[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
ENERGY CONSUMERS RELIEF ACT OF 2013
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 12, 2013
__________
Serial No. 113-30
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_____
U.S. GOVERNMENT PRINTING OFFICE
82-183 WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
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 KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
RALPH M. HALL, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois PAUL TONKO, New York
JOSEPH R. PITTS, Pennsylvania EDWARD J. MARKEY, Massachusetts
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
ROBERT E. LATTA, Ohio LOIS CAPPS, California
BILL CASSIDY, Louisiana MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia DORIS O. MATSUI, California
CORY GARDNER, Colorado DONNA M. CHRISTENSEN, Virgin
MIKE POMPEO, Kansas Islands
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
C O N T E N T S
----------
Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 11
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 12
Prepared statement........................................... 13
Hon. Bill Cassidy, a Representative in Congress from the State of
Louisiana, opening statement...................................
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 14
Prepared statement........................................... 16
Witnesses
Paul Cicio, President, Industrial Energy Consumers of America.... 23
Prepared statement........................................... 25
Brendan Williams, Vice President, Advocacy, American Fuel &
Petrochemical Manufacturers.................................... 30
Prepared statement........................................... 32
William N. Rom, Professor of Medicine and Environmental Medicine,
NYU School of Medicine, on Behalf of the American Thoracic
Society........................................................ 47
Prepared statement........................................... 49
Rena Steinzor, Professor of Law, University of Maryland, and
President, Center for Progressive Reform....................... 57
Prepared statement........................................... 59
Anne E. Smith, NERA Economic Consulting.......................... 71
Prepared statement........................................... 73
Scott H. Segal, Director, Electric Reliability Coordinating
Council........................................................ 175
Prepared statement........................................... 177
Submitted Material
Discussion draft................................................. 5
Statement of the Environmental Protection Agency, submitted by
Mr. Whitfield.................................................. 18
Letter of April 11, 2013, from the Natural Resources Defense
Council to the Subcommittee, submitted by Mr. Rush............. 213
Statement of the Society of Environmental Journalists, submitted
by Mr. Whitfield............................................... 217
Article entitled, ``EPA: Agency comes under fire for `closed,
opaque' press policy,'' by Emily Yehle, E&E reporter, April 11,
2013........................................................... 218
ENERGY CONSUMERS RELIEF ACT OF 2013
----------
FRIDAY, APRIL 12, 2013
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:35 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Hall, Shimkus,
Terry, Burgess, Latta, Cassidy, Olson, McKinley, Gardner,
Pompeo, Kinzinger, Griffith, Upton (ex officio), Rush,
McNerney, Tonko, Green, Capps, Barrow, and Waxman (ex officio).
Staff present: Nick Abraham, Legislative Clerk; Charlotte
Baker, Press Secretary; Allison Busbee, Policy Coordinator,
Energy and Power; Patrick Currier, Counsel, Energy and Power;
Tom Hassenboehler, Chief Counsel, Energy and Power; Mary
Neumayr, Senior Energy Counsel; Andrew Powaleny, Deputy Press
Secretary; Jeff Baran, Democratic Senior Counsel; Alison
Cassady, Democratic Senior Professional Staff Member; Greg
Dotson, Democratic Staff Director, Energy and Environment; and
Caitlin Haberman, Democratic Policy Analyst.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. I would like to call the hearing to order
this morning. And I certainly want to welcome the panel members
who were braving the weather to get here this morning. We
appreciate that. Our ranking member Mr. Rush has been caught in
traffic and is on his way, and when he gets here I am sure he
will want to give an opening statement as well.
But today's hearing, we are going to be focusing on the
Energy Consumers Relief Act of 2013, which was introduced by
our colleague Mr. Cassidy, who is a member of this committee. A
couple of days ago we had a debate on the Keystone pipeline; we
had a hearing on the Keystone pipeline, which I might say the
American people in a recent Pew poll showed that they support
by a margin of 66 percent to 23 percent. And I think during
that hearing, it really brought to the focus two different
views of the way we should be proceeding in developing energy
in America.
One view supported by many people in America, including
some of our Democratic colleagues, view climate change as the
most important issue facing mankind. And they support more
mandates and more regulations relating to energy, forcing
energy cost upward. They support new energy taxes and a strong
cap-and-trade system.
Another vision supported by many in this committee is that
we want a pathway to energy self-sufficiency focused on
maximizing abundant, affordable, and diverse energy resources,
reducing emissions through technological development, economic
competition, and market-based efficiencies. Now, I would say
that in America we don't have to take a backseat to anyone
about being focused on the environment. Our CO2
emissions are the lowest that they have been in 20 years.
EPA reports that total emissions of toxic air pollutants
have decreased by approximately 42 percent between 1990 and
2005. EPA has said that since 1990, nationwide air quality has
improved significantly for the six common air pollutants.
Between 1980 and 2010, total emissions of the six principal air
pollutants have dropped by 63 percent.
Now, I don't know if any of you focused on this, but next
year, the Dakota Prairie refinery is going to open up in North
Dakota. This is the first new refinery in America since 1976.
Now, the reason that this has happening is that because of
fracking on nonfederal lands in the Bakken formation, there is
a bountiful production of this oil and a refinery is absolutely
necessary. Now, what many people don't know is that the tribes
have submitted an application to build a refinery in North
Dakota over 10 years ago, and it has taken 10 years to obtain
this permit.
And while everyone is excited about this refinery opening
up, the problem is that it has been dramatically downsized
because everyone is concerned about the new greenhouse gas rule
that is expected to be coming out of EPA. So on one side,
people are excited; on the other side it is being artificially
remaining a low-scale plant.
Now, the great thing about this development in North Dakota
and other parts the country is that in North Dakota, the
unemployment rate today is 3.2 percent, the lowest in the
country. And since 2009, employment in North Dakota has
increased by 60 percent. So I think those two visions of
America is what we are really talking about today. We have an
opportunity to be energy efficient. We do not have to be
dependent upon the Middle East or anyone else. As a matter of
fact, we are the number one oil-producing country in the world
today, having passed Saudi Arabia in late 2012.
Now, today, we are going to take up a bill that would
require EPA to be more transparent. There was a news release
yesterday put out by the Society of Environmental Journalists
that said that EPA is one of the most closed, opaque agencies
in the Federal Government. And that is the view of many of us
as well.
So the legislation that Mr. Cassidy is introducing today
simply requires a more thorough review of cost and the impact
on jobs, energy prices if the overall cost of the regulation
will exceed $1 billion. So I think this is a very important
piece of legislation and we look forward to your testimony
about it.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
On Wednesday, when the rest of us were gathered to talk
about increasing U.S. energy security through legislation that
would finally approve the 1,666 day-long delayed Keystone
Pipeline, a pipeline that according to Pew, the American public
supports by a margin of 66-23 percent, my colleagues, as they
have done in every other hearing this subcommittee has
conducted so far this Congress, were asking to debate the
science of climate change.
You couldn't paint a picture that is more in contrast to
two visions for the future. Some of my colleagues on the other
side of the aisle vision a future, which they claim is driven
by scientific models, of continued demand destruction mandates,
new energy or carbon taxes, and back door cap-and-trade
regulations. While our vision, a pathway to energy self-
sufficiency, is focused on maximizing abundant, affordable, and
diverse energy resources. Reducing emissions through
technological development, economic competition, and market-
based efficiencies, things that allow our economy and jobs to
prosper, are very different from the solutions the current EPA
and my colleagues on the other side of the aisle recommend.
The Waxman-Markey cap-and-trade bill failed in the
Democratically-controlled Senate for a reason, and it is
because consumers and the American public understand that we
don't have to choose between the environment, and jobs and the
economy with a command-and-control Washington-centric energy
vision. Policies that increase energy costs on consumers only
seek to drive more innovation and jobs offshore. And I would
note, since the time of that bill's failure, we have seen
innovation and job creation flourish in the U.S. energy sector,
but the EPA is now regulating what the Obama administration
failed to legislate and their regulatory assault on coal is
only beginning to be realized.
We are now at the cusp of an industrial and manufacturing
renaissance--- but this future can only be realized if we are
able to continue to successfully harness our resources and
maintain a diverse energy portfolio. New taxes, mandates, and
back-door cap-and-trade policies only hold us back--and we can
look to Europe and other economies as a real world case study
on where that path takes us.
We are here today to debate a bill that seeks to keep us on
this path to self-sufficiency by putting some inter-agency
checks and balances on what many view as an agency who is
single handedly controlling nearly all of the energy and
environment issues facing our nation. The number of major new
rules is like nothing I have seen before and is doing serious
economic damage by reducing energy supplies, raising energy
prices, risking job growth, jeopardizing competitiveness, and
compromising reliability. It is time to restore balance to
EPA's rulemaking process, and that is the goal of the ``Energy
Consumers Relief Act of 2013.''
Specifically, the ``Energy Consumers Relief Act'' would
require that, prior to finalizing a rule estimated to cost at
least a billion dollars; EPA must first submit a concise cost
analysis to Congress. This analysis will provide the public
with greater transparency by requiring the inclusion of such
things as the impact of the rule on gasoline or electricity
prices, as well as any potential job losses.
At the same time, the rule would be subject to an
independent analysis led by Department of Energy in
consultation with the Federal Energy Regulatory Commission and
the Energy Information Administration. DOE would then make an
initial determination whether the rule increases energy prices
for consumers, including low-income households, small
businesses, and manufacturers.
Then, if the Secretary of Energy determines the rule would
raise energy prices or impact fuel diversity, he is required to
conduct a more extensive analysis in consultation with the
Secretaries of Commerce and Labor and the Administrator of the
Small Business Administration to determine if the identified
energy impacts will have significant adverse effects on the
economy, including impacts on jobs and economic growth. If the
effects are in fact significant, then EPA may not proceed with
the proposed rule.
And of course, this bill would increase the scrutiny of
EPA's assault on coal. We have seen a number of costly rules
affecting coal-fired electricity generation, and many more are
in the works. But the agency's own discussion of the impacts of
these rules on electricity costs, reliability, coal-related
jobs, and American competitiveness has been woefully
inadequate. Indeed, we are already seeing coal-fired power
plant shutdowns at a much faster pace than anything EPA ever
suggested. Under the ``Energy Consumers Relief Act,'' these
rules would finally be getting the cumulative analysis they
warrant.
Overall, this bill would empower DOE to take a commonsense,
look-before-you-leap approach to EPA's energy-related billion
dollar rules. And given the prolonged weakness in the economy
and stubbornly high gasoline prices and unemployment rates,
it's a level of scrutiny that is long overdue and critical.
# # #
[H.R. -------- follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. And at this time, I will recognize the
gentleman from Illinois, Mr. Rush, for his opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman. And let me
begin by commending you for agreeing at our last panel on
Wednesday to hold a hearing hopefully sometime in the very near
future and dedicated solely for the purpose of hearing from
scientific experts on the science of climate change. Mr.
Chairman, as you know from 24 letters that Ranking Member
Waxman and I have sent to you and Chairman Upton, since May
2011, we have requested a hearing on this matter.
Climate change is an issue that the minority side takes
very seriously and we believe that hearing from actual
scientists and climatologists rather than industry
representatives will benefit and inform every member of this
subcommittee.
Mr. Chairman, we all understand that just because one might
not like what the facts or the science is telling us does not
mean that we can simply ignore science or facts or wish them
away. Last year's record temperatures, record droughts, record
wildfires, and record levels of flooding prove this point.
Still, we are here holding yet another hearing on yet another
Republican bill designed to gut the Clean Air Act and tie EPA's
hands and prohibit this agency from doing exactly what it was
established to do. And that is to protect the public.
Mr. Chairman, we know that the EPA does not simply propose
regulations willy-nilly, or just pull them out of thin air. In
fact, in a rule that EPA has proposed has been mandated by law
specifically to protect the public health by ensuring that all
citizens have access to clean air, land, and water. My
constituents do not always have the means and wherewithal to
hire expensive lobbyist to influence the debate in the Congress
in order to enact policies favorable to their futures, nor
their financial interest.
So it is imperative that we allow the EPA to act as an
impartial referee and ensure that the playing field is level
for all Americans. This bill before us is flawed in so many
ways but one of its biggest deficiencies is that it will give
the Secretary of Energy unprecedented authority to effectively
veto public health regulation if the Secretary found that the
rule will cause ``any significant, adverse effects to the
economy.''
The analysis called for in this legislation is so skewed
that even if the economic benefits of a rule dramatically
outweigh any significant adverse effects to the economy or
rather to industries' profits, the rule will still be blocked.
Mr. Chairman, I find it is curious that my colleagues on
the other side of the aisle are quick to point out that carbon
emissions in the U.S. are down to mid-1990 levels but refusing
to acknowledge that the EPA regulation implemented under the
Clean Air Act have played a key role in reducing harmful air
pollutants by 60 percent, while at the same time our economy
has grown over 200 percent.
Mr. Chairman, my Republican colleagues, you can't have it
both ways and attack the EPA for issuing regulations while at
the same time pointing to progress that we have made as a
country, both environmentally and economically, due in large
part to these very same EPA rules.
The bill today is simply another sham that may serve as a
good messaging piece for the majority and its allies but will
never, ever see the light of day in the Senate and will never,
ever be signed into law by President Obama. But if getting
through today's hearing will help bring us a step closer to
holding a real meaningful, a real climate change hearing where
we can really tackle the issues that most Americans truly feel
about it, then, Mr. Chairman, I say let's begin the hearing.
Thank you and I yield back the balance of my time.
Mr. Whitfield. Thank you very much.
At this time I recognize Mr. Upton, chairman of the full
committee for 5 minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman.
You know, common sense dictates that we should fully
understand the cost of new regs to jobs and the economy before
they are implemented, especially the highest cost regs as the
Nation continues to endure high energy prices and unemployment.
Maybe the EPA doesn't present a full economic analysis now
because they know the public would not like what it hears. But
transparency and regulatory costs is a reasonable expectation.
And the Energy Consumers Relief Act will make sure that the
EPA, in fact, provides it.
Having worked in President Reagan's OMB, I have long been
interested in the proper oversight of federal regs, and I
cannot think of a set of regs more in need of additional
oversight that EPA's energy-related rules.
I want to commend Bill Cassidy for his Energy Consumers
Relief Act, which is a commonsense solution that bolsters EPA
transparency and puts American consumers first. For an agency
that was never granted any energy policy-setting authority,
EPA, nonetheless, has taken charge of directing the Nation's
energy agenda. They are seeking to regulate where they have
been unable to legislate, evidenced by EPA's avalanche of coal
regs seeking to effectively regulate out of existence the use
of abundant resource without any regard for electricity prices,
reliability, or jobs.
At a time when most Americans haven't seen gasoline under
$3 a gallon in years, we now have a proposed Tier 3 gas rule
that would put forward upward pressure on prices at the pump,
creating a disproportionate hardship for the country's most
vulnerable, those most likely not to be able to afford those
higher prices.
But gas prices aren't alone in being stubbornly high. With
just 88,000 jobs created last month, it looks like 2013 is
going to be yet another year with unemployment staying well
above 7 percent. The Energy Consumers Relief Act gives the
Department of Energy the lead role in conducting a multiagency
analysis of EPA's energy-related rules estimated to cost at
least $1 billion, $1 billion.
No longer will the impacts of these measures on energy
prices, jobs, or manufacturing competitiveness be a secondary
consideration that is hidden from view. It is now more
important than ever to weigh the consequences of the EPA's
actions. The U.S. is on a pathway to unprecedented energy self-
sufficiency, a pathway that has seen technology and innovation
in the energy sector drive new energy resource abundance,
diversity, and affordability, all for the benefit of consumers.
Without the additional checks and balances this bill provides,
the pathway will remain threatened by an agency that sometimes
fails to provide an adequate and complete picture of the
sweeping cumulative impacts of its own regs.
And I would yield to other members of the committee that
might--Mr. Cassidy, I yield the balance of my time.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Common sense dictates that we should fully understand the
cost of new regulations to jobs and the economy before they are
implemented--especially the highest-cost regulations as the
nation continues to endure high energy prices and unemployment.
Maybe the EPA does not present a full economic analysis now
because they know the public would not like what it hears. But
transparency in regulatory costs is a reasonable expectation,
and the Energy Consumers Relief Act will make sure the EPA
provides it.
Having worked in President Reagan's Office of Management
and Budget, I have long been interested in the proper oversight
of federal regulations. And I cannot think of a set of
regulations more in need of additional oversight than EPA's
energy-related rules. I commend Rep. Bill Cassidy for his
Energy Consumers Relief Act, which is a commonsense solution
that bolsters EPA transparency and puts American consumers
first.
For an agency that was never granted any energy policy
setting authority, EPA nonetheless has taken charge of
directing the nation's energy agenda. They are seeking to
regulate where they have been unable to legislate, evidenced by
EPA's avalanche of coal regulations seeking to effectively
regulate out of existence the use of an abundant American
resource without any regard for electricity prices,
reliability, or jobs.
At a time when most Americans haven't seen gasoline under
$3.00 a gallon in years, we now have a proposed Tier 3 gasoline
rule that would put further upward pressure on prices at the
pump, creating a disproportionate hardship for the country's
most vulnerable. But gas prices aren't alone in being
stubbornly high. With just 88,000 jobs created last month, it
looks like 2013 is going to be yet another year with
unemployment staying well above 7 percent.
The Energy Consumers Relief Act gives the Department of
Energy the lead role in conducting a multiagency analysis of
EPA energy-related rules estimated to cost at least one billion
dollars. No longer will the impacts of these measures on energy
prices, jobs, or manufacturing competitiveness be a secondary
consideration that is hidden from view.
It is now more important than ever to weigh the
consequences of EPA's actions; the U.S. is on a pathway to
unprecedented energy self-sufficiency-a pathway that has seen
technology and innovation in the energy sector drive new energy
resource abundance, diversity and affordability, all for the
benefit of consumers. Without the additional checks and
balances this bill provides, this pathway will remain
threatened by an agency that fails to provide an adequate and
complete picture of the sweeping cumulative impacts of its own
regulations.
# # #
OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Cassidy. Thank you, Mr. Chairman.
I am offering the bill this week or next week. And the bill
is actually about transparency.
Dr. Rom, I read your testimony and it is all very nicely
referenced, but there is nothing to prevent that from impacting
or influencing or encouraging EPA to address the situation. All
it is is going to require is transparency. Your article was so
beautifully reference peer-reviewed. I will note that EPA's
work is not peer-reviewed. That is not me saying it; it is
actually the National Academy of Science, which found on
something regarding formaldehyde, that the draft assessment has
not adequately supported its conclusions et cetera, et cetera,
et cetera. You would never accept EPA's document in a peer-
reviewed journal.
With that said, EPA science can be specious. So this is
about transparency. And the stakes are high. People are losing
their jobs over specious science. Now, maybe the science is
good, and maybe the science is not, but I see nothing wrong
with transparency and accountability. Why should the EPA be a
dictator over our lives? Why shouldn't the EPA answer to
somebody?
Ultimately, Mr. Rush spoke about how folks back home don't
have high-powered lobbyists. I totally agree. So therefore, it
is incumbent upon us to make sure that every bureaucracy has
someone to whom they are accountable. In this case it is the
same administration. We would be saying that President Obama
appointed somebody who is going to deep-six his environmental
agenda if he was the Department of Energy Secretary, or if she
was. I don't think that is very practical, very reasonable, or
very likely.
The fact is that everybody should be accountable. There are
an incredible number of jobs on the line here and the science
at times has not been adequate. So therefore, I see nothing
wrong with putting in transparency for those thousands,
millions of Americans who cannot afford a lobbyist but whose
livelihood may be threatened by dictatorial powers which have
no accountability.
Thank you, I yield back.
Mr. Whitfield. Thank you.
At this time I recognize the gentleman from California, Mr.
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. When I woke up this
morning I noticed it had been raining. I was pretty sleepy. I
didn't really want to come to work, and there was a cost to me
because I had to do a lot of things to get ready. But I didn't
realize the benefits. And the benefit is to sit here at a
hearing to talk about a bill that doesn't make sense. So if I
knew the full facts, I could have weighed the costs and
benefits. If I just looked at the costs, that would be one way
to make a decision, but you should look at the costs and
benefits.
Anyway, this bill says we are not going to look at the
costs and the benefits. We are only going to look at the costs.
And if the costs are high, well, forget about it. But that
doesn't make sense because a lot of regulations weigh costs and
benefits and say that the benefits outweigh the costs.
During the 1990s, a lot of people looked at regulations and
they said, oh, we have got to have a cost-benefit analysis.
Well, cost-benefit analysis is far from perfect. Important
benefits can't always be reduced to a dollar figure. The
estimates of compliance costs are frequently inflated. But
cost-benefit analysis, at least attempts to capture both sides
of the equation.
The problem with this bill is it says that when EPA does
this cost-benefit analysis, they should then be accountable to
the Department of Energy to make the decision. Well, why? Why
should the Department of Energy be superior to the
Environmental Protection Agency? The benefits of most important
rules dwarf the costs.
Let me give you some examples. The benefits of the Mercury
and Air Toxics Rules are between four and nine times greater
than the costs. EPA's tailpipe standards for reducing carbon
pollution produced net benefits to society of up to $451
billion by saving car owners money at the gas pump. The
benefits of these and other rules are huge.
Faced with these facts, opponents of EPA rules now say we
should simply ignore the benefits and consider only the costs.
That is what the discussion draft before us requires. This is
an extreme and nonsensical approach. Imagine applying this
bill's premise to everyday decisions. Not my decision on
whether to come this morning, but would somebody decide not to
pay for a child's college tuition, even though college opens
doors of opportunity? If we look only at the price of medical
care and not its benefits, would we forgo medical care?
Every day, Americans look at both the pros and cons of
making even the smallest decisions. But this bill would require
decision-makers in the Federal Government to look only at the
downside of making critical investments to protect public
health and the environment.
This discussion draft is hopelessly flawed. It gives the
Department of Energy a veto over EPA regulations. Is that
giving one bureaucracy some accountability because it has to
satisfy another bureaucracy which has an other purpose than
environmental protection when the agency in charge of
environmental protection, after weighing costs and benefits,
decides to go forward with a regulation?
This is an unprecedented intrusion on the authority of the
EPA. It is not common sense. It is not providing transparency.
It is providing barriers to do something to protect public
health and the environment if there is a cost that the
industries don't like. And therefore, the industries can simply
go and stop regulations.
Now, let's see this bill more in detail. It requires the
Department of Energy to conduct a skewed analysis of only the
costs of EPA rules without any consideration of the benefits.
So if the Secretary of Energy determines that a rule will cause
any ``significant adverse effects to the economy''--that means
the cost--EPA would be blocked from finalizing its rule, after
they went through a cost-benefit analysis, even if the economic
benefits of the rule dramatically outweigh the costs.
I have further comments in my opening statement that I
would like to put in the record, but Mr. Chairman, the American
people want us to solve problems not waste our time with
partisan posturing, taking up nonsensical message bills that
stand no chance of becoming law. This just deepens and
justifies the cynicism of the American people. We have two
problems within our committee's jurisdiction that are crying
out for attention, cybersecurity and climate change. And
instead, we are wasting our time telling people regulations are
no good if special interests don't like it and they can
convince the Department of Energy, which has no expertise on
doing these regulations to be able to veto them if there is any
cost whatsoever. I think this is a real waste of time and I
wish I would have stayed in bed.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
National Defense Magazine recently examined the latest
intelligence forecasts to identify the five biggest challenges
to U.S. and global security in the coming decades. The Energy
and Commerce Committee has jurisdiction to address two of the
top five threats: climate change and cybersecurity.
Today, the Subcommittee is ignoring these urgent threats in
order to spend its time considering what can only be described
as a dumb bill. This bill relies on an outlandish premise: that
EPA's public health and environmental protections provide no
benefits at all to the American people.
During the 1990s, opponents of EPA rules saw cost-benefit
analysis as a way of weakening public health and environmental
protections. Cost-benefit analysis is far from perfect.
Important benefits cannot always be reduced to a dollar figure.
And the estimates of compliance costs are frequently inflated.
But cost-benefit analysis at least attempts to capture both
sides of the equation.
The problem for opponents of EPA's public health rules is
that the benefits of the most important rules dwarf the costs.
The benefits of the mercury and air toxics rule are between
four and nine times greater than the costs. EPA's tailpipe
standards for reducing carbon pollution produce net benefits to
society of up to $451 billion by saving car owners money at the
gas pump. The benefits of these and other rules are huge.
Faced with these facts, opponents of EPA rules now argue
that we should simply ignore the benefits and consider only the
costs. That's what this discussion draft requires. It is an
extreme and nonsensical approach. Imagine applying this bill's
premise to everyday decisions. You would choose not to pay your
child's college tuition, even though college opens doors of
opportunity. You would look only at the price of medical care,
not its benefits.
Every day, Americans look at both the pros and cons of
making even the smallest decisions. But this bill would require
decision-makers in the federal government to look only at the
downside of making critical investments to protect public
health and the environment.
The discussion draft is hopelessly flawed. It gives the
Department of Energy (DOE) a veto over EPA regulations. This is
an unprecedented intrusion on the authority of EPA.
And it then requires DOE to conduct a skewed analysis of
only the costs of EPA rules without any consideration of the
benefits. If the Secretary of Energy determines that a rule
would cause any ``significant adverse effects to the economy,''
EPA would be blocked from finalizing the rule--even if the
economic benefits of a rule dramatically outweigh the costs.
This gives the Secretary of Energy authority to block EPA
public health protections that are required by law.
Even if the Secretary of Energy ultimately decides that the
rule does not hurt the economy, this new process could
indefinitely delay important public health protections. The
bill bars EPA from finalizing a rule before DOE completes its
analysis. But it establishes no deadline for DOE to act and
provides no resources to DOE to undertake these analyses.
Moreover, this bill simply adds more bureaucracy to the
rulemaking process. Numerous statutes and executive orders
already require EPA to conduct rigorous cost-benefit analysis
of its rules, which are subject to public comment and extensive
interagency review. This bill would require the same agencies
to look at the same rules again, but this time ignoring all of
the pages that talk about how the rules would benefit
Americans.
Mr. Chairman, the American people want us to solve their
problems, not waste our time with partisan posturing. Taking up
a nonsensical message bill that stands no chance of becoming
law just deepens and justifies their cynicism. We should spend
our time developing real solutions to real problems. A good
place to start would be with the recommendations of National
Defense Magazine and holding hearings on climate change and
cybersecurity.
Mr. Whitfield. Thank you, Mr. Waxman.
And that concludes the opening statements, so once again, I
want to welcome the panel of witnesses today. We had invited
representatives from EPA and DOE to attend but they do not have
witnesses here. But EPA did submit a testimony, a statement and
I would ask unanimous consent that we introduce into the record
the EPA statement.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. And at this time I would like to introduce
members of the panel. We have Mr. Paul Cicio, who is the
president of the Industrial Energy Consumers of America. We
have Mr. Brendan Williams, who is vice president, Advocacy for
the American Fuel and Petrochemical Manufacturers. We have Dr.
William Rom, who is professor of medicine and environmental
medicine at the New York University School of Medicine, and he
is testifying today, I believe, on behalf of the American
Thoracic Society. We have Ms. Rena Steinzor, who is a professor
of law at the University of Maryland and is also president of
the Center for Progressive Reform. And we have Dr. Anne Smith,
who is senior vice president of NERA Economic Consulting. And
we have Mr. Scott Segal, who is the director of the Electric
Reliability Coordinating Council.
So we have some real experts with us today and we look
forward to your testimony about this legislation.
And Mr. Cicio, I will recognize you first for an opening
statement. Each one of you will be given 5 minutes, and there
is a little box on the table that has green, yellow, and red,
and red means stop. So if you all would pay some attention to
that, we would appreciate it.
Mr. Cicio, you are recognized for 5 minutes.
STATEMENTS OF PAUL CICIO, PRESIDENT, INDUSTRIAL ENERGY
CONSUMERS OF AMERICA; BRENDAN WILLIAMS, VICE PRESIDENT,
ADVOCACY, AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS; DR.
WILLIAM N. ROM, PROFESSOR OF MEDICINE AND ENVIRONMENTAL
MEDICINE, NYU SCHOOL OF MEDICINE, ON BEHALF OF THE AMERICAN
THORACIC SOCIETY; RENA STEINZOR, PROFESSOR OF LAW, UNIVERSITY
OF MARYLAND, AND PRESIDENT, CENTER FOR PROGRESSIVE REFORM; ANNE
E. SMITH, NERA ECONOMIC CONSULTING; AND SCOTT H. SEGAL,
DIRECTOR, ELECTRIC RELIABILITY COORDINATING COUNCIL
STATEMENT OF PAUL CICIO
Mr. Cicio. Thank you. Thank you, Chairman Whitfield,
Ranking Member Rush, for the opportunity to testify before you
and other subcommittee members.
My name is Paul Cicio and I am president of the Industrial
Energy Consumers of America. The IECA member companies have
over $1.1 trillion in revenues. We have over 1,000 major
manufacturing facilities across the country, and we employ over
1.4 million employees. IECA supports the draft bill entitled
``Energy Consumers Relief Act of 2013,'' because transparency
of the cost of compliance is critically important to cost-
effective regulation. Under this legislation, in the event that
the review of cost finds that the EPA regulation would be
harmful to the economy, we would hope that the EPA would
reconsider the rule and seek alternative low-cost regulation.
IECA has three points we would like to share with you this
morning. Point number one, the EPA should not fear transparency
of economics of regulation. They should embrace it as part of
their regulatory reform effort. And EPA should also embrace
pursuit of a more accurate and less controversial method for
calculating health benefits. Too much is at stake to not get
these right; both must be credible.
The EPA must be mindful that the manufacturing companies
have a choice as to where they build their facilities around
the world. The U.S. and its policies are in competition with
other countries for these investments and jobs. This means that
U.S. regulations must compete as well. That is, to regulate in
a manner that is cost-effective and implemented in a time
horizon that are responsible to public health but mindful of
market realities.
The most fundamental element is transparency of the cost of
regulation. And in our view, the EPA scorecard is very poor.
The EPA provided leadership decades ago in reducing emissions.
They now need to lead again by addressing the cost and
transparency issues. Congressmen, this is a win-win. There are
no losers.
Point number two, besides the cost of EPA regulations
placed directly on our own facilities, when the EPA promulgates
rules and costs on, for example, the electric utility industry,
it is us consumers that pay for that. When the EPA promulgates
rules on oil and the gas industry, it is us the consumers that
pay for those. When the EPA chooses fuel mix strategies that
give preference of one fuel over another, it is we consumers
that pay for that. And there appears to be an insensitivity or
a disconnect to this point as EPA proceeds to roll out a
multiplicity of new regulations. Someone has to pay for these
regulations and that someone is the industrial sector and other
U.S. consumers.
As the only sector of the economy that competes with global
competition, the pass-through of these costs to us is
significant, and it is getting greater all the time,
continually eroding at our ability to compete and create jobs.
Point number two, this is not 1970 when emissions were
relatively high and significant action was needed to reduce any
omissions. Emissions have dramatically been slashed since then
and that is the good news. The bad news is that now that
emissions are small, the cost of the next increment of
reduction is very expensive, so expensive that manufacturing
companies could be forced to make decisions on whether to
comply or shut down facilities and move production offshore.
The reality is that manufacturers face a significant number
of existing, new, or proposed EPA regulations all at the same
time, with overlapping requirements and additive and
compounding costs. This plethora of regulations has resulted in
business investment uncertainty.
Point three, we encourage policymakers--all policymakers--
to be mindful of another reality: that when companies spend
capital on regulatory compliance, it consumes capital that
would otherwise be used to create jobs, producing manufacturing
products and exports, both of which are desperately needed to
revive our weak economy and job creation.
Thank you for considering our points.
[The prepared statement of Mr. Cicio follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Cicio.
And Mr. Williams, you are recognized for 5 minutes.
STATEMENT OF BRENDAN WILLIAMS
Mr. Williams. Thank you, Chairman Whitfield, Ranking Member
Rush, and members of the subcommittee, for this opportunity to
be here today.
The Energy Consumers Relief Act is a commonsense measure
that will inject transparency and scientific vigor back into
the regulatory process. While not stopping EPA's ability to
regulate emissions, the legislation would inject a more
rigorous review of the most costly regulations and foster a
more robust, public debate about the costs and benefits of the
proposals.
My written testimony details some of the nebulous costly
and conflicting regulations that fuel and petrochemical
manufacturers are facing. These regulations pose significant
costs often with questionable benefit and ultimately impact
consumers. The consumer impact of regulation is where I would
like to focus my remarks today.
Energy is truly the lifeblood of our economy. Affordable,
abundant supplies of energy make modern life possible and have
made America the most prosperous nation on Earth. Abundant
energy and a clean environment are not mutually exclusive. The
air is cleaner today than it ever has been and it is getting
even cleaner. EPA notes that between 1990 and 2011, emissions
of the six principal pollutants drop 63 percent while vehicle
miles traveled increased 94 percent and energy consumption
increased 26 percent in that period.
Today, emissions are so low the new requirements for
incremental reductions become extremely costly. Given this
reality, it is important to develop objective assessments on
costs and energy supply impacts of additional regulations.
Energy cost increases carry significant implications for
consumers and our economy. Consider the following facts: every
penny increase in gasoline prices translates into a more than
$1 billion increase in household energy spending. And this is
money that, as my colleague noted, consumers could spend
elsewhere on other goods and services.
In 2011, the trucking industry consumed more than 35
billion gallons of diesel fuel. A .01-per-gallon increase would
have translated into an additional $365 million annually for
truckers. Every dime increase in gasoline or diesel prices
sustained over a year costs domestic agriculture over $381
billion annually. In fact, 65 percent of farmer's costs are
dedicated to fuel, electricity, fertilizer, and chemicals.
Increased energy costs not only affect what consumers pay
for transportation and for operating their businesses but also
manufactured goods. Petrochemicals are the basis for most
consumer goods and energy represents one of the largest costs
for petrochemical manufacturers. To highlight the significance
of petrochemicals for consumer products, consider the
following: an average vehicle contains almost 600 pounds of
petrochemical derived plastics, composites, rubber coating, and
textile products. Home electronics, such as TVs, computers, and
cell phones contain up to 40 percent or more of plastics
derived from petrochemicals. Nearly 14 percent of construction
materials used in the U.S. are made from synthetic materials
and derived from petrochemicals. Even renewable energy
products--windmills--about 15 percent of them are derived from
petrochemical products.
These facts make it easy to see how energy cost increases
have significant ripple effects throughout the economy. The
potential for such ripple effects is why we need to ensure
regulation takes a balanced approach and maximizes
environmental protection without disproportionately raising
consumer costs or sending manufacturing jobs overseas.
The Energy Consumers Relief Act will help restore such
balance. As previously stated, today's regulatory environment
is characterized by costly and conflicting regulations with
questionable benefit justifications. The legislation today
establishes a thorough review of the most costly regulations by
federal departments with expertise in energy economic
ramifications of regulations. Such a structure will serve as a
check against a potential for EPA to overstate benefits while
minimizing costs.
Most importantly, by requiring a report to Congress, this
legislation will increase transparency and give policymakers
and consumers alike the opportunity to better understand the
tradeoffs between increased regulation and economic activity.
Such measures will create a more balanced approach to
environmental rulemaking that could significantly impact
consumers and our economy.
AFPM supports the Energy Consumers Relief Act and
appreciate the opportunity to voice our opinion today, and I
will be happy to answer any questions at the appropriate time.
[The prepared statement of Mr. Williams follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much, Mr. Williams.
Dr. Rom, you are recognized for 5 minutes.
STATEMENT OF DR. WILLIAM N. ROM
Dr. Rom. Thank you, Mr. Chairman. Congressman Whitfield and
Congressman Rush, I am Dr. Bill Rom. I am a professor of
medicine and environmental medicine at New York University. I
direct a division of pulmonary critical care and sleep
medicine. I direct what is called the Chest Service at Bellevue
Hospital. This is the Nation's largest and oldest public
hospital in the country. I have done this for the past three
decades.
I am testifying today on behalf of the American Thoracic
Society. It is a medical professional organization of 15,000
doctors dedicated to protecting lung health in the U.S. and
around the world.
I have three important messages I would like to convey to
the committee. First, air pollution inflicts significant health
risks to my patients; second, reducing air pollution is good
for public health and the economy; and third, Congress should
let EPA do its job. As a pulmonary doctor, I spend my days
treating patients who struggle to breathe. They have serious
long diseases like asthma, COPD, pneumonia, and a number of
other conditions like sarcoidosis and IPF that most people have
never heard of. Through a combination of medications,
interventional procedures and GC's management, I work with my
patients to help control their lung disease. However, there is
one thing that neither I nor my patients can control and that
is the air they breathe, and it can be deadly.
So let me share with you what I do on a daily basis. I am
an attending now at the University Hospital and then after that
I am an attending at Bellevue, and I always attend at Bellevue
during the month of July. That is when the new interns come,
that is when the ozone peaks, and that is when the PM
accumulates. We have the largest emergency room in this city
and patients are admitted from there to my service and I also
oversee all the intensive care units.
So I had a patient a while back during the summer. He was
53. He had both asthma and COPD. COPD is chronic obstructive
pulmonary disease and the chronic and the obstructive parts in
that disease mean his lungs can't breathe well on a regular
basis. Despite that, he went to the gym four to five times a
week and works full-time as a computer programmer. One morning
he walked to the bus stop near his home to go and visit a
friend. While waiting for his bus to arrive, he stood near the
exhaust of an idling bus for approximately 5 minutes. Soon
thereafter, he developed the acute onset of severe shortness of
breath and a bystander called the emergency medical services.
In the emergency room, he was in extreme distress. He
couldn't get air in or out of his lungs and his blood pressure
shot up to 200/139. He was emergently intubated and admitted to
the intensive care unit. In the ICU he required near continuous
bronchodilators, high-dose intravenous steroids, a
neuromuscular blockade for management of his severe
exacerbation of asthma and COPD. He remained intubated in the
ICU for 9 days. He stayed in the hospital for 24 days. He was
discharged to acute pulmonary rehabilitation to regain strength
and conditioning. Eight weeks later, he was finally able to
return to work.
Absent the exposure to air pollution, my patient could have
expected to live a fairly healthy life. Instead, air pollution
nearly killed him. His brief exposure to diesel particulate and
gases combine with his underlying asthma and COPD led to this
9-day intensive care stay, 24-day hospital stay with all the
associated costs, approximately about $413,000. So these are my
costs.
And there are 86,000 hospital admissions per year, 86,000
emergency room visits, 1.7 million asthma attacks and on top of
that, 160,000 deaths. So these are my costs. But on this
ledger, they are called benefits, but they are real costs. And
I would just as soon not incur these costs as a physician. We
really should prevent all of these diseases.
So when the air pollution is bad, the above scenarios are
repeated across the U.S. My written testimony is full of the
research articles that show air pollution causes a host of
adverse health effects including mortality and morbidity in the
form of asthma attacks, heart attacks, COPD exacerbations,
birth defects, low birth weight. Recent studies also link air
pollution to loss of diabetes control, even in-utero exposure
leading to cancer in children, presented this week.
The evidence is clear. Air pollution is bad for human
health. The research is equally clear that reducing air
pollution is good for human health and the economy. Recently,
EPA stated the direct benefits of the 1990 Clean Air Act
amendments and associated programs significantly exceed their
direct costs. And even under the most conservative cost-benefit
analysis that assumes no mortality from ozone and particulate
matter, the $137 billion in economic benefits of the 1990 Clean
Air Act protections more than double the $65 billion in costs.
If we include the mortality benefits, is a 30-to-1 ratio.
Lastly, I would note that in the past few years the House
of Representatives has frequently passed legislation that would
block, weaken, or delay EPA's authority to improve our Nation's
air quality. Often the legislation is justified on avoiding the
economic burden of compliance costs. Such thinking is
shortsighted and it fails to recognize the wealth of studies
that show clean air standards actually improve our economy by
preventing death and disease. Such thinking also fails to
recognize that we as a society are already paying for air
pollution indirectly through avoidable emergency room visits,
hospital stays, missed work and school days, and death. Both
our Nation and our economy would be better served by paying the
compliance costs up front and reaping the benefits of a
healthier population. Thank you.
[The prepared statement of Dr. Rom follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you. Ms. Steinzor, you are recognized
for 5 minutes.
STATEMENT OF RENA STEINZOR
Ms. Steinzor. Mr. Chairman, Ranking Member Rush, and
members of the subcommittee, I appreciate the opportunity to
testify today. My testimony makes four points.
One, the Energy Consumers Relief Act has no basis in law or
fact and would enable some of the largest companies in the
world to continue making record profits at the expense of
public health and the environment.
Two, the real danger we face is under-regulation. In fact,
rampant deregulation of Wall Street is the reason why we have
hurtled into the persistent recession that has impoverished
millions.
Three, regulation is vital to the quality of life we take
for granted in America. Most of the rules targeted by this bill
were not dreamed up in the basement of EPA, by an administrator
drunk on her own whiskey, but rather were required by the Clean
Air Act amendments that were crafted by members of this
committee. The beauty of the legislation from a corporate
perspective is that it would gut the Clean Air Act, which
remains overwhelmingly popular with the public, without ever
mentioning its name.
Four, Congress should focus on ways to reinvigorate the EPA
rather than pursuing legislation that would kneecap the agency.
The ECRA is nothing more and certainly nothing less than the
latest attempt to shield some of the wealthiest and most
heavily subsidized corporations in the history from the
relatively modest cost of preventing the chronic harm to people
and the environment caused by toxic air pollution. It would
force a shotgun wedding between EPA, the beat cop that polices
the most intractable sources of pollution; and the Department
of Energy, the government's booster for energy products
nationwide. The inevitable outcome would be a marriage made in
hell that stymies EPA's most important efforts to carry out its
regulatory mission, indifference to its salesperson spouse.
The best way to think about ECRA is as a huge subsidy for
companies that are already pocketing billions in government
largess. The energy companies that would reap this giant
windfall include the big five oil companies--BP, Chevron,
ConocoPhillips, ExxonMobil and Shell--which raked in more than
$119 billion in profits in 2012. Among the most profitable
corporations, ExxonMobil finished at the top of the 2012
Fortune 500 list bringing in profits of more than 41 billion.
Chevron and ConocoPhillips finished third and fourth on the
list, bringing in annual profits of nearly 27 billion and over
12 billion, respectively.
The legislation would relieve these companies from
internalizing the high social cost of their pollution. This
regulatory subsidy comes on top of the massive subsidies that
highly profitable fossil fuel producers already receive. In
2012, the big five oil companies received more than $2.4
billion in various tax breaks from the Federal Government. The
International Monetary Fund estimates that the fossil fuel
industry receives more than 1.9 trillion in total global
subsidies annually, an amount equal to 2.5 percent of the
global gross domestic product.
The rules in the legislation's crosshairs are among the
most beneficial safeguards the U.S. regulatory system has ever
produced. A 2011 report assessing the EPA's Clean Air Act
regulations found that in 2010, these rules saved 164,000 adult
lives and prevented 13 million days of work loss and 3.2
million days of school loss due to pollution-related illnesses
such as asthma and cardiovascular disease, as Dr. Rom explained
so eloquently. Even when measured against the rubric of cost-
benefit analysis, the EPA's regulations revealed to be huge
winners for society.
The 2011 report on EPA's Clean Area Act regulations
concluded that these safeguards have produced benefits worth $2
trillion annually by 2020, dwarfing the $65 billion in
compliance costs.
My written testimony gets into more specific criticisms of
the bill. It also offers some suggestive reforms for the EPA
that would help the Agency carry out its statutory mission of
protecting the people and the environment in a more effective
and timely manner.
Thank you. I would be pleased to answer any questions.
[The prepared statement of Ms. Steinzor follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you.
Dr. Smith, you are recognized for 5 minutes.
STATEMENT OF ANNE E. SMITH
Ms. Smith. Mr. Chairman and members of the subcommittee,
thank you for your invitation to participate in this hearing. I
am Anne Smith, an economist and senior vice president of NERA
Economic Consulting. My testimony is my own and does not
represent any position of my company or its clients.
If EPA and DOE are to be required to estimate employment
impacts of energy-related regulations, it would be wise also to
require that their estimates be made using analysis methods
that are credible and suited to the scale of the regulation in
question. For major energy-related regulations an analysis that
accounts for secondary or ripple effects through the full
economy is the only type that can be expected to provide a
balanced understanding of overall economic impacts.
How has EPA been making its employment impacts estimates so
far? In reviewing how EPA has been estimating employment
impacts for its air regulations, I have identified several
areas of concern, particularly with regard to its current
practices. First, for air regulations released from 1997
through 2010, EPA rarely provided any employment impact
estimates. In the few cases that it did, EPA used methods that
ranged from a single sector or partial approach to a full
economy general equilibrium approach. I found no apparent
pattern to explain when the full economy approach was used or
was not used, but the full economy approach is clearly within
the EPA's toolkit.
In 2011, EPA started to routinely provide employment impact
estimates for its new regulations. However, these more recent
estimates are not credible. They are being calculated in an
inappropriately simplistic manner that uses a cookie-cutter
multiplier. EPA's formula cannot even be called an analysis.
This is what EPA is doing: EPA takes its estimate of the cost
of complying with the regulation, states it in millions of 1987
dollars, and then, to estimate the number of affected jobs,
just multiplies that cost by a single constant factor. That
factor happens to be 1.55.
So what does that mean? Well, you can do the math yourself.
Because the multiplier is positive, this formula guarantees
that EPA will estimate an increase in jobs for every one of its
new regulations no matter what sectors or types of regulation
the regulation may affect, no matter what years the regulation
may take effect in. In fact, the higher the cost of the
regulation, the greater will be the job increase EPA projects
for it.
Furthermore, most of the regulations the EPA has applied
this simplistic approach to are the very types of rules that
are warranting a full economy approach. A full economy analysis
is warranted for high-cost regulations that can affect prices
of widely used commodities. Energy-related regulations over $1
billion would fall into this category. Also, the Utility MATS
Rule, the Portland Cement MACT Rule, the Cross-State Air
Pollution Rule, and the Industrial Boiler MACT Rule all fall
into that category. Yet, all of those rules were instead run
through EPA's simplistic job impacts multiplier, which
predictably estimated that each one of them would increase jobs
and, at the most costly of them, the Utility MATS Rule, would
increase jobs the most.
I have done my own full economy analysis of several of
those recent rules. I used NERA's NewERA Model, which is a full
economy general equilibrium model, but I assumed EPA's own
estimates of those rules' compliance costs. I ran EPA's costs
through a full economy analysis. And for each of those rules,
the full economy analysis projected large negative employment
impacts in direct contrast to the positive job increases EPA
had reported.
For example, for the Utility MATS Rule, EPA had reported an
increase in employment earnings equivalent to 8,000 jobs. But
the full economy analysis of that rule projected a reduction
equivalent to 70,000 jobs. Now, most of those negative
employment impacts from the full economy analysis were in
sectors that do not face any compliance obligations under the
MATS rule, but they are sectors which purchase the regulated
sector's higher-cost product, electricity in this case.
Partial analysis methods simply cannot identify these
secondary or ripple effects. Simply put, because commodity
price effects can cause a significant portion of a regulation's
impacts, high-cost regulations should be analyzed with a full
economy general equilibrium approach. This is not a tall order.
The past shows EPA already has the tools and capabilities to do
it. Thank you.
[The prepared statement of Ms. Smith follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Dr. Smith.
Mr. Segal, you are recognized for 5 minutes.
STATEMENT OF SCOTT H. SEGAL
Mr. Segal. Thank you, Mr. Chairman, members of the
committee. Thanks for the opportunity to testify. My name is
Scott Segal. I am a partner at the law firm of Bracewell &
Giuliani and I also direct the Electric Reliability
Coordinating Council, which includes some of America's top
power producers that are working to ensure that consumers
across the United States have access to reliable, affordable,
and environmentally responsible power.
Look, EPA has a tough job of balancing America's desire for
environmental protection with its demand for affordable and
reliable power. The Agency has issued a number of environmental
rules in the past 2 years, is working on others that, at times,
seem inconsistent with this balance and more of these types of
rules are imminent.
You have heard the names of all of these rules. We don't
have time necessarily to get into every one of them. But Dr.
Smith talked about the MATS Rule, also the State or overturned
actually Cross-State Rule, the changes to ambient air quality
standards, water rules, the status of coal ash, Regional Haze
rules; the list goes on and on.
You know, if you do work for those that utilize coal, you
almost get the impression that the Agency doesn't like coal. It
is funny how that works since every rule I have named directly
deals with coal. Worst yet than these rules, is the capacity of
the Agency to engage in litigation with environmental
organizations, settle that litigation prematurely on terms that
are favorable to expansion of the Agency's power, and also the
use of punitive enforcement strategies, and even direct
opposition to the findings of state regulators who are
themselves competent regulators who are in fact closer to the
problems they seek to regulate.
Taken together, these power sector rules impact about
780,000 megawatts of gas, oil, and oil-fired generation.
Through the year 2025, the most recent estimates show that 348
of the 1,300 coal-fired electric generator units are likely to
close in 38 States, representing about 15 percent of the total
coal fleet. The reasons for those closures, I think, are clear
to all of us. The industry faces a combination of low natural
gas prices and inflexible regulation.
Merely losing 56 gigs, a midrange scenario in line with
what some industry has estimated but also with the FERC--the
Federal Energy Regulatory Commission--itself estimated, just to
give you a sense of perspective is the equivalent of wiping out
all the power generation for the States of Florida and
Mississippi. But coal still has an important role to play in
America's energy future. As Tom Fanning at the Southern Company
recently remarked, the U.S. still is the Saudi Arabia of coal
with 28 percent of coal's reserves.
While the shale revolution is arguably the most
transformative energy event in our time, recent reports have
indicated that the most obvious projects were switching from
coal to natural gas have already been undertaken. Many gas
plants are running at or near capacity. They are running flat
out, meaning that additional demand, assuming the economy ever
recovers, additional demand may have to once again be met by
reliable coal production. But as these rules increase the
regulatory costs, those are passed on directly to consumers in
the form of higher prices. Relying on fewer instead of more
options puts us in danger of paying more for electricity, which
affects the economy as a whole.
You would think that the bill before you today is targeted
only at the stock prices of energy companies, at least to hear
some of its critics. That is not what triggers this analysis.
It is the cost to consumers. And it should come as no surprise
that higher electricity prices are destructive to our economy.
Consider, residential consumers, small businesses, hospitals,
schools, farms, industrial operations all depend on reliable
and affordable electric power. Higher prices disproportionately
impact vulnerable individuals, including the poor, the elderly,
and those on fixed incomes. One-quarter of Americans report
having problems paying for several basic necessities; 23
percent have difficulty in paying their utilities. That is who
is damaged when we don't fully take into account the consumer
impact of higher electricity prices.
By the way, we have heard discussions of higher gasoline
prices and I would also point out that almost half of our
refineries' operating costs, about 43 percent actually, is for
energy and fewer refineries have the capacity to cogenerate
appreciable amounts of electricity on their own, meaning higher
electricity prices equals higher gasoline prices as well.
Our schools--99 percent of school superintendents found
direct budget impacts as result of increased energy costs
associated with maintaining the building spaces. Worse yet,
there is no alternative for a school superintendent other than
to fire teachers to pay for more expensive energy.
Healthcare--EPA's rules also adversely affect public health
in three ways: by increasing the cost of medical care and
treatment, by imposing real threats on human health by
suppressing economic growth and the improved health that it
brings, and by focusing on expensive rulemakings with little
incremental benefit when those resources, if more sensibly
deployed, could save many more lives.
The bottom line, today's legislation is an important first
step in the direction of addressing consumer impact and prices.
It is not a gutting of the Clean Air Act. The power remains
with the Environmental Protection Agency, not the DOE. The DOE
makes an analysis. It is up to the EPA to decide whether to
take that analysis seriously and address those energy consumer
price end points. If they do so, the rule may proceed. So the
power remains with the EPA to take consumer prices seriously.
They should do that, and they should adopt this legislation.
Thank you.
[The prepared statement of Mr. Segal follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Well, Mr. Segal, thank you. And thank all of
you for your testimony.
At this time, we will open it up for questions and I
recognize myself for 5 minutes of questions.
As I had indicated in my opening statement, the Society of
Environmental Journalists recently issued a statement saying
that EPA is one of the most closed, opaque agencies in the
Federal Government. And I think all of us are very proud of the
fact that the Clean Air Act has been unusually effective. EPA
has done a good job of administering the Clean Air Act and
America does not have to take a backseat to any country in the
world in being focused on a clean environment. And we all could
recite statistics that reflect the success of the Clean Air
Act.
But I also think we have an obligation and responsibility
when we have an economy that is having great difficulty of when
we come out with new regulations that cost billions of dollars
that we also explore fully the impact that it has on the
consumers and on society in general. All of us have a
responsibility and a concern about people who suffer breathing
problems. And that is why I think we can be very proud of the
fact that we have made great progress.
I know Dr. Burgess may talk about this a little later, but
we are part of the Montr AE1eal Protocol because of the Clean
Air Act. And because of the Montr AE1eal Protocol, Primatene
Mist is not available over-the-counter anymore to people who
have asthma. And as a result, their direct costs have increased
dramatically because it is simply not available anymore.
And, Dr. Smith, I was really interested in your statement
in which you said you did an analysis, and if I understood you,
it appears that the more cost associated with an EPA
regulation, according to their analysis, automatically there
are going to be more jobs created. Is that what you said or----
Ms. Smith. Yes, that is the formula EPA is applying right
now.
Mr. Whitfield. And would you elaborate on that a little
bit? I mean, that does not sound exactly correct but----
Ms. Smith. Well, it is illogical and that is why I say this
is not an appropriate method in the first place. It is based on
some earlier studies that looked at spending on worker
payments--payments to workers--in industries, in the '80s who
were poor industries, who were reporting off of their
environmental spending. And the finding was that there was not,
across all four of those industries, a significant change in
the amount of spending on workers. But that did not find
increased jobs; it just found that there was a change in the
spending on workers in those four sectors in the '80s.
Now, EPA is taking that summary statistic that says, well,
the number was about zero--was about 1.55 on average--and just
applying it to every new regulation that comes down the pike,
regardless of its relationship to the original study, most of
which have no relationship to the original study.
Mr. Whitfield. So any regulation that has additional cost,
according to the EPA, will create jobs?
Ms. Smith. As long as they continue with this method of
doing their analysis which is, as I said, not really an
analysis at all. It is just a multiplication that is guaranteed
to provide positive jobs through more cost.
Mr. Whitfield. Right.
Mr. Cicio, you had--just a minute here. Well, I am not
going to ask you a question. I will just make one other
comment.
I have been so upset about the stimulus money being
directed to so many green energy projects and I can't help but
I just want to share that right across the border from my home
county in Kentucky in the State of Tennessee, 2 years ago a
company called Hemlock Corporation announced that they were
building a $1.2 billion plant that would employ 1,000 people
and about 2,500 construction jobs to make polysilicon chips for
the solar industry. In the State of Tennessee, there was a big
press conference and everyone announced how this was the future
for America, green energy, which we all support.
Unfortunately, in January of this year after constructing
this plant for 2 years at a cost of $1.2 billion of which there
was government money involved also, they announced that they
were walking away from this plant. They had hired 300 employees
to prepare it for opening, and the terminated all of those
workers. They are shuttering the plant and that, in my view,
along with Solyndra and others, is an indication of how we in
the government tried to mandate what was going to happen and
the marketplace was not ready for it.
So I see my time is expired, and Mr. Rush, I recognize you
for 5 minutes.
Mr. Rush. I want to thank you, Mr. Chairman. And Mr.
Chairman, in due respect to the author of the bill, Mr. Cassidy
of Louisiana, I must say that this bill defies common sense.
Everybody in this room has probably, sometime during the course
of their lives, written out pros and cons listing in order to
make important decisions. This bill will require the federal
decision matrix to consider just half of this list, a pro and
con list when evaluating public health and environmental rules.
The bill requires that the Department of Energy to analyze all
of the potential negative effects of a proposed rule and
determine whether the rule would have a significant adverse
effect on the U.S. economy.
Now, Ms. Steinzor, under this bill would DOE weigh both
sides? Will they weigh the pros and the cons of a proposed
rule?
Ms. Steinzor. Congressman, I think that they would focus
primarily on the costs that are allegedly imposed by the
regulation. And their analysis would come on top of an
extensive analysis by EPA that is supervised by the Office of
Information and Regulatory Affairs at the White House, that is
redrafted, that is hundreds of pages long, scrutinized by
economists. The Department of Energy already has an opportunity
to comment on every rule that EPA prepares. And again, I would
stress all of these rules are statutorily mandated. They don't
come out of the right ear of the EPA administrator. They are
all required by Congress.
Mr. Rush. So this bill requires a skewed analysis that
completely ignores the benefits of the EPA's public health
rules?
Ms. Steinzor. Yes.
Mr. Rush. As a matter of fact, have you looked at the bill?
Do you see the word benefit at all in the bill?
Ms. Steinzor. I do not. And bills like this act as if rules
were sweeping the money into the center of the room and setting
it on fire. They absolutely ignore the benefits to patients
like Dr. Rom's that he explained so well. The incredible
economic costs, not just in medical expenses, but in days lost
from work, staying home with a sick child, being unable to be
productive is an enormous burden on society. And those are the
benefits of trying to control pollution would be to avoid all
of that harm.
Mr. Rush. And matter of fact, the types of rules that this
bill would target have tremendous benefits to public health,
the environment, and often consumers. For example, EPA's
greenhouse gas standards for vehicles are projected to save
families more than $1.7 trillion in fuel costs and reduce
America's dependence on oil by more than two million barrels
per year beginning in 2025.
Ms. Steinzor, that is just one example. How do the benefits
of some of the EPA's other recent rules compare to their cost?
Ms. Steinzor. Well, as Congressman Waxman explained in his
opening statement, the ratio between the cost and the benefits,
the benefits exceed the cost by several orders of magnitude in
almost all of these rules. That is what makes it so ironic.
These rules are a great bargain for the American people and
that is what makes it so ironic, that they have come under this
attack. They have been years in the making. They were required
initiated under the 1990 Clean Air Act amendments. We are now
in 2013. These rules have been bounced around to court and
back, to the Agency to the White House, to Congress, and
finally, after all this time, they are beginning to get to the
end the runway and be ready to take off and now we want further
delay, further analysis, further number-crunching, further
handwringing, and it is just not what you intended.
If Congress doesn't like these results, it should take up
the Clean Air Act, but it doesn't want to do that because that
would be very unpopular with the American people.
Mr. Rush. Thank you, and I yield back, Mr. Chairman.
Mr. Whitfield. At this time I recognize the gentleman from
Texas, Mr. Hall, for 5 minutes.
Mr. Hall. I thank you, Mr. Chairman. And I guess I would
like to start by not just thanking you, but thanking the folks,
as you have. And some of the proposals in the past 3 years such
as the Coal Ash Rule and the Cross-State Air Pollution Rule
have been very detrimental to energy companies and thrust and
jobs and consumers back in my district in northeast Texas.
I certainly admire Scott Segal. I have known him and know
the people he associates with, Searcy Bracewell, and paired now
with the former mayor of New York. They do a good service for
us and that is why I want to direct my question to you. I am
very pro-fossil fuels, I am pro-energy, pro-any source that
might keep us from having to rely on countries that we really
couldn't rely on if circumstances changed just a little bit.
But I want to talk about the compliance time on this of the
EPA--I am talking about anything bad I can think of about EPA
because I think they are the worst enemy of any nation's
opportunity to get ahead and provide the energy that we have
and that we need. And we ought to be selling energy rather than
buying energy.
So I guess what I would ask you is what your concern is
about the compliance timelessness that I talked about for EPA's
energy-related regulations that they are requiring to happen in
just a few months, something that would have taken probably 4
or 5 years and reconsidering it and then coming back with
something just as ridiculous. That took us to the courts, and
the courts from this Texas operation have recognized they are
wrong and the lack of science that the EPA relied upon.
And I thank Bill Cassidy for bringing this and I agree with
every word he said as we opened up here. But what I am
concerned about is what you think about the timelines and not
providing enough time for you to delegate, plan, or implement
these rules, and what effect is that going to have on electric
reliability? Just in general if you could give that to us.
Mr. Segal. Mr. Hall, thanks for your kind words. I would
say on the question of timelines, you would do well to be very
concerned about it. I mentioned briefly in my remarks about
this sue-and-settle phenomenon. And unfortunately, timelines
are often not dictated or at least not honored from a statutory
perspective but come to the floor for the EPA from settlements
that they reach with environmental organizations where they
don't let other members of the regulated community into those
settlement discussions. And so what ends up happening is a
very, very sort of backwards-oriented and unrealistic timeframe
for implementation of the rules.
You know, we have heard a lot today about what a good
bargain all these rules are. I am kind of amused to hear that
they are both a great bargain for industry and at the same time
industry is the opponent that keeps us from having more of it.
You know, industry folks should come to these hearings more
often. They would know about great investment opportunities in
major EPA rulemakings.
The fact of the matter is, despite the obvious costs
outlined with respect to these rules, EPA always claims its
regulations are net beneficial to society. That is like it is
not even worthy of discussion. In the case of the Mercury and
Air Toxics Rule, for example, a rule that costs $10 billion,
none of the benefits came from mercury. If there were truth in
advertising on rules, EPA would constantly be in front of the
Federal Trade Commission explaining why they call their rules
what they call them and why they put in their analyses of
benefits what they put in them.
More than 90 percent of the benefits of this rule are co-
benefits that come from reducing particulate matter, which as
we heard testimony, particulate matter is serious business.
However, that 90 percent reduction comes from reducing
particulate matter below the level that EPA has already said is
highly protective of human health and the environment with a
substantial margin of safety for susceptible subpopulations of
the very sort of person that Dr. Rom was talking about.
EPA inaccurately attributes the benefits to current rules,
like the Cross State Rule Mr. Hall was talking about, benefits
that have been achieved by previous rules. It is like a poker
game with one stack of chips and they keep moving the chips
from rule to rule to rule claiming the same benefit. That is
how Enron got into trouble. But the----
Mr. Hall. In closing, just I know you agree with me that
this bill is going to provide transparency and protects the
consumer and protects jobs, and I am very happy that we are
looking at it today, and I thank you.
I yield back. Our time is up.
Mr. Whitfield. At this time I recognize the gentleman from
California, Mr. McNerney, for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman, and thank the
witnesses for your thoughtful testimony this morning.
It continually amazes me that our friends on the other side
of the aisle think of the EPA as the devil because before the
EPA came along, we had the Love Canal, we had the Cuyahoga
River catching on fire, and look, China doesn't have an EPA.
Would you rather live in Beijing and breathe that air? And so I
mean it produces a good service for country.
Now, it is important to have a balance, I understand that.
But my concern with this bill is that it could indefinitely
delay or block critical public health and environmental
protections for analysis of questionable value, in my opinion,
by the DOE.
Now, Mr. Williams, in your testimony this morning you said
that the bill would inject transparency and scientific rigor
back into the regulatory process, but I am skeptical of that
claim. The bill requires the DOE to draft an inherently biased
analysis that presents only the costs of the EPA rule--and that
has already been brought out this morning--but does not address
the benefits. The DOE is not really capable of that at this
point. It would have to develop a new capability.
Ms. Steinzor, would you consider the analysis required by
the bill to be transparent and rigorous?
Ms. Steinzor. I would not, Congressman. I think the
analysis required by the bill would have the economists staring
into a crystal ball in an effort to run this string of
regulatory impact out into--it is almost like a butterfly flaps
its wings in Rio de Janeiro and there might be an effect in
Tuscaloosa. That is what is wrong with Dr. Smith's very
superficial criticisms of what goes on in EPA analyses. You
can't predict job impacts to the nth degree, and that is what
people are insisting that the Agency do. It already does
extraordinarily rigorous analysis. There are a series of laws--
--
Mr. McNerney. What exactly--so you are going to describe
some of the analysis that is required by the EPA already?
Ms. Steinzor. Yes, very extensive analysis of both costs
and benefits. And those analyses, again I need to get a life
very clearly, but I spend many, many hours reading hundreds of
pages filled with formulas and we love the magical numbers. We
think that they make these estimates precise and reliable, and
in fact, the extensive analysis that is already done, for
instance, on guesstimates. It is just one example. Dr. Rom
mentioned hospitalization for asthma. You know, in one of the
cost benefits of the Clean Air Act, the EPA awarded $330 for
that event. And I am sure that Dr. Rom would laugh at the idea
that his patients go to the hospital and get the kind of
treatment he was describing for $330.
So all of these analysis understate the benefits, overstate
the costs already. The Agency has spent close to 30 years
trying to get these rules out and the pending legislation would
delay us another few decades which would be to the detriment of
the public.
Mr. McNerney. Thank you, thank you. Mr. Segal, do you
believe that well-crafted regulations protecting air and water
quality could result in innovation and job creation?
Mr. Segal. Yes, I do. I absolutely do. In fact, the bill
does not--there is a rumor floating around here that the bill
does not account for benefits. No, the bill focuses very
narrowly on these energy endpoints, but the bill also talks
about shifts in employment. That is what you, Congressman, are
talking about, because when we have a regulation, we may well
take the compliance cost money from that regulation, spend it,
and then if I make a scrubber for example, or I innovate a
scrubber, that will create jobs. But the question is, the money
that I took and spent on the scrubber and on the innovation
related to the scrubber, if it were deployed in more productive
mechanisms, what would the job multiplier be in that instance?
And also----
Mr. McNerney. So by more productive you mean--you said it
would be deployed in more productive measures.
Mr. Segal. Let me give you an example.
Mr. McNerney. OK.
Mr. Segal. Let's say I run a power company, all right? I
won't stretch credulity too much, but let's say I run a power
company. If I don't spend the money on the scrubber, perhaps I
can spend it on a way to improve the energy efficiency of my
power plant, presumably if the EPA doesn't sue me under a new
source review----
Mr. McNerney. But it would have the same out--if you
increase efficiency----
Mr. Segal. Yes, and that would not only reduce emissions,
but it would reduce the cost of power, and then let's say my
community, let's say, a community in northern California or
something like that would receive lower cost of electricity,
more small businesses, more energy-dependent businesses like
florists and grocers and things like that could put on the
extra job or two, that is real job creation and that is the
multiplier effect of lower-cost electricity.
Mr. McNerney. Well, I would like to continue the discussion
but my time has run out, Mr. Chairman.
Mr. Whitfield. Yes, the gentleman's time has expired.
At this time I recognize the gentleman from Nebraska, Mr.
Terry, for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman.
And this bill seemed rather simple and straightforward
until the discussions occurred up here and I want to ask the
author. Under current law right now, the EPA's only--the only
thing they can do is look at the health benefits. That is the
whole basis of it.
Mr. Cassidy. Yes, that is current law.
Mr. Terry. And are you striking that provision under this?
Mr. Cassidy. No, I am not.
Mr. Terry. I am noticing that language.
Mr. Cassidy. No, I am not.
Mr. Terry. So the benefits under health are already written
in the law, and so what you are doing is saying that we need
the other side of the cost-benefit analysis in determining the
cost. Is that right?
Mr. Cassidy. A little transparency so that if someone loses
their job because of the regulation, they actually understand
what thought process went into it.
Mr. Terry. Yes, so this is establishing a cost benefit. The
benefits are already written in there or mandated that that be
in there. And that has been part of our frustration here. And
we mentioned the Mercury Rule. Their modeling showed tremendous
benefit from reduction in mercury poisonings and injuries, but
when you would subpoena medical records from a 60-mile radius
around a coal-fired plant, you wouldn't find any mercury
poisonings ever reported to the hospitals or physicians. Well,
I won't say every--boy, University of Maryland, I am not too
impressed right now.
But I want to go in and talk about that I think in a cost-
benefit analysis, you actually have to discuss--and I want to
talk to Mr. Cicio--because both Republicans and the Democrats
are working on job creation and particularly in manufacturing.
And we have what we are calling the Nation of Builders where we
are bringing in manufacturers in all different industries--big,
medium, and small, international, local--and it is interesting
because all of them have said that energy prices are a key
component. It is a major input cost, and right now in the
United States, we have an advantage, particularly with natural
gas, to being affordable and reliable. So in our manufacturing
plan, that is going to be there.
The Democrats have what they call Make it in America, which
part of their four-point plan is affordable electricity,
affordable energy. And as I understand, an increase of 1
percent in electric costs to a manufacturer in total can be $9
billion out of the manufacturing. Could you comment? Is that
accurate?
Mr. Cicio. Yes, Congressman. In fact, I can verify that 1
percent does equal a $9 billion cost on the manufacturing
sector for our electricity.
Mr. Terry. And then, define for us what that means to
manufacturing.
Mr. Cicio. Manufacturing competes globally. As I said
earlier my testimony, we are the only sector that competes
globally. And we have tough competition, particularly with the
kind of products that we produce. Almost all manufacturers
around the world can meet high-quality standards, and so the
only thing that differentiates us from our global competitors
is cost. And so your point about today, at this very moment, we
have lower natural gas prices that is giving us a relative
competitive advantage.
But the other point associated with this bill is that
policymakers and EPA need to be mindful and remember that all
of the cost of regulations on all our producers of energy,
whether it be electricity, natural gas, oil, what have you, all
of those costs when you are regulating those industries get
passed on to us either directly or indirectly. And this weighs
on this ability to compete.
Mr. Terry. Well, if we were successful in raising electric
prices to the point where it is not economic to manufacture,
will we be lowering the CO2 emissions globally?
Mr. Cicio. No. No, of course not. It is the same way with
other emissions as well. We simply shift the manufacturing
facility offshore. Someone will produce that and it will be
produced offshore emitting albeit greenhouse gases----
Mr. Terry. Probably more.
Mr. Cicio [continuing]. Or any other emission offshore
rather than here.
Mr. Terry. So finding that line is important to actually
reducing global emissions.
Mr. Cicio. Well, absolutely. And our point of why we are
here today is we are not saying don't regulate; we are not
saying we don't want clean air----
Mr. Terry. I agree.
Mr. Cicio [continuing]. We are saying do it better, do it
more cost effectively, and that is a win-win.
Mr. Terry. I will interrupt just for my closing comment.
And, you know, we have been accused on the side of the aisle of
wanting to completely contaminate the entire universe when what
we are arguing for was a difference between 3- to 5-year
implementation to make it more palatable and use technologies
that don't even exist today.
I yield back.
Mr. Whitfield. The gentleman's time has expired. At this
time I recognize the gentleman from California, Mr. Waxman, for
5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
The proponents of this bill argue it will enhance
transparency and provide rigorous analysis of EPA rules. But I
don't look at it that way. Mandating a one-sided analysis that
ignores all of the benefits of EPA's public health rules is not
going to inform anyone. The real effect of this bill is to
indefinitely delay and potentially block crucial public health
rules.
Ms. Steinzor, this bill empowers the Department of Energy
to effectively veto EPA rules, isn't that right?
Ms. Steinzor. Yes, I agree with you.
Mr. Waxman. Does the Department of Energy have the
expertise to make the economic determinations this bill would
require it to make?
Ms. Steinzor. The Department of Energy does not have that
expertise and one of the----
Mr. Waxman. I agree with you.
Ms. Steinzor. Yes.
Mr. Waxman. Now, under this bill, EPA cannot finalize a
rule until the Department of Energy completes its analysis. Ms.
Steinzor, does this bill establish a deadline for DOE to act?
Ms. Steinzor. No, it does not.
Mr. Waxman. So are there reasons why DOE might not be able
to complete its analysis in a timely way?
Ms. Steinzor. Lack of staff and expertise.
Mr. Waxman. So important public health rules can be
indefinitely delayed under this bill, isn't that right?
Ms. Steinzor. Yes.
Mr. Waxman. Dr. Rom, what are the real world impacts of
indefinitely delaying EPA air pollution rules?
Dr. Rom. More hospitalization----
Mr. Waxman. Put your mike on.
Dr. Rom. More hospitalizations, more emergency room visits,
increased mortality, enhanced morbidity, and this is nationwide
and it is over time, and it is actually not improving.
Mr. Waxman. Justice delayed is justice denied.
Dr. Rom. Yes.
Mr. Waxman. Regulations delayed could be help to people
denied. Dr. Rom, you are a pulmonologist. Over your career, I
assume you have seen thousands of patients and had to review
potential treatment options for a variety of conditions. How do
you present treatment options to a patient? Do you review the
benefits of a treatment as well as the potential risks?
Dr. Rom. Yes. When we treat asthma, for example, the
standard treatment is a bronchodilator. Over time, these
bronchodilators have become more selective, fewer side effects.
Now, we have inhalers that have particles instead of
chlorofluorocarbons. We have highly selective inhalers so we
don't have to use things like Primatene Mist from decades ago,
and we present these options to the patients. We now have
steroid inhalers----
Mr. Waxman. So you have a lot more advances that--members
of this committee will remember a debate we had over Primatene
Mist. And from what I was hearing, the profession didn't think
Primatene Mist was the best device to use. In fact, there were
some downsides to it.
Dr. Rom. Yes, there are now----
Mr. Waxman. I just want a yes or no on that----
Dr. Rom. Yes.
Mr. Waxman [continuing]. Because it's just a side issue.
Would you say to a medical professional who only presented the
downsides of a potential life-saving treatment is doing an
ethical job? This is a risk that you would take if you get this
treatment for your health.
Dr. Rom. Yes----
Mr. Waxman. This is the cost you may have to bear to get
this treatment.
Dr. Rom. Yes, but we like to prevent asthma exacerbations
by having patients not only take their treatments, but to have
clean air.
Mr. Waxman. So it is not ethical for a doctor to make a
healthcare decision with a patient using the lists of negatives
without talking about the positives. Is that fair?
Dr. Rom. Yes.
Mr. Waxman. When we go to a doctor or consult with our
accountant or call our realtor, we want to hear the full story.
We want to know the pros and cons before we make important
decisions.
This bill sets a different standard for critical public
health and environmental standards to be determined under law
by the Environmental Protection Agency. DOE could veto an EPA
rule based on skewed analysis of those rules. That doesn't make
sense from a public policy perspective, but it seems to me more
likely when we mandate a skewed analysis of important EPA rules
by requiring DOE to pretend that the rules provide absolutely
no benefits, this bill really leads to indefinite delays or
blocking of those rules based on an absurd analysis.
This is a bill that we shouldn't be spending our time
talking about because it just doesn't make sense even though we
are being told it is common sense. This is not the way I
learned common sense and it is obviously geared to stopping
important benefits from being provided to the American people.
I thank you all for being here. I think you have all wasted
your time just as we did, but you have given us perspectives on
it and I appreciate it.
Mr. Whitfield. At this time I recognize the gentleman from
Ohio, Mr. Latta, for 5 minutes.
Mr. Latta. Well, thank you very much, Mr. Chairman, and I
want to thank the panel for being here. I really do think that
the information we are getting here is very, very valuable for
this committee and for this Congress.
In my district alone, I have about 60,000 manufacturing
jobs. And I spend all of my time when I get home, on the road
talking to those manufacturers. And when I am out there, the
number one issue I hear from them always, the top issue, are
regulations coming from Washington and how it is hindering
their businesses. And these are the folks out there that are
the job creators, the entrepreneurs that are out there making
sure that their friends and neighbors have jobs that can put
food on the table for those kids that they have and send them
to school.
And when we are talking about the number one regulator out
there that affects folks in my district, the one group I always
hear from all the time is the number one agency, it is always
the EPA. And there is not one group or business that I ever go
out to see that would ever say that they are not for clean air
and clean water.
And so we want to make sure that we have those jobs in the
future because, again, with the 60,000 jobs that I have, the
national manufacturers gave me a chart not too long ago that
shows that we have about 1.66 million manufacturing jobs on
this committee alone. And that is what grows this economy.
And I would like to ask Dr. Smith, I can start with you,
and I know we have been having some of these questions going
back and forth, but you testified that the effects of the EPA's
major regulations can have regulatory impacts that ripple
through the full economy. Can you elaborate on that?
Ms. Smith. Yes. When a regulation is highly costly and the
people in the sectors that have to comply with that regulation
end up spending more money for the compliance, by and large the
cost ends up either being passed through to their customers in
higher prices of the products or there is international
competitiveness effects where the affected sectors simply end
up leaving the country and doing their production overseas.
Either way, it has built up trickle-down effects to the
other sectors and the consumers in the economy. So prices rise,
for instance, for oil products or for electricity in this
economy, there will be effects downstream for the consumers of
that electricity. And that is where you start to see these
economic impacts from regulation spreading, inevitably
spreading across into other sectors of the economy. And that is
why the full economy analysis is appropriate in situations like
this.
Mr. Latta. Thank you. And again, looking at my district in
Ohio, where we have so many manufacturers out there
manufacturing jobs, we have got to move that product, either
bring that product going out or we are going to have to have
the material coming in. The National Association of
Manufacturers estimates that the cost of just six EPA rules
affecting the energy sector could exceed $100 billion annually
and threaten more than two million jobs.
Mr. Williams, I have got to ask you. How are the refinery
and petrochemical manufacturing sectors being impacted by those
rules?
Mr. Williams. Sure. We are impacted a number of ways.
Obviously, we are impacted in the cost of producing the
petroleum products--gasoline jet fuel that runs this country
but also as energy consumers. So obviously, as Mr. Segal
earlier stated, when electricity--for a refinery, other than
crude oil costs, the second-largest cost is usually utility
bills. So when something impacts electricity, it impacts us as
an energy consumer. And then it impacts us, obviously, in the
cost of producing fuels for the general public, fuels and
petrochemicals for the general public.
I had an example in my testimony of Tier 3 regulations. We
reduced sulfur and gasoline 90 percent from 2004 to 2007, from
300 parts per million down to 30. Now EPA is looking to move
from 30 down to 10. It is going to be a similar cost and a lot
of the stated benefit is minimal and even questionable.
Mr. Latta. If I could interrupt you, do you have any
estimates of what that is going to cost the consumer out there
with it going on from Tier 2 to Tier 3?
Mr. Williams. Well, if you just look at the production
costs, an estimate we have is that it is a $10 billion upfront
cost with about $2.4 billion annual operating cost. If you are
going to break that down into cost in cents per gallon, it is
somewhere in the .06 to .09 per gallon range.
Mr. Latta. Because I have seen some estimates, I believe,
from the EPA that they are saying it is much, much lower. So
you dispute that number?
Mr. Williams. Yes. There are other studies out there that
indicate they are around a penny a gallon. What those studies
do is they actually look at the Nation as one big refinery and
try and apply reductions to basically either the Nation as a
whole or specific regions when that is not how our industry
works. Every single refinery is different and complex. The
numbers I stated were from a model that actually assesses every
single individual refinery and assesses cost via that
methodology, so----
Mr. Latta. Thank you very much.
And Mr. Chairman, my time has expired and I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
New York, Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Dr. Rom, you make a compelling case that people should
limit their exposure to particulate matter and to ozone. The
legislation we are considering doesn't appear to repeal current
standards, but it certainly prevents EPA from strengthening
them. Are the current standards adequate, or can further
benefits be achieved?
Dr. Rom. That is a very good question. The standards for
ozone have been lowered by President Bush, Bush's EPA from 84
to 75. And we have recently looked at what would happen if we
would net the 75 ppm standard. There would be about 2,000
deaths averted across the country, heavily in the eastern third
of the country. We have also looked at the proposed 70 ppm
ozone standard, and it would avert about 4,000 deaths if we
lowered it to 70. So the standard now of 75 that we are not
even meeting doesn't protect health. And going to the lower
standard would give us a greater benefit.
For PM2.5, we are at 35 for a daily and we have been at a
15 microgram per meter cubed annual. That has recently been
proposed to go down to 12.
If you look at the mortality from PM2.5, there are
mortality and morbidity effects at this proposed standard, and
some most studies are now showing even effects lower than the
standard. Of concern is lung cancer. There has recently been a
study of over 100,000 people who were never smokers looking at
lung cancer. There are 1,000 lung cancers in this cohort and
the lung cancer increase started at 8 and going up. And we are
now just trying to reach a 12 microgram standard.
So to try to derive health benefits with these standards,
we are discovering health defects at or even below these
proposed standards. So if we are going to protect--and
particularly susceptible populations--we need to get a
protective factor in there.
Mr. Tonko. And my understanding is that these are
pollutants, especially ozone and fine particulate matter, can
travel significant distances from their sources. So is this a
problem only for people who live in our urban cores or should
there be a concern about suburban areas and rural areas that
are impacted by the same pollutants?
Dr. Rom. Yes. There is a considerable transport of
particles; however, there are what we would call hotspots. And
what we have recently observed is that highways or where there
is heavy traffic is a hotspot. So living near a road will
increase your risk for developing asthma or having a mortality
affect. And roads are across rural counties as well as urban
counties. So air particulates have a large distance that they
travel, particularly from coal-fired power plants so that to
control these, such ideas and concepts as the Interstate Rule
was promulgated. It is difficult to develop these rules because
they are always challenged in court, but the eastern third of
the country and particularly the coastal regions of California
have both ozone and PM2.5 exposures that don't meet the
standards, and it is a challenge to develop public health
policies to meet the standards. We are getting there.
Mr. Tonko. Thank you. Thank you, Dr. Rom.
And Dr. Steinzor, you have a table in your testimony
listing a number of EPA rules that apply to the energy sector.
They all appear to be rules that would be issued under the
Clean Air Act. As you point out in your testimony, energy
touches many factors in our society. The oil and gas industry
already has exemptions from a number of our environmental laws
including the Safe Drinking Water Act, the Clean Water Act, the
Clean Air Act for gas production with hydrofracking, for
example. Are there rules issued under other statues that would
also be subject to this law?
Ms. Steinzor. Rules issued under the Safe Drinking Water
Act, the Clean Water Act, yes.
Mr. Tonko. And other statutes, though, that would be
affected by this law?
Ms. Steinzor. Yes. Potentially because the legislation says
any regulation that costs $1 billion, but it doesn't give it
time period for that. So if a regulation cost $100 million a
year, it would be subject--any regulation under any law that
could remotely affect energy producers would be covered by this
legislation even if the cost were substantially less than a
billion because we continue to multiply into the future.
Mr. Tonko. Thank you. My time has expired. So with that,
Mr. Chair, I will yield back.
Mr. Whitfield. The gentleman's time has expired.
At this time I recognize the gentleman from Louisiana, Mr.
Cassidy, for 5 minutes.
Mr. Cassidy. OK, thank you.
Dr. Rom, I am also a doctor, I am also an academic, and so
I kind of know the field from which you come. Here is the
National Academy of Sciences discussion of something that EPA
put out. In roughly a 1,000 page draft reviewed by the present
committee, little beyond a brief introductory chapter could be
found on the methods for conduct the assessment. The draft was
not prepared in a consistent fashion. It lacks clear links to
an underlying conceptual framework, and it does not contain
sufficient documentation on methods and criteria for
identifying evidence. I could go on. Would that get published
in a peer-reviewed journal for which you were the editor? Yes
or no?
Dr. Rom. Probably not.
Mr. Cassidy. Yes, probably not.
Dr. Rom. The National Academy of Sciences has looked at a
number of----
Mr. Cassidy. If I may, I have limited time. Probably not.
And yet, this was a draft that was going to incredibly impact
the economics of certain industries.
Next, you mentioned how there is an impact of PM2.5. By the
way, this bill is not about that. It is about transparency so
that there could be an economic effect. I think I know,
although you are a pulmonologist and I am a gastroenterologist,
so I go here a little bit a fearing. Don't we know that
socioeconomic status actually affects the incidence of lung
cancer as well?
Dr. Rom. Yes.
Mr. Cassidy. So if we are able to say that there is this
transparent process that there is going to be a cost of blue-
collar jobs, folks are going to lose their jobs, their families
will be less well-off, et cetera, wouldn't it be fair to say
that that could potentially also have an impact upon the future
prevalence of lung cancer among that population?
Dr. Rom. Well, the effects of tobacco and----
Mr. Cassidy. Yes or no. I mean, just because we know that
economics has an impact, and we know that people----
Dr. Rom. But much larger than SES or socioeconomic status.
Mr. Cassidy. But it is still a factor. So when Mr. Waxman
spoke about how we want to speak about not just the cost but
also the benefits, but if you are an oncologist, you not only
want talk about the potential upside but also the potential
downside. I can say that confidently. We all should do that
ethically. So if we have a law which purports to give all this
great health benefit but we don't go into the fact that it
could cost a blue-collar worker her job, we are not really
talking about the downside, are we?
Mr. Cicio, I am struck that in our current economic
environment our major challenges creating jobs for blue-collar
workers who have traditionally been employed in manufacturing,
construction, and mining. You speak about energy-intensive
enterprises moving back to the United States recreating blue-
collar prosperity, which we seem to have almost ceded to other
countries. Is it fair to say that when natural gas went to $13
per Mcf, there was a negative impact upon blue-collar
prosperity?
Mr. Cicio. When prices of natural gas rose starting from
about 2000 to 2008 to the point that you mentioned, in that
time period, we lost about 5 million manufacturing jobs. We
shut down almost 45,000 manufacturing facilities. So the impact
of energy directly impacted and contributed to job losses.
Mr. Cassidy. So the point of principle that this bill is
about creating transparency for the economic effect of EPA
regulations and not about doing away with their ability to
promote health benefits, it is fair to say as a principle, if
you increase the cost of energy, there is a direct economic
affect upon blue-collar manufacturing jobs, which by the way we
have also learned increases their prevalence of ill health.
Fair statement?
Mr. Cicio. I would agree.
Mr. Cassidy. Mr. Segal, do you agree with Dr. Smith? It
seems almost fantastical to me that the more something costs
the economy, the more jobs that are created, in which case we
should just regulate ourselves to prosperity, right? Now, Mr.
Waxman said there is no common sense there. I don't see the
common sense in the greater the regulatory burden, the more
prosperity we have. Heck, we should regulate our conversation
right now. Throw away the First Amendment.
Mr. Segal. Well, I quite agree. It is kind of a through-
the-looking-glass kind of world. The more expensive something
is the cheaper it is for the economy.
Mr. Cassidy. Now, you also make a point that there is--if
you are creating jobs, oftentimes there is job shift. I think
of the vulnerability of these blue-collar workers. You may be
losing that blue-collar job while you are creating the job for
an EPA bureaucrat. Is that a fair statement?
Mr. Segal. It may be an EPA bureaucrat or it may even be
somebody in another country.
Mr. Cassidy. Isn't that something? That somebody in another
country, because as Mr. Cicio says, it is going to be
manufactured someplace, the question is where. All we are about
is letting that blue-collar worker who doesn't have a lobbyist,
who doesn't have somebody up here with tassels on their shoes
and to be able to understand the impact of rules and
regulations upon them.
I yield back. Thank you.
Mr. Whitfield. The gentleman yields back.
At this time I recognize the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and thank you for
calling the hearing on the Energy Consumers Act of 2013. Many
of the rules that this bill aims to stop are rules that
directly affect both my constituents and companies that employ
my constituents. They are rules that I, too, seriously have
wondered how they got developed. I would love to support the
bill that would require the Department of Energy to have an
official consulting role similar to OMB on the drafting of EPA
rules where appropriate.
For example, I was frustrated to hear that DOE's concerns
about grid reliability were not heeded by the EPA or considered
during the Utility MACT rulemaking. With that said, I am also
shocked that this has set precedent that where one department
has veto power over another department, particularly an
appointee in an agency that is part of Cabinet.
I would like to ask some questions. And frankly, my
colleague from Louisiana, we lost chemical jobs over the years
simply because our price of natural gas went up to $12.50, $13
and North Sea gas is much cheaper. Thank goodness our economy
has changed that so every plant in my district, I think, is
expanding jobs because of our success, at least in Texas, of
the low cost of natural gas.
But now to my questions. Do any of you know whether there
is precedent for this type of policy where there is another
agency actually gets to check their work or say yes or no? I
want somebody telling us what it is going to cost and DOE is
that agency. But I have never known where one agency could just
say, no, you can't do this. Is there any precedent for that?
Scott, or anyone else? I know we have dealt with these issues
for a couple of decades.
Mr. Segal. Well, I will take a crack at it. I mean, the
relationship--and I know, I think Professor Steinzor also has
some stuff in her testimony on this--but the relationship
between the Office of Information and Regulatory Affairs and
OMB, as kind of a regulatory traffic cop, is a similar
relationship.
Mr. Green. But even they only check what, for example, in
this case EPA or some other agency does.
Mr. Segal. Right.
Mr. Green. You know, and theirs is fairly limited. I would
be more interested in forcing agency cooperation, looking at
the cost and the benefits, and have somebody check their work.
Mr. Segal. Let me say two things on that. The first is the
DOE really doesn't veto the bill. I mean, Mr. Waxman is saying
that DOE would sit around stroking its mustache and eliminating
rules. That is not how this bill works in my understanding. The
DOE performs an analysis. Now, the Agency--the EPA that is--
could take that analysis and say, OK, we are going to address
those energy endpoints. We are going to address those. But the
power to address those remains with the EPA. I mean, the DOE
just performs the analysis.
But I do get the point that you are making, and I guess I
would say maybe there is--I have heard a couple of things in
discussion back and forth today, which sounds like there could
be areas of common ground on legislation like this if there
were some alterations made or some additional thinking put into
it. So, I mean, what I am hearing is this is a significant
issue; these energy endpoints are significant issues. The bill
is a great step in the direction of addressing those issues.
And so I hope you guys do something.
Ms. Steinzor. The bill says notwithstanding any other
provision of law, the administrator of EPA may not promulgate
as final an energy-related rule that is estimated to cost more
than 1 billion if the Secretary of Energy determines
significant adverse effects to the economy. So that language
says you may not put the rule out provided that the Department
of Energy has told you not to. And I don't know of any
precedent that puts one agency in this kind of charge.
Mr. Green. Yes, and Mr. Segal is right that we work a lot
with OMB but they really don't do their own, and I would like
to have somebody in the place of doing an economic analysis.
And frankly, the EPA, that is not their job. Our laws have
said that EPA looks at the environmental impact and how they
can--but I also want somebody to say, OK, let's see how we can
afford it other than going to the courthouse where it ends up
being very expensive for both the government and the litigants.
Dr. Smith, in your testimony you testified EPA should
employ a cumulative impact study when preparing these rules. Do
other agencies and departments utilize this type of study in
their rulemaking? And if they do, how often does it compare to
EPA?
Ms. Smith. Well, there aren't too many other agencies that
have done analyses that compared to EPA's. But EPA itself has
done these kinds of comprehensive analyses. They have done them
in the past. They have tools that are ready to go, and the only
question is why they haven't been using them. My feeling is
that because there is no requirement to consider the costs
whatsoever under the Clean Air Act, that defies common sense,
too, that we are imposing our entire Clean Air Act without any
consideration of costs. And that has led to the kind of
inappropriate, non-credible ``economic estimates'' that are
coming out of the Agency at this time, when they fully well
could do a full economy analysis of their own.
Mr. Whitfield. The gentleman's time has expired.
Mr. Green. Five minutes goes by so fast, Mr. Chairman.
Mr. Whitfield. At this time, I recognize the gentleman from
West Virginia, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
I have got a series of questions for several of you that,
if I could, start with Ms. Steinzor. You open your remarks with
some pretty scathing challenges against some of the oil
producers, energy producers, by going over their profit margin,
their profits that they make. I think you had talked about,
according to your testimony, $119 billion in profits. Is that
correct?
Ms. Steinzor. Yes.
Mr. McKinley. OK. What level would be appropriate?
Ms. Steinzor. What level of profits?
Mr. McKinley. Yes. If they are making around 15 percent
profit, you are coming at this with a pretty strong view.
Should they only be making 5 percent?
Ms. Steinzor. Well, if I were in charge, they would be
giving a much larger share of those profits to the same blue-
collar workers that people have expressed so much concern
about.
Mr. McKinley. In other words, OK, so it has nothing to do
with energy or for health. It is just that you say they
shouldn't have this money. So am I correct?
Ms. Steinzor. No. I----
Mr. McKinley. I don't want to dwell on it a lot because I
know that this money goes into pension funds and retirement
accounts for people, so there is some value to having a
corporation make some money. I am just curious why----
Ms. Steinzor. And I am not saying corporations should not
make money. I am saying that these are some of the most
enriched companies in the country that are up here----
Mr. McKinley. And ConocoPhillips is a--they make 15 percent
profit. I don't know that that is exorbitant given such a
diversity that they earn from chemical manufacturing to oil
production and energy production. I am just curious. You seem
to be willing to attack the profit margins of these companies
and--OK, that is fine. I have run into people like you every
once in a while.
But let's go to Dr. Rom. You know, you made a very poignant
issue earlier when you talked about the individual that was
standing there, next to a--for 5 minutes. Was he your patient
or something like that?
Dr. Rom. I didn't see him in the emergency room but I saw
him----
Mr. McKinley. So he wasn't your patient?
Dr. Rom. Yes, for a period of time.
Mr. McKinley. I don't want to make a big deal of it, but
did you ever have any children that ever went outside without a
coat on and they were sick? They got sick from being outside
or--I am just curious. Did this person have a level of personal
accountability? If he had a pulmonary problem and stood there
in front of an exhaust pipe for 5 minutes that you referred to,
didn't he have a--just to step back? Did you ever tell him that
or did you say let's blame the government or let's blame that
bus for running there?
Dr. Rom. Well, he was intubated at that point----
Mr. McKinley. OK.
Dr. Rom [continuing]. So I couldn't ask him those types of
questions.
Mr. McKinley. I think it was a very----
Dr. Rom. But I think the rate of exposure is the important
thing.
Mr. McKinley. And I think it is important, and I am with
you on that. I think you made a good point but I also think
there is a question about--I want to go into more on what you
were talking about----
Dr. Rom. I agree with you on personal responsibility. We
give people medicine----
Mr. McKinley. OK. You and others have testified time and
time again here before us about asthma and other health-related
issues, but can you help me, Doctor? How do you differentiate
someone getting asthma or some kind of airborne disease from
being outdoors from when they are indoors? If they spend 90
percent of the time indoors, why do we always keep attacking
our outdoor air quality when it only represents about 10
percent of the time of the air we are exposed to? Do you think
we should be looking at indoor air quality?
Dr. Rom. Oh, absolutely.
Mr. McKinley. OK, but that isn't where--the EPA doesn't
have any authority to do that, and I am not sure that I want to
get them in my house. When someone comes down with an asthma
attack, can you differentiate, you can tell me, they get that
because they were riding in their car outdoors or when they
were inside their house on a couch that was giving off
formaldehyde?
Dr. Rom. Those are very good points, Congressman. Indoor
air pollution is a real problem. The WHO this week said there
are 3.5 million deaths from indoor air pollution and 3.3
million from outdoor air pollution, so they are almost equal
across the globe. In this country----
Mr. McKinley. But the EPA says the indoor air quality might
be as bad as 100 times worse in indoor, and on any given day,
five times worse.
Dr. Rom. Indoors----
Mr. McKinley. How do you differentiate it?
Dr. Rom. Yes. Indoors----
Mr. McKinley. Why are you attacking one group and not the
other?
Dr. Rom. Indoors with a room like this where we have
central air conditioning, the ozone is virtually zero. So we
tell our patients to stay indoors on bad ozone days. But the PM
and the sulfur oxides and NOx get indoors as well as outdoors.
So we have problems with the other pollutants.
Mr. McKinley. OK. I think we have run out of time. If you
could give me some other information about how you
differentiate, it would be very helpful. Thank you.
Mr. Whitfield. The gentleman's time has expired.
At this time I recognize the gentleman from Kansas, Mr.
Pompeo, for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman. You know, I am puzzled
how this discussion evolves. We have a piece of legislation
here proposed by Dr. Cassidy that is about information, it is
about disclosure, it is about policymakers having knowledge
about what a particular federal action, whether that be a
statute in this case, regulatory--what costs it would impose.
And I want to go down the entire panel, and this is just a
simple yes-or-no question in the fine tradition of Mr. Dingell.
Yes or no, do you think federal policymakers, regulators ought
to know and communicate--to your constituents, Mr. Cisco; your
patients, Mr. Rom--the cost of a regulation?
Mr. Cicio. Yes.
Mr. Williams. Yes.
Dr. Rom. Yes.
Ms. Steinzor. Yes.
Ms. Smith. Yes.
Mr. Segal. Yes.
Mr. Pompeo. Great, we have consensus. Mark the time. That
is what this legislation is about. This is about identifying
costs. I assume everyone would also think that on the benefits
of a regulation as well. Everyone is nodding their head so we
have consensus there as well. I mean, we start here and we have
a member talking about climate change and the fact that last
year's temperatures are proof of climate change. I made that is
just--you can't let these facts go--I mean these intensely
unscientific statements go unchallenged.
Mr. Segal, we end up talking about this health benefits.
You had mentioned this and if you could just give me 30 more
seconds, blackouts, brownouts, electric reliability risk, and
its relation to the thoracic health of Dr. Rom's patients.
Mr. Segal. Well, sure. There are several different ways in
which it is related. But directly the cost of electricity is a
major cost factor for hospitals. So if you increase electricity
cost, you increase the cost of providing medical care at the
hospital. And, in fact, what we call electronic medicine these
days is heavily dependent on affordable and reliable power. But
then, in an indirect sense, I think we have all established, or
at least many of us have agreed, on the notion that high
electricity prices make industry less competitive, make
gasoline more expensive, and as a result, have a negative
impact on employment.
And employment is--great research done by Dr. Harvey
Brenner at Johns Hopkins estimates the amount of a percentage
increase in unemployment of the amount of actual increase in
mortality and morbidity. And that is not taking into account,
frankly, in EPA's benefits analysis. See, that is an indirect
cost so they don't take that into account. So they will cook
the books in the other direction but they won't take into
account these macroeconomic impacts on health.
Mr. Pompeo. Yes. I am certainly worried about cooked books.
I am even more worried that there is no analysis----
Mr. Segal. Yes.
Mr. Pompeo [continuing]. Being done. They are simply not
even opening the books or attempting to prepare the books or
even considering cost.
One last point of cleanup. Dr. Rom, you made a statement
about ozone--that 75 parts per million, you said it saved
certain lives if we want to 70, is that right? Do I have that
right?
Dr. Rom. That 75, it is between 1,500 and 2,000 lives that
you will save if you are meeting that standard. We are
currently above the standard.
Mr. Pompeo. Got it. More lives if we want to 70?
Dr. Rom. Four thousand at 70. And that was----
Mr. Pompeo. How about at 60? More lives at 60?
Dr. Rom. Double.
Mr. Pompeo. Awesome. How about zero? More lives still?
Dr. Rom. Background is probably in the 30 to 40 range----
Mr. Pompeo. There we go. We get perfection. Background 35.
More lives still saved if we get from enforcing 75 to 70 and
then we ultimately get to 35, more lives saved, I assume?
Dr. Rom. When you are at background, you are at background,
so I can't really say----
Mr. Pompeo. But it is better than 70. You would rather be a
background than at 70?
Dr. Rom. Yes.
Mr. Pompeo. Yes. When I hear folks say--sometimes folks who
think this kind of legislation makes sense exaggerate to--I
think it is silly to make statements about perfection and
background. I think they are not even worth talking about. I
mean, it is silly. So I think we all have an obligation to be
straightforward about what is possible and the real cost
associated with those things without saying hey, we are going
to kill people if we don't go do this. I think it is
disingenuous. I think it doesn't serve the public interest very
well and I just hope we will all refrain from that. I yield
back.
Mr. Whitfield. The gentleman yields back. At this time I
recognize the gentleman from Illinois, Mr. Shimkus, for 5
minutes.
Mr. Shimkus. Thank you, Mr. Chairman. And I am going to be
quick because I know the bells have rung and there are probably
a couple of more members that want to also ask questions. I do
appreciate the panel.
Listen, we are legislators. The way a bill becomes a law is
there is an idea--Mr. Cassidy has one--and we debate it, we
move it, and it becomes law. And it changes the dynamics that
will help both sides and the disparaged colleagues who are
bringing legislation in good faith is just unfortunate because
it just frustrates me that we don't have to stoop to that.
And Dr. Rom, I applaud the profession. I love people in the
healthcare sector. They are servants. They do great work. But I
also am concerned about a mayor who can try to ban the Big Gulp
doesn't have clean air emission buses like natural gas or
biodiesel transport systems that would help alleviate some of
that issue. That would not be an issue if it was a natural gas
bus. So I am sure there are some there but--I would just add on
this, this is the question. New source review is a public
policy by this country that says that if we are going to
retrofit manufacturing facilities or power plants with new
generators more efficient, maybe it doubles the efficiency,
then the power plant has to go through a whole new permitting
aspect on their environmental regs.
So I just ask this question. If we know that these
generators can double the efficiency and the power plant is
meeting current air standards--and so you are going to get more
electricity output almost lowering the price in half--does it
make sense--if it is meeting the current environmental
standards, does it make sense to force the industry to reapply
for all the air permits? And we will just go left to right and
then I will be done and then we can move time to----
Mr. Cicio. No, it doesn't and that is why this legislation
is needed to identify what the costs are so that if the costs
are high, then hopefully, it will give the EPA an option to go
back and look at alternative, less costly options.
And along with this question you asked I would like to
address Congressman Green's point. If there isn't a precedence,
there needs to be a precedence because the EPA is not an agency
with expertise in the energy area. The rules that the EPA is
dealing with are so energy-intensive-related that they need
help from the Department of Energy to make sure that they get
it right.
Mr. Williams. I would agree with Mr. Cicio and your
statement and it really points to the fact that, oftentimes,
EPA in particular looks at these things in silos and gets to
some of the regulatory complex I talked about in my written
testimony, an example, I mentioned Tier 3 earlier. We have a
regulation that requires us to take more sulfur out of gasoline
even though we reduced it 90 percent. That is going to increase
GHG emissions 1 to 2 percent. And then we also have EPA's GHG
regulations under the PSD provisions and facing NSPS GHG
relations. At sometime in the future EPA has announced that. So
it highlights your point exactly.
Dr. Rom. Yes. I would point out that for transparency EPA
generally is willing to listen to a power plant company or
manager to discuss multi-pollutant controls in NSR----
Mr. Shimkus. And not to cut you off, this is current rules
and current laws that we apply by now that they are not.
Obviously, they force people then, to go through the old
permitting process if they are going to bring a new generator
online. It is just the current law and it is crazy. It makes no
sense. But that is current. Ma'am, no comment?
Ms. Steinzor. I think it makes perfect sense.
Mr. Shimkus. OK, that is fine. Dr. Smith?
Ms. Smith. It serves as a hindrance towards efficiency
improvements.
Mr. Segal. For once, my law degree maybe trumps an M.D.
This is a legal program and it gets the incentives exactly
backwards, Mr. Shimkus. It prevents efficiency improvements and
even prevents pollution prevention, even though that is
supposed to be an explicit exception.
Mr. Shimkus. Exactly, thank you. I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman.
The time is limited so I will have to be brief. I agree.
The whole idea of this bill is so that the EPA can take a look
at it and say, OK, maybe we need to find a less costly way of
doing this if it is a good thing to do. But more importantly, I
think we ought to be looking at those estimates, knowing that
the EPA can consistently--in just the short time that I have
been here the last 2 \1/4\ years, I haven't seen a thing yet, I
think, the EPA has gotten the numbers right on. We may disagree
on policy but I at least would like to have the numbers be
close to reality. They are not there, which is why I think it
is part of the reason that we have this bill, have somebody
besides the EPA taking a look at these issues. I for one
believe that that responsibility rests here in Congress.
When it comes to the arguments and people say there is no
precedence for this or there is no precedence for the Act under
which we are talking. There was no precedence for the Clean Air
Act in the first place. So under that argument, we should never
have had this bill in the first place. And I would have to
direct that to my friend, the law professor because, as you
know, this country is about starting things and doing things a
different way than the rest of the world. Otherwise, we
wouldn't have a democratic republic form of government because
we were the first ones in the world to have that with the
nature--recognizing the city state of Athens and some other
minor experiments in that.
But from a nation of this size, we were the first to have a
democratic republican form of government. I think it is a great
way to go and I think we should go there. But I will tell you
one of the problems that I see from this testimony today and
from the questions that I hear is that we actually had a member
here say today something about this would hinder everyday
decisions. A billion dollars in Washington is considered an
everyday decision. Well, before I was here, I came from the
Virginia legislature and the last year I was in the Virginia
legislature, our entire budget was less than $40 billion. To
me, a billion-dollar decision is not an everyday decision and
that is the reason we need this bill.
I don't understand these folks who don't want to have
Congress getting more information and have us taking more
responsibility. You know, the people elected us to be
responsible for these things. And coming up with a new bill, a
new idea to put checks and balances into the system, not to say
we don't do something that is good, but to put checks and
balances there at that billion-dollar level. When that is
unreasonable, it is clear we have a problem in Washington and I
think this bill will help fix that.
Mr. Whitfield. The gentleman yields back.
At this time I recognize Mr. Olson for 5 minutes. We have 6
minutes left on the floor for a vote.
Mr. Olson. I thank the chair and welcome to the witnesses.
I know we are running short on time but Texans can always find
time to brag about the Lone Star State. So I would like to
remind my colleagues that my State was the fastest-growing
State in the union the last 10 years. People from all over the
country were flocking to Texas for four reasons: our income
tax, zero; commonsense regulations; right-to-work state; and
cheap, reliable energy.
One of the biggest challenges my State faces in the future
is reliable energy. ERCOT, who controls power generation for
about 90 percent of my State, has said we need five more power
plants, large ones, coming online by 2014 or we risk having
another power crisis. If we have a summer heat wave like in
August of 2011, we will have rolling brownouts and blackouts
again.
EPA's war on coal has stopped two new power plants from
being built: Las Brisas and White Stallion along the Gulf Coast
there by Corpus Christi and Bay City.
My question is for you, Mr. Segal. Can you talk about the
reliability issues you see coming? Are my home State's
challenges the exception or the rule?
Mr. Segal. No, sir. They are not the exception, although
Texas faces a particularly onerous situation, particularly with
the amount of manufacturing assets we have in refining and in
chemicals, et cetera, that the entire rest of the country
relies upon for their manufacturing. Look, prior to those rules
being laid down by the EPA, our friends over on the Senate side
spent 7 months trying to figure out if EPA had even talked to
FERC about the electric reliability impact. I would like to
read their conclusion. ``Instead of taking the questions and
concerns seriously, the EPA largely ignored requests for the
Agency to work closely with FERC and reliability experts to
identify potential reliability risks and then amend the rules
to lessen those risks,'' very similar to what your bill would
do.
Indeed, in recently released internal emails, FERC
employees expressed frustration with trying to work with EPA
noting, ``I don't think there is any value in continuing to
engage EPA on these issues.'' They had no interest in trying to
adjust reliability on a priori basis.
Mr. Olson. And that makes my State's crisis acute.
Mr. Williams, Mr. Cicio, would you like to add anything to
Mr. Segal's comments?
Mr. Cicio. I am glad you brought this up. I have worked in
the manufacturing sector for 42 years, my entire life, and I
can confidently say that there is greater concern about
electric reliability by manufacturers than ever before, and it
is because of the EPA rules on the power sector. And it is a
prime example of the EPA not having the expertise to deal with
the entire direct and indirect implications of their actions.
Mr. Williams. I would agree with Mr. Cicio and note that,
as I mentioned earlier, refiners other than crude oil costs,
electricity is their second-largest cost. The same applies for
petrochemical manufacturers. And if there are reliability
issues, they are going to significantly impact our sector and
our ability to make the products and make this country run.
Mr. Olson. One question, Mr. Williams. How would this bill
have helped if it had been law when EPA got in and destroyed
our flexible permitting system? Remember they came in, rolled
in, 17 years of precedence over on the Clinton Administration,
the Bush Administration, the first years of the Obama
Administration, threw it out and the court, the 5th Circuit
finally had to overrule them. But how would this bill have
helped that situation, and what is the damage that has been
done? Have we recovered yet?
Mr. Williams. Well, the flex permit issue is a great issue
because EPA officials had told people in our industry, yes, it
worked you just didn't do it the way we wanted you to do it,
which required folks to go back to the drawing board and de-
flex a lot of their facilities.
And it goes back to the point I made about how this bill
would help. This bill actually, as many members have
highlighted today, add more transparency to the process. It
would allow the Department of Energy to take an energy impact
economy-wide look at how all these different regulations fit
together and how the benefits and the costs are assessed, and
in some cases, how the costs aren't assessed.
I mentioned the conflicting regulations with Tier 3 and
greenhouse gas. As before, there has been a lot of talk about
PM. The Tier 3 rule also talks about addressing PM. EPA, as was
earlier mentioned, just finalized a PM standard that they say
was protective of the public health and environment. The PM
analysis and Tier 3 did not look at that. It looks at in silos.
So how do we know where the PM benefit is actually coming from?
So these are just examples of oftentimes the fact that
these regulations happen in a silo and there are implications
that aren't considered when EPA is going through their
analysis. This bill would help because the Department of Energy
would certainly prevent against the fox-guarding-the-hen-house
scenario for lack of a better analysis.
Mr. Olson. My time is going up instead of going down so I
yield back.
Mr. Whitfield. The gentleman's time has expired.
Mr. Rush. Mr. Chairman?
Mr. Whitfield. Yes?
Mr. Rush. Mr. Chairman, I ask for unanimous consent to
submit the letter for the record from the Natural Resource
Defense Council addressing this concern with getting the
Consumers Relief Act.
Mr. Whitfield. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. I would also like to enter into the record
this press release from the Society of Environmental
Journalists.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. Also, I made a statement that the U.S. was
the number one oil producer in the world. Actually, we are the
number one natural gas producer in the world. We are third in
oil and they anticipate we may be number one in 2018. So I want
to correct that.
Also, I just want to clear up briefly, as result of our
last hearing, Mr. Rush, it was your understanding that I had
agreed to a hearing on climate change, which if I led you to
believe that I think I was mistaken. However, having said that,
I personally have talked to our staff. While we have different
priorities, many on your side view climate change as the most
important issue. We believe jobs, the economy, and some other
things are more important. But our staffs will be working
together to try to develop a format to move forward to address
some of your concerns on this issue.
Mr. Rush. Thank you, Mr. Chairman. I guess I kind of don't
know where we are at because I was assured--I thought that we
had a hearing scheduled, a definite hearing scheduled. But as
long as we are proceeding in that direction, I guess we have to
go along with it.
But Mr. Chairman, I don't think that we have to decide
between climate change and jobs. I think that is not the issue
here. The issue is whether or not we are going to have
scientists and climatologists before this committee to offer
expert opinion. Thank you.
Mr. Whitfield. Thank you. The record will remain open for
10 days, and I want to thank you for your time. We appreciate
your testimony and expertise. And with that, this hearing is
adjourned.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Whitfield. Thank you.
[Whereupon, at 11:52 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]