolving
their grievances.
I also would like to raise briefly several considerations
relevant to the draft bill's substantive changes to Section
328.
First, exploration and drilling activities in the OCS can
emit substantial amounts of pollution. During the 168 day
Arctic OCS drilling season, one exploratory OCS source could
emit approximately as much on a daily basis as a large state-
of-the-art refinery.
Second, human exposure to pollution from OCS sources does
not stop at the shoreline. Substantial human activity occurs
between the shoreline and the State seaward boundaries and in
some areas may extend into the OCS. Failure to control OCS
sources adequately may result in the need for more expensive
onshore controls. It was this problem off the coast of
California that led Congress to require OCS sources to obtain
Clean Air Act permits in the first place.
In closing, EPA supports the use of an efficient permitting
process to develop domestic energy supplies safely and
responsibly. Our responsibility is to protect the health of
Americans, but we know we must do so with commonsense measures
that also allow us to strengthen our domestic energy supply.
I look forward to answering your questions.
[The prepared statement of Ms. McCarthy follows:]

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Mr. Sullivan. Thank you, Ms. McCarthy.
We will now open it up for questions, and I recognize
myself for 5 minutes.
Ms. McCarthy, in your testimony you cited the President's
blueprint for a secure energy future and a supposed commitment
to producing domestic oil. The insulting thing is that you take
credit for current production rates, stating that we have
already made progress towards these objectives. Last year,
America produced more oil than we had since 2003. Are you
really taking credit for current domestic production when those
projects took years to develop?
Ms. McCarthy. Mr. Chairman, I am simply stating a fact that
production is equal to 2003. EPA takes no credit for anything
other than an attempt to work with Shell and others to
expeditely move those permits forward.
Mr. Sullivan. Ms. McCarthy, can you name one significant
project that the Obama administration supported that would
increase the production of oil? And is the Alaskan Arctic
permitting fiasco an example of that kind of work, handiwork?
Ms. McCarthy. Mr. Sullivan, let me just challenge a little
bit back at you that I don't think there has been a fiasco in
the Shell permitting, and I would like to clarify that, if I
may.
There were statements made that we have taken 5 years to
address Shell permits, and they are still not in place. In
fact, every time Shell has applied for a permit, a permit has
been issued by the agency within 3 to 6 months of that permit
application being complete.
Mr. Sullivan. But you don't think 5 years for a permit is
not a fiasco?
Ms. McCarthy. There has never been 5 years to a permit
decision by Shell. We have reached a permit decision, and many
of those decisions have been appealed. Shell has consistently
revised the request, changed the project, changed what sea they
want to drill in. And now I think we are very close to an
understanding between us and Shell about where their
opportunity is, how they can structure their permit and how we
can deliver a solid permit for them in a period of time.
Mr. Sullivan. There hasn't been any final agency action for
5 years.
Ms. McCarthy. There are many reasons for that, not least of
which is that for 3 years Shell sought to obtain a minor source
permit----
Mr. Sullivan. Do you think that is too long, though? Would
you agree that that is too long?
Ms. McCarthy. I don't agree that it has been 5 years with
the same permit, Mr. Chairman. That is the only point I am
trying to make. Each time the permit has been revised, and we
have effectively issued a permit.
Mr. Sullivan. Well, what about the agency final action
hasn't happened?
Ms. McCarthy. That is correct. Many of the permits have
been withdrawn; many of them have been changed. In the most
recent ones, there were two that were remanded by the EAB. We
are working through those issues in a collaborative way, and we
expect a solid permit very soon.
Mr. Sullivan. A lot of these companies that you talk to,
one, can't get through, but, when they do, they are told to
redo things, do this. It seems like a real game you are playing
with them.
In the private sector they don't deal with that kind of
stuff when they are out there. People make decisions and
quickly. And they check every box, but it seems to take a very
long time.
Ms. McCarthy. I think that we are trying to work very
effectively with the project developer to get a permit for the
project they are developing. If their parameters change and
their interests change, we try to adjust to that.
I will tell you that that is one of the reasons why the
President has pulled together an interagency group, to ensure
that all of the permits are done as expeditiously as possible
and we can get these permits accomplished in a collaborative
way.
The agency itself is also looking at how the permit
standards for these permits in the Arctic relate to the permits
we are issuing in the Gulf of Mexico and doing our best to move
those forward.
Mr. Sullivan. Well, in your statement you say, we have
already made progress towards these objectives. Could you name
some of the progress you have made?
Ms. McCarthy. I am sorry, which objectives are you
referring to, Mr. Chairman?
Mr. Sullivan. Well, you say here that--you say, we have
already--OK, it says, on March 30th, the President released a
blueprint. We also are taking steps to reduce our dependence on
oil. Wherever it comes from, by leveraging cleaner alternative
fuels and greater energy efficiency, we have already made
progress towards these objectives. Last year, America produced
more oil than we had since 2003. What were the progresses that
you have made towards these objectives?
Ms. McCarthy. Well, if I might, let me be a little bit
parochial and say what EPA has accomplished, because I think it
is significant.
We mentioned in my testimony the light-duty vehicle rule,
which will actually save 1.8 billion barrels.
Mr. Sullivan. I am kind of just talking about domestic oil
production, in regards to domestic oil production.
Ms. McCarthy. In domestic oil production we have--I do not
have specific examples I can offer you. All I can say is, when
EPA is working with a refinery----
Mr. Sullivan. I understand what you are saying, but why
wouldn't you mention it in your opening statement then?
Ms. McCarthy. I actually think I was referring to the
light-duty vehicle rule when we are talking both about
production as well as reducing dependency on oil, which
includes reducing 1.8 billion barrels of oil dependency as a
result of the light-duty vehicle rule.
Mr. Sullivan. Well, I guess we will agree to disagree,
because it is not in your statement.
Ms. McCarthy. OK.
Mr. Sullivan. And I thank you very much.
I would now like to yield to the gentleman from Illinois,
Ranking Member Rush, for 5 minutes.
Mr. Rush. Mr. Chairman, I have an article here dated 5/11/
2011 from Greenwire. I would like unanimous consent to enter it
into the record.
Mr. Sullivan. Do you have a question?
Mr. Rush. No, I have an article.
Mr. Sullivan. Without objection. I am sorry. I apologize.
[The information appears at the conclusion of the hearing.]
Mr. Rush. Ms. McCarthy, the goal of the Clean Air Act is to
protect public health and welfare from harm from air pollution,
and the bill that we are discussing today will change the way
that EPA and States can address pollution from offshore
drilling. Some have argued that this bill is just about
streamlining the permitting process, and I want to make sure
that in the proposed changes there is no due harm to the public
health and to the public welfare.
One provision in the bill will allow the drilling companies
to look at how the drilling will affect air quality onshore,
ignoring any potential impacts to air quality between the
drilling rig and the shoreline. Does the EPA have concerns that
this change will allow health impacts to be ignored offshore?
Ms. McCarthy. Mr. Rush, there is substantial human activity
off the shoreline, as we all know, which means there is a
potential, should this bill go through as proposed, of
substantial human exposure to air pollution, in particular
between the area of the shoreline and the State seaward
boundary.
Mr. Rush. So native Alaskans who breath the air will be
potentially harmed while they are fishing or whaling, is that
what you say?
Ms. McCarthy. That is correct.
Mr. Rush. OK. With the chairman, you had some discussions
regarding the delay, and you maintain that Shell has
resubmitted applications. They have moved the goal line. They
keep moving the goal post further and further away and keep
changing the goal post. Will you kind of elaborate more on what
you were trying to express?
Ms. McCarthy. Yes, I would, Mr. Rush.
EPA, since 1990 and 1992, has been moving forward with
processing these permits in a timely way. We have processed 13
permits. Each of those has been done within 3 to 6 months of
the permit application being complete. Some of those since 1992
have been referred to the Environmental Appeals Board. But the
Appeals Board itself processes its appeals, on average, within
a 5-month period. And what that does is it provides the public
an opportunity to be heard, but it also provides an expedited
way to ensure that that permit is as strong as it needs to be.
During that 5-year period or the initial 3-year period
Shell changed its mind about where it wanted to drill, the
types of vessels it would use, the type of project it wanted to
pursue.
We have consistently worked with them and issued new
permits in a timely way. The good news is that I believe that
we are very close to a strong permit that will allow them to
have actually three drilling operations going on in the Arctic
in a way that is protective of public health and consistent
with current law.
Mr. Rush. So in your opinion then this process is going to
come to an end, and it hasn't been the fault of the EPA. This
has been the responsibility of the company changing its plan?
Ms. McCarthy. It is. But I am not trying to blame Shell
anymore, that I think at this point Shell is trying to blame
us. These are very difficult projects to pursue. Particularly
in Alaska it is even more difficult, because of the weather,
because of all of the different technologies you need, the ice
breakers, the emergency response. We have little air quality
monitoring data. There are hurdles that you need to go through,
but we are getting better and better. And as these permits get
issued, that it will lay a foundation for the ones that follow.
Mr. Rush. And it is your opinion that Shell is satisfied
really with the process as it has taken place and they are not
at odds at all with the EPA in terms of this----
Ms. McCarthy. I think they believe that the three permits
that we are processing now will be very valuable to them. I
think they recognize that they are going to be solid legally
because they have been tested through the EAB. And history has
shown us that, once the EAB reviews a project and makes a
decision, that it is a very solid ground for that permit moving
forward in terms of any subsequent court challenge, which
almost never follows.
Mr. Rush. We are all concerned about the timeliness of
these permits in this process. But I just want to caution all
of us that, you know, in this instance we have to get it right.
Haste does make waste in this particular instance.
The fact is that the public health and welfare is solidly
at stake, and so we need to do our due diligence. And I think
that any reasonable person would agree and understand that
these things do take time. We don't want EPA rushing to issue
permits for oil drilling, no matter who the company is or where
it is located at.
Thank you very much, Mr. Chairman. I yield back the balance
of my time.
Mr. Sullivan. Thank you, Mr. Rush.
Now I will recognize the gentleman from Texas, Mr. Burgess,
for 5 minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman.
Ms. McCarthy, I hate to go off topic here for a moment
because our opportunity to talk--as much as I cherish the
opportunities, we don't get to talk that often. It was about a
year ago that you came to a briefing called by Mr. Markey to
talk to us off the record about some of the activities that
were going on as a result of an energy policy that was passed
by the Congress signed by the President December of 2007
dealing with the mandate for blending ethanol into the Nation's
gasoline supply. Do you recall that we had that meeting?
Ms. McCarthy. Yes, I do.
Mr. Burgess. I had a number of questions about the type of
testing that had been done and where it had been done. It has
been extremely difficult for me to get answers on that. I asked
many of those questions to Lisa Jackson when she was here,
Administrator Jackson, when she was here in February. And my
understanding is those answers came yesterday to the committee,
but they have not been shared with me yet.
But let me just ask you again about where we are, because
there are a lot of questions out there from people about what
is happening with the amount of ethanol in the Nation's
gasoline supply and the safety of that. Where is the agency
right now as far as being able to--where are you in the process
of studying this? Where are you in the process of rulemaking
with this? What are people to expect this summer as they crank
up their lawn mowers and weed eaters and Mantis tillers? What
are they to expect from the performance of their engines with
this additional ethanol?
Ms. McCarthy. Well, first, let me be very clear, E15 is
right now not on the market. There are a number of decisions
that need to be made before it can be in the fuel supply.
Mr. Burgess. I am just going to interrupt you for a second.
Because, although E15 was not mandated, what Congress did to
you--I was against this when it happened, but it mandated that
a certain volume of ethanol be incorporated into the Nation's
gasoline supply and utilized by, I forget, 2015 or 2020. But in
order to meet that blend requirement it is going to require a
higher percentage of ethanol in the Nation's gasoline supply,
is it not?
Ms. McCarthy. It actually required renewable fuel, so not
in particular ethanol. And the requirement was in 2022 for 36
million gallons to be replaced with renewable fuels. So I don't
think the impetus for E15 was necessarily that 36 million
figure.
We actually are required under law to entertain waiver
requests which look at whether or not a fuel should be allowed
to happen and to be allowed to be brought into the market on
the basis of whether or not it is going to pose significant air
pollution problems or challenges to the air pollution control
equipment that are on vehicles or engines.
And we have received such a request on E15. DOE did do
significant testing, and we did it on the newer vehicles, which
is 2001 and newer vehicles, because those vehicles have----
Mr. Burgess. I don't mean to interrupt, but actually I have
a letter from Secretary Chu from the Department of Energy
February 18th, and he said you all were doing the testing. And
this is one of the problems I get into, is this circuitous
discussion.
Ms. McCarthy. I can look at that and clarify for you.
But DOE did a significant amount of testing. Manufacturers
did testing as well that we are privy to. And we look at the
full range of testing available to us. The bottom line was
there was sufficient testing to indicate that E15 could be used
in 2001 and newer vehicles.
We are right now looking at a fuel registration
application. That means we are looking at health consequences
associated with E15. We are about ready to make a determination
on that.
The agency still has to develop a final guidance on what
that means for underground storage tanks and dispensing units,
and individual States need to make certification decisions.
So there is a lot happening between here and there.
We also have a final rule that we have to get out that
looks at how to prevent misfueling. That package will be out
shortly.
Mr. Burgess. Let me reclaim my time, because it is about to
run out.
Let me just say it is all great. That is the theory. Let me
tell you the application, the application from Lowry's Lawn
Mower Repair last Monday when I had an impromptu town hall
where I was getting my lawnmower fixed.
And they said, this is great for business. I asked them
about ethanol, of course the existing levels of ethanol. He
said, it is great for business. We get to rebuild so many of
these little engines that it is just keeping us--it is like the
President's own jobs program. They have to keep hiring people
like me to fix their lawn mower's.
And this is the problem that people all over this country
are encountering, and I encourage you to be on top of this and
not try to play catch-up.
I yield back, Mr. Chairman.
Ms. McCarthy. Thank you, Mr. Burgess.
Mr. Gardner [presiding.] Thank you.
We have a long series of votes right now, so we are going
to suspend the hearing until 11:00 or until the vote series is
completed. Thank you.
[Recess.]
Mr. Gardner. We will call this committee hearing back to
order, and I now recognize myself for 5 minutes for Ms.
McCarthy.
Ms. McCarthy, just a couple of quick questions for you.
Thank you for your time and patience in waiting for this vote
series to be over; and, everybody else, I appreciate your time.
Do you believe in fossil fuel energy development?
Ms. McCarthy. Yes.
Mr. Gardner. Do you believe we should utilize the energy we
here in the United States?
Ms. McCarthy. Yes.
Mr. Gardner. Do you believe the United States should be
energy secure by using our own energy?
Ms. McCarthy. I believe we should enhance energy security
any way we can.
Mr. Gardner. Do you believe Alaska provides us an
opportunity to move us toward energy security?
Ms. McCarthy. I believe that that is clearly the intent of
the President, is to utilize domestic supplies as much as we
can and ensure that public health is protected as we do it.
Mr. Gardner. Do you believe the efforts on this matter
before us have achieved this goal, Chukchi and Beaufort Sea?
Ms. McCarthy. I think we are on a path to success. Yes, I
do.
Mr. Gardner. Five years delay, you believe we are on a path
to success?
Ms. McCarthy. I actually think it has been 5 years of
discussion with Shell where things have changed considerably.
But I think at this point we have three permits that I feel
very confident that we can issue and that will be legally
defensible and protective as well.
Mr. Gardner. Do you agree or disagree with Administrator
Jackson's previous testimony to the Senate Appropriations
Committee in the context of the Shell Arctic air permits where
she said, and I quote, I believe that the analysis will clearly
show that there is no public health concern here, that it is
quite likely these activities will not cause air pollution that
will endanger health.
Ms. McCarthy. I'm sorry. I don't know the context of that
comment, so I can't really respond to it. But I can say that I
believe that we are on the path to issuing permits that will be
protective of public health the way the Clean Air Act intends.
Mr. Gardner. So you are unfamiliar with Administrator
Jackson's testimony before the Senate committee? It was Senator
Murkowski's questioning on the issue of Alaska and the Beaufort
Chukchi Sea.
Ms. McCarthy. I certainly am aware that that happened. I
don't know the direct context of that quote. But it seems
perfectly reasonable to suggest that we can issue permits that
are protective of public health, particularly the way in which
Shell is now currently structuring them in their project.
Mr. Gardner. The transcript right here says--it basically
is a question. She talked about the lengthy permit process, the
new requirements that have taken place; and Administrator
Jackson went on to say that the analysis will clearly show
there is no public health concern here. Do you agree with that?
Ms. McCarthy. We are completing the modeling analysis now,
the way in which the EAB has requested it; and we feel pretty
confident that that will prove the Administrator to have been
absolutely correct.
Mr. Gardner. So you would agree with Administrator Jackson
then?
Ms. McCarthy. I would agree, but I would just caution that
we haven't yet written the permit in response to the EAB, so I
don't want to presume what that says.
Mr. Gardner. Did she misspeak then when she was saying
there is no public health----
Ms. McCarthy. No, I think she was talking in general the
fact that we believe that we can write a permit that is
protective of public health. And I think we will be doing that.
Mr. Gardner. In your testimony, you state that preventing
appeals to the EAB will limit opportunities for public comment.
Are you aware that the public has an opportunity to comment
with respect to any and all air and environment issues during
the Department of the Interior's 5-year lease plan.
Ms. McCarthy. I do.
Mr. Gardner. Are you aware that the public has an
opportunity to comment again with respect to any and all air
and environment issues during the regional planning
environmental document?
Ms. McCarthy. I am well aware that there is an opportunity
to have comment in general, not about a specific source.
Mr. Gardner. And on this one there were public hearings in
Nuiqsut, Point Lay, Barrow, Kaktovik, Wainwright, Point Hope,
and that is just in one area of public comment. Are you aware
that the public has an opportunity to comment with respect to
any and all air and environment issues again at the time of the
lease sale?
Ms. McCarthy. I'm not that familiar with the lease sale
issues. I'm sorry.
Mr. Gardner. Well, they do actually have the opportunity to
comment.
And surely you are aware that the public has an opportunity
to comment with respect to the air permit itself when EPA
Region 10 goes through its review process.
Ms. McCarthy. We actually provide that under the Clean Air
Act. That is correct.
Mr. Gardner. And so are four rounds of public comment not
sufficient?
Ms. McCarthy. I don't believe that the question of whether
or not EAB has a role in the process is really directly related
to the amount of participation of the public. It is a question
of how to handle appeals under the Clean Air Act and whether or
not you want to account for that and provide that in a quick
and easy way that the EAB does or whether you want to refer
that directly to the Federal Court.
Mr. Gardner. I thought that was one of the reasons you said
the EAB is necessary, was for public comment.
Ms. McCarthy. It is because, once the permit is finalized,
it provides an opportunity for challenge of that permit to the
EAB where they look at whether or not it has sufficient legal
underpinnings and----
Mr. Gardner. Well, you have a final action. There is final
agency action. That is just another bite at the apple. Don't
you think it is best to move this to the courts so they can
make a determination?
Ms. McCarthy. I think it is entirely up to folks whether or
not they want to move it to court. I am not suggesting court
isn't adequate.
Mr. Gardner. After four or five rounds of comment?
Ms. McCarthy. What I'm suggesting is that they are much
more inefficient, they are much lengthier, they will--in fact,
if they take a year and a half and send it back, we will be
starting all over again.
I think the EAB provides a service to us, and they are the
agency to make sure that our permits are accurate, that they
are technically correct, and that they are legally defensible.
And, over time, the EAB has not been challenged in Federal
Court successfully. So they have eliminated the need to go to a
lengthy Federal and expensive process.
Mr. Gardner. I will ask you this question. I am running out
of time. Are you aware that in the central and western Gulf of
Mexico after the permit is issued, there is no appeals court?
Ms. McCarthy. I am aware that the appeal is to Federal
court.
Mr. Gardner. The public can just go to court and get it
resolved. Is that why the Gulf has been more efficient?
My time has expired. I want to be respectful of my time, so
I apologize for that.
Mr. Green, 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
First, Ms. McCarthy, I talked to you earlier. Thank you for
not only being here today and for our vote schedule but also
being in Houston at the end of March. Our subcommittee had a
hearing on some of the battles we have in Texas, and I
appreciate your time.
This suggested legislation we are working on obviously is
of interest, because I'm used to the Gulf of Mexico and
Department of the Interior rules, and so I'm learning a little
bit about EPA's authority on the other coast.
In the Federal Register in 1991, EPA explicitly stated
that, quote, the intent of Congress in adding Section 328 was
to protect ambient area quality standards on shore and ensure
compliance with PSD standards. EPA is to accomplish this by
controlling emissions of pollutants for which the ambient
standards have been set in their precursors from the OCS that
can be transported onshore and affect ambient air.
Why has there been a shift in the policy at the EPA where
now you interpret Section 328 to mean you must regulate the air
impacts offshore?
Ms. McCarthy. Actually, the way in which we are
interpreting our mission is to protect public health. I think
we were given clear direction in the Clean Air Act that that
meant that we need to treat these offshore sources as if they
were onshore, because there is a great deal of human activity
in particular along the shoreline in the States' seaward
boundary.
So we do actually apply the Clean Air Act, I think, as the
law intended, but we are looking at that in terms of
differences that we would see between what is happening in the
Arctic and the Gulf of Mexico and attempting to apply that part
of the rule in a way that is effective for public health
protection but will still allow the permitting to occur in a
sensible way.
Mr. Green. During the Alaska hearing we heard testimony
about ongoing litigation at the U.S. District Court here in the
District of Columbia which recently raised the issue of whether
the EAB process must be completed within the overall 1-year
time limit under the Clean Air Act within which the EPA must
issue or deny final prevention of significant deterioration
permit. Do you agree that the EAB process should be completed
within the overall 1-year time limit?
Ms. McCarthy. The position of the agency at this point--and
this is actually being litigated--is that the 12-month time
limit refers to the completion of the application to the time
when the region issues the permit. We do not believe that we
are required to complete the EAB process in that timeline.
However, I would point out that on these permits we have
completed the--between permit application in the region,
issuing a permit has been between 3 and 6 months; and, on
average, the EAB only adds 5 months to that process.
Mr. Green. One of the criticisms of this bill is how it
would define a source once drilling activities occurred,
exactly like the BOEMRE defines the sources in the Gulf of
Mexico. You mentioned how you believe that a source should be
defined once anchor is down. But how does the EPA define a
source of rigs that are not attached to the ocean floor such as
a dynamically positioned one, one that doesn't have the anchor?
Ms. McCarthy. Well, actually Region 4 is looking at that
issue right now. My understanding is that BOEMRE looks at that
issue as being a source when it actually enters into the lease
area because it is dynamically positioned instead of anchored.
We are looking at the same issue and likely to come out in the
same way, but that permit has yet to be issued.
Mr. Green. The President's blueprint established a cross-
agency team to, quote, facilitate a more efficient offshore
permitting process in Alaska, while ensuring that safety,
health, and environmental standards are fully met. EPA
participates in this team and has established an interagency
working group comprised of regional and headquarter permit
experts to help expedite the resolution of the OCS air
permitting issues.
What is the status of that group's work now?
Ms. McCarthy. The work group was started almost a year ago,
and we are looking at the permits in the Arctic as well as the
Gulf of Mexico, and we are looking at determinations that are
consistent for where the point of compliance ought to be and
how we make these decisions consistently. So it is very active.
We are engaged in the Presidential process to work with the
other agencies, and we feel that the decisions we are about to
make will be consistent and will provide a standard for other
permits that follow.
Mr. Green. OK. Thank you, Mr. Chairman.
Mr. Gardner. The gentleman yields back his time.
The chair recognizes Mr. McKinley for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
Welcome back.
Ms. McCarthy. Thank you.
Mr. McKinley. In your opening remarks--and with my hearing
issues maybe I didn't hear properly, but in your opening
remarks, you refer to, I believe, you were concerned about the
pollution from drilling rigs. Do you remember that comment?
Ms. McCarthy. Yes.
Mr. McKinley. What pollution from a drilling rig are you
referring to?
Ms. McCarthy. Actually, the pollution that is associated
with the drilling rig itself as well as the vessels that
support that rig that are within a 25-mile radius. That is what
the Clean Air Act requires us to take a look at. It is
substantial amounts of pollution.
Mr. McKinley. By virtue of them being there so----
Ms. McCarthy. Well, it is the engines. It is the ships
themselves as they sit stationary. So there is significant
sources of emissions of particulate matter, of sulfur dioxide,
of nitrous oxide. There is significant amounts of pollution,
actually, commensurate with----
Mr. McKinley. We have the same quote. Unfortunately,
neither of us have the date, and I can't pin you down because I
don't have the date where Lisa Jackson said there will be no--
--
Ms. McCarthy. I think she was referring to the fact that
when our permit is complete and finalized we will have
accounted for that pollution, minimized it in accordance with
the Act, and ensure that the national ambient air quality
standards are complied with at the point of compliance. And
that is one of the issues that is under debate in the law that
you are considering.
Mr. McKinley. I'm struggling with that a little bit,
because I don't know how you are going to get there. If just
the mere presence is going to be a pollutant, I don't know how
then we are going to get there. You just don't want us there?
Ms. McCarthy. No, we actually treat it the exact same way
as we treat onshore facilities; and we look to ensure that they
are properly controlled and that they don't significantly
impact air quality in the way in which the standard applies it.
That does not mean that we can't issue permits offshore the
same as we do onshore.
Mr. McKinley. Let me go back to--I hesitate to ask you to
submit to me something in writing about it, because I would
like to know more about your position on that. Because back on
March 1 when you appeared last before us, we were talking
about--you made a comment in your presentation and several of
my colleagues on the other side of the aisle said the same
thing, and that was subsidies for the coal industry. And I
challenged you on that then, and I continue to challenge.
I asked then, and you said, I will send those to you. This
is now May 13. We have called your office, and you have not
responded. We have e-mailed your office, and you haven't
responded. And you haven't responded. We have no record of
supporting your statement that coal is subsidized--and how.
It is almost an arrogance here of using that term. And I
don't understand where they are coming from. Because I go back
to my district in West Virginia and ask coal companies about
what their subsidy is, and none of them, to a person, to a
company, none of them have any idea what you are talking about.
But yet it is used as though it is gospel around here that the
coal companies are subsidized.
I ask again, will you please put it in writing, the
companies that are subsidized and in what vehicle?
Ms. McCarthy. I'm happy to respond, and I do believe I
remember the context of my comment if you would like me to
explain it now. If not, I am happy to do that.
Mr. McKinley. Just as long as you put it in writing.
Everyone talks around here----
Ms. McCarthy. I don't think I was referring to financial--
--
Mr. McKinley [continuing]. With nothing to back up what
they are saying----
Ms. McCarthy. I don't think I was referring to financial
subsidies.
Mr. McKinley. When somebody says coal companies are
subsidized, I want to know who it is. Because I don't want to
see the coal companies subsidized. I don't want to see the
fossil fuel subsidized. I think this is a misrepresentation
here with that. So I may be supportive. But I want to know
which ones you are talking about or is this just a hit again on
fossil fuels coming from this administration.
Ms. McCarthy. I don't believe that I was referring to a
financial subsidy. I think that I was referring to the fact
that many of the coal facilities are not required to meet toxic
standards----
Mr. McKinley. You used the term subsidies----
Ms. McCarthy [continuing]. That other facilities are
required to meet.
Mr. McKinley. Others in the panel have talked about that
the coal industry is subsidized. I want to know specifically
what do you mean? And so if you are backing off your word, that
is fine.
Ms. McCarthy. I think that was the context that I was
discussing the issue----
Mr. McKinley. You can say that in context, but you don't
remember what her context was. Everyone has context----
Ms. McCarthy. Well, I was at the first one----
Mr. McKinley. Just please put it in writing to me.
Ms. McCarthy [continuing]. Not at the second one.
Mr. McKinley. Just put it in writing if you----
Ms. McCarthy. OK.
Mr. McKinley [continuing]. Would. It has been----
Ms. McCarthy. We are happy to work with your staff.
Mr. McKinley [continuing]. Ten weeks.
Ms. McCarthy. I will make sure that I get you the
information----
Mr. McKinley. Put it in writing.
Ms. McCarthy [continuing]. That you are looking for.
Mr. McKinley. Thank you.
Mr. Gardner. The gentleman's time has expired.
Mr. Shimkus--Mr. Waxman is recognized for 5 minutes.
Mr. Waxman. Thank you very much.
Ms. McCarthy, the bill sets an extremely tight deadline for
issuing an OCS permit, just 6 months before the date a complete
application is filed. I support a deadline, but this one may
not be realistic. It may sacrifice important elements of the
process, such as public participation.
If you just devoted more resources to it, would EPA be able
to evaluate a permit application, set source-specific air
pollution limits, allow for public comment, and provide for
administrative review within a 6-month time frame?
Ms. McCarthy. No, that is not possible.
Mr. Waxman. What if you eliminated all administrative
review?
Ms. McCarthy. We still would need time to make sure that
the permit was legally defensible and that all of the
appropriate technical analysis had been conducted.
Mr. Waxman. What happens when EPA doesn't have enough time
to do its job properly?
Ms. McCarthy. Like anyone else, we can make mistakes, and
those can be challenged, and we start again at square one again
with the permit process for the applicant and us.
Mr. Waxman. Ms. McCarthy, as you know, the Department of
the Interior issue permits in the western and central Gulf of
Mexico instead of EPA. We have heard the argument that Interior
issues permits in 30 days, and EPA should be able to do the
same. I would like to ask you about this. Does EPA require air
quality modeling and use of best available control technology
for every OCS source that would emit at least 250 tons of a
pollutant per year?
Ms. McCarthy. We do.
Mr. Waxman. And the Interior Department, on the other hand,
exempts the vast majority of drilling operations in the Gulf
from analyzing air quality impacts or applying pollution
controls. For example, from 8 miles on out, any source emitting
250 tons per year of a pollutant would be exempt from air
quality requirements. And 30 miles out, a source could emit up
to a thousand tons per year without regulation. Interior set
these exemption thresholds in 1979 and has not updated them
since.
Ms. McCarthy, can you tell us a lit bit about how air
pollution analysis and standards have changed since 1979?
Ms. McCarthy. Let me give you one quick example, Mr.
Waxman, and that is we now have a standard for fine particles,
PM2.5 particulate matter. That is one of the most serious
public healths that we know of, and it is well documented. It
actually accounts for tens of thousands of premature deaths
annually. That standard came into being after BOEMRE's rules,
and they have never been updated to account for that.
Mr. Waxman. It is not clear to me that Interior's approach
provides any meaningful air quality protection.
Another important difference is that Interior does not
allow for any public comment on exploration plans which contain
the air pollution estimates. Cutting out public participation
certainly saves time. The Interior Department process doesn't
provide for administrative appeals either.
Ms. McCarthy, could you comment on the value of public
participation in EPA's decisionmaking and the benefits of
providing for administrative appeals?
Ms. McCarthy. First of all, in terms of public
participation, it is enormously important when you are dealing
with a source of pollution that can impact public health to get
the residents to understand what the project is, how it has
minimized any threat to their livelihood, and to understand the
context in which the facility is operating.
In the Arctic, you have whaling operations where
individuals spend significant time within range of some of
these facilities, and you have to account for that, give them
an opportunity to be heard so you can understand how best to
protect that public interest.
In terms of the EAB, it is by far the fastest, cheapest,
and most credible way to get to a permit that is legally
defensible. It has historically been shown to be completed
within about a 5-month period of time. And only four times have
the EAB decisions ever been challenged, and they have never
been overturned in Federal Court. So if you are looking to get
to yes or no soon, that is the quickest way to do it.
Mr. Gardner. Will the gentleman yield for a quick question?
Are you saying there is no comment on DOI permitting.
Ms. McCarthy. Actually, there is no comment on specific
sources. There is, I understand, comment on a 5-year lease----
Mr. Gardner. On exploration in Alaska.
Ms. McCarthy. It is a very general exploration plan.
Mr. Waxman. Reclaiming my time, because it is about to run
out, there is no comment at DOI in the early part of the
process where we do have it at EPA. The Interior Department
models what we had prior to 1990. Congress moved the authority
to EPA outside of the western Gulf because in areas with air
quality problems that model simply doesn't work.
And I would note that this provision was adopted as a floor
amendment representing a bipartisan agreement between
Representatives Mel Levine, Bob Lagomarsino, Bill Lowery, Mike
Bilirakis, and Billy Tauzin, a bipartisan group, none of whom
are still here.
I hope as this subcommittee moves forward we will try to
improve the current process, not turn back the clock.
Thank you very much, Mr. Chairman.
May I just ask one last question?
If we were going to put a time limit, what would be a
reasonable time limit? Because, right now, it is open ended,
and that is driving the applicants crazy.
Ms. McCarthy. Mr. Waxman, we are happy to work with you on
it. I don't have a time line in mind. I know we need to do it
expeditiously, but I know that we shouldn't sacrifice public
health or provide opportunities for extensive litigation where
it doesn't currently exist.
Mr. Waxman. Thank you, Mr. Chairman, for that time.
Mr. Gardner. Thank you.
Mr. Shimkus is recognized for 5 minutes.
Mr. Shimkus. Again, I'm glad I made it back. I appreciate
your help on the Prairie State thing, as I did in my opening
statement; and, of course, that does segue into this. Because
it is state-of-the-art technology, and this is a big issue.
Mr. Waxman's final point really highlights why we think
there is need for legislation. Because there is no timeline.
And when you don't have a timeline and you raise capital to
assume risk, these drilling rigs are probably even more
expensive up in the Arctic, millions of dollars a month or at
least half a million dollars just operating before all the
other costs, how can someone make the business case for moving
forward if there is no timeline?
And so that kind of segues into some questions that address
this. Obviously, you have a great faith and confidence in the
EAB, and I respect that. But I think some of the conclusions
are difficult for us to accept. Because, for me, it just kind
of sounds like the indirect land use debate, when we had how
much forest are you going to preserve on renewable fuels and
this whole indirect land cost. Because the EAB said that the
Clean Air Act excludes nonroad engines like vessels from
stationary source regulation. They rejected arguments that
vessels should be regulated as stationary source like
California and Delaware are advocating.
So our question is, who do you agree with? The EAB or
California or Delaware? And what do you really think the Act
requires?
Ms. McCarthy. Well, first of all, I should have clarified
probably when Mr. Waxman raised this that the statute does have
a 12-month limit in it between complete application----
Mr. Shimkus. Well, I think that is his point.
Ms. McCarthy [continuing]. And final permit----
Mr. Shimkus. There is statute----
Ms. McCarthy. So there is--but----
Mr. Shimkus [continuing]. And then we are 5 years.
Ms. McCarthy. No. No. We are 3 to 6 months. I think we are
getting very confused. In that 5-year process was a series of
changed permits and withdrawn permits.
Mr. Shimkus. Do you reject that 2007 was the initial start
of the process?
Ms. McCarthy. It depends on what you--well----
Mr. Shimkus. That is our point.
Ms. McCarthy. But let me answer your second question. I
actually think there is a little bit of confusion over the
vessels. The way the Act and the rules require is that we take
into consideration the emissions from those vessels as we are
looking at what you call a potential to emit, which is the
amount of emissions from that source.
We argued in the recent Shell permits that you don't have
to apply back to those vessels. The EAB actually agreed with
that. So unless----
Mr. Shimkus. But, reclaiming my time, you are saying these
transportation vessels you want to regulate them in conjunction
with the stationary source review.
Ms. McCarthy. I'm saying that the Act requires that we look
at the emissions from all of those vessels----
Mr. Shimkus. And we are saying the past practice of the EAB
doesn't support that.
Ms. McCarthy [continuing]. In the 24-mile range.
I think the EAB totally agreed with the way we are handling
it, and there is no issue remaining----
Mr. Shimkus. I think there is not a consistency, and that
is part of our problem.
Ms. McCarthy [continuing]. With the Shell permits about the
vessels.
Mr. Shimkus. Now let's just continue this process because
this is really--does EAB help or does it hurt? We would argue
that it is hurting, because the point is that--is the EAB--you
keep saying it eases litigation, but EAB is litigation.
Ms. McCarthy. No. It prevents the need----
Mr. Shimkus. Do they have----
Ms. McCarthy [continuing]. Of a Federal Court.
Mr. Shimkus. Judges?
Ms. McCarthy. Yes. It does.
Mr. Shimkus. Do these judges wear robes? Are there briefs
submitted?
Ms. McCarthy. Absolutely.
Mr. Shimkus. Are arguments heard?
Ms. McCarthy. Yes. At times. Oral arguments.
Mr. Shimkus. I'm not a lawyer, but that sounds pretty close
like litigation to me.
Ms. McCarthy. It is a adjudication process without
question, but it is a carefully crafted, very narrow----
Mr. Shimkus. But in this process----
Ms. McCarthy [continuing]. And one in which they have----
Mr. Shimkus. EAB and----
Ms. McCarthy [continuing]. Even most recently issued----
Mr. Shimkus [continuing]. Your action has caused----
Ms. McCarthy [continuing]. A standing order for a narrow
purpose.
Mr. Shimkus [continuing]. Ping-ponging of the permit, and
that is where we will--I think we can make a credible argument
this has taken 5 years because it gets ping-ponged back to you,
back to the EAB, and then we have no resolution.
Ms. McCarthy. Well, when the EAB has remanded permits back
as a result of inadequacy in those permits and when they have
gone back to the EAB, they have never ping-ponged it back again
in the history of the EAB. One bite at the apple. If it comes
back to them, they have summarily dismissed it, and it is
narrowly about the issues that they raised----
Mr. Shimkus. I have 10 seconds left. I would submit that
this case, if someone was doing a case study, they would say
that this has been ping-ponged back three times. And I would
put that into the record.
And I yield back my time.
Mr. Gardner. The gentleman yields back.
The gentlelady from California, Mrs. Capps, is recognized
for 5 minutes.
Mrs. Capps. I thank you, Ms. McCarthy, for your testimony
and also your patience while we had the lengthy votes on the
floor.
I represent a coastal area in southern California. This is
an area that has some of the worst air quality in the Nation.
So I'm rightly concerned, I believe.
There are 18 oil platforms off my shoreline. I'm concerned
about this draft bill that seeks to exempt certain emissions
from regulation, especially in an area that needs to reduce
pollution like the area that I represent and live in and
because of the jeopardizing of human health that is involved.
You have suggested that draft would preclude the EPA from
requiring OCS sources to demonstrate compliance with health-
based air quality standards at any point offshore. What would
be the impact of this pollution on the health of the people who
live--not just those who come and work on the rigs or on the
platforms but the people who live and work near and along the
coastline?
Ms. McCarthy. It would clearly allow larger amounts of
pollution to enter into the region that you represent and on
the shore, and it would then probably subsequently require
significant amounts of more onshore reductions to account for
those emissions coming forward. That is what led to Section 328
to happen back in 1990, and I think that we would see some of
these those problems arise again.
Mrs. Capps. So in Alaska and in the areas of concern under
discussion today, there are the health impacts to oil
production crews but also to commercial fishermen, to
recreational users, to the villages that dot the shoreline.
And I know in the second panel one of the witnesses will be
someone representing the California Air Resources Board and
their testimony with the same concern, about if certain
pollution is allowed to exist offshore, then the regulations
will have to be more severe for onshore in order to comply with
severely strong regulations that the State of California has
imposed for the sake of all people living whose air is affected
by this.
I'm very aware of how failing to limit onshore emissions
from OCS activities can affect onshore activities. In my
district, emissions from marine vessels make up the lion's
share of our total inventory, and it is not just the vessels
transiting the Santa Barbara Channel. Nondrilling marine
vessels that support construction, production, and processing
of our OCS platforms emit hundreds of tons of pollution each
year. These emissions force our air pollution control district
to take drastic steps to limit onshore sources of pollution. So
this is a big area of concern for me.
And I want to give you the rest of the time if you will
share with this committee how the requirements for OCS sources
in this draft bill will affect regulation of onshore sources.
Ms. McCarthy. I guess the biggest area of concern I have is
the difference between how it is currently regulated and what
this would propose, in particular along the State seaward
boundary. What we are talking about is an area where there is
significant human activity. It is also an area in which your
State and others need to regulate to.
Mrs. Capps. Absolutely.
Ms. McCarthy. The National Ambient Air Quality Standard is
applicable at the outside of that boundary. So what you are
doing is allowing emissions in that area which you will not be
able to regulate effectively, we will not be able to minimize,
it will increase human exposure, and you will then have to
compensate by forcing additional reductions onshore. That is
not, I think, the system that any of us would think would work
very well.
Mrs. Capps. Mr. Chairman, I would like this to be
underscored in this hearing today, I hope it will be
underscored in the second panel, that when regulations are
imposed in an area like Alaska in mind with a certain
population that has--I'm glad my colleague from southern
California has joined us. Because the population that we two,
the two of us in the San Diego area and I on the central coast,
is quite different from that in Alaska. And these regulations
will have to be enforced in all of the 50 States with coastal
areas, even though the challenge will be quite different,
depending on the location.
It is very clear in Santa Barbara, in the channel with our
national parks, our marine sanctuary with all the resources we
have, that our offshore pollution greatly impacts--even today,
under the current regulations, impacts our requirement to meet
our standards for air quality and have to be mitigated already
by stronger, more stringent standards onshore because of the
marine activity that goes on because of our oil platforms
offshore.
So I thank you for this testimony, and I believe it is
important, this hearing, that we really get all of the
information on the table. And I appreciate the opportunity for
my 5 minutes.
I yield back.
Mr. Gardner. Thank you.
The gentleman from California is recognized for 5 minutes.
Mr. Bilbray. Yes, thank you very much, Mr. Chairman, and I
apologize.
First of all, the gentlelady from way up north----
Mrs. Capps. It is not that far up north.
Mr. Bilbray. Well, Santa Barbara to San Diego seems like a
world apart sometimes. But she is right that there is obviously
different implementations.
But, right now, you have the implementation of the Clean
Air Act where the offshore facilities are regulated by the
districts. As a former member of the Air Resources Board and 6
years there and 10 years in the district, not only is that the
platforms themselves but all of the support vessels and issues
like that--this doesn't just apply to the offshore oil drilling
itself, but even the importation of oil is affected through the
air district, that the bunker oil used by ships when they enter
the south coast air basin actually now is being managed by what
kind of oil you burn when you are in that area, as opposed to
when you leave the area. So all of these are big challenges
that have been addressed or are trying to be addressed.
The biggest issue is giving the flexibility to the local
administrators to be able to apply the technologies that work
in that part of the area. And it is extraordinary that--when we
are talking about international shipping being affected by air
basin management and stuff like that.
But I think that one of the things that when we talk about
offshore oil that isn't talked about is that this imported oil
is 10 times more likely to foul our beaches than what
traditional drilling has done in the past. And imported oil has
a threat that we don't talk about.
I, for one, always love to point out that anybody who has
ever sailed in southern California might know that in the fog
the one way you are able to find Newport Harbor is with the oil
leaks that are coming out of not the rigs but from the natural
seepage that happens there to the point that where the Chumash
Indians used the seeping oil to seal their canoes. And it was
that much of a culture that they actually used the seeping oil
for medicines and other issues.
So this issue of what is the practical challenges that we
have in certain areas, I think, need to be reflected, but also
the fact that, as somebody who grew up on the beach with that
stinking oil sticking to my feet, the tar balls, I always
blamed the ships offshore, rather than realizing that they are
natural occurring seepage that was just part of the California
experience all the way back to ancient Indians and Native
Americans.
So I appreciate the fact that somebody is willing to sit
down and talk about the facts instead of the fantasies, and I
would only ask that we make sure that we work with local
communities but do it in a way that understands there is a
vested interest to get to yes rather than always playing it
safe and getting to no.
And I have run into those structures even when we were
working on environmental issues like trying to get a waiver
from ethanol mandate in California. We had Federal regulators
that would not agree with the Air Resources Board and the local
community that there were certain fuel mixers that might be
fine for the rest of the country that should not be mandated,
and they kept finding reasons to delay, delay, delay. I made
sure we were able to work together and find answers to those
challenges and find a way to say yes.
Maybe what we sadly have to do is make it as dangerous to
say no as it does to say yes.
Your comments.
Ms. McKinley. Well, first of all, let me congratulate
California for the work they do in terms of permitting of the
platforms and all the work they do to protect the air quality
there.
I would say that the system we have in place right now is
one that attempts to apply the law, that attempts to use
technology, air modeling, the best technologies we have
available. And I think we are well on our way to permitting
three Shell applications and an application by ConocoPhillips.
And the only thing I would caution is that to change the
rules of the road at this point may cause more uncertainty than
certainty they would provide, and you just need to consider
that moving forward. And I still believe that the EAB is an
opportunity to actually avert lengthy Federal litigation and
move these issues forward and know that we have a very secure
and legally defensible permit.
Mr. Bilirakis. Now let us admit one thing. No matter what
we do, no matter what the regs, no matter what the review,
there are those out there in our community at large that will
find a reason to try to litigate and obstruct any more expanded
exploitation of offshore facilities.
Ms. McCarthy. That's right.
Mr. Bilirakis. And basically the concept is it will never
be good enough to avoid their opposition.
Ms. McCarthy. And I think that is why--I don't disagree
with you particularly where the Arctic is concerned. There are
many challenges. Public concern is certainly one of those
challenges that we need to be prepared to meet, but that means
having the most legally defensible permit.
What we have learned through the EAB process is that when
it goes through that process, it is remanded back, it gets
strengthened. There are only four times when that returned
permit has ever been appealed to Federal Court, and three out
of the four it has hands down been upheld.
So if you are really concerned about litigation and that
never going away, we think the EAB can help with that process.
The fourth time, it hasn't been decided.
Mr. Bilbray. I know my time has expired, but I would like
to point out to my colleagues on both sides of the aisle,
southern California--south of southern California which is a
little place called San Diego County, 3 million people, we can
talk all we want about offshore oil, but actually right off
from Coronado Hotel--and some of you may know where Coronado
is--the potential for having offshore oil there is right in our
face because Mexico actually controls all----
Mr. Rush. Mr. Chairman, with all due respect, we have got
to go.
Mr. Gardner. Understand. Thank you.
The gentleman from Washington is recognized for 5 minutes.
Mr. Inslee. Thank you.
We all have an interest in this. I know some of the folks
who live up in Shishmera and other places along the coast who
are very concerned about air quality. But before I ask you a
question, I just want to make a comment about this effort to
expedite oil exploration on the North Slope. I think there is
something that is--irony, I'm not sure is the right word, maybe
something closer to distress about this situation--in that what
we are doing is that we are burning oil and gas, and as a
result of burning oil and gas, we are destroying the Arctic
because we are destroying the Arctic ice cap. And as we are
destroying the Arctic ice cap, we are freeing up more space
that may be available for more drilling, which means we will do
more drilling, and then we will destroy more of the planet.
There is a certain irony here that it is sort of an
encroaching free fire zone that we have, and I'm not sure that
is really healthy for a lot of us. And the science on this is
very, very sobering.
Two weeks ago or last week, the Arctic Monitoring
Assessment Program, which is an international group, very
credible community of the eight nations that border the Arctic,
came out with a report that the Arctic is melting two to three
to four times faster than the IPCC would have predicted a few
years ago and that that will result in sea level rise several
fold what was predicted. The IPCC had reported predictions of
7- to 23-inch sea rise, but because of the acceleration in the
melt in the Arctic and Greenland, this report predicts a 35- to
63-inch rises in sea level by the end of the century.
So we are looking at three to maybe five to 6 feet--5 feet,
excuse me, to sea level rise associated with this. And yet, as
a response to that, what is our response? We just go look for
more places to drill in the place we just destroyed because of
our use of these fuels. And here we are today trying to
expedite that process, rather than trying to find some
alternatives to fossil fuels.
I just think that we should consider that background for
this discussion. I don't think it is a healthy one for any of
us.
Now, with that in mind, I would just ask Ms. McCarthy if
you can just comment on this whole concept. In the clean air
law, should we consider these larger issues? Is it appropriate
for us to consider these larger issues? Or are those just
beyond the realm of this particular statute?
Ms. McCarthy. The only thing I would say is that in our
effort to look at reducing pollution from these sources, a lot
of the pollution that is emitted from an OCS source impacts
climate change, and we do our best to reduce those pollutants
as we are looking at these individual permit decisions.
I do think you need to look at it in the context of the
President's blueprint for energy security where he understands
that there is a transition period that would move away from
fossil fuel where domestic sources are incredibly important.
And part of that challenge is making sure they are the cleanest
we can get and that during this type of exploration that we
take care of the air pollution as much as is humanly possible.
But I do think you are raising a sobering issue. And the
issue is, if we can have the legislature turn their attention
to the issue of climate and come up with a backdrop for these
decisions that was better informed and looked more long term,
it would be a benefit to all of us.
Mr. Inslee. And we have taken some baby steps. I got the
best political event I have ever gone to was in Woodinville,
Washington, last October. I got to help dedicate the first
electric car charging station in America at a church, at the
Wooden Cross Lutheran church. And that happened because of our
stimulus bill that helped some infrastructure development of
the electric car infrastructure.
We are doing some good things around the country. I wish we
could turn our bipartisan attention to those things, rather
than just try to accelerate something that is causing so much
harm.
Thank you.
Mr. Gardner. The gentleman yields back.
The gentleman from Texas, Mr. Olson, is recognized for 5
minutes.
Mr. Olson. Thank you, Mr. Chairman; and thank you, Ms.
McCarthy, for coming today and thanks for your patience and
your being accessible to this committee. I appreciate it. I
want to thank you for coming to Texas for a hearing, a field
hearing there. You provide an example for your colleagues.
I read your testimony, and I have to admit I was surprised
by something I read. In your testimony, you said that the
President's blueprint for a secure energy future recognized the
importance of producing domestic oil as safely as possible
while also taking steps to reduce our dependence on oil
wherever it comes from.
And that last sentence disturbs me. Is it this
administration's position that reducing dependence on American
oil takes the same priority as reducing dependence on foreign
sources of oil? Yes or no?
Ms. McCarthy. It wasn't meant to imply either way. That is
not what that sentence was intended. I think the sentence was
just intended to reflect the fact that the President
understands that energy security is enhanced with domestic
supplies and that, in general, the more we can become
efficient, the more there is a general less reliance on fossil
fuels.
Mr. Olson. Your statement says, will reduce dependence on
foreign oil regardless of where it comes from, reduce
dependence on oil regardless of where it comes from. We know
what this administration is doing to domestic production, the
moratorium on the Gulf, now the permitorium, the persistent
attacks on hydraulic fracturing, the EPA regulations, just to
name a few. Yet we are going out and promising Brazil that we
will be their best customer for their oil. And my question is,
do you believe Brazilian companies have the same regulatory
environment that American companies do? Yes or no.
Ms. McCarthy. I can't speak to that. I don't know the
regulations in Brazil.
Mr. Olson. Do you have a hunch?
Ms. McCarthy. No.
Mr. Olson. My guess is they are not quite as stringent as
we have here in the United States of America.
And, again, I don't know why we would invest in Brazil. Why
not invest this money right here, increase American jobs,
reduce our dependence upon foreign oil? And particularly with--
the guys here have the most regulatory environment. They are
the most economically, environmentally friendly companies that
are doing drilling in the world. And why do we want to punish
them? I don't understand that. It just seems to me that this
administration would rather increase our dependence on foreign
oil rather than tap into our American supply and help supply
desperately needed jobs.
One more question about a bill I'm going to introduce,
ma'am. It is called the Establishing Public Accountability Act.
It is H.R. 1341. It is a very short bill, just two pages, and
basically what it says is we think--I propose as EPA is going
through a rulemaking process that they have to do a study of
the impact on jobs here in America, whether it creates jobs or
whether it destroys jobs, and have to do that before the public
comment period so the public has an opportunity to review what
EPA has done, what they think is going to happen, and they have
to tell the source, what you use, was research done internally,
or was it some private contractor? Again just more
accountability. Let the American public know what is going on.
And would you support that bill?
Ms. McCarthy. Actually, I don't know if the administration
has taken a position on the bill, but I do know that, in terms
of the Clean Air Act regulations that we have initiated of
late--because that is all I can speak to. I haven't been here
for a great deal of time--that when they directly impact or
regulate facilities that we certainly do an economic analysis,
including a jobs analysis.
Mr. Olson. Does that sound like a good idea to you, though,
to get the American public a jobs impact right in the bill,
right in the proposed rulemaking, before the public comment
period, so the American public can look at what EPA is doing
and say do some research on their own and say good or not good?
Ms. McCarthy. When you have a rule that impacts the economy
and can potentially impact jobs directly, I think it is
important for us to take account of that in the rulemaking
process. And to the extent that we can, where modeling is
available and the information is solid, we certainly want to do
that.
Mr. Olson. Good. I appreciate that comment. I'm looking
forward to working with you to get H.R. 1341 passed.
Thank you, ma'am.
Mr. Gardner. The gentleman yields back.
I want to thank the Assistant Administrator for being here
and your time today and for hanging in there with us. So I
appreciate that. And we will move to the second panel.
Thank you very much for joining us today, and thank you as
well for waiting with us through the vote series.
We will be joined on this panel by Mr. Brian Turner, the
assistant executive officer for Federal Climate Policy,
California Air Resources Board; also Mr. Ali Mirzakhalili,
director of the Division of the Quality Delaware Department of
Natural Resources and Environmental Control, along with Mr. Bob
Meyers, senior counsel for Crowell and Moring; and Mr. Lynn
Westfall, executive vice president of Turner, Mason & Company.

STATEMENTS OF BRIAN T. TURNER, ASSISTANT EXECUTIVE OFFICER FOR
FEDERAL CLIMATE POLICY, CALIFORNIA AIR RESOURCES BOARD; ALI
MIRZAKHALILI, DIRECTOR, DIVISION OF AIR QUALITY, DELAWARE
DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL; BOB
MEYERS, SENIOR COUNSEL, CROWELL & MORING; AND LYNN WESTFALL,
EXECUTIVE VICE PRESIDENT, TURNER, MASON & COMPANY

Mr. Gardner. Thank you for joining us, Mr. Turner. If you
would like to, you have 5 minutes for your statement.

STATEMENT OF BRIAN TURNER

Mr. Turner. Mr. Chairman, Ranking Member Rush, thank you
for the opportunity to testify today on this draft legislation.
My name is Brian Turner. I represent the California Air
Resources Board, also known as CARB. It is much easier to say.
CARB is the primary body charged with protecting air and
quality and air-related health in California and charged with
speaking for the State on air quality issues. As you know,
California is one of the Nation's largest producers of oil and
gas. Unfortunately, California is also especially in regions
with significant oil and gas production, endures some of the
worst air quality in the Nation.
CARB and our partners in local air quality control
districts have a long history of working to ensure that oil and
gas development can occur in an environmentally responsible
manner that does not exacerbate our severe air quality
challenges.
CARB and our local air districts have significant concerns
with this draft legislation. We understand the bill is intended
to address the perceived shortcomings in two specific
permitting decisions. We have no comment on those decision. We
do, however, have concerns about trying to change fact-specific
individual permit decisions by wholesale changes in the Clean
Air Act, which has worked well in our State in regulating OCS
activity for almost 20 years. CARB feels the legislation could
have far-reaching unintended consequences on existing effective
protections for public health in California.
Draft section 328 disenfranchises local citizens and
ultimately will prove counterproductive, we feel, by increasing
permit disputes, delays and litigation.
Section 328 of the Clean Air Act at issue here today was
passed in 1990, largely at the insistence of Californian
officials, industry, and union groups because of the failure of
previous regulatory systems. Not just environmentalists, but
State and local governments, business, industry, and residents
across the spectrum were incensed that onshore sources enjoyed
more lax air pollution regulation while onshore sources bore
the burden of heavier regulation to make up for it.
Section 328 ended not just a decade of litigation between
the State and Federal Government, it ended the complicated and
expensive fights previously that we were involved in trying to
bring adequate regulation of offshore sources from the
available regulatory processes.
In contrast, section 328 enshrined the simple but powerful
idea that offshore sources of air pollution should be treated
the same as onshore, stationary sources. This equity of
permitting process and air pollution control requirements is
central to the strength and success of OCS permitting in
California today.
And the systems worked remarkably well. Air pollution from
OCS sources has declined dramatically while industry on and
offshore are certain of predictable and a relatively process.
The draft bill unravels this carefully constructed and
successful program threatening more pollution and more expense
and less regulatory certainty.
I will briefly summarize our concerns. By changing the
definition of OCS source, the discussion draft dramatically
limits the time frame for considering emissions from a project.
Artificially limiting the time frame in this way reduces the
amount of emissions that are counted as part of the project.
This will result in some entire projects that would currently
be regulated falling beneath regulatory thresholds for PSD, for
offsets, or both.
Thus, the entire project would avoid air pollution controls
and so substantially increase air pollution.
Second, by prohibiting the application of PSD requirements
on vessels, the draft could preempt multiple existing State and
local regulations on a variety of nonroad engines. These
sources would then be uncontrolled, further increasing
emissions. This prohibition on PSD also complicates the
enforceability and applicability of CARB's recent important
Statewide regulations of harbor craft and ocean going vessels
Mr. Bilbray referred to.
Third, by requiring that air pollution impacts of OCS
source be measured on an onshore location, the bill increases
regulatory burden for industry and government and decreases
public health protections for offshore users, including oil and
gas production crews, commercial fishermen, tourists and
recreational users.
Lastly, by removing administrative and judicial appeals to
Washington, DC, the draft completely preempts the existing
local administrative review and State court appellate process.
This would quash local control, impose stupendous new costs on
State and local governments and taxpayers and disenfranchise
community groups and local stakeholders, effectively closing
the courthouse door to otherwise worthy concerns.
In closing, CARB believes that in California, the
amendments made by this draft are unnecessary and will do more
harm than good. We encourage the committee to consider, to
strongly consider whether such broad legislation is even
necessary, or whether the two specific permitting decisions in
dispute can be resolved without wholesale changes to an
otherwise successful program.
Thank you again for the opportunity to talk.
Mr. Gardner. Thank you, Mr. Turner.
[The prepared statement of Mr. Turner follows:]

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Mr. Gardner. Mr. Mirzakhalili.

STATEMENT OF ALI MIRZAKHALILI

Mr. Mirzakhalili. Chairman Gardner, Congressman Rush, and
members of the subcommittee, thank you for the opportunity to
testify on this draft legislation to amend the Clean Air Act
regarding air pollution from outer continental shelf
activities.
My name Ali Mirzakhalili, and I am the director of the Air
Quality Division for the State of Delaware's Department of
Natural Resources and Environmental Control.
We believe the proposed amendments would severely limit
Delaware's authority to effectively regulate offshore sources
pollution. The proposed constraints placed on States' rights
and authorities will adversely affect our ability to protect
public health and welfare from harmful effects of air pollution
and adversely affect the local economy, particularly Delaware's
large tourism industry.
Delaware has an air pollution problem. We failed to meet
the 8 Hours Ozone and Fine Particle Standards. We have been
successful in implementing pollution control strategies for
stationary and area sources. Delaware's major and minor
stationary sources are now well controlled and collectively
account for only 31 percent of our statewide emission
inventory. However, we still face the challenge of attaining
and maintaining the health-based air quality standards, our
remaining opportunities to reduce emissions are largely related
to mobile sources, both on and offroad, including offshore
sources.
Through delegation of OCS program, Delaware applies the
same requirement to the OCS sources as we do to sources
onshore. We have an effective permitting process that includes
the ability to issue expedited permits. We find that existing
authorities under the Clean Air Act appropriate, effective and
workable. If not properly controlled, OCS activities will have
an adverse impact on Delaware's air quality, which makes us
enormously interested in the fate of these proceedings.
With respect to the specific provisions of the draft bill,
I offer the following: Delaware opposes the proposed amendment
of the Clean Air Act section 328(a)(1), which could require air
quality impact of any OCS source to be measured and determined
solely with respect to the impact at an onshore location and
the corresponding onshore area. We support retaining the
existing language that provides for onshore and offshore
sources to be treated same.
The proposed amendment would limit Delaware's ability to
protect the national air quality standards in the offshore
areas of Delaware, leaving recreational and commercial users of
our waters unprotected. The amendment disregards potential
visibility or other impact of a Delaware OCS source on any
neighboring State.
Moreover, the consideration of the effects of transported
pollution on Delaware from OCS activities and neighboring
States would be prohibited. This provision will add to the
permitting complexity by requiring complicated modeling
analysis that may require extensive pre-project monitoring to
establish baselines relative to future impact as well as
producing an entirely new wrinkle in the applicability
examination.
Applicability determinations are often the most
controversial and time-consuming element of the permitting
process. This amendment, therefore, is contrary to the presumed
streamlining objective of this legislation.
Delaware opposes section 328(a)(4)(c), which would
establish that a drilling activity commences and ceases to
exist based on when the owner commences and ceases the actual
drilling operation.
It is a misconception that sources that operate for a short
duration of time do not significantly affect air quality. It is
noteworthy that much of this discussion may be unnecessary if
the proposed sources install and operate tests at a local
control technologies, which oil and gas exploration companies
can certainly afford.
Finally, we oppose the new Section 328(d) permit
application. The language requires final agency action to be
taken not later than 6 months after the date of filing of a
complete application. While Delaware generally issues
stationary resource permits within 6 months, the review times
vary based on the complexity of a source's application.
Accordingly, we do not believe it is necessary or
appropriate to set a permit review time limit in the bill.
Imposing a time limit on the permitting agency is inconsistent
with existing land base requirements and is unnecessary. A 6-
month timeframe does not provide adequate time for permit
drafting, review with permittee and public participation and
EPA comment in all instances, and places a one-sided and one-
size-fits-all requirement on the permitting agency.
Second, the new language at 2 and 3 subverts existing state
due process procedures and forces an agency like ours to argue
and defend its decision in Federal Court. Although I am
confident that we can aptly defend our permit decisions in any
court, the potential cost of such adjudication will serve as a
disincentive for maintaining our delegation of this program. We
believe such an outcome is, again, contrary to stated goals of
this discussion draft and will discourage states from accepting
delegation. Once again, thank you for this opportunity to
testify and I look forward to answering your questions.
Mr. Gardner. Thank you.
[The prepared statement of Mr. Mirzakhalili follows:]

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Mr. Gardner. Mr. Meyers, you are recognized for 5 minutes.

STATEMENT OF BOB MEYERS

Mr. Meyers. Thank you. And I appreciate the opportunity to
testify again today. I just want to address a few key points.
First, there is a complaint that the draft legislation somehow
impedes the ability of States to protect air quality. In
particular, California complains that it is concerned about the
public health impacts of offshore emissions and that by
supposedly preventing the State from implementing its mobile
source regulations, the discussion draft would deny health
protections to onshore and offshore populations, including crew
members on OCS service vessels. As pointed out in my written
testimony, it is entirely unclear how refusing to allow mobile
sources like vessels to be broadly redefined in the Clean Air
Act as stationary sources denies California or any other State
any authority it may have to regulate mobile source emissions.
If States have mobile source authority, they can use it.
The discussion draft is silent on this point. Indeed,
California has been a prime example of exerting such authority
in seeking Clean Air Act waivers for its mobile source
standards. In fact, in public comments the State has already
claimed authority to regulate crew vessels servicing an oil
platform under its mobile source authorities.
Again, the discussion draft is limited to exertion of
stationary source authority. The argument regarding health
protection also seems to fall apart when you realize that
California currently exempts 70 percent of in-use harbor craft
diesel engines. Under CARB's final regulations, in-use fishing
vessels are not subject to requirements to replace in-use
engines with cleaner engines. These vessels generate 40 percent
of all harbor craft emissions, or 10 times the amount of
emissions associated with OCS sources off Santa Barbara County.
Parenthetically, California partially justifies excluding
70 percent of vessel engines and 40 percent of emissions due to
the lower health risk from fishing vessels offshore as compared
to near shore emissions. Accurately measuring the lower health
risk is one of the very concepts the discussion draft advances.
Second, there is a complaint that the legislation won't
allow California air quality districts to incorporate CARB's
statewide maritime rules and other rules into PSD permits
beyond State regulatory waters. Since California currently
defines regulated waters to extend 24 miles offshore, the State
appears to be arguing that it should be allowed to extend its
authority beyond the 25-mile limit in Section 328. I may be
wrong on this, but that seems to be what I have read in the
written testimony.
Third, there is a concern with regard to local
administrative review and process. In this regard, it is
unclear from my review of the testimony whether California is
arguing that administrative review process exists within its
delegated authority from EPA, or outside of this authority.
Under either authority no mention is made as to whether
California will consider a permit final after issuance or
whether as in the AB process, invocation of the process itself
would delay finality.
Some of the prime concerns behind the discussion draft are
to establish clear deadlines and to recognize that development
of OCS sources involves issues of national importance. But
apparently, EPA and States do not think there is any reason to
hold themselves accountable for meeting any statutory
deadlines. EPA has argued in court that the current Clean Air
Act requirements for issuing a permit in one year are
inapplicable when the EAB, which is part of the EPA, chooses on
its own to grant review of permit decisions.
EAB is not subject to any statutory limit on its
deliberations since Congress didn't create it. Delaware argues
that imposing a time limit on a permitting agency is
inconsistent with existing land-based requirements and is
unnecessary. It argues that States should be able to determine
on a case-by-case basis, when sources begin and cease operation
and make source specific evaluations. While I respect the
State's perspective, the issue before you today is
implementation of Federal PSD requirements, which Congress
indicated should be decided within a specific amount of time.
So I don't think you can have it both ways. I don't think
you can argue that the present system without effective time
limits and with potentially unlimited discretion for
administrative review, is a better system than one which
attempts to place time limits on review and help define what
Congress intended in 1990. I also don't think the arguments are
consistent with the structure of the Clean Air Act which makes
clear distinctions between mobile stationary source regulation.
Instead, what is being advocated is seemingly unfettered
discretion to merge two concepts when OCS sources are involved.
At a minimum, this presents the issue of double regulation of
the same sources.
Finally, there appears to be the impression that this is
somehow an Alaska problem. I can't agree with this perspective.
Without additional legislative or regulatory direction there is
no assurance that the experience with region ten permits and
the EAB review of these permits won't be replicated elsewhere.
As far as I can see, the only thing that hasn't been offered up
is the EAB's new order. But this order itself allows the EAB to
hold arguments in appropriate cases where it determines that an
argument would assist in decision making.
Further, the EAB explicitly retains the authority to modify
its procedures as appropriate on a case-by-case basis. This
hardly gives one confidence that the process for the next OCS
permit is somehow fixed.
Once again, thank you for the opportunity to be here. And I
think the subcommittee's focus on developing legislative
solutions in this area is appropriate, and I look forward to
answering any questions.
Mr. Gardner. Thank you, Mr. Meyers.
[The prepared statement of Mr. Meyers follows:]

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Mr. Gardner. Mr. Westfall, you have 5 minutes.

STATEMENT OF LYNN WESTFALL

Mr. Westfall. Thank you. Mr. Chairman, members of the
committee, it is my pleasure to be here today to discuss the
importance of Alaska crude production to the West Coast of the
United States. My name is Lynn Westfall. I currently serve as
the executive vice president of Turner, Mason & Company, a 40-
year old consulting firm to the refining business. Prior to
joining Turner-Mason, I spent 36 years in the refining
business. Thirty of those years were with companies having
significant assets on the West Coast. Fourteen of those years
are on the West Coast itself.
In my remarks today, references to the West Coast means the
seven-State area comprised of Alaska, Washington, Oregon,
California, Nevada, Arizona, and Hawaii. Those defining
characteristics of the West Coast market is isolation from the
rest of the country. The area only receives 17 percent of its
refined product demand from other areas of the U.S. In contrast
to an area such as the midwest, which is supplied by pipelines
from the Gulf Coast for over two-thirds of its product demand.
In terms of crude supply, there are no pipelines that bring
crude into the West Coast from other areas of the country. This
means that the West Coast is totally dependent on crude
production from California and Alaska with any shortfall having
to be made up with foreign imports. This isolation is
understandable given the history of crude production in the
area. As you can see on my first chart, Alaska crude production
peaked in 1988 at just over 2 million barrels a day, and
California production peaked in 1985 with slightly more than 1
million barrels a day.
With crude demand of only 2.5 million barrels a day, the
West Coast became a major exporter of crude to the rest of the
United States. During this time, crude pipeline capacity was
built to take crude out of the West Coast but not to bring it
in, and shipments to the rest of the U.S. peaked in 1985 at
almost 700,000 barrels a day. During the same period, the area
only imported 10 percent of its requirements, and Alaska crude
accounted for some 84 percent of the area's crude demand.
Since peaking, though, crude production in both Alaska and
California has declined by about 4 percent a year. As you can
see on the next chart, by 1993, local production had fallen
below demand in the area, and by 2001 crude shipments out of
the area to the rest of the country ceased altogether. The west
coast then began to rely more and more on foreign imports which
have grown six-fold since the early 1990s.
As you can see here, in 2010 the West Coast imported about
1.1 million barrels a day of crude, about 48 percent of its
demand. I should point out that that number is artificially low
due to reduced product demand caused by the recession. At more
normal demand levels, the West Coast last year imported over
1.4 million barrels of crude, or about 53 percent of its
demand.
So where does the West Coast turn to supply its crude
needs? On this next chart, you can see that last year it
depended on the Middle East, South America and Canada for 80
percent of its crude imports and about 20 percent from other
areas in the world. More importantly, however, is its
increasing dependence on OPEC for crude. If you look at the
next chart, since 2000, west coast oil imports from OPEC have
more than doubled, and OPEC has accounted for over 75 percent
of the growth of imports into the area. I think the obvious
conclusion from this historical review is that as crude
production in Alaska has declined, the West Coast has turned
more and more to OPEC for its crude requirements.
For the past 30 years, the West Coast has moved to being a
large exporter of crude to being a large importer. This has had
the predictable outcome of raising relative prices in the
region. As you can see on the final chart, during the 1990s,
ANS Crude sold at a discount to crude on the Gulf Coast of
about $2.80 a barrel. Since 2005, however, this discount has
been reduced to just $0.63 a barrel for an increase over $2 a
barrel. This amounts to a crude price increase of about $1
billion per year, or about $0.05 per gallon of gasoline.
Looking forward, the West Coast may become even more
dependent on imports and imports from OPEC. Had there been no
production of crude from Alaska in 2010, the West Coast would
have imported over 73 percent of its crude requirements and
over 70 percent of those imports would probably have come from
OPEC.
As a final point, you should be aware that the almost
200,000 barrels a day that were imported into the West Coast
from Canada are in jeopardy of being reduced by the new
California low carbon fuel standard. Under this regulation,
crude produced by mining or enhanced recovery techniques, such
as oil sands from Canada, will be penalized with a carbon
footprint 20 percent higher than conventional crudes. Products
refined from this crude then will make it much more difficult
for refiners to reduce their carbon footprints and this can
divert Canadian oil supplies away from the West Coast.
I think the importance of providing an abundant secure
supply of transportation fuels to this part of the country and
the lack of infrastructure into the area from other parts of
the U.S. seem to make a compelling case for any actions that
increase local supplies.
Thank you for your time and attention. I look forward to
your questions.
[The prepared statement of Mr. Westfall follows:]

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Mr. Gardner. Thank you, Mr. Westfall. We now move into the
question phase of the hearing. And I will recognize myself for
5 minutes.
Mr. Westfall, I will start with you. About the fuel supply,
I read in the paper the last couple of weeks where it is
talking about fuel supply and its impact on price, yet when
certain people ask me a question about what is happening to the
price of gasoline at the pump, they will say that the supply of
fuel has nothing to do with price. Does the supply of gasoline
impact its price?
Mr. Westfall. Absolutely.
Mr. Gardner. If there is more supply of oil, what happens
to the price of gasoline?
Mr. Westfall. Obviously, if there is enough supply of oil,
the price will be reduced. That is what I had in my historical
chart there, although it is the reverse. As crude supplies went
down, the cost of crude went up on the West Coast.
Mr. Gardner. So increased supply results in lower prices at
the pump?
Mr. Westfall. Absolutely.
Mr. Gardner. Mr. Meyers, I wanted to ask you a couple
questions about the testimony earlier from this panel, as well
as the assistant administrator of the EPA, specifically dealing
with their contention that offshore human exposure to emissions
from OCS sources will be unaccounted for under the legislation.
And your testimony, though, suggests that Congress' intent with
Section 328 of the Clean Air Act is to protect onshore ambient
air quality. You went into that a little bit. Could you go a
little bit further into the congressional intent on onshore air
quality.
Mr. Meyers. Yes. I mean, the legislation seemed to have
been developed over a process of several years. There was
legislation introduced in 1987 and leading up to the 1990 Clean
Air Act. I think most people say, you know, the reason, as was
testified here, was problems of onshore air quality in the
nonattainment districts in California that drove this issue.
So the legislation is defining the impact with regard to
the nonattainment area onshore. So I think that is consistent
with the original intent of the bill.
Mr. Gardner. And Mr. Meyers, are you familiar with the
Department of Interior role in OCS?
Mr. Meyers. Somewhat. It is not my area of expertise.
Mr. Gardner. I was just wondering, the comment period that
was brought up earlier, there is comment period when it comes
to Department of Interior activities?
Mr. Meyers. I believe so. Again, that is not my area of
expertise.
Mr. Gardner. Thank you. And you stated in your testimony
that Section 328 of the Clean Air Act is not intended to be
used for the purpose of preventing exploration development of
the OCS?
Mr. Meyers. Right.
Mr. Gardner. Does applying identical onshore ambient air
quality standards to offshore facilities depart from Section
328's intent?
Mr. Meyers. I think the question that has arisen is what
does the--arisen in permit decisions over 5 years what does
this section mean, and I think that is the source of the
problem. I think California and Delaware have interpreted it
one way, I think there are other reasonable interpretations. So
the role that legislation can serve, which I think would
actually speed up the process is for clarification, for
clarifying what Congress meant at that point in time. The
reason it was referred to in terms of the applicability process
being the most difficult part, I agree, I agree.
So why wouldn't more clarity by legislation help speed up
the process if trying to decide what you are applying the Clean
Air Act to is the hardest part of the process.
Mr. Gardner. And Mr. Turner, in his testimony, stated that
the legislation changes the timing for when an OCS source
becomes regulated as a stationary source rather than a mobile
source. Does the legislation change that time?
Mr. Meyers. No. I think the legislation--I think it gets
confused, frankly.
Mr. Gardner. So just a clarification to prevent needless
litigation?
Mr. Meyers. Well, clearly, I think Assistant Administrator
McCarthy said it correctly, that the Clean Air Act requires
that the emissions be accounted for, but there is a difference
between accounting for the emissions from the vessels and
directly regulating the vessels as a stationary source using
stationary source standard language of best control technology.
There are authorities in the Clean Air Act in title 2 that are
specifically designed for the regulation of on-road and off-
road sources. EPA has used those authorities. EPA regulates all
marine vessels right now of all three categories. EPA and the
United States are entering into emission control areas to
control fuel use off the coastline. These are the authorities
that have been done. The confusion here is when people are
trying to use stationary source regulation and applying it to
mobile source on the basis of the provision in 328 that talks
just about the emissions.
Mr. Gardner. When it comes to California, for instance,
they have exempted several vessels from the requirements as
well, haven't they?
Mr. Meyers. Yes. I think I mentioned that. There was
concern with air quality for people offshore, and I am not
disputing that that could be an issue, it depends on where you
are. But we have addressed that like we have done for cars,
through mobile source regulations. EPA has issued regulations
California has. I was saying that there was a reference in the
testimony that part of the concern was the crew members of
supply ships for OCS sources, and that was one reason why they
needed to regulate those vessels.
What I was pointing out is they don't go back in their own
regulations on fishing vessels, which are 40 percent of the
emissions, and apply the retrofit requirements that they have
required, even though fishermen are on those vessels too. So it
seems a little bit, you know, uneven. I am sure they have their
reasons for doing it, but I think, again, the argument is
trying to use the stationary source provisions of the Act to
get at something that was not intended.
Mr. Gardner. Thank you, Mr. Meyers. Ranking Member Rush.
Mr. Rush. Thank you, Mr. Chairman. Mr. Turner, you seem to
have some disagreements with the comments of Mr. Meyers, if I
can read the expressions on your face. Would you care to add
some commentary to Mr. Meyers' testimony?
Mr. Turner. Thank you, Mr. Rush. I am afraid I am a very
poor poker player. But I do think we heard some inaccurate
information there. One was the definition of an OCS source. And
the contention is that this legislation would not change that
definition, and I disagree. It would change how--it would
change how the definition of OCS source is currently
implemented.
As we have done in California for 20 years, we read the
legislation one way, and that allows us to regulate the whole
of a project as we understand it. Changing that definition now
too drastically, and I have some evidence in my testimony of a
25 percent reduction, I have another instance where it calls
for 50 percent reduction in the total emissions of a project
causing some projects to drop out of regulations completely,
dramatically increasing pollution. So it does change the
definition of a source with specific tangible air pollution
impacts.
The other contention was that we are trying to regulate
mobile sources through a stationary source regulation. What
this is allowing is using existing nonroad regulatory--sorry.
So there is two differences. One, we don't regulate vessels
with fact. That is clear in the legislation that we can't do
that. What we do do is incorporate regulations that exist on
vessels andother nonroad sources into a PSD permit. This
legislation exempts all those vessels and potentially all those
nonroad engines on those vessels, things like train engines, et
cetera, from those existing regulations that we would
incorporate into the permit.
So again, those engines would be unregulated offshore very
differently than what would happen to them onshore to get us
back to the situation we were pre-1992 when there was much more
contention over each of these permitting decisions. Thank you.
Mr. Rush. Mr. Mirzakhalili, in the area of public
commentary in Delaware, when you open your process up for
public comment, who actually participates in those sessions?
Mr. Mirzakhalili. We give opportunity for all public
comment through a public notice receipt of application and a
public notice available to draft permit. And so the public has
an opportunity to review both comment on application and
comment on that draft permit before we finalize the permit
process. So it is an open process that provides that
opportunity.
Mr. Rush. Mr. Turner, is that a similar process in
California?
Mr. Turner. Yes. I will point out we both have delegated
authorities, so this entire process is run by local officials,
the local administrative review. We have talked a lot about the
environmental appeals board, et cetera, here today. That is not
at issue in either of the State-delegated programs.
Mr. Rush. And so would this bill have an adverse impact on
your current status in terms of environmental impact for the
State and local stakeholders?
Mr. Turner. As far as the administrative and judicial
review, it would remove it completely from our existing local
process. And let me just, when a district makes a permitting
decision, the first appeal is heard by the district's appeals
board, hearing board, which is made up of local officials,
local county supervisors, boards of the city councils. After
that decision, if there is judicial review, and usually that
process, because it is much more locally based with local
experts and local elected officials, resolves disputes. That is
what it is intended to do, and that is what it overwhelmingly
successfully does. If there is a permit appeal at that point
into the judicial system, it goes into the State court system,
the local Superior Court, the court of final appeals, the
California Supreme Court. Anyway, it is all kept locally, local
control, local experts, local stakeholders.
Mr. Mirzakhalili. And in Delaware, we have a similar
system. It is an administrative appeals board process that they
are not wearing robes, and it is not nonjudiciary, it is
administrative, and appeals to that can go to a court system.
And this proposal entirely bypasses that.
Mr. Rush. Mr. Chairman, I yield back.
Mr. Gardner. The gentleman yields back. The gentleman from
Illinois, Mr. Shimkus, is recognized for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. A lot of questions,
not a lot of time. Would we all agree that title 1 is for
stationary sources, by the Clean Air Act? Title 1 of the Clean
Air Act? Would you agree that that is for stationary sources,
Mr. Turner, yes or no?
Mr. Turner. There are other stationary source regs, I
believe, in other portions of the Act including in section 3,
subtitle 3.
Mr. Shimkus. But title 1?
Mr. Turner. Title 1 deals with----
Mr. Shimkus. Stationary sources, OK.
Mr. Mirzakhalili. National ambient air quality standards
are part of title 1, so it encompasses more than just----
Mr. Shimkus. As are hazardous air pollution regulations?
Mr. Meyers?
Mr. Meyers. Yes, I think that is correct.
Mr. Shimkus. Mr. Westfall?
Mr. Westfall. I am glad to say I don't know the answer.
Mr. Shimkus. Neither did I until this morning. No. Title 2
is mobile sources under the Clean Air Act. Mr. Turner?
Mr. Turner. I believe so.
Mr. Shimkus. I can't pronounce your name.
Mr. Mirzakhalili. Mirzakhalili. Yes.
Mr. Shimkus. You would agree with that, Mr. Meyers?
Mr. Meyers. Yes.
Mr. Shimkus. Mr. Westfall?
Mr. Westfall. The same answer.
Mr. Shimkus. And Mr. Meyers, you mentioned this would be
double regulations on the OCS?
Mr. Meyers. Yes. Going back on the comment here, I mean, I
think it is being misconstrued that the mobile sources aren't
regulated. They are regulated. California passed a regulation.
EPA has regulations. It is not a question of them being
regulated.
Mr. Shimkus. Would it be illegal to regulate mobile sources
under title 1?
Mr. Meyers. Well, that is not what the--there is not
authority.
Mr. Shimkus. There is no authority, so that would be
illegal? Would it be illegal? I mean, is California breaking
the law by regulating mobile sources under title 1.
Mr. Meyers. I wouldn't go--I don't--I am not going to go
that far.
Mr. Shimkus. Mr. Meyers, reclaiming my time. Under the
Clean Air Act, it states the term ``stationary source'' means
generally any source of air pollutant except those emissions
resulting directly from internal combustion engine for
transportation purposes, or from a nonroad engine or nonroad
vehicle as defined in section 7550. So how do you that?
Mr. Turner. If I may----
Mr. Shimkus. You may, but I think you are on shaky ground
here.
Mr. Turner. I hope to clear something up because I think
this is a source of confusion. Section 328 created this new
thing called an OCS source. It specifically involves the
vessels associated with drilling activity.
Mr. Shimkus. Well, I think that is why the clarity of this
language is needed to address, because the Clean Air Act here
says mobile sources internal combustion engines should be title
2, and that is why we are having this. The EAB also, in
essence, agrees with this point. Based upon this judgment, or
it is an order, they say you can't regulate mobile sources
under title 1. And this raises the issue that we addressed with
Administrator McCarthy, which we would like to make sure we
address for clarity in the record.
Here is the three court cases or EAB, she wouldn't say they
are court cases, I would say they are court cases because they
have judges, you have litigants, you have orders. And this one
is 2007, ping, right, pong; 2010 ping-pong, 2011 ping-pong. Are
these court cases being pushed back and forth in a litigation
quagmire to delay taking advantage of our abilities to recover
oil and gas? Mr. Meyers.
Mr. Meyers. Well, I think the Agency stated that they have
taken legal position that the EAB, which is part of EPA,
doesn't have to obey the 1-year requirement in the Act. So I
think the history of this has been in the record. There have
certainly been remands from the EAB. But the Agency right now
doesn't think that is abounded by the 1-year PSD requirement in
the Act. I am unsure what the States think. I think there have
been some representations that the State administrative process
should be allowed to basically work unfettered. So I think the
question for States is do they think they are bound by the 1
year in a PSD under delegation.
Mr. Shimkus. And going back to the first ruling or judgment
or whatever it is called is where the EAB defines in here that
you can't regulate mobile sources under title 1, only
stationary sources.
Now, going back. Mr. Westfall, by delaying this how does it
affect our reliance on imported crude oil and our energy
position for the United States and prices?
Mr. Westfall. It does nothing but make us more dependent on
foreign sources.
Mr. Shimkus. And that is the irony of this whole thing?
Mr. Westfall. And particularly a place like the West Coast
that has no other supply, domestic supplies can't reach their--
--
Mr. Shimkus. Their exclusion raises gas prices for their
own consumers?
Mr. Westfall. Absolutely.
Mr. Shimkus. Thank you.
Mr. Gardner. Thank you. The chair recognizes Mr. Bilbray
from California for 5 minutes.
Mr. Bilbray. Thank you. Mr. Turner, one of the things that
has been brought up and discussed, and I was just wondering,
when we get into the different implementations, the rest of the
world may not know about AB 32, but obviously--and I don't know
how much you are engaged or ARB has been included in that
implementation.
The question is, is that when you look at domestic
production, is 32 a consideration at all under ARB under
today's strategies?
Mr. Turner. Two ways that I would say that it is. Oil and
gas sources are obviously--the production of oil and gas is a
major CO2emission source. They are regulated as
such. Number two is that many of our strategies to reduce
carbon emissions will also reduce our petroleum demand. So
those are two ways in which they interplay.
Mr. Bilbray. Well, my question, then, is you do an offset
by the fact that if you don't have domestic production or
offshore production of fossil fuel in this country, it then
creates the issue that we have like in the South Coast Air
Basin is the importation. And is there an offset considered of
the fact that in lieu of domestic production, there is a major
emissions issue of the long transport of imported oil along
that? Is that even considered at ARB when they get into it, as
a no project option has an environmental footprint?
Mr. Turner. I am not deeply familiar with their modeling
analysis to say whether it shows a dramatic--I don't believe it
shows much effect of AB 32 on the domestic production honestly
that would curtail it by the action of that program. So I am
happy to get you further information on that.
Mr. Bilbray. One of the biggest things that makes the whole
issue of AB 32 and the whole issue with the greenhouse gas is
totally so far beyond what the intention of the Clean Air Act
was that it has really kind of created a whole new world of
reality for those of us that come from the air district
background. South Coast is impacted. Who else are you seeing
within our nonattainment areas that this is a major issue on?
Mr. Turner. South Coast, Ventura County and Santa Barbara
County.
Mr. Bilbray. And so it really isn't an issue if we were
talking about exploration. My big question when you get into
this is that our memorandum of understanding with the military,
how enforceable has that been of us requiring them to change
operations?
Mr. Turner. I don't know the answer to that.
Mr. Bilbray. So in other words, if you are now regulating
the crew boats as being a stationary source that are running
off. Now, those stationary sources, the platforms, they are
within the coastal waters of the territory of California?
Mr. Turner. Some are and some aren't.
Mr. Bilbray. Some aren't? So some of this is actually
trans--I mean, transterrestrial or jurisdictional, so you are
actually regulating platforms that are outside the State of
California?
Mr. Turner. If we are talking about air quality
permitting----
Mr. Bilbray. Yes.
Mr. Turner [continuing]. We regulate to the 25-mile zone
limits, what section 328 does. It allows us to delegate an
authority after 25 miles.
Mr. Bilbray. So in other words, we basically allowed you to
come into federal jurisdiction. And the same time, do you
regulate the crew boots and the support boats that run out to
San Clemente Island or San Nicolas Island, what kind of
oversight does the South Coast Air Basin put on the Federal
activity that runs between L.A. Harbor and the Federal
facilities that are sitting offshore.
Mr. Turner. The military?
Mr. Bilbray. Yes.
Mr. Turner. I don't think those are covered by the harbor
craft.
Mr. Bilbray. Do you a degree of inconsistency here that if
we are talking about one operation on Federal territory and
another operation on Federal territory, we now pick and choose
which is a mobile source that we actually have jurisdiction on
and which ones we don't?
Mr. Turner. Our jurisdiction over oil and gas development
on the OCS was--the structure was set up by Congress in section
328, and we were delegated by the EPA.
Mr. Bilbray. OK. Now let me tell you something. The 1990
Reform Act also required the use of methanol and ethanol, so,
you know, my attitude is just because Congress took an action
doesn't mean in my book, as a former member that sat on that
you know committee for over 6 years and 10 years on air
district, doesn't carry a lot of weight with me. But what I get
on this is you are talking about regulating these, what
everybody would obviously perceive as a mobile source, the crew
boats, are being regulated now more like the off-road equipment
regs that you are implementing for the terrestrial emission
issue with the construction trades?
Mr. Turner. CARB's regs on the harbor craft and the ocean
going vessels is under EPA section 209 like the light duty
vehicles. We have got a CARB out there that we are authorized
by EPA. California is the only State that is because of its
severe air quality issue.
Mr. Bilbray. Have we been able to implement the bunker fuel
issue for vessels coming in from overseas?
Mr. Turner. I believe. I will get you information on the
current status. I believe we are.
Mr. Bilbray. OK.
Mr. Gardner. I want to thank the witnesses for joining us
today. I appreciate your time and testimony. The record will be
open for 10 days to submit questions for the record. And that
concludes today's hearing. Thank you very much.
[Whereupon, at 12:55 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

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