[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                  EPA'S EXPANDED INTERPRETATION OF ITS
                    PERMIT VETO AUTHORITY UNDER THE
                            CLEAN WATER ACT

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

                                (113-76)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                    WATER RESOURCES AND ENVIRONMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 15, 2014

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,      Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDREE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida

                                  (ii)

  
?

            Subcommittee on Water Resources and Environment

                       BOB GIBBS, Ohio, Chairman

DON YOUNG, Alaska                    TIMOTHY H. BISHOP, New York
GARY G. MILLER, California           DONNA F. EDWARDS, Maryland
SHELLEY MOORE CAPITO, West Virginia  JOHN GARAMENDI, California
CANDICE S. MILLER, Michigan          LOIS FRANKEL, Florida
ERIC A. ``RICK'' CRAWFORD,           ELEANOR HOLMES NORTON, District of 
Arkansas,                            Columbia
  Vice Chair                         EDDIE BERNICE JOHNSON, Texas
DANIEL WEBSTER, Florida              GRACE F. NAPOLITANO, California
JEFF DENHAM, California              STEVE COHEN, Tennessee
REID J. RIBBLE, Wisconsin            JANICE HAHN, California
THOMAS MASSIE, Kentucky              RICHARD M. NOLAN, Minnesota
STEVE DAINES, Montana                ANN KIRKPATRICK, Arizona
TOM RICE, South Carolina             DINA TITUS, Nevada
MARKWAYNE MULLIN, Oklahoma           SEAN PATRICK MALONEY, New York
MARK MEADOWS, North Carolina         NICK J. RAHALL, II, West Virginia
RODNEY DAVIS, Illinois                 (Ex Officio)
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
BILL SHUSTER, Pennsylvania (Ex 
Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

William L. Kovacs, senior vice president, environment, technology 
  and regulatory affairs, U.S. Chamber of Commerce...............     4
Harold P. Quinn, Jr., president and CEO, National Mining 
  Association....................................................     4
Nick Ivanoff, senior vice chairman, American Road and 
  Transportation Builders Association............................     4
Leah F. Pilconis, Esq., senior environmental advisor, Associated 
  General Contractors of America.................................     4
Richard O. Faulk, senior director, Initiative for Energy and the 
  Environment, George Mason University School of Law.............     4
Patrick Parenteau, professor of law, Vermont Law School..........     4

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. Nick J. Rahall II, of West Virginia.........................    44

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

William L. Kovacs................................................    46
Harold P. Quinn, Jr..............................................    57
Nick Ivanoff.....................................................   122
Leah F. Pilconis, Esq............................................   127
Richard O. Faulk.................................................   137
Patrick Parenteau................................................   142

                       SUBMISSION FOR THE RECORD

Hon. Donna F. Edwards, a Representative in Congress from the 
  State of Maryland, request to submit written statement of 
  Melissa Samet, senior water resources counsel, National 
  Wildlife Federation............................................    24

                         ADDITION TO THE RECORD

National Stone, Sand and Gravel Association, written statement...   150

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
 EPA'S EXPANDED INTERPRETATION OF ITS PERMIT VETO AUTHORITY UNDER THE 
                            CLEAN WATER ACT

                              ----------                              


                         TUESDAY, JULY 15, 2014

                  House of Representatives,
   Subcommittee on Water Resources and Environment,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Bob Gibbs 
(Chairman of the subcommittee) presiding.
    Mr. Gibbs. Good morning. The Subcommittee on Water 
Resources and Environment of the Committee on Transportation 
and Infrastructure will come to order.
    A couple of housekeeping items. First, I ask unanimous 
consent that the hearing record be kept open for 30 days after 
this hearing in order to accept other submissions of written 
testimony for the hearing record.
    Are there any objections?
    [No response.]
    Mr. Gibbs. Hearing none, so ordered.
    Today we have one panel. I welcome the witnesses. I will 
start off here with my opening statement.
    I again would like to welcome everybody to the hearing 
today. We are here meeting to examine the EPA's expanded 
interpretation of its permit veto authority under the Clean 
Water Act.
    Today we will hear from multiple stakeholders on the 
potential economic and job creation impacts of the EPA's new 
interpretation of their veto authority under the Clean Water 
Act. The Army Corps of Engineers has the lead responsibility 
for implementing the Wetlands Dredge and Fill Permitting 
Program under section 404 of the Clean Water Act.
    Under the Wetlands Permitting Program, the Corps is 
responsible for receiving and reviewing section 404 permit 
applications and issuing wetland permits. Section 404 assigns 
the EPA a limited review role in regard to section 404 permits. 
EPA may comment on section 404 permit applications during an 
interagency review period for each permit, and EPA also has the 
limited authority under section 404(c) to prevent the Corps 
from issuing a permit to authorize a particular disposal site 
or to restrict the terms of the permit, if the EPA determines 
that the permit would result in certain unacceptable 
environmental effects.
    Consistent with this process, in 2007, the Corps issued a 
section 404 permit for the Spruce No. 1 Mine project in West 
Virginia. Prior to the issuance of the permit, the project 
applicant conducted an extensive 10-year environmental review 
in which EPA fully participated and agreed to all of the terms 
and conditions included in the authorized permit.
    Subsequently, the mine operated pursuant to and in full 
compliance with the section 404 authorization and made 
substantial investments in the project in reliance on the 
permit.
    However, in 2009, the EPA unilaterally changed the rules of 
the game after the fact and took steps to revoke parts of the 
Spruce project issued permit even though they were in full 
compliance with the conditions of the permit. More than 3 years 
after the permit's issuance, EPA finalized the permit 
revocation in early 2011, halting development of the mine, 
jeopardizing jobs and the substantial investments and injected 
uncertainty into any industry impacted by section 404 
permitting.
    After the permit holder challenged EPA's permit revocation 
action in the Federal courts, the U.S. Supreme Court has 
decided not to review the 2013 Appeals Court decision that the 
EPA did not exceed its power when it stripped the Spruce Mine 
of its 404 permit.
    Revoking a permit after such has been issued and when no 
violations of the permit--I want to make that key--no 
violations of the permit have occurred is unsettling. It is an 
arbitrary and irresponsible way for Government to act.
    The EPA has not only asserted itself after a permit has 
been issued. It has recently been preempting potential 
applicants. A recent example of the EPA perhaps illegally 
exercising its veto authority before someone even applies for a 
404 permit is in the Pebble Mine, Bristol Bay, Alaska project.
    In this case, without ever receiving an application 
describing the proposed action, the EPA has declared that no 
permit, regardless of conditions and potential public benefits, 
can ever be issued in that designated area.
    I consider this regulatory overreach to be a fundamental 
property rights issue. With this new and broad interpretation 
of its powers, EPA is setting itself up as the ultimate manager 
of land use and economic development in the Nation. This is an 
example of Government that thinks it has no limitations on its 
power.
    The EPA's newly expanded interpretation has the possibility 
of becoming a very dangerous precedent by opening the door for 
revoking not just 404 permits, but perhaps other permits as 
well.
    This new action by EPA will affect both public and private 
development and raises the question: what does it really mean 
to get a permit? What does it mean to get a final decision from 
the Federal Government?
    If an agency is given the right to unilaterally revoke an 
already issued permit, then nothing can ever be considered 
final. The issuance of a Federal permit should come with the 
certainty that the activity can go forward unencumbered, but 
within the bounds of the permit, particularly those activities 
on private lands. This no longer seems to be the case, and it 
is going to have a stifling effect on not just mining 
operations in Appalachia but on economic development 
nationwide.
    I look forward to the testimony from our witnesses today, 
and at this time I yield to Mr. Bishop for a statement or any 
comments he may have.
    Mr. Bishop. Thank you very much, Mr. Chairman. I appreciate 
you holding this hearing, and I appreciate you yielding to me.
    I recognize that there is a difference of opinion among 
Members of this panel on the activities of the executive branch 
to protect public health and the environment. However, I am 
troubled by the tone taken by this Congress in carrying out its 
oversight activities of the current administration. Too often 
these days we have let the rhetoric surrounding controversial 
issues overtake the reality, and this seems especially true 
when it comes to talking about actions of the Corps of 
Engineers and the Environmental Protection Agency.
    Today's hearing is an example of this. The title of this 
hearing talks about the EPA's expanded interpretation of its 
Clean Water Act authority, as though this agency is creating 
new authority by its actions where none previously existed.
    Our former Senator from the State of New York, Daniel 
Patrick Moynihan once said everyone is entitled to his own 
opinions, but not his own facts. And so as we begin this 
hearing, it is important that we all have the same set of facts 
from which to work.
    Here are the facts. Fact No. 1, Congress enacted the Clean 
Water Act in 1972 and provided the Corps and the EPA 
complementary roles in the implementation of the Federal 
section 404 permit authority over discharges of dredged or fill 
material at specific sites in waters of the United States, 
including the adoption of the EPA's 404(c) oversight 
responsibility.
    Fact No. 2, since enactment of the Clean Water Act, the 
Corps of Engineers has processed on average 60,000 section 404 
permit applications per year, resulting in over 2.5 million 
approved permits since 1972.
    During that same period of time, the Environmental 
Protection Agency has exercised its section 404(c) authority a 
total of 13 times, 13 times in 2\1/2\ million permit 
applications.
    Fact No. 3, of the 13 actions taken by the EPA under 
section 404(c) since 1972, 12 were under Republican 
administrations and only 1, the 1 that we are discussing this 
morning, was under a Democratic administration. I will note 
that 8 of the 12 under Republican administrations were during 
the Presidency of Ronald Reagan.
    Fact No. 4, of the 13 times EPA has previously exercised 
its section 404(c), 3 of these 404(c) actions were taken after 
a Corps of Engineer permit was already issued, 2 under 
Republican administrations and once under a Democratic 
administration. An additional two 404(c) actions were taken in 
the time period before a Clean Water Act permit was issued by 
the Corps, both under a Republican administration.
    Fact No. 5, one of the projects that was blocked by a 
404(c) action of a Republican administration was finally 
resolved and approved by this current administration.
    So as history has shown, the Environmental Protection 
Agency of both Republican and Democratic administrations has 
used its congressionally authorized oversight authority over 
the section 404 program in a limited and relatively consistent 
manner. To characterize the Agency's recent actions related to 
section 404(c) as an expanded interpretation is simply not 
supported by the facts or the historical record.
    Now, it is fair for Members to have a difference of opinion 
on how the Corps and the EPA have carried out their Clean Water 
Act responsibilities. However, when we use that difference of 
opinion to mischaracterize or, worse, to demonize the 
intentions of these agencies, I believe we fail to uphold our 
larger congressional responsibilities.
    In my view, the EPA seems to have exercised its section 
404(c) authority since 1972 with restraint, acting only when 
the activities in question would have had an unacceptable 
adverse effect on the local environment, the very test that 
Congress established for the agencies back in 1972.
    While I recognize that those who may have been affected by 
these actions may have a different view, I believe that these 
groups will have a difficult time in arguing that the Federal 
agencies have abused or expanded this authority over the years.
    I thank all of the witnesses for being here today. I look 
forward to your testimony.
    I yield back. Thank you.
    Mr. Gibbs. Other Members may submit written testimony for 
the record.
    Today I welcome the witnesses. Our first witness is Mr. 
William Kovacs. He is senior vice president, environment, 
technology and regulatory affairs of the U.S. Chamber of 
Commerce.
    And then we have Mr. Harold Quinn, Jr., president and CEO 
of the National Mining Association; Mr. Nick Ivanoff, senior 
vice chairman of the American Road and Transportation Builders 
Association; Ms. Leah F. Pilconis, senior environmental advisor 
to the Associated General Contractors of America; Mr. Richard 
Faulk, senior director, Initiative for Energy and the 
Environment, George Mason University School of Law; and Patrick 
Parenteau, professor of law at the Vermont Law School.
    Welcome all, and we will start off with Mr. Kovacs.
    The floor is yours.

    TESTIMONY OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, 
ENVIRONMENT, TECHNOLOGY AND REGULATORY AFFAIRS, U.S. CHAMBER OF 
  COMMERCE; HAROLD P. QUINN, JR., PRESIDENT AND CEO, NATIONAL 
    MINING ASSOCIATION; NICK IVANOFF, SENIOR VICE CHAIRMAN, 
AMERICAN ROAD AND TRANSPORTATION BUILDERS ASSOCIATION; LEAH F. 
   PILCONIS, ESQ., SENIOR ENVIRONMENTAL ADVISOR, ASSOCIATED 
   GENERAL CONTRACTORS OF AMERICA; RICHARD O. FAULK, SENIOR 
  DIRECTOR, INITIATIVE FOR ENERGY AND THE ENVIRONMENT, GEORGE 
    MASON UNIVERSITY SCHOOL OF LAW; AND PATRICK PARENTEAU, 
              PROFESSOR OF LAW, VERMONT LAW SCHOOL

    Mr. Kovacs. Thank you, Chairman Gibbs and Ranking Member 
Bishop, for inviting me here to discuss EPA's expanded 
interpretation of the permanent veto authority under section 
404 of the Clean Water Act.
    I do recognize----
    Mr. Gibbs. Mr. Kovacs, can you pull your microphone a 
little closer?
    Mr. Kovacs. Oh, sure.
    Mr. Gibbs. Is it on?
    Mr. Kovacs. Yes.
    Mr. Gibbs. OK.
    Mr. Kovacs. While I do recognize that EPA permanent 
authority under section 404(c) has been upheld by the DC 
Circuit, I would like to focus on the practical implications of 
EPA's expanded new policy by discussing first the real work 
impacts of EPA's use of a retroactive veto policy authority 
and, second, the problems that arise when an agency, such as an 
EPA but there are others, stretches its authority under broadly 
written statutes enacted decades ago, many of which have not 
been formally reauthorized by Congress in decades.
    In the practical world, securing a permit, and I think this 
is our biggest problem with the retroactive veto, is a 
multiyear effort involving complex studies, engineering 
reports, compliance with over 30,000 pages of regulations 
covering air, water, waste, endangered species, and 
environmental impact statements. When a permit is granted, the 
developer has complied with literally every regulatory detail. 
The developer goes through this torturous process to develop a 
significant project with the expectation that the project will 
add economic value to the community, create jobs, and increase 
shareholder value.
    The developer enters the permitting process believing that 
once it proves it can meet every condition imposed by the 
Government, that it will hold the permit for a specific number 
of years to both complete and operate the project.
    EPA's retroactive veto means that a permit no longer is 
granted for a specific period of time. Rather, a permit has 
value only as long as the Administrator believes that it should 
not be revoked. Under EPA's new policy, a developer, in effect, 
only applies for a contingent permit, one that might be revoked 
whenever the Administrator desires.
    And I raise this in the context of the retroactive 
authority is completely unnecessary in this environment. First 
of all, should the developer violate any condition of the 
permit, EPA has massive administrative, civil, and criminal 
enforcement authority, emergency powers, injunctive relief, and 
it can even revoke the State's authority to retain full 
jurisdiction over the project.
    So a retroactive permit authority creates such great 
uncertainty in the permitting process the developers will be 
extremely cautious before risking millions of dollars when 
needed to apply for a permit that they think can be revoked. 
And I say that because it is millions of dollars to get one of 
these permits.
    And while the DC Circuit's decision invoked a coal mine, 
and that is a very controversial issue, the fact is that the 
retroactive permit authority can be used in any 404 permit, 
including ports, pipelines, waterways, highways, airports, 
housing authorities, industrial facilities, and even big box 
stores. So we are moving into a path that might be much more 
disruptive than the political controversy over a coal mine.
    But EPA's retroactive permit authority is only one of the 
many ways in which the Agency is unilaterally expanding its 
regulatory authorities. The claim of retroactive authority is 
merely the latest. In the case of Pebble Mine, which the 
chairman mentioned, in Alaska, the developer spent over one-
half billion dollars and it has not even yet been able to apply 
for a permit. In this situation, the activists petitioned EPA 
requesting that the permit be preemptively denied before even 
Pebble could apply for it.
    To appease the activists, EPA undertook a watershed 
assessment using outdated models and operations of a mine. 
While EPA has not yet preemptively prohibited the permit 
application, it has formally started the process to prohibit 
it.
    So we have a combination right now of EPA asserting a 
retroactive authority on a permit, a prospective authority on a 
permit, and when EPA moves forward with its ``waters of the 
U.S.'' and this greatly expanded area that they are going to 
have 404 jurisdiction over, it literally places most of the 
land mass that is near water in some kind of restriction that 
they do not have now.
    Couple these powers with EPA's other powers under other 
statutes, and then add into that Fish and Wildlife's efforts in 
expanding the habitat for endangered species, and the result is 
the Government is developing policies that will actually 
regulate most of the land in the United States. This type of 
regulatory structure is literally shutting down our ability to 
build infrastructure or large industrial projects anywhere. 
This is serious, and the Nation will not begin to grow and 
create jobs until we can start building again.
    And I want to finish with the fact that several years ago 
we did a project called Project, No Project, and we just looked 
at the number of facilities trying to get permits in March of 
2010, and there were 351 private facilities that wanted to put 
in almost $600 billion worth of investment, and they could not 
get permits. The permitting process is probably one of the most 
important things Congress can look at.
    Thank you.
    Mr. Gibbs. Thank you.
    Mr. Quinn, welcome.
    Mr. Quinn. Good morning. Thank you, Mr. Chairman, Ranking 
Member Bishop, and members of the subcommittee. Thank you for 
the invitation to appear today and testify, and we appreciate 
your efforts and time to look at this important questions about 
restoring predictability and certainty with the Clean Water Act 
permitting process.
    The United States has several advantages when it comes to 
attracting capital for investments need to grow and sustain our 
economy. We have deep capital markets, a global leading 
workforce in terms of productivity and skills, a strong 
platform for innovation and technology development, a world 
leading transportation infrastructure to get products to market 
quickly, and low-cost and reliable energy, though I must say 
even that may be in jeopardy now with recently policies that we 
saw bring our electric grid close to the edge of breaking this 
past winter.
    The point being is that all of these advantages can be 
erased with regulatory policies that create delays and 
uncertainty for capital intensive projects. Let me just speak 
to the mining industry.
    Finding and developing our mineral resources in this 
country requires substantial investments, hundreds of millions 
and even billions of dollars. As a consequence, regulatory 
certainty is an essential and a highly valued commodity. 
Lengthy delays and regulatory do-overs and permitting decisions 
compromise the commercial viability of projects. They increase 
costs, reduce the net present value of projects, and impair 
potential financing sources.
    So the efficiency and predictability of the permitting 
process matters in decisions about where to invest. The choice 
could be stark: invest in countries with a predictable pathway 
for receiving permits within 2 or 3 years, or perhaps the 
United States where it may take three or five times longer.
    Over the years, the process for obtaining Clean Water Act 
permits has become longer, more complicated and more expensive. 
To make matters worse, we have now entered unchartered water 
for regulatory certainty with EPA's claim that it can, one, 
revoke a permit issues by another agency after the fact, the 
example the chairman used in his opening statement, a project 
that met the test of a 10-year environmental review and 
obtained EPA's prior consent; or instruct State and Federal 
agencies not to consider any permit application until it 
decides whether development in that State is appropriate; or 
change the process for reviewing permits after applications 
have been filed and pending for several years and, as a result, 
effectively force companies to abandon their applications out 
of frustration.
    In short, it appears that in EPA's role it can never be too 
late or too soon to inject itself in the process or change the 
rules for reviewing project permit applications. Let me be 
clear. Valid concerns about environmental protection should be 
fully considered and addressed. At the same time, they should 
not serve as an excuse to trap projects in a limbo of 
duplicative, unpredictable and endless review or carry a 
prospect that decisions will be revisited when there's a change 
in leadership at an agency.
    There is a time and place for EPA to engage the permitting 
process and raise legitimate issues it does not believe are 
being evaluated. That opportunity arises between the time a 
permit application is filed and prior to a decision.
    Since the enactment of the Clean Water Act and until now 
that opportunity has proven more than adequate to the task. 
Words can debate whether the language of the Clean Water Act 
accommodates EPA's recent breathtaking claim of authority, but 
the fact that such authority was not apparent for 40 years 
should raise red flags as this subcommittee considers the 
questions before it today: is this what the Clean Water Act 
intended? And is this good public policy?
    In the wake of EPA taking such extraordinary actions, the 
Agency issued statements that it only plans to do so very 
rarely, but for all practical purposes that is not a guarantee 
any project can take to the bank.
    Thank you very much for your attention today.
    Mr. Gibbs. Thank you, Mr. Quinn.
    Mr. Ivanoff, welcome. The floor is yours.
    Mr. Ivanoff. Thank you very much.
    Chairman Gibbs, Representative Bishop, members of the 
subcommittee, my name is Nick Ivanoff, and I am president and 
CEO of Ammann & Whitney, an engineering company based out of 
New York. I am here today on behalf of the American Road and 
Transportation Builders Association where I currently serve as 
the senior vice chairman.
    ARTBA, now in its 112th year of service, represents all 
sectors of the U.S. transportation construction industry which 
sustains more than 3.3 million American jobs. ARTBA members 
must directly navigate the regulatory process to deliver 
transportation improvements, including obtaining Clean Water 
Act permits.
    The permitting process is essential for balancing the need 
for protecting our natural environment with the need to improve 
our transportation networks. ARTBA members benefit from a well-
run permitting system because it lets them know their 
responsibilities upfront and allows them to plan ahead during 
construction.
    However, in order for a permitting system to function 
properly, there must be certainty. Once a permit is issued, we 
need to be able to rely upon the fact that the permit's 
conditions will not change.
    EPA's decision to revoke Arch Coal's Clean Water Act permit 
in January of 2011 sets a very dangerous precedent which 
threatens to remove this certainty from the permitting process. 
Major transportation projects can take years, if not decades, 
to complete. In order for these projects to move forward, 
planners need to know permits received at the beginning of a 
multiyear construction process will be valid throughout the 
project's life span.
    While the EPA's decision was directed at a single mining 
operation, its impacts have been felt throughout multiple 
industries. As a result of EPA's actions, permit holders could 
be in danger of losing their permits through no fault of their 
own, but simply because EPA changes the rules in the middle of 
the game.
    Certainty in the permitting process is also integral to the 
financing of transportation projects. As you know, public-
private partnerships are being eyed more and more frequently as 
a means of project delivery. In order for parties to invest in 
transportation improvements, they need some level of certainty. 
The prospect of a valid permit being rescinded at any time 
increases risk for project investors, making the project much 
less appealing or increasing the entity's required rate of 
return on their capital.
    EPA's permit veto is even more troubling in light of the 
Agency's recent regulatory attempt to expand its jurisdiction 
under the Clean Water Act. If EPA's proposed jurisdictional 
rule is implemented, the universe of water bodies requiring 
Federal permits will expand. This would be a one-two punch for 
transportation improvements as their permitting burden would 
increase, and even if those permits are obtained, the length of 
their validity would certainly be in doubt.
    It should also be noted that there has been recent 
bipartisan progress in the area of streamlining the project 
review and approval process for transportation projects. If 
EPA's retroactive permit veto is allowed to stand, this 
progress as well as any other benefit from future reforms would 
be diluted. Any reduction in delay gained from improvements to 
a project delivery process could be negated by the increased 
uncertainty in the regulatory process for wetlands.
    ARTBA was pleased to see this committee introduce the 
bipartisan Regulatory Certainty Act of 2014, which would curb 
EPA's ability to retroactively veto a valid permit. ARTBA 
supports this measure and sees it as a means to restore 
certainty to the permitting process.
    Mr. Chairman, Representative Bishop, ARTBA deeply 
appreciate the opportunity to take part in today's discussion, 
and I certainly look forward to answering any of your 
questions.
    Thank you very much.
    Mr. Gibbs. Thank you.
    Ms. Pilconis, the floor is yours. Welcome.
    Ms. Pilconis. Thank you.
    Chairman Gibbs, Ranking Member Bishop, and members of the 
subcommittee, thank you for inviting the Associated General 
Contractors of America to testify today.
    AGC represents over 25,000 construction contractors, 
material suppliers, and related firms. These firms construct 
buildings, highways, bridges, water and wastewater facilities, 
and other public and private infrastructure.
    My name is Leah Pilconis, and I am a Senior Environmental 
Advisor to AGC. On behalf of AGC, I maintain liaison with EPA 
and other Federal agencies that interpret and enforce 
environmental laws.
    Construction activity in ``waters of the United States'' 
requires a 404 permit. AGC believes that EPA's authority to 
modify a section 404 permit does not and should not extend 
beyond the point at which the Corps issues the permit. 
Unfortunately, EPA has taken a much more expansive view of its 
authority, asserting on its Web site that it can modify a 
section 404 permit before a permit is applied for, while an 
application is pending, or after a permit has been issued.
    EPA's actions are disrupting the longstanding permit 
process that property owners and construction contractors rely 
on. The Agency is disregarding the regulated community's 
reasonable, well settled, and investment-backed expectations. 
It is taking away the finality of a dually issued permit.
    Under a joint EPA and Army Corps proposal to redefine 
``waters of the United States,'' AGC expects many more 
construction projects to require section 404 permits. If EPA 
has its way, every permit will forever remain subject to 
modification and even revocation at literally any time simply 
because EPA unilaterally changes its opinion of information 
that it has long possessed. AGC believes it is now up to 
Congress to step in and solve the problem.
    The alternative is to allow EPA to render years of 
development planning and billions of dollars in investments 
virtually meaningless based on nothing more than a reassertion 
of concerns that did not prevail in the original interagency 
review process.
    Working without a permit is not a viable option. The 
penalties for failing to obtain the necessary Clean Water Act 
permit can be severe, and that is just the tip of the iceberg. 
Many of today's infrastructure projects cost billions of 
dollars to construct, and they require huge sums of money 
upfront just to begin work. Project delays and disruptions can 
easily cost millions and millions of dollars.
    Scarce resources are wasted. Economic benefits are delayed, 
and workers lose their jobs. The widespread economic damage 
hits the property owner, the general contractor, the 
subcontracts, the material suppliers, the individual 
construction workers and the community.
    What is more, those who are opposed to a construction 
project for whatever reason now have an incentive to bring 
citizen suits to try to compel EPA to modify or revoke the 
projects 404 permit. Legal proceedings mean delays, wherein 
overhead and other costs continue to accumulate. If EPA is 
allowed to revisit the environmental impact of a 404 permitted 
project at any time, then the permit holder cannot rely on the 
sole statutory mechanism for measuring Clean Water Act 
compliance, the permit.
    The Corps regulations specifically address permit 
modification or suspension and lay out the five factors to be 
balanced in that inquiry. Those factors promote compliance and 
protect reliance interests. If EPA continues to assert 
unconstrained veto power over permits issued by the Corps, it 
will substantially deter investments in projects that require 
404 authorization, which will translate directly into lost jobs 
and lost economic activity across the whole economy.
    Billions of dollars of investments are dependent on the 
finality that comes with a duly issued Corps permit. Leaving 
projects unbuilt has consequences far beyond the owners and 
users who are deprived of the use of that project.
    Construction is a major contributor to employment, cross 
domestic product, and manufacturing. Section 404 projects 
generate significant indirect and induced benefits to 
affiliated industries. Reduced levels of investment in those 
projects translate directly into lost jobs and lost economic 
activity across the whole economy.
    The U.S. currently faces a significant backlog of overdue 
maintenance across its infrastructure system. The suspension 
restriction or lack of financial support for 404 projects could 
result in intolerable delays to the revocation and improvement 
of public infrastructure, including highway, transit, bridge 
repairs, and dam repairs.
    Finally, the debt rating agencies will account for this 
risk through lowered bond ratings, particularly on 
controversial projects, resulting in increased underrating fees 
and interest rates. In some cases, project proponents may not 
be able to obtain necessary financing or public funding.
    Mr. Gibbs. Thank you.
    Mr. Faulk, the floor is yours. Welcome.
    Mr. Faulk. Thank you, Mr. Chairman and members of the 
committee.
    Mr. Gibbs. Put the microphone on and pull it a little 
closer maybe.
    Mr. Faulk. Here we are.
    Mr. Gibbs. Speak up like the previous witness who did 
really well.
    Mr. Faulk. Absolutely, absolutely. I want to thank you, Mr. 
Chairman, and your sense of humor and the members of the 
committee for inviting me to speak to you this morning.
    At the outset I want to note that I am not appearing here 
on behalf of any client or any organization. I have responded 
to the committee's invitation as a concerned citizen, and I am 
going to provide information based upon my experience and my 
observation.
    I am the Senior Director of Energy and Environment 
Initiative at the Law and Economics Center of George Mason 
University, where I develop and participate in forums designed 
to promote constructive dialogue regarding our Nation's energy 
and environmental issues.
    I am also a partner in the Washington, DC, law firm of 
Hollingsworth, LLP.
    I have become familiar with the sources of the 
Environmental Protection Agency's alleged authority to veto 
permits issued under section 404 of the Clean Water Act, as 
well as the disputes that have arisen recently regarding the 
extent of the authority both before and after permits have been 
issued by the Corps of Engineers, which is, of course, the 
primary authority responsible for such actions.
    Based upon my review, three situations that have arisen 
recently, I believe that there's an urgent need for a 
comprehensive inquiry into whether the current statutory 
structure can be properly construed to authorize retrospective 
and prospective vetoes of legitimate business activities.
    The risk presented by such vetoes can be examined in these 
three situations that I've mentioned: the one which has already 
been discussed at length involving the Mingo Logan Coal 
Company, Spruce Mine No. 1; the second being the Pebble Mine 
Project development in Alaska, which involves a prospective 
veto; and the third that I am aware of is a request that was 
made in May, May 27th, 2014, to the EPA by a group of Native 
Americans in Wisconsin who are seeking a prospective 
prohibition of exploration and extraction by mining companies, 
particularly the Gogebic Taconite Mine for protecting the water 
resources associated in those situations.
    If the congressional inquiry that I am requesting this 
committee to recommend reveals that these risks exist, Congress 
should consider amending the Clean Water Act to preclude these 
problems. These amendments should require that the EPA's 
objections and withdrawal of specifications occur only during 
the normal permitting process, not before the permitting 
process is commenced and not after the process is concludes.
    Without these protections, these practices which are 
enhanced by deferential judicial review unreasonably expand the 
EPA's regulatory range and threaten to upset the delicate 
balance of powers and participation necessary to ensure the 
administration fairly of the Federal Clean Water Act.
    It is worth noting that with respect to the Mingo Logan 
situation, that in the Supreme Court the argument was made in 
the petition for certiorari that the Supreme Court has already 
decided the question under the Coeur Alaska case, which is 
cited in my materials, that the Corps of Engineers is entitled 
to full respect for its decisions, and that they, in fact, have 
the authority to deal with these issues during the course of 
the permit issuing process. And that case can be found at 557 
U.S. 261. It was decided in 2009.
    But aside from these legal arguments, there is a multitude 
of economic issues that should be addressed here. Giving EPA 
the unconstrained authority to revoke section permits at any 
time strips the permits of the finality and regulatory 
certainty that Congress clearly intended for them to have, 
while the Corps is required to consider the impacts on 
investments as a part of its issuing process.
    It is interesting that the EPA claims it has no 
responsibility to consider these investment opportunities. 
Certainly there is nothing in the Clean Water Act that suggests 
that they must do so, and therefore, they have a situation that 
is left to their complete discretion without even considering 
or affording any deference whatsoever to these important 
issues.
    Permits are extremely important and regulatory certainty is 
extremely important in all of these situations, and the threat 
of deferential judicial review is also a problem. As we know 
from the recent decisions of the Supreme Court, all of these 
issues are entitled to dispositive interpretations. EPA's 
interpretation are dispositive under the Chevron issues. They 
receive all sorts of recognition.
    Scientific issues are entitled to an extreme degree of 
deference. Under those circumstances you can see that the 
danger of this situation which deprives parties of 
opportunities to challenge these issues in the permitting 
process adequately necessarily precludes any meaningful review 
of these issues by the courts.
    Mr. Gibbs. Thank you.
    Mr. Parenteau, welcome. The floor is yours.
    Mr. Parenteau. Thank you, Chairman Gibbs, Representative 
Bishop, members of the committee. I appreciate the opportunity 
to appear here today.
    I am, like Mr. Faulk, appearing in my individual capacity 
as someone who has spent over 40 years dealing with the Clean 
Water Act, but I do not have a dog in this particular fight.
    I would note at the outset, however, I think it is very 
unfortunate there is not a member of the public from the 
Bristol Bay community here. The committee is debating a change 
in the law that could have very dramatic implications for the 
people that rely on a world-class fishery, a billion-dollar 
fishery that supports 14,000 jobs, that provides over half of 
the sockeye salmon that the world consumes. This is a one of a 
kind resource, and it is in your hands. The fate of this 
resource is in the hands of this Congress.
    So with that let me just say that EPA has interpreted its 
authority under section 404(c) of the Clean Water Act in 
precisely the same way it is interpreting it today as it did in 
1972, as the Congress did in 1972 when it wrote this law. This 
law authorizes EPA to exercise this very rare last resort, very 
carefully crafted authority before, during or after the 
issuance of a 404 permit.
    That was written in the EPA's rules from the very 
beginning. I was a Regional Counsel with EPA. I am very 
familiar with these rules. I applied these rules in the 
Attleboro Mall veto case under the Reagan administration, and 
it has been clear from the beginning that this authority has 
existed, and EPA has always interpreted it consistently.
    It is also true that EPA has very, very rarely exercised 
this authority. In fact, obviously it is very true that they 
very rarely exercise 404(c) veto authority at all, on only 13 
times out of, as Mr. Bishop said, 2 million permit activities.
    It is also true that EPA has been challenged each and every 
time it has exercised this authority in the courts, and it is 
true that EPA's position has been upheld by the court each and 
every time it has been challenged. Its administrative record, 
its science basis, its consideration of economic impacts, its 
consideration of alternatives, the reasons it gives for 
exercising this rare authority, every single facet of every 
single decision under 404(c) has been vigorously litigated by 
some of the finest litigators in the country, and each time 
EPA's position has been upheld, all the way now to the Supreme 
Court.
    So in terms of law, it is well settled that EPA is well 
within its bounds in the way that is operating under the 404(c) 
program.
    People can legitimately disagree, obviously, as to whether 
a particular veto ought to have been issued in a particular 
case, as to whether EPA should invoke the 404(c) authority at 
all. There are reasonable grounds to disagree and reasonable 
ways of seeing these things, but the authority to do that is 
clearly there.
    Let me also say having been in the middle of this 404(c) 
process it is multilayered; it is four steps; it takes months, 
if not years, to complete. It is preceded by extensive 
consultations with the Corps of Engineers, with the project 
applicants, with local officials, with scientific authorities, 
with local communities, with site specific investigations, with 
peer reviewed science. All of that is part of these 
administrative records. It is all transparent. It is all there 
for anyone to see and anyone to challenge and anyone to debate. 
It is all on the record. It is all out in front. There is 
nothing in secret about it.
    Finally, I would like to say that the instances in which 
this authority have been used have produced some very, very 
positive results. From the small to the large, in the Attleboro 
Mall case not only was the project in question a shopping mall 
built ultimately in an upland area that saved wetlands, but it 
led to a revolutionary change in the way that the agencies, the 
Corps and the EPA, administer the 404 program and specifically 
the way that mitigation of wetland impacts are handled.
    It led to the most comprehensive set of mitigation 
regulations that we now have that have finally once and for all 
identified exactly and precisely how applicants can proceed to 
develop sites responsibly and with mitigation that actually 
works in accordance with the recommendations of the National 
Academy of Sciences and others.
    That all resulted from that one single veto. Before that 
point in time there was no agreement between these agencies, 
lots of arguments, lots of litigation, lots of uncertainty. The 
veto broke through that. The veto resulted in an agreement that 
finally resolved that.
    In the Two Forks case, very quickly, not only did we save 
Cheesman Canyon, one of the most priceless trout fisheries in 
the Western United States and very high value; not only did we 
save the seven towns that would have been flooded had Cheesman 
Canyon have been dammed, but the Denver Water Board came up 
with a water conservation policy as a result of that and 
acknowledged that the 404(c) veto led them to do that, which 
allowed Denver to grow by 100,000 people with no further water 
supplies needed.
    Section 404(c) is not broken. It works. It is doing what Ed 
Muskie and the others thought it was supposed to do in 1972. It 
should be retained.
    Thank you.
    Mr. Gibbs. Thank you.
    I will start off here. First I want to address what Mr. 
Parenteau just said. In your written testimony, you got the 
verbiage here for the rule, and then I have the actual section 
404(c) that is in the law, and I would respectfully argue that 
the law was loosely written.
    You cited the rule, not the actual law, and I think what we 
need to do is Congress needs to clarify this a little bit 
because apparently for nearly 40 years, the EPA did not abuse 
this authority even though it was not that clear, and now we 
have seen that.
    My questions start to Mr. Faulk. Of the 13 vetoes that the 
ranking member addressed, would you concur that that was 
operating within the law, and that is a separate issue to what 
has happened at Pebble and happened at Spruce.
    Mr. Faulk. Yes, yes, I would say so, and the reason I would 
say so is because the situation at those facilities is 
substantially more aggravated than most of those particular 
instances.
    Mr. Gibbs. Yes. OK. I do want to make an announcement, too, 
that for the record both the EPA and the Army Corps denied our 
request to testify before the committee on this subject. So I 
wanted to make that clear.
    Regarding Mr. Quinn, on those 13 vetoes, would you concur, 
too, that those were operating within the scope of the Clean 
Water Act and their jurisdiction, and that is different than 
what they have done in those other two cases that I just 
mentioned?
    Mr. Quinn. Well, Mr. Chairman, I do not have all of the 
facts to each of these. So I would say that the veto we saw at 
Spruce was completely different and extraordinary. Several 
years after the fact we had a 10-year review process. The 
project had been adjusted to address EPA concerns. EPA signed 
off on it.
    Here is what I find amazing, is that I listened to the 
professor's testimony about how transparent the process is for 
the veto situation, but the question is, and nobody seems to 
answer it, why is an EPA engaged in the process where it is 
directed to between the time the permit application has been 
filed and before a decision has been issued by the court?
    It seems remarkable to me that all of a sudden after the 
decision by the Corps, EPA finally has this remarkable 
revelation that, oops, we should have told them ahead of time 
this is not an area we want to----
    Mr. Gibbs. So you would argue that the intent of the CWA 
was for the Corps and the EPA to be involved during the process 
and they could veto during the process?
    Mr. Quinn. That is the context I see in the statute, and I 
can see that the courts have said that the language is broad 
enough to accommodate what they are doing. My point is I do not 
think that is good public policy, and Congress ought to have a 
question whether that----
    Mr. Gibbs. I want to take this a little further. This will 
be for Mr. Quinn or Mr. Faulk on the expansion of the EPA's 
rule on the ``waters of the United States.'' It seems to me 
that there is a possibility there will be a lot more requests 
for section 404 permits from all types of different entities, 
developers, farmers, local governments, townships. Did you see 
it that way, Mr. Faulk, I guess?
    Mr. Faulk. Yes, I really do. I think we are seeing an 
effort by the EPA here with these proposals to basically bring 
in basically any place that connects in in any way to waters 
under the United States jurisdiction to be extended, and we 
will see farmers, for example, who withdraw water.
    We will see other businesses that withdraw water that are 
from these things, come into the regulatory process. We are 
going to see a surge of applications for these permits, and all 
of these people are going to have to rely upon what those 
permits say in the process of planning their business 
activities on a daily basis.
    And with that it becomes uncertain. The question of how 
much they can invest, how big their businesses can grow, how 
intense their business activities can be.
    Mr. Gibbs. I want to give Mr. Kovacs a chance. You want to 
talk about that, too, I think.
    Is your mic on?
    Mr. Kovacs. I think the thing that troubles me the most is 
that in the process, EPA was involved. It was actively 
involved, and in fact, it wrote to the Corps and indicated that 
it might have some problems, but then it indicated just go 
forward.
    Then the company starts construction, and then 4 years 
later, they decide to exercise the veto. So I think that is an 
important issue.
    The second part that is really important is I think if you 
look at Justice Scalia's last discussion in the UAR case 2 
weeks ago on the greenhouse gases, he is very clear. Congress 
did two things. One is 40 years ago you delegated a lot of 
authority to the agencies and much has not been done to look at 
the authority recently, and there is an institutional problem.
    But the second thing is, he said, you know, different 
definitions can be looked at in different titles of an act, and 
what you have to do is look at the structure of the act. So 
when you are looking at this, in this particular case, the 
Court looked at one word, ``wherever,'' and it did not look at 
the entire structure of 404(c) and the role of the Court or the 
role of the Corps and the role of the Agency.
    So I think in that sense, and now you are going into 
``water of the U.S.'' and other regulatory change which is 
going to greatly increase the number of facilities that may be 
in this issue or in this problem.
    Mr. Gibbs. Thank you.
    My time has expired. I will yield to Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman.
    Let me thank the witnesses for their testimony. I have to 
confess that I am not entirely sure where to start here, but 
let me start with a couple of things that I heard.
    I heard a lot about this being a dangerous precedent. I 
heard a lot about expanded jurisdiction. I heard a lot about 
alleged authority. Let me start with the authority. I am going 
to read section 404(c).
    ``The Administrator,'' by that they mean the EPA 
Administrator, ``is authorized to prohibit the specification, 
including the withdrawal of a specification, of any defined 
area as a disposal site, and he is authorized to deny or 
restrict the use of any defined area for specification, 
including the withdrawal of specification as a disposal site 
whenever he determines.''
    Now, I am not a lawyer. Perhaps that it is a good thing. I 
am teasing. But that seems pretty clear to me. That seems 
pretty clear to me.
    Mr. Parenteau, would you agree that that is pretty clear 
authority?
    Mr. Parenteau. Yes, and more importantly, the DC Circuit 
agrees and so apparently does the Supreme Court, which denied 
review in Mingo Logan. Let me read you what the DC Circuit 
said.
    ``Using the expansive conjunction 'whenever,' the Congress 
made plain its intent to grant the Administrator authority to 
prohibit, deny, restrict, withdraw a specification at any 
time.'' And the court emphasized ``any.''
    Mr. Bishop. OK. So hopefully that disposes of the issue of 
whether or not the authority being exercised is alleged or 
whether it is statutorily based.
    The second thing I would say is so we seem to have a 
situation in which the authority that the EPA is exercising is 
well within its statutory authority and well within the way in 
which that authority has either been interpreted or validated 
by the courts.
    We also have a situation in which the numbers make the case 
unmistakably that the authority is rarely exercised. And so 
when I hear about uncertainty and I hear about not a guarantee, 
.99999 percent of the time the 404(c) permit that is issued is 
validated or accepted or not challenged by the EPA.
    So I guess my question is: what is new here? There was a 
revocation of a permit under President Reagan. I do not think 
anyone's hair was on fire at the time. I do not know. I was 
doing something else at the time.
    One was denied by George H.W. Bush's EPA. I do not remember 
this being a huge issue that brought about a hearing of this 
type. So what is new? What is precedent setting about what the 
Obama administration's EPA has done that was not precedent 
setting by what the Reagan administration EPA did or the George 
H.W. Bush EPA administration?
    I will go further. This administration has vetoed or 
overruled an EPA veto of a 404, section C permit. Why is that 
not precedent setting? Why does that not yield the same kind of 
uncertainty that I keep hearing about?
    And I know I am asking rhetorical questions, but I would 
invite any of the panel to help me understand what is precedent 
setting about this, and why is it that if an agency over a 42-
year history exercises its veto authority .000001 percent of 
the time, why does that induce the kind of uncertainty and the 
kind of sort of doomsday rhetoric about how people cannot 
possibly plan when the EPA can drop the ax at any time?
    Mr. Quinn. I will be happy to try to answer that, Mr. 
Bishop. I think it is a good thing that you are not a lawyer 
because I think you bring some fresh perspectives to this.
    I have been involved in a lot of this litigation, but I 
will admit I am a recovering lawyer. So I will try not to 
derail my recovery on this.
    But I think there are a couple of distinctions, and as I 
have said before, I would agree with your statement that the 
courts have validated at least part of this interpretation. No 
question, and I am not here to debate whether the language 
accommodates it or not. Apparently it does, at least on a 
retroactive aspect.
    But I think there are important factual distinctions, 
timing distinctions on the Spruce permit occurring with a very 
extended review period, for a decade, obviously a lot of 
interaction between the agencies, a final decision, and then 
years after that final decision, a redo or revisiting on that. 
So I think that is a clear difference.
    I think on the preemptive moves we are seeing now are 
unprecedented where EPA has gone into a situation and has 
basically said we do not want any agencies entertaining any 
application it may receive until we finish doing our own study, 
and that has actually invited now new requests from outside 
groups to come and evaluate other areas as well.
    Mr. Bishop. May I just interrupt?
    Mr. Quinn. Please.
    Mr. Bishop. There were two preemptive denials pre-the Obama 
administration, both by Republican administrations. How do 
those two preemptive denials differ?
    Mr. Quinn. Prior to an application being filed.
    Mr. Bishop. Yes, there were two of those prior.
    Mr. Quinn. I would have to look and see what the context of 
that is.
    Mr. Bishop. But is that not important? If what we are 
dealing with here is an agency's statutory ability to enforce 
the law that Congress has written and left in place, and one 
administration does it and it is a freebie, no problem, and 
another administration does it and we have a hearing with six 
witnesses and we are talking about expanded authority.
    Is it not important that we understand the distinction 
between those first two and what we are dealing with now? And I 
do not mean to put you on----
    Mr. Quinn. No, no. I do not know the context of that. So I 
cannot directly answer that question. I think in this case we 
have a situation where a company has invested $700 million in 
looking at, explore and develop a mineral resource, and even 
before it has the opportunity to file some engineering plans, 
specifics, and have it evaluated whether it can balance these 
different needs, it is being pushed out and the State is being 
pushed out of any role in deciding what is a balanced approach 
on this.
    Here is what I would say, Mr. Bishop, is that I think in 
the end of the day the real question is: can we not accomplish 
what we are all looking for under the process that has been 
typically adhered to for 40 years, which is when an application 
is filed, this is when the interaction occurs, and before you 
reach a decision if EPA wants to say, ``This decision by the 
Corps is going to be wrong. I have talked to them ahead of 
time, and now I am going to commence a proceeding''----
    Mr. Bishop. And I guess that is my point. I accept what you 
say, and I guess my point is: how does one occurrence 
constitute atypical?
    You know, there have been 60,000 permits applied for a year 
in the 5 years of the Obama administration, 300,000 permits and 
change. Once, once, how does that constitute something that now 
businesses cannot reasonably count on?
    In the 8 years--I am sorry. Did I run over my time?
    Mr. Gibbs. Yes, you are over your time.
    Mr. Bishop. I am way over my time.
    Mr. Gibbs. Yes, you are way over.
    Mr. Bishop. Thank you, Mr. Chairman.
    OK. I will come back to it.
    Mr. Gibbs. I was trying to allow the witnesses to respond 
to your rhetorical questions.
    Mr. Bishop. Thank you.
    Mr. Gibbs. But just a comment. The bills we are looking at 
tomorrow in markup, I think, in reference to my bill, try to 
put a reasonable time period for the 404(c) to come into 
effect, not 3 years later. So I think it is a commonsense, 
reasonable time, and that is what we are trying to address in 
the legislation.
    Mr. Markwayne Mullin from Oklahoma, do you have questions?
    Mr. Mullin. Yes, sir. That caught me a little off guard 
though.
    It is a privilege and honor to be here and have the panel 
in front of us.
    I had some deep concerns about it. I have dealt personally 
with the EPA. I have dealt personally on these permit issues. I 
have personally run into hurdles when we were trying to build 
such things as retention ponds for drilling sites, when we are 
trying to do dirt work and control the runoff where the will 
come in and start making different permit issues, different 
requirements, and overrunning DEQ.
    And as Mr. Bishop was trying to allude to, he was simply 
saying, ``Why now?'' Well, as a business owner I can answer 
that and say it is because it is politically motivated, and we 
cannot judge that. We cannot simply stay up and say there are 
rules and common sense that apply to this.
    In 1972, Mr. Parenteau--is that how I am saying that?
    Mr. Parenteau. Parenteau.
    Mr. Mullin. Parenteau. I am sorry.
    In 1972, the initiative was to try cleaning up the waters 
because we were abusing it. The overreach now of the EPA has 
become so absurd that I do not think anybody in this room can 
deny that there is some political motivation behind this, and 
that is where the uncertainty as a business owner comes into 
play.
    When you know what rules you have to play by, but then when 
no rhyme or reason can come in and say, ``No, we are just not 
going to do it,'' after we as business owners are investing 
millions of dollars to get a project done, and they do not even 
have to give us an explanation of why, there is a difference 
between 40 years ago and today.
    And I do not think even you, sir, can disagree with that. 
When we have a President that openly says that he is for 
something and completely against something else, there is a 
problem with that.
    And as an entrepreneur, what we simply want to do is say 
let there be certainty in it. Tell us why. Where are you going 
with this, not just because you feel a certain way? Where is 
the balance between the good of the people and your agenda?
    And I would like you, sir, to expand a little bit on where 
the difference even in Congress, where we are at today versus 
1972, and where the EPA has grown from 1972 to where it is 
today, and where is the certainty as a business owner. As the 
gentlelady said, because I am not even going to try saying your 
last name, from AGC, the permitting process and the fines have 
become absurd. And how can we predict the future and how can we 
adequately prepare for the cost of the infrastructure that this 
committee is all about?
    Mr. Parenteau. One of the greatest uncertainties that we 
are dealing with has been given to us by the United States 
Supreme Court in two very controversial decisions.
    Mr. Mullin. I agree with that.
    Mr. Parenteau. And if you are asking what can Congress do 
about it, what I would tell you is what the Supreme Court said 
you can do about it, which is the clarify the scope of the 
jurisdiction of the Clean Water Act.
    There is going to be tremendous disagreement about what the 
scope of that act ought to be. Let me just say this.
    Mr. Mullin. Well, the EPA came in and they made their own 
reach of what the U.S. waters are.
    Mr. Parenteau. That is correct.
    Mr. Mullin. And they are moving way upstream, way above 
navigable waters. Now we do not even understand what 
``navigable waters'' really means.
    Mr. Parenteau. The proposal that is on the table would 
actually reduce the extent of the Federal jurisdiction as it 
existed before these two decisions were handed down. The Fourth 
Circuit of the United States----
    Mr. Mullin. Hold on. Reduce?
    Mr. Parenteau. Yes, reduce.
    Mr. Mullin. They are moving further upstream.
    Mr. Parenteau. No, sir.
    Mr. Mullin. Sir, I will beg to differ on first-hand 
experience because I had the farmer that had moved upstream 
where they have denied us the ability to even fertilize their 
own ground because they are saying runoff is now part of 
navigable water.
    Mr. Parenteau. Runoff is activities.
    Mr. Mullin. Activities are considered a ditch? Say you have 
got to be 1,000 feet away from a watershed, and a watershed is 
within 1,000 feet of a ditch?
    When you live in northeast Oklahoma, everything is on a 
hill. You are within 1,000 feet of a waterway everywhere you go 
if that is the interpretation.
    Mr. Parenteau. EPA's role has reduced the scope of the act 
with regard to ditches. It has, as a matter of fact.
    Mr. Mullin. I would like for you to clarify that.
    Mr. Parenteau. I would be happy to do so.
    Mr. Mullin. And say how that is even possible.
    Mr. Parenteau. I would not only be happy to clarify it. I 
will cite you the case that upheld a broader definition of 
ditches than EPA is using.
    Mr. Mullin. OK. When they are coming back upstream, sir, 
and they are saying that now runoff is considered part of a 
navigable water, if a steam will flow into a navigable water, 
at least you should be able to put a canoe. When the Congress 
specifically put in ``navigable water'' in it and now their 
interpretation is so much broader, farther upstream, and now 
they are having a complete different interpretation of what 
U.S. waterways are, and you are saying they have shrunk?
    Mr. Parenteau. Yes, they have. Before----
    Mr. Mullin. I do not think there is anybody in this room 
that can possibly agree with you on that one.
    Mr. Parenteau. I understand that.
    Mr. Mullin. We just had a hearing about this 3 weeks ago, 
and even they said they had broadened their reach.
    Mr. Parenteau. Would you like some authority?
    Mr. Gibbs. The gentleman's time has expired.
    Mrs. Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman. I thank you and 
the ranking member for having this hearing, and I thank all of 
our witnesses for being here today.
    You know, look. At the end of the day everybody in this 
room wants clean water. We understand how vital that is, and 
being from Arizona, I know how important it is to life and to 
our future economic development. And so I understand the 
importance of this hearing.
    But I also represent a sprawling Arizona district that has 
coal mining, copper mining, four coal-fired electric plants, 
and I understand the need for certainty in terms of the EPA 
regulations.
    Mr. Quinn, I also understand math, and I want to 
congratulate you on these algebraic equations in your 
testimony. I like that. So thank you. Thank you for that.
    But my first question is for you, Mr. Quinn. I mean, in the 
40 years since 1972, can you describe for us what kind of 
changes you have seen in the regular EPA permitting process?
    Mr. Quinn. Well, I think the changes we would see would be 
as following: expanding the reach of what needs to be permitted 
over the years; more complexity in terms of obtaining those 
permits; more time to get them; and it being more expensive to 
put forward the information that is being required now by EPA 
and the Corps of Engineers.
    I think the difference of 40 years and how the process has 
worked is I know the ranking member and I have had this 
discussion on the context of various decisions, but I would say 
I do not think we have ever seen a veto of a preexisting permit 
decision that has occurred so far after the actual 
contemporaneous issuance of the decision.
    On the previous or a preemptive type situations we have 
seen now recently in Alaska, I am going to have to concede to 
the ranking member I am not familiar with all of the facts, 
though I do believe that maybe the cases he is referring to 
might be areas where EPA had previously decided or the Corps 
previously decided were not appropriate for any filling, and 
then when a project proponent came back again, they just said, 
``Hey, we said no the first time. We are not going to say no.''
    But I have to be careful about that. I have to look at all 
of the context of those decisions.
    But I think the process has become longer and more complex, 
and I think the regular rule of order had been until recently 
typically the issues would be worked out within the context of 
once your application is filed and prior to the final decision 
being made, and the veto was viewed as a veto of a pending or 
prospective or decision about to be made about an area that was 
within the application itself, not after the fact, not after 
reliance had been made on those decisions.
    Mrs. Kirkpatrick. This question is for anyone on the panel 
who can answer it.
    Do you have any idea about the change in time for 
permitting and cost for permitting from 1972 till now? Anyone? 
Yes.
    Mr. Kovacs. I believe that there are studies that show that 
every year the overall permitting process takes longer, and 
that is just across the board. And if you went from 1972 
straight forward, I think you will find several things.
    One is it has become much more costly to file a permit 
because you just have more to do. It not only is costly. It is 
more complex. It is far more controversial. The use of citizen 
suits on virtually every project is just expected anymore. It 
is political, and then if you just look at the sheer number of 
regulations that have been imposed that a project has to comply 
with, it has increased since 1976. My recollection is it is 
about 180,000 new regulations.
    So you put all of that together and it is just tougher to 
move into a new project. That is all, and so that when you get 
the permit, whatever is going to be decided should be decided 
within that timeframe.
    And EPA actually had looked at this project within the 
timeframe and passed, and then at a later date said, ``Well, we 
have changed our mind.'' And I think that is the difficulty. If 
it was a month later and nothing had happened, maybe somebody 
would say, ``Well, they missed it.'' But you need to put it in 
a box, and once the Government approves that they can do the 
project, it should move forward and they use their enforcement 
authorities.
    Mr. Ivanoff. Mrs. Kirkpatrick, in terms of time.
    We just recently completed a study for the Federal Highway 
Administration to look at the environmental process and the 
permitting process. In the 1970s, it took about just a little 
over 2 years to complete the environment process. Now, over the 
last 7, 8 years, it is closer to 5\1/2\ years. So that gives 
you a context, from about 2 to 5\1/2\.
    Mrs. Kirkpatrick. Thank you. I appreciate that.
    I am going to yield back the balance of my time. Thank you.
    Mr. Gibbs. Mr. Meadows.
    Mr. Meadows. Thank you, Mr. Chairman.
    Thank each of you for your testimony.
    So let me go a little bit further, Mr. Ivanoff. You said 
that the time to complete the environmental study has greatly 
expanded according to your study; is that correct?
    Mr. Ivanoff. Yes, sir, it is.
    Mr. Meadows. All right. So what regulations have changed 
within a law they got passed back in the 1970s and now to make 
that process longer? Have there been additional regulations?
    Mr. Ivanoff. Well, I think part of the issue is there have 
been additional regulations, but there also have been 
interpretations, and if you take a look at interpretations by 
the Army Corps of Engineers, by EPA, certain definitions can be 
contradictory and confusing.
    Mr. Meadows. All right. That is where I thought you might 
go with it. So let us look at interpretations. The rule of law 
should give a consistent standard for everybody that is really 
especially from an administrative standpoint is not subject to 
individual interpretations. Would you agree with that?
    Mr. Ivanoff. Absolutely.
    Mr. Meadows. All right. So if we have this and we are 
making preemptive decisions on veto, whether it is under this 
administration or another administration I could care less. 
What I want to make sure of is that those who invest in 
infrastructure, as you do, those who invest in building, as 
others here at the witness table do, those that invest in 
manufacturing, as others at the table do, have some consistent 
standard.
    Would you all agree that that is important that we have a 
consistent standard?
    Mr. Ivanoff. Sure, absolutely.
    Mr. Meadows. Mr. Parenteau, would you not agree that it is 
important to have a consistent standard?
    Mr. Parenteau. Well, the saying is consistency can be the 
hobgoblin of small minds. It all depends on the facts of 
individual cases.
    Mr. Meadows. So yes or no, consistent standard or not? 
Would you agree with that?
    Mr. Parenteau. Consistent application of statutory 
authority, yes.
    Mr. Meadows. All right. How many miles of road have you 
built, Mr. Parenteau?
    Mr. Parenteau. I did build----
    Mr. Meadows. Personally.
    Mr. Parenteau [continuing]. A driveway of about a quarter 
of a mile.
    Mr. Meadows. OK. So a driveway. I built roads, and I have 
had permits from the Army Corps and EPA, a number of permits, 
and I have built miles of roads and built bridges, and that 
interpretation can be very troubling when there is not a 
standard.
    And the chilling effect that it has is I make a 
determination on whether I really want to make an investment or 
not, whether I want to risk millions of dollars base on perhaps 
a standard that may depend on one bureaucrat having a bad hair 
day. That is not something that you would think would be good 
for us to do in terms of law, would you?
    Mr. Parenteau. I am not familiar that EPA has ever made 
such a decision.
    Mr. Meadows. Well, I know because you do not live in North 
Carolina, and you did not do the permits with me, and your only 
real knowledge might be a driveway that you have built.
    So I mean I am telling you that we have built these. We get 
to see the inconsistencies. So let me put it maybe in a 
vernacular. You are an attorney, right?
    Mr. Parenteau. Yes, I confess that.
    Mr. Meadows. Well, do you think it would be a good thing 
for a judge, before he hears the case, to say, ``I have already 
made the verdict''? Yes or no. It is an easy question.
    Mr. Parenteau. Of course not, and EPA is not doing that.
    Mr. Meadows. I did not say EPA was doing that. I said would 
it be a good thing for a judge before they hear it.
    Mr. Parenteau. No, they should hear the evidence.
    Mr. Meadows. OK. How do we know, and let us take Pebble 
Mine; how do we know that the decision that the EPA has made, 
because you talked about transparency earlier----
    Mr. Parenteau. They have not made a decision.
    Mr. Meadows. Well, I understand, but their inaction has 
made a decision.
    Mr. Parenteau. They have initiated a review, yes.
    Mr. Meadows. And so they have made some kinds of decisions 
internally.
    Mr. Parenteau. They responded to a petition from commercial 
and native fishermen, yes. They did.
    Mr. Meadows. OK. Well, and the jury is out whether that was 
encouraged by some within the EPA. There is all kinds of 
rhetoric that is out there, and so that may or may not have 
happened.
    Mr. Parenteau. No idea.
    Mr. Meadows. But is it important that we have a set of laws 
and a set of regulations where everybody can look at this 
transparently and say this was the decision that was made?
    Mr. Parenteau. Yes, and we do.
    Mr. Meadows. OK. With that, when you make a determination 
by some agency ahead of actually hearing the case and express 
their veto power, does that not give you some concern that too 
much power may be within one agency and one particular person?
    Mr. Parenteau. If that were happening, it might concern me, 
but it is not happening.
    Mr. Meadows. OK. So it has never happened?
    Mr. Parenteau. Not to my knowledge, no.
    Mr. Meadows. So you have intimate knowledge of some 2 
millions applications?
    Mr. Parenteau. No.
    Mr. Meadows. I would not think so.
    Mr. Parenteau. I have knowledge that 2 million activities 
went forward without a veto, but that is all I know.
    Mr. Meadows. All right. So for you to not have a dog in 
this hunt, as you stated, how can you be so opinionated on all 
of these particular issues to not have a dog in the hunt?
    Mr. Parenteau. My opinion is based on my experience with 
the law and the way it has been applied. That is all I am 
talking about.
    Mr. Meadows. All right. I am out of time. I will yield 
back, Mr. Chairman.
    Mr. Gibbs. Ms. Edwards.
    Ms. Edwards. Thank you, Mr. Chairman.
    And I would like to ask unanimous consent that a statement 
that I have from the National Wildlife Federation be entered 
into the record.
    Mr. Gibbs. So ordered.
    [The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Ms. Edwards. Thank you, Mr. Chairman.
    And I want to thank all of the witnesses, too, because even 
when I do not agree with you, I do not think it is our job to 
harass you.
    I want to thank the witnesses today, and just a reminder 
that on April 9th, our full committee marked up H.R. 524, and 
that would have amended section 404(c) of the Clean Water Act 
to limit the authority of the Administrator of the EPA to veto 
the specification of the Army Corps of Engineers or by a State 
of a site for the discharge of dredged of filled material.
    When we held that hearing, I noted at the time that we had 
not held a single hearing or reviewed any legislation either by 
subcommittee or full committee on the issue, and yet we were 
marking up the bill. I pointed out that I thought that if this 
was such a serious concern, that we would have done that. And 
so I am glad that we are holding this hearing today.
    I just want to note that section 404(c), under that 
section, actions can be taken if the impact of the permit 
activity is likely to result in significant degradation of 
municipal water supplies, including surface and groundwater, 
and significant loss or damage to the fisheries, shell fishing, 
wildlife habitat or recreation areas, and that has been true 
for this section has been vitally important to the 
implementation of our clean water laws for 40 years.
    I just want to note as well that in my home State of 
Maryland, we have the fourth longest coastline in the 
continental United States and the Chesapeake Bay, the largest 
estuary in the country and several of its tributaries, and so 
we do have a dog in this fight, and the shoreline of our 
Chesapeake and its tidal tributaries actually stretch for over 
2,000 miles with thousands of streams and rivers and acres of 
wetlands that provide fresh water flows into our bay.
    As we have heard the testimony and listening to supporters 
of the legislation, you would think that the EPA has actually 
exercised its veto authority frequently, and nothing could 
actually be further from the truth. As the witnesses know and 
as my colleagues know, the Army Corps issues about 60,000 
permits every year, and yet EPA has used this section of the 
Clean Water Act only 13 times, 60,000 permits a year, 13 times 
in the 41-year history of the law.
    And in 11 of those instances that was done by a Republican 
administration. This administration, the Obama administration, 
the Obama EPA has only exercised that veto authority ones, 
count it, once, and yet we are holding a hearing to essentially 
prohibit the EPA from exercising that authority.
    It seems quite irresponsible, in my view. I think the act 
already represents a huge step forward by requiring States to 
set clean water standards and protect uses, and in my 
estimation, you know, it is important for the Federal 
Government to use its authority to do the right thing to 
protect human health and the environment.
    And so respecting the law, I would like to ask the 
professor here from Vermont Law School, you have studied the 
implementation of the Clean Water Act and the implications of 
this provision. Can you just please tell us for the record 
whether, you know, in permitting over 60,000 permits a year it 
is even reasonable to say that there has been a gross abuse of 
the law and the implementation of the law, given that this veto 
authority has only been exercised 13 times and, again, one time 
under the Obama administration?
    Mr. Parenteau. I do not believe there has ever been a gross 
abuse of the law in any of the 13 exercises of 404(c), and I 
think the courts have uniformly ruled that that is the case. So 
my opinion is basically based on my reading of the way the 
courts have reviewed the use of that authority and since EPA 
has consistently been upheld every single time, my only 
conclusion can be there has been no abuse of the law.
    Ms. Edwards. Thank you very much, and with that I yield.
    Mr. Gibbs. Mr. Davis.
    Mr. Davis. Thank you, Mr. Chairman, and thank you to the 
panel.
    This issue concerns me, and it should concern the 
constituents that I represent in central Illinois. There has 
been a lot of talk about the past, about previous 
administrations using authority to change section 404 permits, 
but the one instance that concerns me is the retroactive use of 
the veto power, and that is with the mine in West Virginia.
    Now, I am here in Congress because 22 years ago I saw that 
a signature on a piece of paper here in Washington could have a 
detrimental impact on the largest employer that we had in my 
home county, in Christian County, Illinois. Our largest 
employer used to be Peabody Mine No. 10. Many of my friends, 
their families relied upon that coal mine that provided coal 
dug out underground in Christian County in Kincaid, Illinois, 
and Pawnee, Illinois. It was put on a conveyor belt and shipped 
over the highway to the then Con Ed coal-fired power plant that 
ironically shipped and still ships power up to the Chicago 
metro area.
    Now, because of amendments to the Clean Water Act that coal 
mine was shut down because it became more effective, cost 
effective overnight to bring coal in by rail from out West, in 
Wyoming and others, the Powder River Basin, by train to burn at 
the coal-fired power plant across the street from Peabody Mine 
No. 10.
    It was a devastating blow to our economy. Families lost 
jobs, and this is what scares me about the bureaucracy because 
it is not just about legislation and amendments through the 
Clean Water Act that were signed into law back in the early 
1990s. This is about a Federal agency taking a retroactive 
approach to a permit that has already been issued, to possible 
job creation in West Virginia, and West Virginia could be 
anywhere.
    That is what scares me about this administration's ability 
to talk about what has been done in the past, but drastically 
do something different in the instance that they use this same 
authority.
    Now, as a former congressional staffer, I have worked with 
the Corps of Engineers in the 404 permitting process in the 
past, and it is a long and arduous process. It frustrates me 
that my colleagues believe that those who enter into the 404 
permitting process always have nefarious reasons to want to get 
out and not follow any of the rules. I do not think that is the 
case at all.
    I think most who want to follow the rules and go through 
the 404 permit process only want to do everything that they are 
being asked to do by the different agencies who have 
jurisdiction, and to assume otherwise I think is something that 
goes against the American dream and what people want to do to 
create opportunities and create opportunities and jobs and grow 
our economy, which we all say we want to do.
    Now, I also understand I do not have a lot of time left, 
and I want to hear from at least some of you on some concerns. 
I am going to start with Ms. Pilconis.
    I enjoyed your testimony, and can you elaborate further on 
what you are hearing though from your members?
    Construction projects are key now since we do not have as 
many coal mining jobs in Illinois. A lot of our former coal 
miners rely upon working on road projects that many of your 
members actually go out, put the risk. They risk their capital. 
They risk sometimes their savings, their life savings, to go 
create jobs for others in my district.
    And I want to know have you all at AGC done any analysis as 
to how EPA and their regulations support or stifle your 
business and economic output?
    Ms. Pilconis. Sir, I would be happy to comment on that.
    Speaking directly to some of our construction members, they 
have really great concerns about how this process has the 
potential to delay or stop construction. They have explained a 
lot to me about all of the millions and millions of dollars 
that go into a construction project upfront before construction 
even begins.
    And so to the extent that you have delays, you have people 
who are not working. You have all of the money that has been 
spent on lining up insurance, bonding, the investors who have 
put money forth towards the projects, the site designs, the 
contract documents. All of that money that has been spent is 
potentially kind of going for naught if the projects cannot 
move forward.
    You know, we have talked a lot about what is different now, 
and I think one of the things that is different now is we are 
kind of in the age of information technology. So with so many 
people it would be difficult to find a person who is involved 
in business who has not heard about what is going on with this 
permit that EPA has withdrawn years after. And so that is 
creating a lot of doubt, maybe more doubt than what investors 
would have had in the past.
    So our members are very, very concerned about the doubt 
that investors are going to have in putting money towards 
projects that are going to require 404 permits.
    They are also concerned about how many more projects may 
require 404 permits, and we are not just talking about huge in-
stream channelization projects or massive amounts of fill 
material or even per the definition of discharge of dredge 
material. We are talking about just mechanized earth moving 
activity.
    And so it is really hard to find or to conceive any 
construction project in a sometimes wet area or, you know, in a 
ditch that is not going to require a 404 permit moving forward.
    Mr. Davis. Well, thank you. That was a great response to my 
question, and it actually got to the crux of the issue where 
many of your members are investing so much of their own money 
upfront to go through the processes that the Federal 
Governments, State government, local governments put forth, and 
they are doing that. And every time they have to go over 
another hurdle, it raises the cost of the project, which costs 
taxpayers in this country even more to move into construction 
which creates the jobs all of us keep talking about.
    You are the ones, your members are the ones who create the 
jobs in this economy. It is not here in Washington, and thank 
you. And I think this process and the uncertainty that we give 
you and your members out here in Washington because of this 
regulatory environment, because of this administration, and 
especially with a retroactive decision on an already issued 404 
permit is shameful, and I am sorry that we actually have to 
have this discussion.
    And, Mr. Chairman, thank you.
    Mr. Gibbs. Mr. Rice.
    Mr. Rice. Thank you, Mr. Chairman.
    I have said this before, but I think the United States 
could be the most competitive country in the world, but we have 
a noose of regulation around our own necks and we strangle our 
own selves and make ourselves not competitive. I think what Mr. 
Davis was referring to earlier with the uncertainty created by 
this veto power just is one more thing that makes us less 
competitive when it takes now 5 years instead of 2 years in 
1972 to get one of these projects approved. It makes us less 
competitive.
    That combined with our highest tax rate in the world and 
other regulatory burdens that companies have to face when they 
get here sends more and more jobs overseas every year, and what 
I want to do is fight that at every turn.
    I am curious. What standard does the EPA, Mr. Parenteau, 
have to meet before they issue one of these vetoes?
    Mr. Parenteau. Unacceptable adverse impact to five 
specified resources: water supplies, fish and wildlife habitat, 
et cetera. So the statute has a very high standard to meet, 
unacceptable adverse impacts, and a very narrow set of special 
aquatic resources.
    Mr. Rice. Mr. Quinn, do you think that is an objective 
standard? Is it easily measurable? Is it subject to discretion?
    Mr. Quinn. Well, I think standards like that are in the eye 
of the beholder. What is unacceptable, start with that 
particular. It has become pretty subjective. What one 
decisionmaker deems unacceptable could change with a different 
decisionmaker. That is part inherently in a lot of the process.
    I think the discussion here today is, well, as subjective 
as that might be, when are you going to make that decision. Is 
it now? And when you make that, are you going to adhere to it 
or have somebody else come in later and say, ``I want to 
revisit that decision''?
    Mr. Rice. Yes. I have personal experience with 404(q) 
elevation letter that was issued by the EPA out of Atlanta. So 
to say this has only been done three times, maybe under 404(b) 
or (c) or whatever we are talking about here, maybe that is 
true, but here this was issued prospectively out of Atlanta 
before the environmental reports had even been completed. 
Before any mitigation plan had ever been submitted, the EPA 
Regional Administrator sends a letter that says that I-73 will 
have an unacceptable impact on South Carolina.
    It absolutely has a chilling effect without the data in 
front of them and the fact that any bureaucrat would have that 
power I think is shocking in this country. I think that if we 
are going to have any veto power, it needs to be made very, 
very objective and clear and when it can be exercised, and I do 
not think we should have one at all. That is what the Army 
Corps job is, is to evaluate these things, and it certainly 
should not be done until all of the facts are in.
    So I do not have any other questions other than to say I 
have seen this impact and it has a huge shilling and anti-
competitive effect.
    Thank you.
    Mr. Gibbs. Mr. Massie.
    Mr. Massie. I want to start out with a quick observation. 
All of the successful business owners that I know, whether it 
is the Mom and Pop shop or a big corporation or entrepreneurs 
just getting started, they have one thing in common. Although 
they might be ideologically opposed to the rules that they are 
playing under, all of the successful ones are pragmatists. I 
mean, they look at the rules. They say, ``I understand. Maybe I 
do not agree with these rules, but I am going to play by these 
rules.''
    But in return all of the ones in my district, and again, 
this goes for a one-man shop or a big corporation, they ask 
certain things about these rules. Make sure they are 
understandable. Do not change the rules during the game while I 
am playing the game. And make sure my competitors are playing 
by the same rules.
    That is what is troubling about these recent revocations of 
permits, is that we are changing the rules during the game. We 
do not know that it is going to be applied uniformly to all of 
the competitors, and how do you understand it at the end of the 
day?
    Ironically, a lot of these business people who may be 
ideologically opposed to these rules find at the end of the day 
that obtaining that permit provides an air of certainty and 
legitimacy to their endeavor that could actually, although 
pursuing the permit is hard in getting it, once it is obtained, 
it makes it easier to get the capital that they go seek.
    And let me make another observation about capital and 
investors. They are all uniformly risk averse. When I went out 
and sought investment for my own company, I knew it was too 
risky to go to a bank. So I went to the venture capitalists 
because I heard, you know, they will invest in risky things, 
private capital. What did I find out? They spent all of their 
time trying to reduce the risk because that is the number one 
attenuating factor on the valuation of your endeavor, is the 
risk involved.
    I think there are observations that business owners make. 
Mr. Parenteau, you quoted Senator Muskie. I would like to quote 
him, too. In 1972 during the deliberations of the Clean Water 
Act, he said there were three essential elements to the Clean 
Water Act: uniformity, finality, and enforceability.
    Do you agree that finality is an important criteria?
    Mr. Parenteau. Absolutely.
    Mr. Massie. I do, too, and that is what disturbs me about 
this. People watching this discussion might say, well, if 
somebody is a bad actor or they violate the conditions of the 
permit, I understand it could be revoked, but it seems to me 
that is not what we are talking about here. It sounds like the 
EPA is asking to change the rules of the game after the game 
has started if they decide to change their permitting 
methodology or maybe they failed to do all of their due 
diligence. They want more time after they have issued the 
permit.
    In fact, when Congress passed the Clean Water Act, they 
intended for expeditious decisions on section 404 permits. 
Specifically, Congress instructed to the maximum extent 
practical decisions on section 404 permits will be made within 
90 days. This seems to blow a hole, a loophole, in that big 
enough to drive a truck through. Now the EPA has no onus to 
complete their due diligence in that 90-day window as Congress 
intended.
    And just quickly, I want to ask a couple questions, but you 
said that the new definition of the waterways that are affected 
or under the jurisdiction of the EPA will not change their 
jurisdiction or expand it, but twice in committee hearings the 
EPA Director or Assistant Director has testified to me it is 
going to be a $100 million to $200 million cost to the economy 
to promulgate the new definition.
    So it is hard for me to see how it does not have a bigger 
authority.
    Mr. Kovacs, I had a quick question for you. We have been 
talking about mining and this in the context of a mining 
permit, but can you talk about other industries that are 
affected by 404 permits and how recent treatment of 404 permits 
within the mining context could have ramifications in other 
industries and what those other industries are?
    Mr. Kovacs. Well, certainly. I mean, the way it is 
structured right now virtually anyone who moves dirt by a 
waterway would have that problem, and mining may be 
controversial, but let us take a big box store, which can also 
be controversial to a community, but let us say, for example, 
you go in, you go through the entire permitting process, you 
have a wetland nearby, and you get a 404 permit. You start 
construction, and then 3 months later EPA decides, well, maybe 
we do not like the runoff from the stormwater from the big box 
store, and maybe they came to that decision because the 
community decided they did not want the big box store.
    All of a sudden you have got the veto available. So they 
vetoed the permit 3 months in, and there was a mall case, and I 
think the professor worked on that 10 years ago or 20, but what 
happens is all of a sudden the permit is revoked. You have to 
ask: well, does construction have to stop?
    Well, yes. How can the company, you know, plan to redo the 
permit? Well, they are going to have to do that during whatever 
time they have to deal with the bank. What happens to the 
financing? What happens to the workers that are on the site?
    That is the single problem with the revocation after the 
permit has been finalized. And in this particular situation, 
EPA had all of the facts, and it decided to go forward with the 
permit. It was 4 years later that it changed its mind.
    So when you talk about certainty, the certainty is when 
they review those documents, they are saying that this person 
or this permit complies with everything, and after that point 
when it is issued, they have administrative powers to take it 
back. They have civil fines up to $1 million dollars. They can 
put the person in jail for a very, very long period of time. I 
think it is 15 years. During the process if there is harm to 
the community, the citizens can sue. You have got emergency 
powers. You have got injunctive relief.
    What is so magic about just stopping the project? And I 
think that the question I think Congressman Bishop asked, and 
it is a great question, is why is it different now. I think 
because there are so many things spinning around. There are 
more regulations. It is costly. It is taking more time. It is 
taking 5 years instead of 2 years. You have got citizen suits. 
You have got sue and settle, and when you put all of this 
together, when you go through this process, ask Cape Wind, 12 
years of trying to get permits and lawsuits.
    If you have got the money, maybe you can make it, but the 
financing is going to walk away well before the permit is 
approved.
    Mr. Massie. My time has expired, but just to complete that 
observation, it is not just mining that is going to be 
affected.
    Mr. Kovacs. It is pipelines, big box stores.
    Mr. Massie. Home builders.
    Mr. Kovacs. Home builders, rail lines.
    Mr. Gibbs. The point is delays cost money, right?
    Thank you.
    Mrs. Capito.
    Mrs. Capito. Thank you, Mr. Chairman.
    And I appreciate the panel.
    I wanted to ask a question to kind of set up the context 
for me, and I will kind of go through the line here starting 
with Mr. Kovacs, although I realize you are representing a lot 
of different types of businesses. So maybe I will start with 
Mr. Quinn.
    The average length of time that it takes companies in your 
business to obtain a 404 permit after they filed an 
application, do you have any idea what the average length of 
time is?
    Mr. Quinn. Well, a number of years ago a lot of permitting 
was done under the general permit system because many of our 
operations have multiple other permits that look at very much 
the same thing: water, reclamation, and planning, and so forth.
    Over the years the policy has been pushed to diminish the 
availability of the general permits that would take several 
months to obtain and pushed more into individual permits which 
can take several years. So we have gone from several months to 
several years.
    I can tell you for a large minerals metal mine in this 
country we are looking at 7 to 10 years to get all our permits 
together. So when the length of time already diminishes the 
value----
    Mrs. Capito. Right.
    Mr. Quinn [continuing]. And you put the uncertainty of now 
you may go to a meeting with some lenders and they say it is 
going to take you that long, we say it is worth it because we 
have the certitude that once this permit is issued----
    Mrs. Capito. Right.
    Mr. Quinn [continuing]. In the United States we live by it. 
In Indonesia, that may not be the case. Well, these decisions 
will make that guarantee much----
    Mrs. Capito. So we are talking in excess probably of 5 
years.
    Mr. Ivanoff, what about with you all in the road and 
transportation building?
    Mr. Ivanoff. Well, as I mentioned earlier, maybe you were 
out, but I mentioned to Mrs. Kirkpatrick that we just did a 
study for Federal Highway Administration, and the entire 
environmental review process and approval process has gone from 
about 2\1/2\, just over 2 years back in the 1970s to in the 
last 5 to 8 years we are more than 5 years. So it has more than 
doubled.
    And part of it also depends on which jurisdiction of the 
Army Corps you get involved with as well because of the 
different approvals related to wetland banking, for example, 
which is one of the mitigating techniques that we use.
    Mrs. Capito. Right. And I would imagine, too, whatever 
Corps, for instance, our Huntington Corps is very busy on the 
coal mine side. So there is a backlog. I know that to be true.
    What about Ms. Pilconis?
    Ms. Pilconis. Yes. Thank you.
    So the AGC Association represents all different facets of 
commercial construction. So our members are building everything 
from buildings, shopping centers, warehouse, and then the 
highways and other things that we have talked about here today.
    So what AGC contractors are telling me is that for a 404 
permit, just talking about that permit specifically--
    Mrs. Capito. Right.
    Ms. Pilconis [continuing]. Generally anywhere between 18 
and 24 months. For a general permit, a nationwide permit, 6 to 
8 months.
    Mrs. Capito. Has that increased as well, like Mr. Ivanoff 
said, over the last several years or is that pretty much steady 
through the 404?
    Ms. Pilconis. It has increased. It has increased over the 
last several years.
    Mrs. Capito. OK. So we talked about the finality of the 
commitment of having a final recommendation, and I think that 
not only weighs into the financing aspect of it, but also the 
predictability of that community, and some of the things that I 
have been trying to bring forward, particular in speaking with 
the EPA, is to try to get that consideration for the economic 
and job impact of the decisions that they are making.
    For instance, in the case of Spruce, I mean, that was a 
huge blow to the economics of that area of the State I 
represent, West Virginia.
    In terms of your companies, Mr. Kovacs, at the Chamber, are 
you satisfied that this process really does include an economic 
and jobs review or do you think it would be better served to 
either enlarge that or remove it or what are your feelings on 
that?
    Mr. Kovacs. Well, actually I am thrilled that you asked 
that question. Each one of the environmental statutes starting 
when they were drafted in the 1970s had a provision in there 
which requires a continuous evaluation of job loss and adverse 
economic impact. In EPA, we had avoided this in the air area 
and in the 40 years that they have had that requirement they 
have never done one, and the same I would assume would be true 
of water, and I know they have not done any in solid waste.
    So that is the first thing, but the second thing is even in 
terms of regulatory impacts as to looking at jobs, which they 
do occasionally, EPA does only regulatory impact on about 2 
percent of its rules. So if you went back 15 years and you had 
7,000 rules, you might have 146 that they look at something and 
in only about, I think, only two did they do a whole economy 
modeling.
    So they really are not looking at jobs at all, but more 
importantly the continuous evaluation of the job impact is 
something very important because when these regulations hit, 
they do not hit the whole country. They hit communities, and 
people have to really appreciate that.
    Mrs. Capito. I would agree there, and I would contend, too, 
that maybe that is not what they base their decision on, but it 
has to be part of the bigger picture when you are looking at 
what direction you are going to go, and we have found that to 
be lacking as well.
    I thank you all for holding out and letting me be the last, 
or I think I am the last questioner. Thank you very much.
    Mr. Gibbs. Mr. Jolly.
    Mr. Jolly. Thank you, Mr. Chairman.
    Mrs. Capito. Sorry, Mr. Jolly.
    Mr. Jolly. To the witnesses, thank you.
    Mr. Faulk, as a George Mason law graduate, thank you for 
being here.
    I had a quick question for you. Is the prospective veto 
authority just zoning by another name?
    Mr. Faulk. I think it could become that as EPA is applying 
it because, in fact, what can happen here as they withdraw 
whole swaths of land and watersheds out of consideration for 
permitting activities, then you are basically precluding any 
sort of exploration, production, mining, extraction or any 
other sort of useful activities taking place on that piece of 
land.
    Mr. Jolly. Do you think 404(c) should be changed?
    Mr. Faulk. I think it should. I think it should definitely 
be restricted to require the EPA in this extensive permitting 
process to make its objections known then. To say why now 
afterwards really presume the fact that they did not have an 
adequate opportunity to make their points known.
    Mr. Jolly. Mr. Parenteau, do you think the law should be 
changed?
    Mr. Parenteau. No. Congress created this situation. You 
understand this was a political compromise in 1972.
    Mr. Jolly. No, I understand.
    Mr. Parenteau. If you want to change it, my recommendation 
would be give it to EPA. Give the whole authority to EPA. Put 
it where it belongs.
    Mr. Jolly. OK. Mr. Kovacs, the President has been flying 
around the country taunting the Congress about passing 
infrastructure bills, which frankly, we will do today and very 
unceremoniously he has indicated he will sign.
    Can you tell us a little bit about your Project, No Project 
study and the results of what decisions by the administration 
have done for jobs in the economy?
    Mr. Kovacs. Certainly. The Project, No Project did several 
things. One is it asked a very simple question. In the middle 
of the recession, the Great Recession, we wanted to know how 
much investment was out there, the private investment, that was 
going to go into projects that could not get permits, a very 
simple question.
    So we put it down. We localized it to electric generation, 
and there were 351 projects in March of 2010 seeking to get a 
permit, and they were willing to invest $561 billion, which 
would have created about 1.9 million jobs per year for about 7 
years during the construction period. It was all hung up on 
permits.
    About the same time when the Congress was doing the 
Recovery Act, there were questions around saying we are just 
going to fund the shovel-ready projects, and we were audacious 
enough to say there are not any. If you have got a permit, you 
are building.
    So we got provision in the Recovery Act. Senator Barrasso 
and believe it or not, Senator Boxer, they got a provision in 
which said that for a Recovery Act project, they have to use 
the most expeditious way possible, which did not look at all of 
these ``whenevers.'' It just said we are going to use the most 
expeditious way possible unless there is a major problem.
    We did not know how many it was going to affect, but out of 
the 214,000 projects that were funded during the Recovery Act, 
192,000 of the projects were funded through the most 
expeditious way possible. Had they all had to go through an 
entire environmental review, you would not have spent any of 
that money.
    So the entire permit process is broken, and where the 
administration is is they keep on saying they want permits 
streamlined, and we all want permits streamlined, but their 
version of permit streamlining has no deadlines. Our version of 
permit streamlining or what we think of it as is it has a lead 
agency. The lead agency coordinates all the other agencies. All 
the other agencies have 90 days in which to say they are going 
to be in the project or out of the project, and then they make 
a decision on the project within 2 years as to whether it gets 
the permit.
    It does not change any substantive laws. It just says the 
agencies have a duty, and the duty is to review the permits and 
make a decision, and frankly, after that the courts are going 
to take over if people want to sue.
    Mr. Jolly. Very good. Thank you.
    Ms. Pilconis, this type of delay, what does it mean for 
exposure of developers, construction companies, contractors, 
the financial exposure? And I will ask you to be very quick. I 
have one more question.
    Ms. Pilconis. OK. Financial exposure has to do with all of 
the money that they are putting in upfront to get the projects 
going, you know, whether you are talking about the owner of the 
project or the general contractor, buying the property, getting 
the financing, the insurance, the bonding.
    Mr. Jolly. Surety bonding.
    Ms. Pilconis. Exposure with bonding is huge. You know, 
bonding is a guarantee that the project is going to be done, 
and if you cannot move forward with the project, the 
construction company is going to have to pay that money back.
    Mr. Jolly. And they bear the risk.
    Ms. Pilconis. The bonding agency.
    Mr. Jolly. The construction company bears the risk.
    Ms. Pilconis. Absolutely.
    Mr. Jolly. OK. One last question. I apologize for running 
out of time. One last question, Mr. Quinn. Has Senator Muskie's 
intent been perverted by the EPA's use of retroactive vetoes?
    We have heard a lot about it today.
    Mr. Quinn. Yes.
    Mr. Jolly. Would you consider Senator Muskie's intent to 
have been changed by the EPA?
    Mr. Quinn. I think the way it has been exercised lately is 
a departure from what was originally envisioned in terms of the 
time in process and coordination that was supposed to go on.
    Mr. Jolly. Do you think the law should be changed?
    Mr. Quinn. I think the law should be clarified and restore 
the certainty that preexisted. Yes, I think there is proper 
context and a proper process to get these decisions made 
properly and people can rely on those decisions. If they need 
to be revisited, revisit it for legitimate reasons, not for 
temporal reasons that somebody else has taken over.
    Mr. Jolly. Thank you very much. Thank you to each of you.
    Mr. Gibbs. At this time I will recognize Mr. Bishop for the 
purpose of a unanimous consent request.
    Mr. Bishop. I ask unanimous consent to enter into the 
record the statement of the ranking member, Mr. Rahall.
    Mr. Gibbs. So ordered.
    Mr. Bishop. Thank you, Mr. Chairman.
    Mr. Gibbs. This concludes our hearing. I want to thank our 
panelists again for coming in and testifying. Thank you very 
much.
    [Whereupon, at 11:48 a.m., the subcommittee was adjourned.]
    
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