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25–128 2018

MODERNIZING ENVIRONMENTAL LAWS: CHALLENGES AND OPPORTUNITIES FOR EXPANDING 

INFRASTRUCTURE AND PROMOTING DEVELOPMENT AND MANUFACTURING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENVIRONMENT 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 16, 2017 

Serial No. 115–8 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

GREG WALDEN, Oregon 

Chairman 

JOE BARTON, Texas 

Vice Chairman 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

MIMI WALTERS, California 

RYAN A. COSTELLO, Pennsylvania 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, CaliforniaL RUIZ, 

California 

SCOTT H. PETERS, California 

DEBBIE DINGELL, Michigan 

SUBCOMMITTEE ON ENVIRONMENT

JOHN SHIMKUS, Illinois 

Chairman 

DAVID B. MCKINLEY, West Virginia 

Vice Chairman 

JOE BARTON, Texas 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

PETE OLSON, Texas 

BILL JOHNSON, Ohio 

BILL FLORES, Texas 

RICHARD HUDSON, North Carolina 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GREG WALDEN, Oregon (ex officio) 

PAUL TONKO, New York 

Ranking Member 

RAUL RUIZ, California 

SCOTT H. PETERS, California 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

JERRY MCNERNEY, California 

TONY CA ́ RDENAS, California 

DEBBIE DINGELL, Michigan 

DORIS O. MATSUI, California 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(III) 

C O N T E N T S 

Page 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 2 

Prepared statement .......................................................................................... 3 

Hon. Paul Tonko, a Representative in Congress from the State of New York, 

opening statement ................................................................................................ 4 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 6 

Prepared statement .......................................................................................... 8 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 9 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 99 

Prepared statement .......................................................................................... 100 

WITNESSES

Jonathan F. Mitchell, Mayor, New Bedford, Massachusetts ............................... 10 

Prepared statement .......................................................................................... 13 

Kevin Sunday, Director, Government Affairs, Pennsylvania Chamber of Business and Industry ................................................................................................ 26 

Prepared statement .......................................................................................... 28 

Answers to submitted questions ...................................................................... 232 

Melissa Mays, Founder, Water You Fighting For? ............................................... 47 

Prepared statement .......................................................................................... 50 

Emily Hammond, George Washington University Law School on behalf of 

Center for Progressive Reform ............................................................................ 55 

Prepared statement .......................................................................................... 57 

Thomas M. Sullivan, Vice President, Small Business Policy, U.S. Chamber 

of Commerce ......................................................................................................... 64 

Prepared statement .......................................................................................... 66 

Answers to submitted questions ...................................................................... 235 

Ross E. Eisenberg, Vice President, Energy Resources Policy, National Association of Manufacturers .......................................................................................... 73 

Prepared statement .......................................................................................... 76 

Answers to submitted questions ...................................................................... 241 

SUBMITTED MATERIAL

Statement of the Associated General Contractors of America, submitted by 

Mr. McKinley ........................................................................................................ 128 

Statement of labor groups in opposition to H.J.R. 59, submitted by Mr. 

Green ..................................................................................................................... 133 

Statement of American Forest and Paper Association and American Wood 

Council, submitted by Mr. Carter ....................................................................... 137 

Statement of the American Road and Transportation Builders Association, 

submitted by Mr. Shimkus .................................................................................. 152 

White paper entitled, ‘‘EPA’s New Source Review Program: Evidence on Processing Time 2002 to 2014,’’ February 2015, Resources for the Future, submitted by Mr. Shimkus ........................................................................................ 155 

Statement of the Center for Progressive Reform, submitted by Mr. Tonko ....... 174 

Article entitled, ‘‘The claim that American households have a $15,000 regulatory burden,’’ dated January 14, 2015, submitted by Mr. Tonko .................. 180 

Report by the Congressional Research Service, submitted by Mr. Tonko .......... 184 

Page

IV 

Article entitled, ‘‘EPA’s New Source Review Program: Time for Reform?’’, 

dated January 2017, Environmental Law Reporter, submitted by Mr. Shimkus ......................................................................................................................... 216 

(1) 

MODERNIZING ENVIRONMENTAL LAWS: 

CHALLENGES AND OPPORTUNITIES FOR EXPANDING INFRASTRUCTURE AND PROMOTING DEVELOPMENT AND MANUFACTURING 

THURSDAY, FEBRUARY 16, 2017 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENVIRONMENT, COMMITTEE ON ENERGY AND COMMERCE

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

2123 Rayburn House Office Building, Hon. John Shimkus (chairman of the subcommittee) presiding. 

Present: Representatives Shimkus, McKinley, Barton, Murphy, 

Olson, Johnson, Flores, Hudson, Walberg, Carter, Walden (ex officio), Tonko, Ruiz, Peters, Green, DeGette, McNerney, Dingell, Matsui, and Pallone (ex officio). 

Staff present: Wyatt Ellertson, Research Associate, Energy/Environment; Adam Fromm, Director of Outreach and Coalitions; 

Giulia Giannangeli, Legislative Clerk, Digital Commerce and Consumer Protection/Environment; Tom Hassenboehler, Chief Counsel, 

Energy/Environment; Zach Hunter, Director of Communications; 

A.G. Johnston, Senior Policy Advisor/Professional Staff, Energy/Environment; Katie McKeough, Press Assistant; Mary Neumayr, Senior Energy Counsel; Tina Richards, Counsel, Environment; Chris 

Sarley, Policy Coordinator, Environment; Dan Schneider, Press 

Secretary; Peter Spencer, Professional Staff Member, Energy; Hamlin Wade, Special Advisor, External Affairs; Luke Wallwork, Staff 

Assistant; Jeff Carroll, Minority Staff Director; Jacqueline Cohen, 

Minority Senior Counsel; Jean Fruci, Minority Energy and Environment Policy Advisor; Caitlin Haberman, Minority Professional 

Staff Member; Rick Kessler, Minority Senior Advisor and Staff Director, Energy and Environment; Dan Miller, Minority Staff Assistant; Alexander Ratner, Minority Policy Analyst; Matt Schumacher, 

Minority Press Assistant; Andrew Souvall, Minority Director of 

Communications, Outreach and Member Services; and C.J. Young, 

Minority Press Secretary. 

Mr. SHIMKUS. Let me call the subcommittee to order. 

And before we start opening statements I want to welcome, and 

I will have my ranking member welcome Congressman Walberg 

and Congressman Carter, who are new to the Energy and Commerce Committee as a whole, and also new to the subcommittee. 

So, so welcome. Glad to have you. 

2 

Mr. TONKO. Thank you, Mr. Chairman. On our side I would like 

to welcome Congresswoman Debbie Dingell at the end of this tier, 

and Representative Scott Peters and Representative Raul Ruiz. 

So we look forward to a very productive session with Energy and 

Commerce. 

Thank you, Mr. Chair. 

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

Mr. SHIMKUS. Thank you. And this is a kind of a new committee. 

It has got expanded jurisdiction over part of the stuff we are talking about today. And so and this is also a committee that helped 

push through the Toxic Chemical Reform bill which was a, I would 

argue, is one of the major pieces of legislation that got through in 

the last Congress. 

So, so we work well together. We fight when we need to fight, 

and that is the way the system works. So it is great, it is great to 

have you here. 

And I will recognize myself for 5 minutes for my opening statement. 

Welcome to the Environment Subcommittee’s first hearing of the 

115th Congress. The topic of the hearing today reflects what is 

going to be one of the themes of our legislative work this Congress, 

and that is to identify the best ways to modernize the statutes 

within our jurisdiction in ways that deliver effective environmental 

protections and remove unnecessary barriers to expand economic 

opportunity in communities and the nation. 

We will be returning to this topic a lot in the coming months. 

Today focuses on challenges to economic development under certain 

laws and policies administered by the Environmental Protection 

Agency. We will be taking testimony to help us to identify practical 

solutions and statutory updates that will accelerate the development of infrastructure and manufacturing. 

In a future hearing, we will look at similar challenges at the Department of Energy. In particular, we will be working to update 

and ensure more rapid implementation of our nation’s nuclear 

waste management policy. 

As we know from extensive committee oversight, getting our nation’s used fuel management program back on track will result in 

a path to reinvigorate the nuclear energy sector, save taxpayers billions of dollars in liability costs, and unlock tens of billions of dollars for construction and associated infrastructure projects. 

The benefits of good jobs in strong communities that result from 

this kind of economic activity can be difficult to measure fully, but 

that makes them no less real. And so, as we look at how to modernize environmental laws, we should always keep in mind the intangible good that comes from enabling people to have the economic wherewithal to live healthier and safer lives. 

These community-strengthening benefits of economic development are central to the goals of the EPA’s Brownfields Program. 

This program incentivizes states, local governments, and private 

stakeholders to clean up underused or abandoned industrial and 

commercial properties, and to return them to beneficial use. There 

are more than 450,000 Brownfield sites in the United States. In 

3 

many communities across the nation, Brownfields contribute to the 

blight that depresses property values, inhibits development, and 

contributes to economic stagnation. 

Cleaning up these sites and returning them to productive use is 

great for the economy because Brownfields grants can be directly 

leveraged into jobs, additional redevelopment funds, and to increase residential property values. So it offers the kind of a community boost we want from good environmental policies. 

While the Brownfields Program seems to be working, there is always room for improvement. So, we today welcome Mayor Jon 

Mitchell from New Bedford, Massachusetts. Mayor Mitchell has developed solar projects from contaminated sites, which is also something that is happening near my district in East St. Louis, Illinois. 

Turning contaminated sites into solar seemed like an excellent way 

to develop infrastructure while addressing blighted areas within 

our communities. 

In the implementation of our air laws, the states, localities, and 

private sector all face challenges in developing new infrastructure 

or manufacturing projects. As noted in past committee hearings, 

when companies seek to invest in large capital projects, they need 

realistic and predictable project timelines. This is necessary to 

plan, design, procurement, installation and operations. Yet, uncertainties in the process for obtaining air permits can lead to costly 

delays and decisions not to invest in these projects. 

EPA is required to make new source permit decisions one year 

after a completed application is filed. An analysis that looked at 

preconstruction permits for power plants and refineries, however, 

found that while permits in the late 1990s averaged around 160 

days, from 2002 to 2014 it took an average of 480 days to issue a 

decision on a permit application. 

In other cases, we see EPA setting new air standards but failing 

for years to issue implementation regulations. EPA took nearly 

seven years to issue guidance on how to comply with its 2008 ozone 

standards. It took more than three years to issue final implementation regulations for its 2012 particulate matter standards. 

The unnecessary delays for project developers and city and state 

planners just add up and result in the costly waste of time and 

project investments idling on the sidelines. We should be able to do 

better than this. In today’s modern economy it makes no sense that 

we cannot have a more efficient permitting process, or more timely 

guidance from the regulatory agencies. 

Our witnesses today will provide local, state, and national perspectives that should help guide us as we consider common sense 

measures to expand economic opportunity by modernizing certain 

environmental statutes. 

And with that my time is almost out. And I yield back my time 

and recognize the ranking member of the subcommittee Mr. Tonko. 

[The prepared statement of Mr. Shimkus follows:] 

PREPARED STATEMENT OF HON. JOHN SHIMKUS

Welcome to the Environment Subcommittee’s first hearing of the 115th Congress. 

The topic of the hearing today reflects what is going to be one of the themes of 

our legislative work this Congress. And that is to identify the best ways to modernize the statutes within our jurisdiction in ways that deliver effective, environVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
4 

mental protections and remove unnecessary barriers to expand economic opportunity in communities around the nation. 

We will be returning to this topic a lot in coming months. Today focuses on challenges to economic development under certain laws and policies administered by the 

Environmental Protection Agency. We will be taking testimony to help us to identify 

practical solutions and statutory updates that will accelerate the development of infrastructure and manufacturing. 

In a future hearing, we will be looking at similar challenges at the Department 

of Energy. In particular, we will be working to update and ensure more rapid implementation of our nation’s nuclear waste management policy. 

As we know from extensive Committee oversight, getting our nation’s used fuel 

management program back on track will result in a path to reinvigorate the nuclear 

energy sector, save taxpayers billions of dollars in liability costs, and unlock tens 

of billions of dollars for construction and associated infrastructure projects. 

The benefits of good jobs and strong communities that result from this kind of 

economic activity can be difficult to measure fully-but that makes them no less real. 

And so as we look at how to modernize environmental laws we should always 

keep in mind the intangible good that comes from enabling people to have the economic wherewithal to live healthier and safer lives. 

These community-strengthening benefits of economic development are central to 

the goals of the EPA’s Brownfields program. This program incentivizes states, local 

governments, and private stakeholders to clean up under-used or abandoned industrial and commercial properties and to return them to beneficial use. 

There are more than 450,000 brownfields sites in the United States. In many communities across the nation, brownfields contribute to the blight that depresses property values, inhibits development, and contributes to economic stagnation. 

Cleaning up these sites and returning them to productive use is great for the 

economy because brownfields grants can be directly leveraged into jobs, additional 

redevelopment funds, and into increased residential property values so it offers the 

kind of community boost we want from good environmental policies. 

While the Brownfields Program seems to be working, there is always room for improvement so we today welcome Mayor Jon Mitchell from New Bedford, Massachusetts. Mayor Mitchell has developed solar projects on contaminated sites which is 

also something that is happening near my district in East St. Louis. Turning contaminated sites into solar seems like an excellent way to develop infrastructure 

while addressing blighted areas within our communities. 

In the implementation of our air laws, the states, localities, and the private sector 

all face challenges in developing new infrastructure or manufacturing projects. 

As noted in past Committee hearings, when companies seek to invest in large capital projects, they need realistic and predictable project timelines. This is necessary 

to plan designs, procurement, installation, and operations. Yet uncertainties in the 

process for obtaining air permits can lead to costly delays and decisions not to invest 

in these projects. 

EPA is required to make new source permit decisions one year after a completed 

application is filed. An analysis that looked at preconstruction permits for power 

plants and refineries, however, found that while permits in the late 1990s averaged 

around 160 days, from 2002 to 2014 it took an average 480 days to issue a decision 

on a permit application. 

In other cases, we see EPA setting new air standards, but failing for years to 

issue implementation regulations. EPA took nearly seven years to issue guidance on 

how to comply with its 2008 ozone standards. It took more than 3 years to issue 

final implementation regulations for its 2012 particulate matter standards. 

The unnecessary delays for project developers and city and state planners just add 

up and result in the costly waste of time and project investments idling on the sidelines. 

We should be able to do better than this. In today’s modern economy, it makes 

no sense that we cannot have more efficient permitting processes or more timely 

guidance from the regulatory agencies. 

Our witnesses today will provide local, state, and national perspectives that 

should help guide us as we consider commonsense measures to expand economic opportunity by modernizing certain environmental statutes. 

OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK 

Mr. TONKO. Thank you, Mr. Chair. And welcome to our panelists 

and to the new members of the Energy and Commerce Committee 

5 

on both sides of the aisle. I look forward to working with you all 

as a member of this committee. 

Decades of American history demonstrate we can grow our economy and create jobs while improving our environment and public 

health. I am not convinced that trend is about to change. I want 

to make it clear from the start of this hearing that our environmental protections provide significantly greater benefits than costs 

to society. It results in healthier people, which means fewer sick 

days, asthma attacks, hospital visits, and premature deaths, among 

many other benefits. 

OMB estimated that major rules promulgated by EPA from 2004 to 2014 generated benefits between $160 and $788 billion compared 

to $38 to $45 billion in costs. Clean Air Act protections account for 

the majority of these benefits, and have prevented millions of lost 

work and school days. The Cross-State Air Pollution Rule had a 

benefit-to-cost ratio exceeding 50 to 1. And a clean power plant will 

reduce carbon pollution while saving lives. 

Strong laws can prevent environmental disasters. When our laws 

fail to protect people, the cost can be tremendous. 

I want to thank Ms. Mays for being here today from Flint, Michigan. It is important for members to hear about the harm that was 

done to thousands of our fellow Americans and how it could have 

been prevented by better laws and greater investment from the 

Federal Government. The price of this disaster will far exceed the 

investment that would have been necessary to prevent it. 

The case of Flint should make it clear that real infrastructure investment is indeed needed. We cannot fool ourselves into thinking 

it can only be done through deregulation. We need federal dollars 

behind our efforts. 

So I would agree that some of our environmental laws should be 

updated. And I would suggest starting with strengthening the Safe 

Drinking Water Act. Our water infrastructure is crumbling. In 

many communities it is becoming a liability to economic growth, to 

public health and to safety. 

Democratic members of this subcommittee have reintroduced legislation to improve the Safe Drinking Water Act. It has been 21 

years since we last updated this law. It is past time to reauthorize 

the drinking water SRF which has received flat funding since its 

inception, despite growing needs and aging infrastructure. We 

must give EPA the authority necessary to be able to set standards 

and require an update of the Lead and Copper Rule. 

Similarly, our Brownfields law is in need of an update. This program has been incredibly successful by every method, and it is a 

great investment. Every federal dollar leverages between $17 and 

$18 in other public and private funding. Cleaning up these sites 

has environmental, health, and economic benefits, including increasing nearby residential property values and putting unused 

properties back on local tax rolls. 

But many of the easy Brownfields have been cleaned up. In addition to more flexibility, we need to examine whether the funding 

level for individual sites and the overall program is adequate. For 

both water and Brownfields, strengthening these laws would create 

jobs, protect public health, and ease the burden on local governments. Last Congress this subcommittee worked together on TSCA 

6 

reform, a law that industry, consumer protection, and environmental stakeholders all agreed needs to be brought into the 21st 

Century. I hope we can find common ground again this Congress 

to improve laws where a consensus exists on the need for reform. 

Based on the testimony we will hear this morning, I think there 

are strong cases to start with drinking water and Brownfields. 

And with that, Mr. Chair, I would like to yield my remaining 

time to Representative Doris Matsui from California. 

Ms. MATSUI. Thank you very much, Ranking Member Tonko, 

yielding time. 

Strong investment in water infrastructure is vital to our health 

and safety. As we have seen tragically this week in California at 

Oroville Dam, aging and neglected infrastructure threatens lives. 

Just 70 miles south of Oroville at Folsom Dam, which is just upstream from my district in Sacramento, we are demonstrating the 

positive impact infrastructure can have. I worked tirelessly to ensure the millions of dollars in federal investment over the last decade building a spillway, which is making our residents safer, our 

regions more secure. That also involves environmental standards, 

too. 

Water infrastructure is vital for public safety and public health. 

Instead of rushing to weaken our environmental standards, I hope 

we can come together to make real commitments to maintaining 

and improving infrastructure in all our communities. 

Thank you. And I yield back. 

Mr. SHIMKUS. The gentlelady yields back her time. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Pallone for 5 minutes. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

Our nation’s crumbling infrastructure is a pressing issue that we 

must address. And in this subcommittee that means investing in 

drinking water infrastructure, Superfund cleanups, and Brownfield 

grants. Our current investments in these critical public health programs is simply not enough. This week’s evacuation in California 

related to the Oroville Dam are the latest example, but far from 

the only example. 

My Democratic colleagues and I have repeatedly introduced legislation to modernize and fund these infrastructure programs. The 

Republicans have consistently opposed or blocked these efforts. 

Today I join many of the Democrats on this subcommittee in announcing the reintroduction of the Safe Drinking Water amendments and Ranking Member Tonko’s AQUA Act to fund drinking 

water infrastructure efforts. When Democrats controlled the House, 

the AQUA Act passed easily on a bipartisan voice vote. But since 

Republicans took over they have avoided the issue. And I hope this 

hearing is a sign that Republicans are ready to join our infrastructure efforts. 

As the Federal Government has pulled back infrastructure funding in recent years, the backlog of infrastructure repairs and replacement has grown, and so has the price tag to address it. Laying 

7 

pipe replacements into water mains burst costs more than planning 

ahead. Delaying Superfund cleanups while contaminants spread in 

the environment costs more than quickly containing and addressing pollution. 

In the long run we’re not saving money by ignoring the problem. 

And only public funding can close the gap to the communities in 

need. Now, I expect my Republican colleagues will suggest today 

that the key to spurring infrastructure is environmental deregulation instead of public funding. But that approach is dangerous and 

shortsighted. 

Environmental protections are essential for public health, for the 

economic viability of our communities, and for the preservation of 

our natural resources. The benefits of environmental protections 

far outweigh the costs, and so repealing those protections would 

hurt far more than it would help. Cutting environmental protections may benefit some in the short term, but others will pay with 

their health and welfare. 

We will hear today from Melissa Mays, a resident of Flint, Michigan. The ongoing drinking water crisis in Flint will only be solved 

with significant federal funding. Melissa’s experience shows why 

environmental protections are so important and what can happen 

when short-term economic decisions overrule environmental considerations. Any efforts by Republicans in Congress and President 

Trump to remove environmental protections will have lasting consequences, unleashing dangerous pollution that could take decades 

to clean. 

We will also hear today from the Mayor of New Bedford, whose 

harbor is a Superfund site thanks to the unrestricted dumping of 

PCBs decades ago. That harbor, like the Superfund sites in my district, shows the long-term costs of having to clean up pollution, 

costs that could have been avoided if stronger environmental protections had been in place. 

Mayor Mitchell will also tell us about new clean energy jobs in 

New Bedford, in both the solar and wind energy industries. These 

are good jobs, driven in part by environmental protections. 

And there are numerous small manufacturers nationwide that 

develop and manufacture air pollution control equipment. The experienced and innovative technologies produced in this sector position these manufacturers as leaders in international markets for 

pollution control and environmental services. Repealing air quality 

regulations will not only eliminate vital public health protections, 

it will also kill those jobs. 

When it comes to infrastructure, Democrats will continue to fight 

for the federal investments our communities need. These investments strengthen public health while also creating good-paying 

jobs. And when it comes to environmental protections, Democrats 

will continue to lead the fight for safe drinking water, clean air, 

and clean land. We can have a safe environment and a strong economy. In fact, in the long run, a safe environment is absolutely necessary for a strong economy. 

And I will yield back unless anybody else wants my time, Mr. 

Chairman. 

8 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Our nation’s crumbling infrastructure is a pressing issue that we must address, 

and in this Subcommittee that means investing in drinking water infrastructure, 

Superfund cleanups, and Brownfields grants. Our current investments in these critical public health programs are simply not enough. This week’s evacuations in California related to the Oroville Dam are the latest example, but far from the only example. 

My Democratic colleagues and I have repeatedly introduced legislation to modernize and fund these infrastructure programs, but Republicans have consistently 

opposed or blocked those efforts. 

Today, I join many of the Democrats on this Subcommittee in announcing the reintroduction of the Safe Drinking Water Act Amendments and Ranking Member 

Tonko’s AQUA Act to fund drinking water infrastructure efforts. When Democrats 

controlled the House, the AQUA Act passed easily on a bipartisan voice vote. But 

since Republicans took over, they have avoided the issue. I hope this hearing is a 

sign that Republicans are ready to join our infrastructure efforts. 

As the federal government has pulled back infrastructure funding in recent years, 

the backlog of infrastructure repairs and replacement has grown, and so has the 

price tag to address it. Delaying pipe replacements until water mains burst costs 

more than planning ahead. Delaying Superfund cleanups while contaminants spread 

in the environment costs more than quickly containing and addressing pollution. In 

the long run, we are not saving money by ignoring this problem. And only public 

funding can close the gap for the communities in need. 

I expect my Republican colleagues will suggest today that the key to spurring infrastructure is environmental deregulation, instead of public funding. That approach 

is dangerous and short-sighted. 

Environmental protections are essential for public health, for the economic viability of our communities, and for the preservation of our natural resources. The benefits of environmental protections far outweigh the cost, so repealing those protections would hurt far more than it would help. Cutting environmental protections 

may benefit some in the short term, but others will pay with their health and welfare. 

We will hear today from Melissa Mays, a resident of Flint, Michigan. The ongoing 

drinking water crisis in Flint will only be solved with significant federal funding. 

Melissa’s experience shows why environmental protections are so important, and 

what can happen when short term economic decisions overrule environmental considerations. 

Any efforts by Republicans in Congress and President Trump to remove environmental protections will have lasting consequences, unleashing dangerous pollution 

that could take decades to clean. 

We will also hear today from the mayor of New Bedford, Massachusetts, whose 

harbor is a Superfund site thanks to the unrestricted dumping of PCBs decades ago. 

That harbor, like the Superfund sites in my district, shows the long-term costs of 

having to clean up pollution - costs that could have been avoided if stronger environmental protections had been in place. 

Mayor Mitchell will also tell us about new clean energy jobs in New Bedford, in 

both the solar and wind energy industries. These are good jobs, driven in part by 

environmental protections. 

There are numerous small manufacturers nationwide that develop and manufacture air pollution control equipment. The experience and innovative technologies 

produced in this sector position these manufacturers as leaders in international 

markets for pollution control and environmental services. Repealing air quality regulations would not only eliminate vital public health protections, it would also kill 

those jobs. 

When it comes to infrastructure, Democrats will continue to fight for the federal 

investments our communities need. These investments strengthen public health 

while also creating good-paying jobs. And when it comes to environmental protections, Democrats will continue to lead the fight for safe drinking water, clean air, 

and clean land. 

We can have a safe environment and a strong economy. In fact, in the long run, 

a safe environment is absolutely necessary for a strong economy. 

Mr. SHIMKUS. The gentleman yields back his time. 

The Chair looks to the majority side to see if anyone else wants 

to do an opening statement. The Chair recognizes the gentleman 

from Texas Mr. Barton for 5 minutes. 

9 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. I won’t take 5 minutes, Mr. Chairman, but you are 

gracious to give me that time. 

First, I want to congratulate you on chairing this subcommittee. 

A long time ago I chaired a similar subcommittee that had kind of 

the jurisdiction of Mr. Upton’s subcommittee and your subcommittee; we did energy and environment. And it should be that 

way because they exist together. So I am very pleased that you 

chair the subcommittee and have the jurisdiction that this subcommittee has. 

I want to welcome our witnesses to the first hearing of this subcommittee. This is an important issue. Republicans hear the Democratic side, who seem to think we are ready to rape and pillage the 

environment. Nothing could be further from the truth. 

We do want to review our environmental statutes and put them 

in context with where we are today in terms of economic development. You can have both. You can have positive economic development and effective environmental protection. And I think this hearing is going to lead us to begin to do that. 

I would hope, Mr. Chairman, that as we go through the hearing 

process we, we take a serious look at, to the extent we want to reform, review, change some of the environmental statutes, that we 

put in a true, effective cost-benefit analysis. I see no reason we 

can’t use real numbers and real science, as opposed to some of the 

studies that the Obama Administration did. 

I was here when we did the Clean Air Act amendments early 

’90s. I was here when we passed the last Safe Water Drinking Act. 

Then Chairman John Dingell worked across the aisle to craft both 

of those pieces of legislation. And I’m sure you and Mr. Weldon 

hope to do the same thing with Mr. Pallone and the Democrats. 

I hope we also take a real look at CO2. I know that’s not the direct purpose of this hearing, Mr. Chairman, but there is no question that the criteria pollutants in the Clean Air Act, mercury and 

SO2 and NAAQS and particulate matter, that they are true pollutants. 

CO2 is a little different animal. It’s not directly harmful to 

human health. The theory is that the amount of manmade CO2 has 

somehow tipped the balance in the upper atmosphere, and that is 

causing, over long periods of time, consequences that are negative. 

It is not entirely clear whether that is an absolutely true fact or 

not as opposed to a theory. And I hope we will, I hope we will take 

a look at that and, if necessary, clarify what a pollutant is under 

the terms of the Clean Air Act. 

In any event, Mr. Chairman, you are gracious with your time. I 

appreciate you yielding to me. And I look forward to this hearing 

and to our witnesses. 

Let me say one other thing. The minority has somehow decided 

that Flint, Michigan, is a federal issue. There is no question that 

if we do an infrastructure bill we can lend a helping hand to many 

communities around the country that need to upgrade their water 

systems. But to say that the reason that Flint, Michigan, happened 

is because of lack of federal initiative is not a true statement. 

10 

That was a state and local issue. The local community and the 

state did not do their job. And I know we have the gentleman from 

Michigan Mr. Walberg, now on the committee, and he may have a 

different view about that. But we certainly want to help the Flint, 

Michigans of the world, but to say that that is now a federal responsibility 100 percent, I strongly disagree with. 

But I yield. 

Mr. SHIMKUS. The gentleman yields back his time. 

So, again, welcome to the panel. This is how we operate: 

You all submitted your opening statements for the record. I will 

recognize each one of you for 5 minutes to kind of summarize. And 

then we will go on to questions. And it should, it should go real 

well. 

So first off we’d like to welcome the Honorable Jonathan Mitchell, Mayor of New Bedford, Massachusetts. Sir, welcome. You have 

5 minutes and you are recognized. 

HON. JONATHAN F. MITCHELL, MAYOR, NEW BEDFORD, MASSACHUSETTS; KEVIN SUNDAY, DIRECTOR, GOVERNMENT AFFAIRS, PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY; MELISSA MAYS, FOUNDER, WATER YOU FIGHTING 

FOR?; EMILY HAMMOND, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL ON BEHALF OF CENTER FOR PROGRESSIVE REFORM; THOMAS M. SULLIVAN, VICE PRESIDENT, 

SMALL BUSINESS POLICY, U.S. CHAMBER OF COMMERCE; 

AND ROSS E. EISENBERG, VICE PRESIDENT, ENERGY RESOURCES POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS 

STATEMENT OF MR. MITCHELL 

Mr. MITCHELL. All right. Thank you, Mr. Chairman. Good morning, members of the committee, subcommittee. 

My name is Jon Mitchell. I am the Mayor of New Bedford, Massachusetts. And I am pleased to be here to testify on behalf of the 

United States Conference of Mayors where I chair the Energy Committee. 

Today I want to discuss the importance of reauthorizing and 

modernizing the Brownfields law and by describing how New Bedford has used the program and turned environmental liabilities 

into environmental assets. If Congress is interested in giving economic development tools to communities, reauthorizing and modernizing the Brownfields law should be a cornerstone of that effort. 

Let me give you a little bit of background on New Bedford. 

New Bedford was the world center of the 19th Century whaling 

industry, and later became a national center for cotton textile manufacturing. Today the city has recaptured its national leadership in 

the maritime sector as the number one commercial fishing port in 

the United States. Our city historically has struggled, however, 

with high unemployment rates and demographic challenges, like 

most older, industrial urban centers. 

That said, the city and the region are in the midst of a noticeable 

transformation. This past year we enjoyed the sharpest drop in unemployment of any metropolitan area in America. When I came 

11 

into office 5 years ago the unemployment rate hovered around 14 

percent. And today it is 3.7 percent. 

With two major Superfund sites, hundreds of Brownfield sites 

and a few remaining opportunities for so-called greenfield commercial development, New Bedford has come to recognize that our path 

to continuing our trajectory of growth and prosperity lies in part 

in unlocking the potential of contaminated sites through innovative 

new approaches. 

I would like to highlight two of our projects: a traditional 

Brownfield site and a redeveloped Superfund site. 

New Bedford’s upper harbor is host to dozens of historic textile 

mill buildings. With a healthy real estate market and spectacular 

views of the river and marshlands, private sector investors there 

in that part of the city have recognized the potential for conversion 

of these mills to residences. The city has moved forward with plans 

to construct a recreational bike path along this particular area that 

would follow the shoreline between the mill buildings and the 

water’s edge. 

The fundamentals of economic activity are all in place. That said, 

an important underlying factor has been, throughout the period of 

redevelopment, Brownfield grant funding. In key instances, grants 

have helped catalyze and support New Bedford’s mill conversion 

projects. And this is a problem that is similar in so many cities 

across America. 

Targeted Brownfield funds have been used creatively to fill important gaps and cover assessment and remediation costs that were 

problematic for the city and its private sector partners. For example, the city was recently awarded two $200,000 Brownfield cleanup grants that paid for the remediation of two derelict large fuel 

tanks along the river. And that led, that opened the doors up for 

redevelopment. All told, multiple waterfront buildings have now 

been converted, and tens of millions of dollars have been invested, 

and hundreds of construction jobs were created, all as a result of 

this unlocking of the door through Brownfield grants. 

It also may, and turning to the other project, it may surprise you 

that, according to The Wall Street Journal, the City of New Bedford has the distinction of having the most installed solar capacity 

per capita of any municipality in the continental United States. We 

are actually beaten by Honolulu, for obvious reasons. 

I would like to highlight our flagship solar project, which is the 

Sullivan Ledge Solar Project, because it is a great example of the 

creative re-use of a contaminated site that has helped support local 

jobs and deliver bottom line benefits. 

Sullivan’s Ledge was one of the country’s most high-profile 

Superfund sites. Today, atop a cleaned and capped landfill, sits a 

1.8 megawatt solar farm with over 5,000 solar panels that generate 

electricity to support over 200 homes. Our effort was far from easy, 

but it required a great deal of creativity by pulling in PRPs and 

getting very creative about some of the technical hurdles that we 

had to confront. But it is now, indeed, an environmental asset. 

So what does all this mean to us as we look at Brownfields and 

Congress’ role in supporting Brownfield redevelopment? It’s this, 

and members touched upon this directly: whole funding of the 

Brownfields program. At the current levels EPA funds only 30 perVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
12 

cent of the applications. And this is a very good investment in cities, especially ones like mine, creating a multi-purpose grant that 

enhances flexibility for cities to move money around to the sites 

that need it the most. Increased cleanup of grant amounts is, in 

particular, a cleanup grant as opposed to assessment is especially 

important. 

And then there are a handful of other things, like allowing reasonable administrative costs in the grant program, clarifying grant 

eligibility for publicly-owned sites, removing barriers for local and 

state governments to address mothballed sites, and encouraging 

Brownfield cleanups by so-called good Samaritans. 

In closing, Brownfield redevelopment is a win/win for everyone 

involved. And it creates jobs, cleans up the environment, and it is 

pro business and pro community. 

And I thank you again for the opportunity, Mr. Chairman, to 

speak to all these matters. 

[The statement of Mr. Mitchell follows:] 

13 


25128.001

Written Testimony of New Bedford Mayor Jon Mitchell 

For The U.S. Conference of Mayors 

Before the House Energy and Commerce 

Subcommittee on Environment and the Economy 

Thursday, February 16, 2016 

"Modernizing Environmental Laws: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing" 

INTRODUCTION 

My name is Jon Mitchell. I am the Mayor of New Bedford, Massachusetts, where I have 

served since 2012. I'm pleased to be here to testify on behalf of the U.S. Conference of 

Mayors where I serve as Chair of the Energy Committee. Mr. Chairman and members of 

the Committee, I would like to officially submit my written testimony for the record. 

I am pleased to speak before you today to examine potential reforms to environmental 

statutes to promote infrastructure, development, and manufacturing. My testimony will 

focus on the reauthorization of the Brownfields Law with its national and local impact to 

infrastructure, economic development, and job creation. 

In particular I will describe how New Bedford has pursued renewable energy as one 

creative solution to the redevelopment of brownfield and Superfund sites, and in the 

process, turned environmental liabilities into economic assets for the community. 

If Congress is interested in giving economic development tools to communities, 

especially those that are economically struggling, reauthorizing and modernizing the 

Brownfields Law should be a cornerstone in that effort. 
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HISTORY 

Since the early 1990s, the Conference of Mayors made the redevelopment of brownfield 

properties one of its top priorities. At that time, the Government Accountability Office 

(GAO) estimated there were anywhere from 400-600,000 brownfield properties. 

Brownfields are defined as abandoned or underutilized property whose redevelopment 

is hindered due to real or perceived environmental contamination. 

Developers and business owners were unwilling to touch these properties out of fear of 

liability. These concerns were the result of the joint, several, and strict liability 

provisions in the Comprehensive Environmental Response, Compensation, and Liability 

Act (CERCLA), a 1980s law more commonly known as Superfund, which made an 

innocent developer just as responsible for the cost of cleanup as the actual polluter. 

As a result, these potential businesses would develop on greenfields rather than take a 

risk on a brownfield property. This has contributed to urban sprawl and left abandoned 

or underutilized sites in just about every community in the United States. New Bedford 

alone has several hundred brownfields and two Superfund sites. 

As former Chicago Mayor Richard Daley said at the time, "As a nation, we recycle 

aluminum, glass, and paper, but we don't recycle our most valuable commodity, our 

land." 

The Conference of Mayors worked with Congress and the EPA to formulate legislation 

and a program that provided some liability relief for innocent developers as well as 

money to do assessments and cleanup. 

This was legislation had strong bipartisan support. The fact that the Small Business 

Liability and Brownfields Redevelopment Act passed in the Senate with a 99-0 vote and 
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was put on the unanimous consent calendar in the House and then signed by President 

Bush, demonstrates the vast bipartisan appeal of this issue. 

And you can understand why: This is a win for the community, the environment, and 

the business community. 

NATIONAL IMPACT OF BROWNFIELDS 

The Brownfields Law and the EPA Program that resulted has had a very positive impact 

on many communities throughout the nation. According to EPA, since the inception of 

the program, they have awarded nearly $600 million in assessment money which has 

resulted in over 24,000 brownfield assessments. They have also awarded about $215 

million for cleanup grants resulting in over 1,200 cleanups completed. This has created 

over 113,000 jobs and nearly $22 billion dollars leveraged. 

In fact, each EPA dollar spent leverages approximately $18 in other investments. 

Another added bonus is that by developing on brownfield sites, you are also reutilizing 

or refurbishing already existing infrastructure. 

However, resources have been limited, and EPA has had to turn away many highly 

qualified applicants due to lack of funding. EPA estimates that for the past 5 years, over 

1,700 requests for viable projects were not awarded money because of limited funding. 

EPA estimates that if they were able to provide funding to those turned away 

applicants, an additional 50,000 jobs would have been created along with an additional 

$12 billion of leveraged funding. 

In the last Conference of Mayors survey, 84 percent of cities said that they have 

successfully redeveloped a brownfield site with 150 cities successfully redeveloping 

nearly 2,100 sites, comprising more than 18,000 acres of land. And, at that time, there 

were over 1,200 sites comprising of another 15,000 acres that were in the process of 
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being redeveloped. 106 cities reported that 187,000 jobs have already been created 

through the redevelopment of brownfield properties with 71,000 jobs in the predevelopment stage and 116,000 permanent jobs. 

These new developments have resulted in an increase in tax revenues at the local, state, 

and federal level. 62 cities reported that their actual tax revenues from redeveloped 

brownfield sites totaled over $408 million with an estimate of potential revenues 

ranging from $1.3- $3.8 billion. 

And, it should be noted that in every survey that the Conference of Mayors ever 

conducted, the top three impediments to brownfields redevelopment were always the 

same-- lack of clean up funds, the need for more environmental assessments, and 

liability issues. 

BROWN FIELDS REDEVELOPMENT IN NEW BEDFORD 

Moving from a national perspective, I want to tell you about this program at the local 

level. First of all, I want to give you a little background on my community. New Bedford 

is port city located sixty miles south of Boston with a population of roughly 100,000. It is 

most widely known as the world center of the whaling industry in the 19th century, 

featured prominently in the premier American novel, Melville's Moby Dick. Later a 

national center of cotton textile manufacturing, the City today has recaptured its 

national leadership in the maritime sector, as the number one commercial fishing port 

in the United States for the past sixteen years. 

To be sure, my City has struggled with a high unemployment and demographic 

challenges like most other older urban areas. That said, the City and region are in the 

midst of a noticeable transformation: Not once, but twice in the past two years the New 

Bedford area has seen the sharpest year-over-year drop in unemployment of all 387 
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metropolitan areas studied by the Bureau of Labor Statistics. When I came into office, 

our unemployment rate hovered around 14%; today it is 3.7%. 

This recent success aside, our primary local economic development goal is to build a 

permanent foundation for economic prosperity that isn't subject to the vagaries of 

business cycles or any one industry, but instead builds on our many underlying assets. 

As Mayor, I can tell you that, as I survey all the impediments to achieving our 

overarching economic goal, no factor is more fundamentally constraining that the lack 

of suitable land for future development. As a result of our industrial past, New Bedford, 

like many communities throughout the nation, lives today with an environmental legacy 

that takes off the table too many sites that could otherwise accommodate new business 

expansion or infrastructure investments. 

With two major Superfund sites and hundreds of brownfield sites, we in New Bedford 

have come to recognize that our path to prosperity lies in unlocking the potential of 

contaminated sites through creative, innovative new local policy approaches. My hope 

is that Congress can likewise adopt creative, new strategies that will allow the federal 

government to become an even stronger partner with cities like New Bedford. 

I would like to highlight for the Subcommittee two of our local redevelopment projectsa traditional brownfield site and a redeveloped Superfund site. What these two projects 

have in common is that, in both cases, the City has found ways to unlock underlying 

economic potential and turn an environmental liability into environmental and 

economic asset. 

THE RIVERWALK AND RESIDENTIAL MILL RE-USE PROJECTS 

New Bedford's upper harbor is host to dozens of historic mill buildings built alongside 

the Acushnet River. Our mills date to the period around the turn of the 20th century 

when New Bedford's cotton textile mills dominated the industry. 
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What the builders of these magnificent brick, stone, and lumber structures could hardly 

have imagined was that today they represent a unique opportunity for residential living 

and recreation along the water's edge. 

With a healthy real estate market and spectacular views of tidal marshes and wildlife in 

the midst of an urban center, private sector investors have recognized the potential for 

conversion of these mills to residences. Moreover the City has signaled its commitment 

and moved forward with plans to construct a public recreational path called "The 

Riverwalk" that would follow the shoreline between the mill buildings and water's edge. 

Make no mistake: The story of our mill conversions is a demonstration of the 

importance of having solid economic fundamentals in place. In this case, an underlying 

market demand for housing, attractive historic structures in an appealing location, and a 

publicly-funded recreational amenity that creates additional value. 

What I would like to suggest to the Subcommittee is that all of these factors should be 

seen as necessary but not sufficient. 

An important, often under-appreciated, factor underlying all of this economic activity 

has been brownfield grant funding. In key instances, grants have helped catalyze and 

support New Bedford's mill conversion projects. Targeted brownfield funds have been 

used creatively to fill important gaps and cover assessment and remediation costs that 

were problematic for the city or its private development partners to assume. 

One recent example is illustrative: The City was recently awarded two $200,000 

brownfield clean-up grants that paid for the remediation of two 75,000-gallon 

underground storage tanks containing 30,000 gallons of No. 6 fuel oil at a key 

waterfront location. These grants were themselves preceded by a brownfield 
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assessment grant. Addressing this serious environmental hazard was essential to all the 

nearby development projects. 

Today I can report that just west of the remediated tanks stands the new Cliftex Lofts, a 

market-rate/ affordable age 55+ housing complex. Just south is the Whaler's Cove 

complex which was successfully developed as 55+ and assisted living units. The City's 

new Riverwalk will pass just east of the tanks. 

All told, multiple mill buildings have been converted at a cost of tens of millions of 

dollars in investment, and hundreds of residents now fondly call these buildings home. 

SULLIVAN'S LEDGE SUPERFUND SITE RE-USE 

It may surprise some to learn that the Wall Street Journal reported not long ago, that 

the City of New Bedford had the distinction of having the most installed solar capacity 

per capita of any municipality in the continental United States. 

I will refrain today from delving into how and why a medium-sized city in the Northeast 

came to pursue such an ambitious solar energy initiative, but I would like to highlight 

our flagship solar project, the Sullivan's Ledge Solar Project. 

Sullivan's Ledge, once the site of one of the country's most high-profile "Superfund" 

hazardous waste sites, was recently converted by the City to a 1.8 megawatt solar farm 

with more than 5,000 solar panels spread across ten acres, and producing enough 

electricity for 226 homes. 

This accomplishment was the result of years of work to steadily navigate through 

considerable legal, regulatory, engineering, and financial hurdles. In all, the project 

required strong cooperation from multiple state and federal agencies, the solar 
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industry, and fourteen private parties responsible for the underlying environmental 

liability. 

It was far from easy, but it was well worth the effort. Sullivan's Ledge is a great example 

of our "liabilities-into-assets" mind set and the creative re-use of a contaminated site in 

manner that has helped support local jobs and delivered bottom-line benefits to city 

government and taxpayers. 

Some background is useful: Sullivan's Ledge operated as a granite quarry until about 

1932. Between the 1940s and the 1970s, local industries used the quarry pits and 

adjacent areas for disposal of hazardous material and other wastes. Beginning in the 

1980s until2000, the site was cleaned up in three stages which included excavation and 

capping among other remedies. It continues to be closely monitored. The cleanup 

solution meets all EPA and Massachusetts Department of Environmental Protection 

standards and ensures the health and safety of residents. 

The Massachusetts Department of Environmental Protection had made it a priority to 

support the siting of renewable energy installations on contaminated lands and landfills, 

so Sullivan's Ledge was welcomed by state environmental leaders as a project that 

demonstrated the energy, environmental, and economic benefits to be gained from the 

state-level strategy. 

Power generation began in 2014 and soon afterward the Project began to receive 

recognition for its innovative approach to a complex environmental challenge. The City's 

effort at Sullivan's Ledge drew special praise from the EPA as an example to the nation 

of how solar energy production can become a redevelopment strategy for contaminated 

sites. 

There are two aspects of Sullivan's Ledge worth consideration by the Subcommittee: 
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First, to state the obvious, the clean-up of the property made all else possible. Without 

successful remediation, there would be no solar park and none of the associated 

benefits. 

Second, with regard to the benefits, I want to emphasize that the rational for pursuing 

the solar project was as much about local jobs and local fiscal benefits as anything else. 

Due to renewable energy incentives, Sullivan's Ledge alone is projected to save New 

Bedford city government $2.7 million over the next twenty years in utility costs. The ten 

solar projects and one wind project in the City's renewable energy power program 

together are projected to save city government nearly $30 million over the next twenty 

years. With the City spending $6-7 million annually in electricity bills, these savings are 

not insignificant and are major help in reducing the burden on local taxpayers. 

As important, Sullivan's Ledge, along with several of our other solar projects, was 

installed by a New Bedford-based solar company with a history of hiring local residents. 

As a result, we were able to advance important local job-creation/retention goals. In all, 

roughly a dozen of our own residents were on site at Sullivan's doing the work of 

installing and wiring panels. 

This project was a win on so many levels- it created local green construction jobs, it 

redeveloped a severely contaminated property, it saved taxpayer money, it helps fight 

climate change, and it helps makes us more energy independent. It also serves as a 

model for other communities throughout the nation. 

WAYS TO IMPROVE THE PROGRAM 

The Brownfields Law has a proven track record of leveraging private sector investment, 

creating jobs, and protecting the environment. It also reuses and, in many cases, 
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modernizes infrastructure that is already in place as opposed to building out new 

infrastructure that will need to be maintained and eventually replaced. 

The Brownfields law provided some liability relief for innocent purchasers of brownfield 

properties and provided resources to conduct environmental assessments and cleanups. 

However, there is much more work to be done. As mentioned earlier, GAO estimated 

there are between 400-600,000 brownfield sites throughout the United States. 

The challenge that communities face now is that many of the "easy" brownfield sites 

have been developed and now what remains are the more difficult brownfield sitesthe, what we would like to call, the medium to dark brown brownfield sites. The 

Conference of Mayors, along with many others, believe that with some changes to the 

Brownfields Law would help spur on additional redevelopment projects and economic 

growth. 

I would like to highlight some of the key recommendations that the Conference of 

Mayors believe would make a significant difference with redeveloping even more 

properties. 

Full Funding of the Brownfields Program -I know budgets are tight and we are all doing 

more with less. However, this program has a proven track record of leveraging private 

sector money, putting people to work, and taking formerly contaminated properties and 

putting them back into productive pieces of land that increases all of our tax bases. At 

the current funding levels, which are far below the authorized level, EPA only funds 

(roughly 30 percent) of the applications that make it to headquarters. The mayors of this 

nation believe this is a good investment that pays for itself and not only should be fully 

funded at the previously authorized levels of $250 million but, in fact, the authorized 

and appropriated levels should be increased. 
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Creation of a Multi-Purpose Grant- The way the program works currently is that a city 

applies for various grants and identifies the properties where the money will be spent. 

The only problem with that scenario is that this is not flexible enough for real 

marketplace situations. A city may have multiple developers and businesses who are 

interested in several brownfield properties. What many cities could use is the ability to 

assess a number of properties and provide cleanup grants and loans depending on 

which site or sites are chosen for redevelopment. It hinders that opportunity if a city 

has to apply for a grant and wait six months to a year to see if they get funding. The 

Conference of Mayors would like to see the establishment of a multi-purpose grant to 

be given to communities that have a proven track record of fully utilizing their 

brownfield money. We believe by giving us that flexibility will make the program even 

more useful to not only us but our business community as well. 

Increase Cleanup Grant Amounts- As I mentioned earlier, many of the "easy" 

brownfield redevelopment projects are already underway or have been completed. 

What we have left are brownfields that are more complicated due to the level of 

cleanup that is needed, market conditions, location of the site, or a combination of 

these factors. The Conference of Mayors would like an increase in the funding ceiling for 

cleanup grants to be $1 million and in special circumstances, $2 million. This would give 

some additional resources to conduct cleanup at the more contaminated sites and bring 

these properties back into productive use. 

Allow Reasonable Administrative Costs- Brownfield grant recipients should be allowed 

to use a small portion of their grant to cover reasonable administrative costs such as 

rent, utilities and other costs necessary to carry out a brownfield project. As far as I 

know, this is the only program that prohibits administrative costs entirely. As a result, 

smaller communities and non-profits sometimes do not bother to even apply for these 

grants due to the cost burdens associated with taking a federal grant. 
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Clarify Eligibility of Publicly-Owned Sites Acquired Before 2002- The Conference of 

Mayors and the Brownfields Coalition believes that as long as a local government did 

not cause or contribute to the contamination of the property but just happened to own 

the property prior to 2002, when the law was enacted, they should be allowed to apply 

for EPA funding for that property. It took Congress nine years to pass the original law 

and in that time, many communities took it upon themselves to take ownership of 

contaminated properties so that they could potentially turn these properties around. 

These same communities have now found themselves ineligible to apply for any funding 

for those properties to assist them with their efforts. 

Remove Barriers to Local and State Governments Addressing Mothballed Sites- The 

Act should exempt local and state government from CERCLA liability if the government 

unit (a) owns a brownfield as defined by section 101{39); (b) did not cause or contribute 

to contamination on the property; and (c) exercises due care with regard to any known 

contamination at the site. 

Local governments throughout the country have long recognized the harm abandoned 

and underdeveloped brownfield properties can pose to their communities. Properties 

that lie idle because of fear of environmental contamination, unknown cleanup costs, 

and liability risks can cause and perpetuate neighborhood blight, with associated threats 

to a community's health, environment, and economic development. 

Local government property acquisition authority is one of the key tools to facilitate the 

redevelopment of brownfields. Through voluntary sales or involuntary means including 

tax liens, foreclosures and the use of eminent domain, local governments can take 

control of brownfields in order to clear title, conduct site assessment, remediate 

environmental hazards, and otherwise prepare the property for development by the 

private sector or for public and community facilities. 
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Although property acquisition is a vital tool for facilitating the development of 

brownfields, many local governments have been dissuaded by fears of environmental 

liability. 

Encouraging Brownfield Cleanups by Good Samaritans- The Act should provide an 

owner-operator exemption from CERCLA liability for non-liable parties that take cleanup 

action or contribute funding or other substantial support to the cleanup of a brownfield, 

in conformance with a federal or state cleanup program, but do not take ownership of 

that site. Groups such as Ducks or Trout Unlimited have wanted to clean up properties 

and restore them to their natural habitat but because they have no protection under 

the law, they could be held as liable as the person who polluted the property. We need 

more, not less, people and organizations to help clean up these sites. 

Closing 

I wish to thank the Subcommittee for having me testify today. Brownfields 

redevelopment is a win-win for everyone involved. It creates jobs, it cleans up the 

environment, and it's pro-business and pro-community. The reauthorization of this law 

should be a top priority for this Congress and I urge you to pass a reauthorization bill 

and appropriate the necessary funds to jump start the development in communities 

throughout the nation. Thank you again for this opportunity. 
26 

Mr. SHIMKUS. Thank you very much. 

Now I will turn to Mr. Kevin Sunday, Director of Government Affairs at Pennsylvania’s Chamber of Business and Industry. Your 

full statement will go into the record. You have 5 minutes and you 

are recognized. 

STATEMENT OF KEVIN SUNDAY 

Mr. SUNDAY. Thank you and good morning, Chairman Shimkus, 

Ranking Member Tonko, members of the subcommittee. It is an 

honor to appear before you this morning on behalf of the PA Chamber. 

My name is Kevin Sunday, Director of Government Affairs. The 

PA Chamber is the largest broad-based business advocacy association in the state, a state that is second in the nation in total energy 

production, and in the top ten for manufacturing output. Among 

states, we have the fourth highest coal production, the second largest natural gas production, the second largest nuclear fleet. We are, 

in short, a big energy state. 

Pairing these assets with the generational opportunities before 

us with pipeline and the electric transmission infrastructure mean 

we have the opportunity of a lifetime to grow our economy in a way 

that we haven’t seen in decades. And that means we can take advantage of every facet of the value chain from energy production 

and power generation, to infrastructure, to manufacturing and refining. Each segment of that value chain relies and builds upon one 

another. And when we encourage the growth of one, we encourage 

opportunity in the others. 

And we are starting to see some of that happen in our state. For 

example, we have had a shuttered steel mill reopening because of 

demand for new pipe. Domestic energy production gave three refineries in Southeast Pennsylvania and their thousands of employees, 

many of them union, a new life. A global integrated gas company 

picked Southwest Pennsylvania for a multi-billion dollar petrochemical facility. It is the first time in decades that anyone is talking about building that kind of operation outside of the Gulf Coast. 

Those are just a couple examples. I have many more in my testimony. And I would like to say that those kinds of opportunities are 

so common that our unemployment rate is among the lowest in the 

country, but it is not. In fact, it trails it by almost a full point. And 

that is because we are leaving opportunity on the table. 

We do need a skilled and ready workforce and we do need a competitive tax, trade, and labor policy to compete as a state and as 

a country, but we also need a modernized approach to our nation’s 

environmental laws and the implementation of them so that we can 

promote economic opportunity without sacrificing environmental 

progress. 

The current air quality compliance obligations are draconian. We 

have an energy-intensive manufacturing facility in Southeast Pennsylvania, and they spend more on annual air quality compliance 

than they spent buying the entire operation a few years ago for 

$180 million. 

We have another company that spent $100 million on control 

equipment for emissions that the facility will never produce. 

27 

New regulatory obligations are being handed down faster than it 

takes to get a permit, and the obligations have become inordinately 

complex. State regulators are tied up due to a lack of guidance 

coming from federal agencies, and we would encourage Congress to 

take a hard look at how national ambient air quality standards are 

revised and implemented. 

The EPA’s use of unrealistic modeling in establishing NAAQS 

designations and in permitting evaluations is discouraging growth. 

We have heard first-hand companies declining to invest in Pennsylvania because of ozone transport requirements. And research is 

clear, such as that of Michael Greenstone, who was President 

Obama’s Chief Economist on the Counsel of Economic Advisers, 

that the consequences of being designated non-attainment are severe, with billions of lost economic activity. 

With regards to permitting, the current structure requires companies to account for emissions they will never actually emit. We 

have seen a number of our companies stuck in an endless loop of 

litigation and appeals. We also should rethink the current offset 

approach that requires one facility to shut down or retire so that 

another one can operate. 

And, finally, when it comes to moving and using energy, we have 

lost opportunity because of delays in permitting new infrastructure, 

which require years of review from nearly a dozen state and federal 

agencies. What has already been permitted is at risk to litigation, 

which is going to delay things even further. We would encourage 

Congress to take the opportunity to step in and provide clear guidance on what the National Energy Policy Act should and shouldn’t 

cover. 

And I would encourage this committee that, if nothing else, as 

I have said in my remarks and testimonies for you to act, I would 

remind you that today is the fifth anniversary of the Mercury and 

Air Toxics Rule being published in the Federal Register. That rule, 

I would remind you, was estimated by EPA to cost $10 billion to 

secure $4 million. Again, $10 billion in cost for $4 million in benefit 

for mercury reduction. And I should also note that EPA was off by 

a factor of four regarding how much coal generation would shut 

down in the wake of the rule. 

I have some recommendations in my testimony I would encourage you and the administration to take a look at. Our challenges 

are many but our opportunities are greater. And I would encourage 

that we embark on a process that incentivizes innovation and 

growth in emissions reduction, not one that encourages litigation 

and needless bureaucracy. 

Thank you. 

[The prepared statement of Mr. Sunday follows:] 

28 


25128.014

PAChamber'M 

of Business and Industry 

Testimony 

Submitted on behalf of the 

Pennsylvania Chamber of Business and Industry 

Modernizing Environmental Laws: Challenges and Opportunities for 

Expanding Infrastructure and Promoting Development and Manufacturing 

Before the: 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Environment 

Presented by: 

Kevin Sunday 

Director, Government Affairs 

Washington, DC 

February 16, 2017 

417 Walnut Street 

Harrisburg, PA 17101-1902 

717.720.5443 phone 

http:/ /www.pachamber.org 
29 


25128.015
30 


25128.016

Testimony of Kevin Sunday) Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

Good n1orning Chairman Shimkus, Ranking i'v1ember Tonko and members of this committee, 

I'v1y name is Kevin Sunday, director of govermncnt affairs for the Pennsylvania Chamber of Business and 

Industry. It is an honor to appear before you this morning to discuss the challenges our state faces with 

respect to attracting new manufacturing and building the necessary infrastructure to deliver energy to market, 

in part due to the current air quality regulatory construct. It is our sincere hope that the challenges and ideas 

\Ve bring before you today encourage you to be bold in your efforts to modernize our nation's approach to 

envitonrnental protection in a way that continues to improve the quality of our environment while also 

promoting economic gto\vth. We must also be faithful and look to set policy that encourages the retention 

and expansion of existing manufacturing and industry. 

The P 1\ Chamber is the largest, broad-based business advocacy organization in the commonwealth. Our 

members are of all sizes, crossing all industry sectors throughout Pennsylvania. AU of our members are 

comnllted to the stewardship of our state and nation's land, air and watet1 and we seck to provide a 

thoughtful and balanced approach on ways we can continue to reduce our environmental itnpacts and grow 

the economy. Pennsylvania and this country have been afforded the opportunity of a lifetitne to grow the 

economy in a way not seen :in decades, so long as every facet of the energy value chain is allowed to flotu:ish: 

the energy production and generation industry, the pipeline and electric transmission sectors, and 

manufacturing and industrial production. lvlodemizing our nation's approach to enviromnental regulation can 

help us realize this opportunity without sacrificing environtnental quality. 

Infrastructure and Domestic Energy Production are Creating New Opportunity for Pennsylvania 

Pennsylvania is well-poised to grow every industrial sector, not just rnanufacturing, given our abundant 

natural resources and leadership in the electric generation sector. Indeed, we have already seen a nutnbcr of 

manufacturing success stories in Pennsylvania thanks to the increased production of domestic energy 

resources and the build-out of pipeline infrastructure. These include: 

Access to natural gas helps a leading pharmaceutical company's manufacturing facility reduce 

emissions and costs to remain competitive 

A leading pulp and paper n1anufacturer turning to natural gas for on-site heat and power to reduce 

cost and emissions 

Thrcr soon-to-be shuttered refmeries in southeast Pennsylvania finding new life thanks to access to 

domestic fossil fuels 

Page 3 
31 


25128.017

Testimony of Kevin Sunday1 Pennsylvania Chamber of Business and Industiy 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Oppm1unities for Expanding Infrasttucture and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

A global integrated oil and gas company selecting southwestern Pennsylvania to site a multi-billion 

petrochemical facility 

:\leading consumer products company harnesses local gas reserves to provide all of its heating and 

power needs and send po\ver back out to the grid 

A financial institution turns to an on-site natural gas con1bined heat and power system to reduce 

costs and ensure reliability for its computing systems 

t\ dormant steel mill will soon be restarted due to pipeline projects increasing the demand for rolled 

steel 

A shuttered coal-fired power plant in the mid-state will run on natural gas thanks to a greenfield 

pipeline project 

These success stories demonstrate just a fraction of the renewal of opportunity that can be achieved in part 

through policy that allows all segments of the energy value chain to flourish. These segments include the 

development of our natural resources, po\ver generation from a diverse portfolio of fuel sources, expanded 

oil, gas and electric infrastructure, and the use of those commodities in manufacturing and industry. The 

American economy stands to benefit trenwndously as energy is developed and moved through infrastructure 

for final use in a home or business; ·we can also continue to secure additional improvements in air and water 

quality as we develop this value chain. 

It must be noted that, for the projects referenced above, the ftnancial considerations inyolved, such as access 

to low-cost energy and access to markets for produced products, were enough to ovcrcornc the substantial 

regulatory hurdles that state and federal environtnentallaw present. I Iowever, for many projects, the 

regulatory structure becomes so burdensome on top of difficult economic conditions that shutting down the 

facility becomes the only option. Such has been the case for many of Pennsylvania's coal-fired power plants 

and heavy industry. The lack of infrastructure and burdensome regulatory requirements has also discouraged 

new investment into our state. Pennsylvania also recently lost out on a $500 million invcsttnent in a 

petrochemical facility in southeastern Pennsylvania due to a lack of pipeline infrastructure and regulatory 

dclays. 1 Thls is not the only situation where we have lost investment due to delays getting infrastructure 

permitted; an untold number of other projects have been lost in response to a combination of regulatory 

obligations that continually increase and a lack of certainty regarding the implementation of these obligations. 

'Pa. business leaders: Shale-gas pipeline build-out needs to step up. Philadelphia Inquirer, ~ov. 1, 2016. 

http: I !www. philly.co m/philly/business/Pa-biz-leaders-Shale-gas-pipeline-build -out-needs-to-stcpup.html 

Page4 
32 


25128.018

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16 1 2017 

The Current Regulatory Construct Presents Substantial Challenges to Industry and Is Reducing 

Economic Opportunity 

Despite the significant opportunities energy development can bring to Pennsylvania's businesses and 

industries, our unemployn1cnt ttJ.tc has climbed by nearly a full point over the past year, from 4, 7<:/o in 

December 2015 to 5,6~/o in December 2016.::: Our unemploytncnt rate is now higher than the national average 

of 4, 9~/0, and the sectors which have shed the most jobs over the past year are in industries which are most 

exposed to impacts from environmental regulation: trades, manufacturing, mining, and construction. 

T'W-rice as many p_,.\ Chamber businesses say environmental regulations have a negative impact on operations 

compared to a positive . .'\ \'Yhile our companies remain optimistic, expecting to see an increase in sales and 

workforce in the near future, it is apparent that we are not fully capitalizing on the opportunities before us, 

The current regulatory approach presents a tnajor chaUengc for every segment of the energy value chain, and 

as a result we are unnecessarily litniting econotnic opportunity. Businesses seeking to invest in new or 

expanded operations need dear direction frotn regulators on what compliance obligations arc and will be in 

the future. Unfortunately, at the present time, regulatory requirements, particularly those in air and water, are 

changing faster than it takes to get a permit. 

Despite Nationwide Progress with Air Ouality the Cost of Compliance Continues to Mount 

Air quality issues present a particular challenge for industry. The current construct under the Clean Air "'".\ct 

unnecessarily inhibits investment and expansion of facilities. Hundreds, if not thousands, of tnan-hours and 

untold sums of capital arc required to secure initial permits ;~nd ensure on-going compliance, consuming an 

ever-increasing share of cornpanies' budgets tlut could otherwise be spent in expanding the workforce or 

investing in research and development, It is becoming increasingly costly and more difficult to integrate a 

management team's intent to expand production or otherwise execute a competitive vision for growth with 

mounting compliance obligations As an example) one energy-intensive manufacturer in southeast 

Pennsylvania spends more per year in annual air quality compliance obligations rhan it cost the current 

ow~nership to buy the entire facility a few years ago for $180 million, This facility is a key economic driver in 

the region, with a workforce of nearly 500 employees and several hundred contractors, many of them in the 

2 Pennsylvania Unemployment Rate Falls to 5.6% in December. Pennsylvania Department of Labor and 

Industry, Jan. 20,2017. http:l/www.media.pa.gov/Pages/Labor-and-Industry-Details.aspx'/newsid=224 

o 261h Annual Pennsylvania Economic Survey. Pennsylvania Chamber of Business and Industry, October 

2016. http: //paehamber.org/pdf/2016 Economic Survey.pdf?1478794849 

Pages 
33 


25128.019

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the I louse Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

building and construction trades. Any layoff that occurs at this facility or the others like it will cost the region 

18 jobs, the state 22 jobs and the country Gl jobs.~ Another manufacturer was required to spend $100 million 

to install pollution control equipment to control emissions that the facility will ne\tet produce. This is the 

product of EPA's so-called "once-in, always-in"s guidance mernorandun1 for major sources of hazardous air 

pollutants (HAPs), which requires facilities to install and use extremely costly control equipment compliant 

with Maximum ;\chievable Control Technology standards for HAPS even if the I lAPs emissions of a facility 

are reduced to below major source thresholds (even to zero) due to changes in processes and operations. 6 

The Consequences of Non-Attainment and Ozone Transport 

The current construct of the Clean Air Act presents an iromediate discouragement to any company looking to 

build or expand in Pennsylvania or other fellow Ozone Transport Region states (a gwup of northeastern 

states frorn Virginia to Maine), as well as in any area of the country that has been designated as nonattainment. Generally speaking, EP1\ sets a National Ambient Air Quality Standard for a particular pollutant 

(such as ozone or S02) and works with states to designate counties or metropolitan regions of the country 

that are not meeting the standard. Facilities in these "non-attainment" areas are then required to comply with 

emissions limits that are more stringent than areas in attainment Once the region meets attaitunent, the 

burden on facilities is eased somewhat. However, by virtue of how the Clean 1\ir Act has been \Vtitten and 

amended, Ozone Transport Region states must continually impose the more stringent, Hnon-attainment" 

emissions rules for ozone on their companies even after the states attain the already rigorous federal NAAQS 

for ozone in ail areas within their own borders. In addition, EPA's continual lowering ofNAAQS for other 

pollutants and the process it has used to characterize air quality has resulted in an increasing number of 

counties and regions being placed into ('non-attainn1ent," despite an overall improvement in air quality. ~fhc 

C.r\.i\'s so-called "anti-backsliding" ptovis1ons7 prohibit EPA from casing regulatory requirements on sources 

even if EPA establishes a less stringent NAAQS. 

• Re-employment Assessment and Economic Impact ofConoeoPhillips and Sunoco Closings .• January 9, 

2012.Pennsylvania Department of Labor & Industry Center for Workforce Information & Analysis. 

https: llwww.doleta.gov lperformancelresults/Annua!Reports/PY20t2 IPA Impact Co naco Sunoco Clo 

sings.pdf 

s This policy was instituted in a May 1995 memorandum, entitled "Potential to Emit for MACT Standards 

-Guidance on Timing Issues." See https:l/www.epa.gov/sites/production/filesl2015-

o8/documents/pteguid.pdf 

6 The Environmental Council of the States, a national non-profit association of state environmental 

officials, has repeatedly affirmed (six times since 2000) a resolution for EPA to change this policy. See 

http; I I www .ecos. org/wp-conten t/ uploads /2016 I o 2IResolution -00-12 -Once-in-20 15v. pdf 

7 Clean Air Aet Section 172(e): If the Administrator relaxes a national primary ambient air quality 

standard after November 15, 1990, the Administrator shall, within 12 months after the relaxation, 

Page 6 
34 


25128.020

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

The negative economic consequences of a non-attainment designation for a county or tnulti-county region 

arc significant. Research by 0..1ichael Greenstone, who was chief economist for President Obama's Council of 

Economic Advisors from 2009 to 2010, demonstrates that in a fifteen-year observation period nonattainment counties lost 590,000 jobs and $75 billion in economic output.R .t\nother report by Greenstone and 

his colleagues shows that productivity of manufacturing facilities falls significantly following a non-attainment 

designation.' Research by W. Reed \"\'alkcr, a professor at l:C Berkeley, found a 15% decline in employment 

in the 1990's in sectors affected by the 1990 Clean Air 1\ct amendments.lll It should be noted that EPA is not 

reqtUrcd to consider economic impacts at all when nuking changes to NA.AQS require1ncnts. For other Clean 

Air .Act requirements and environmental regulations that are required to account for economic impacts, the 

comprehensive cost of job losses are significant and not properly recognized, as noted by Jonathan lvfasur 

and Eric Posner, who conservatively estimate that the lifetime loss of income for one unemployed worker is 

$100,000 throughout the worker's lifetime. Ily requiring federal agencies, such as EPA, to account for this 

lifetime loss of earnings, the agencies would set regulatory policy in a tnorc balanced manne.r. 11 In a separate 

paper, 1\1asur and Posner note that traditional cost~bcncfit accounting ignores employment impacts in large 

part by relying on the faulty assumption that all workers who lose jobs as a result of the regulation will quickly 

regain them at equal wages. 12 It must also be noted that Clean Air Act Section 321\3 obligates EPA to 

conduct a continual evaluation of job loss or employment shifts as a result of the administration and 

enforcement of the Act; Congress should ensure that EPA is in fact carrying out this obligation. 

Beyond the issue of non-attainment, the current ozone transport and N .. AAQS construct contained within the 

Clean Air Act also reguirc states to enforce "over-control" of emissions at sources beyond what is necessary 

for that state to attain full compliance of N1'u\QS within their own borders. In the case of the recent Crosspromulgate requirements applicable to all areas which have not attained that standard as of the date of 

such relaxation. Such requirements shall provide for controls which are not less stringent than the 

controls applicable to areas designated nonattainment before such relaxation. 8 The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 

Clean Air Act Amendments and the Census of Manufacturers. Michael Greenstone, September 2001. 

'NWW.nber.org/papers/w8484.pdf 

9 The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing. Michael 

Greenstone, John A. List and Chad Syverson, September 2012. http:!/www.nber.org/papers/w18392.pdf 

w Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act. W. Reed Walker, 

February 2011. 

http://faculty.haas.berkeley.edu/rwalkcr/research/w reed walker paper pre publication.pdf 

"Unemployment and Regulatory Policy. Jonathan S. Masur and Eric A. Posner, December 2012. 

http: I /chicagounbou nd. uchicago .ed u I cgi /viewcon ten t.cgi? a rticle-160 s&context-law and economics 12 Regulation, Unemployment and Cost-Benefit Analysis. Jonathan S, Masur and Eric A. Posner, August 

2011. http: I /www.law. uchicago .ed u /files /file/571-359-jm-eap-regula tio n.pdf 

!3 42 usc §7621. 

Page7 
35 


25128.021

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

State Air Pollution Rule (CSAPR) update, 1.1 which EPA finalized only last fall but is part of its 

itnplementation plan for the 2008 ozone rule, Pennsylvania's power generators will be required to over~ 

control their emissions by more than 30~/o during ozone season in 2017, as noted by the Pennsylvania 

Department of Environmental Protection 15 -despite the fact that all monitoring points in the state 

den1onstratc: attainment of the 2008 standard, almost all monitoring points in the state are demonstrating 

attainment of the 2015 standard, and monitors arc showing a reduction of ozone concentrations by as much 

as 10 ppb since 2011. 

Recent Regulatory Changes Are Disruptive to Business Planning 

Last year's CSAPR update is one example of a federal agency finalizing new and extremely stringent 

regulatory obligations that afford industry extrc1nely short periods of time to comply and that disrupt 

business planning. EPA fmalizcd the CSAPR update with a purported aim to help Ownc Tranopott Region 

(OTR) states meet the 2008 ozone standard by lowering emissions budgets for electric generating units in 

Pennsylvania and other OTR states during the ozone season of May 1 througb September 30,2017. 

1-lowevcr, the rule was not published as final in the Federal Register until Sept. 7, 2016, giving affected units 

less than eight months to develop and implement a cotnpliancc strategy. Pennsylvania's final ozone season 

budget for 2017 is about 67°/o smaller than established in past ycars.lG This budget allocates a given amount of 

NOx allowances to each state and particular units in the state, and allowances may be boughtJ sold, traded or 

banked for usc in future compliance periods. \Vbilc units are allowed to surrender NOx allowances to comply 

for this year's ozone season under CSAPR, should emissions from units in state as a whole exceed the ozone 

season budget by more than 121°/o (which is a probability), units must surrender allowances at an extremely 

punitive rat..io of 3:1. Eight months is sin1ply too short a runway for a facility to alter its production schedule 

to allow for inst<1llation of ne\v controls, and some facilities arc not in a position where there are enough 

allowances to run during the entire season. As a result, some facilities arc in a position where they will ha\"C to 

14 Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS. Environmental Protection Agency, 

Sept. 7, 2016. hltps://www3.epa.gov/airmarkets/CSAPRU/CrossState%2oAir%2oPollution%2oRule%2oUpdate%2ofor%2othe%202008%2o0zone%20NAAQS%202060 

%2oASos%2oFRM.pdf 

15 Comments on EPA's Proposed Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS. 

Pennsylvania Department of Environmental Protection, Feb. 1, 2016. 

http: 1/files.dep.state.pa.us/Air /Air0uality/AOPortalFiles/Current%2oEvents/Comments on CSAPR U 

pdate Rule EPA-HQ-OAR-2015-0500.pdf 16Cross-State Air Pollution Rule (CSAPR) Update: Final Rule. Pennsylvania DEI', Dec. 8, 2016. 

http: //files .dep .state. pa. us /Air /Ai rQual ity/AQPorta lFiles/Advisory%2oCommittees /Air% 2oQuality%20 T 

echnical%2oAdvisory%2oCommittee/20t6!12-8-

t6/CSAPR (Update) AQTAC Presentation for December 2015(4l.pdf 

Page 8 
36 


25128.022

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. t6, 2017 

curtail operations during the spring and summer- \vhich historically have been the season when demand for 

electricity generation is at its highest. 1\s a direct result of regulation, some power generation facilities will lose 

market share. 

Our members have also reported that the final Startup, Shutdown and Malfunction Rulc, 17 finalized in 2015, 

poses a substantial challenge to their operations and risk profiles. The SSJvf rule requires states to eliminate or 

drastically alter their approach to handling emissions from facilities during startup, shutdown and malfunction 

-approaches that had been on the books for decades and that had shielded facilities from being penalized for 

emissions excecdcnces that cannot be physically avoided. The rule impacts facilities across all industrial 

sectors, and many facilities affected by the rule are physically unable to meet the enllssions restrictions the 

n1le imposes. The rule, which is under litigation, was the product of a settlement arrangement behveen EPA 

and the Sierra Club. 

The Need for Reform in the Offsets and Permitting Pro,-rams 

There is a need to reform the offset program in its entirety. \\'hile sources in the Ozone Transport Region 

can secure NOx and VOC emissions reduction credits from sources in OTR states that have reciprocity 

agreements, new or expanding facilities located in non-attainment areas for other N"A .. A.QS criteria pollutants 

are not afforded the same flexibility -these sources must secure ERCs only from Rrithin the same nonattainment area, which can be as small as one county. With NA;\QS for all pollutants continually being 

ratcheted downward, facilities seeking to make changes to their facilities to stay competit.iYe may run into a 

situation where there are no affordable ERCs for the relevant pollutants. \'X/idening the geographic area in 

which facilities may sell, trade or bank credits would be a potential solution but will require a legislative 

change. ln addition, regulatory requirements have outpaced technological development, and as a result many 

companies are unable to make an economically rational decision to over-control emissions in order to bank 

and sell ERCs. Instead, facilities are more and more relying on ERCs from retired facilities, "vhich the Clean 

Air Act does authorize. But it should be apparent to even the most casual obsetYcr that an emissions control 

construct that rehcs on an ever-increasing number of facility shutdowns and retirements in orde-r that new or 

surviving facilities may operate is not good for our economy. Further, the cost of these credits have gone up 

over time, consuming increasing shares of companies' compliance budgets, due in part to a trading market 

17 State Implementation Plans: Response to Petition for Rulemaking; Restatement and Update of EPA's 

SSM Policy Applicable to SIPs; Findings of Substantial Inadequacy; and SIP Calls to Amend Provisions 

Applying to Excess Emissions During Periods of Startup, Shutdown and Malfunction. Environmental 

Protection Agency, June 12, 2015. https:/lwww.gpo.gov/fdsys/pkg/FR-2015-06-12/pdf/2015-

12905.pdf#page-2 

Page9 
37 


25128.023

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

that is continually distorted by EP i\ regulations and implementation guidances that state ERCs for the same 

pollutant can be used for compliance with certain emission control requirements but not for others. 

The current Non-attainment New Source Review construct also discourages expansion of existing 

manufacturing (and the attraction of new facilities) in non-attainment areas. l\1ost large-scale manufacturing 

and industrial facilities will trigger NSR thresholds for NAi\QS pollutants. \'Vhen these facilities seek to 

expand their operations, th(~y tnust calculate if there will be a net emissions increase as a result of the 

modification, and EPA has established that such a calculation must assume that a source will produce its 

maximum possible emissions eve1)' hour of every day for the duration of its existence (referred to as 

"potential to emit" or PTE), even though such a calculation is not representative of many facility's actual 

operations. Companies must then account for these emissions that will ne1.·er be emitted by accepting a more 

stringent limit and installing costly conu·ol technology than would be necessary had the calculation on future 

net emissions be representative of actual future operational practice. In practice, this has discouraged 

companies from inYesting in installing cheaper and cleaner-burning burners in their boiler systems or other 

on-site heating and power units. EPA has the discretion to make a change to pennitting facility expansions 

based on expected future actual emissions, but has decided not to, as described in a guidance memo to the 

Indiana DEPYl Such a change would still require offsets and controls, but would be based on actual facility 

operations. As a result, this change would not impair states' ability to continue to make progress with respect 

to attaining NA:\QS. The Clean Air 1\ct could also be amended to encourage facility modifications by 

recognizing the inherent emissions reductions and expressly authorizing such changes, instead of applying 

new source technology restrictions that disincentivize efftcicncy improvements at facilities, as discussed in the 

recommendations section of th1s testimony. 

In addition, the current permitting process allows for a revolving appeals process that has killed numerous 

projects. To move forward with a new facility, applicants must work with regulators to establish what 

controls (and/ or the appropriate amount of offset credits) are needed on the project. Industry must work 

with regulators at the state and federal level as to what is the appropriate !lest Available Control Technology" 

(or BACT, applied to facilities in attainment areas) or Lowest 1\chievablc Emissions Ratc20 (or L\ER, applied 

to facilities in non-attainment areas). These evaluations examine controls technology employed at consttucted 

facilities throughout the country. Before beginning construction~ a facility needs to obtain a pre-construction 

'

8 Letter from U.S. EPA Region 5 to Indiana Department of Environmental Management. U.S. EPA, April 

4, 2011. https://www.cpa.gov/sites/production/files/2015-07/documents/atpanct.pdf 

' 9 42 usc§ 7479· 20 42 usc § 7501. 

Page 10 
38 


25128.024

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

permit, which establishes what appropriate controls are needed based on presumed impact. A preconstruction perm.it ha.s a lifespan of 18 months. Too often~ howc·ver, third-party NCO's challenge the 

permitting agency's conclusion in the pre-construction permitting process, and the litigation hangs the project 

up in years of delay. EY'en if the applicant and agency are successful in court, EPA policy (and the lifespan of 

the preconstruction permit) requires agencies to do another determination on impacts and appropriate 

technology. Third-party NGO's can then appeal again that the agency's detennination was flawed, the process 

repeats itself and the project never gets off the dt:a\ving board- not for an aetuallack of being able to comply 

with the relevant requircrncnts but because there is no clear process to get to a "yes." 

There must be a clear path to ayes" so that projects can be planned and financed appropriately. Such a path 

can be made by establishing that B/1CT/LAER evaluations should he conducted only within the universe of 

\vhat controls arc employed at facilities that have actually been constructed and that are in the satne industrial 

category as the proposed project. A cement kiln has significant operational and technical differences from a 

compressor station) a gas-flred power plant or an oil refinery and these differences should be accounted for 

when evaluating what technology should be considered in a B1\CT or Li\ER evaluation. It must be noted 

that should EP i\ change its policy in accordance with our recommendations rhere will not be an adverse 

environmental impact facilities will still have to operate in a manner that allows non-attainment areas to 

make improven1cnts in air quality, and facilities in attainment areas will have to operate in a manner that does 

not deteriorate the local air quality. The difference is that these facilities '\Vill actually be allowed to operate 

thanks to a streamlined permitting process. Efforts to streamline the process should be welcomed by all, 

given that a recent analysis demonstrated projects being permitted through the PSD program are taking more 

time. 21 By the same analysis, review limes for all projects in the EPA region that includes Pennsylvania arc 

among the highest of any region in the country. 

Sustainable, long-term operation and management of individual manufacturing and industrial facilities 

requires a dear and consistent regulatory em.~ironmcnt. Too often, however, the regulations are not only 

continually being made more stringent, but the interpretation of them has been subject to frequent change 

(such as the rescission and replacement of EPA metnoranda that address ambiguities in a particular statute or 

regulation). Guidance to states and industry on implementation is lacking or unclear, exposing companies to 

risk of enforcement or third-party litigation. \\'1lilc some issues can be resolved administratively by an EPA 

that is focused on balancing economic development and protecting the environment, Congress should abo 

21 EPA's New Source Review Program: Evidence on Processing Time, 2002-2014. Art Fraas, Mike Neuner, 

and Peter Vail, February 2015. http:/fwww.rff.org/files/sharepoint/Worklmages/Download/RFF-DP-15-

Qd,llilf 

Page 11 
39 


25128.025

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding ivlodernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

take steps to reform the Clean Air Act; some recommendations are included in the fmal section of this 

testimony. 

Thoughtful Policy is Needed to Support Additional Infrastructure and Energy Development 

No conversation about promoting manufacturing and industry in this country ·would be complete without 

touching on how to continue to develop our natural resources and ensure "\VC have competitive markets in the 

power generation sector. That means a level playing field where markets, not subsidies and mandates, 

determine the outcome for power generators. Federal regulators should also recognize and respect the 

primacy of states in regulating energy development within their borders. Policyrnakcrs should also not cave to 

"keep it in the groundn activists, whose policies would result in the loss of 14 1nillion jobs, the doubling of 

gasoline prices and a four-fold increase in natural gas costsJ~ According to the same analysis, a nationwide 

ban on hydraulic fracturing would cost Pennsylvania almost half a million jobs and increase costs for the 

average household by $3,500 per year. 

There is also a clear and immediate need for additional interstate pipeline and electric transmission. 

Companies seeking to construct such large-scale interstate projects must secure approvals from the Federal 

Energy Regulatory Commission through a National Environmental Policy Act (NEPA) review process. The 

NEP ;\process was established with the aim of requiring federal agencies to consider environmental impacts 

before authorizing projects. The \V'hite House Council on Environmental Quality provides implementation 

guidance to federal agencies on how to implement this policy. In the waning months of the Obama 

administration, CEQ fmalized guidance directing federal agencies, including FERC, to consider climate 

change impacts during NEPA reviews. The guidance noted agencies should consider direct and indirect 

clinutc impacts as a result of approved projects. However, quite problematically, the guidance did not contain 

a clear effective date or a clear expectation on how federal agencies should apply the guidance to projects 

whose reviews were pending ... Also problematic is the guidance's elevation of climate impacts for alternatives 

analysis, as is its lack of hard and fast thresholds for \Vhat en1issions or irr1pacts should be included or 

considered. As such) this guidance has placed the federal agencies and project applicants at litigation risk by 

granting additional paths for third-party NGO)s to arbitrarily challenge a final decision approving a project. 

Even if the litigation is ulttrnately unsuccessful in terms of reversing a FERC approval (and nearly all 

challenges to FERC final actions under NEP ;\ have been unsuccessful as such), the project would be 

22 What if Hydraulic Fracturing Was Banned? U.S. Chamber of Commerce Institute for 21st Century 

Energy, Nov. 4, 2016. 

http://www.energyxxi.org/sites/default/themes/bricktheme/pdfs/CoC BannedFracking FULL v3.pdf 

Page 12 
40 


25128.026

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

unnecessarily delayed while litigation proceeds. It should be apparent that during such a delay, the 

m.anufacturing and construction jobs associated with the project \Vill not materialize, families and businesses 

will continue to pay higher costs, and the cconotny will suffer as a result. To help avoid these outcomes, the 

CEQ guidance should be rescinded and to the extent the Trump administration would like to advise federal 

agencies to consider climate impacts, it should do so with clear guidance on how to handle projects that arc in 

the middle of their reviews. Congress should also consider amending the statutes requiring NEPA to make 

clear ho\v federal agencies should consider environmental impacts, including those related to climate change. 

NEPA should be used as originally designed: a measure to require consideration of environmental impacts to 

the extent Congress decides, in balance with the other prerogatives of the agency, such as ensuring 1he 

interstate transmission of electricity and gas in a manner consistent with the public interest or ensuring a fast, 

safe, efficient and convenient transportation srstem. NEPA should not he used as a weapon to halt 

development of crucial infrastructure. 

The CEQ guidance also emphasized the Obama administration's social cost of carbon (SCC). The SCC is a 

significant departure in environmental cost~ benefit calculations and was calculated on a global, rather than 

domestic, basis and over an extremely long period of time, and employed a significant amount of speculation 

and conjecture ahout long~ term impacts. Congress and the Trump administration should deliberate as to 

whether or not a more appropriate, specific and sciencc~bascd approach \Vould be to better characterize 

impacts on a domestic basis, which \Vould he in keeping with the historical approach to costs and benefits of 

regulation. A global SCC justifies more costly regulation than would a domestic SCC. 

Page 13 
41 


25128.027

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

Recommendations to Modernize Out Regulatory Approach 

The following summarize the key issues raised in this testirnony in conjunction with an associated 

reconunendation to change the relevant stan1te, regulation or policy, wid1 the general aim of incentivizing 

innovation and economic growth in a rnanner that also encourages etnissions reductions. 

EPA should make administrative changes Non-Attainment New Source Review (NNSR) provisions 

and its modeling guidance to reflect expected ernissions from actual operation,r;, rather than from a 

potcntial-to~emit basis,23 Similarly, the PSD program discourages cost~saving and emissionsreducing improvements at facilities and needs to be reformed, and the HAPS uonce in, ahvays in" 

policy should be retracted The Clean Air Act can be amended to accommodate these refom>.<. 

As discussed in this testimony, the current NNSR construct discour-ages investment into existing 

manufacturing by rcL1uiring facilicics to accept emission control rates that arc more stringent and to secure 

more ernission reduction credits than are needed to protect public health< Sinillarly, the nwdcling guidances 

issued by EPA significantly overstate expected emissions frmn sources and result in more areas being 

designated as non-attainment than is realistic. 

The PSD program penalizes any facility seeking to change its operations if it has not been running at capacity 

prior to the modification. The implementation of' major modification" regulations under PSD have becon1c 

extremely costly and in practice have discouraged improved efficiencies at manufacturing and industrial 

facilities- for example, many facilities seeking to switch to more affordable and less-emitting fuel sources in 

their boilers have been prevented from doing so because of the "actual-to-PTE" test. 

Another air quality rule that interferes with a facility's ability to change its tnanufacturing or industrial process 

is the HAPs "once in, always in" po1icy, which requires a facility that \-Vas ever once a n1ajor source of HAPs 

to always install MACT for HAPs upon expanding ot changing tht~ facility- even if that facility's emissions 

profile operates at below major sow:ce thresholds. 

Should EPA prefer the Clean Air Act be amended ftrst to provide support for these changes, a simple change 

to the Clean Air Act could be made by addressing the modification issue by statute and expressly stating that 

"any capital investment or change L11 operation of a source that results in the reduction of potential or actual 

23 For more discussion on recommendations establishing a better approach to modeling, as well as 

reforming the offset program and establishing requirements for the timely issuance of implementation 

mles and modeling guidance, please see a recent whitepaper, "EPA's New Source Review Program: Time 

for Reform?" The whitepaper, authored by Fraas, Graham and !I olmstead, is appended to this testimony. 

Page 14 
42 


25128.028

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

emissions is permitted by this statute without condition, requirc1nent, or comment by EPA. The permittee 

n1ust notify EPA of the investment or change in operation within 90 days of the cotnpletion of the change." 

EPA should alter its permitting policy to provide certainty that projects that must undergo BACT or 

LAER determinations by determining appropriate emissions controls based upon the emissions 

control technology that was available dunng the Jnitial permit application at projects Jn tbe same 

industrial category and tbat were actually cor1structed at the time; current agency policy requiring 

projects to undergo a revolving door of appeals prevents some projects from ever being built. 

Third-party challenges to BACT and LAER determinations arc frequent and have inhibited the construction 

of a substantial number of new projects in this country. EPA should revise its permitting policy to not require 

BACT o1· L\ER determinations after lengthy litigation by making clear that only proJects that were in 

existence at the time of a pennit application subrnission, not the conclusion of litigation, should be 

considered for BACT and L\ER evaluations. Further, EPA should require applicants and state agencies to 

only compare controls technologies used by facilities in the same industrial category as the proposed project 

and to only consider controls employed at proJects that have actually been built. This change would provide 

the necessary certainty to projects and would also not impair air quality: the law is clear that facilities cannot 

operate in a manner that interferes with non-attainrncnt areas progressing to\vards attainment nor in a 

manner that deteriorates air quality in attainment areas. 

Amend the Clean Air Act co promote development in non-attainment areattJ tttreamline EPA 

approvals or review of proposed state/local permitting actions and provide certainty to final 

pennitting actiontt. 

A non-attairuncnt designation discourages economic investment; the Clean Air .Act should be amended to 

alJow for delegated air agencies at the state or local level to permit new projects using BACT, rather than 

L\ER, provided that the pernlltting official determines that the usc of such technology will not significantly 

impact local air quality. Such a change is needed as NA,\QS for ozone and other pollutants approach 

background levels. Further, the Act should be amended to prohibit challenges to state permitting decisions 

except in cases of tnajor deficiencies. Mere disagreement over a permitting official's judgment in 

implementing often atnbiguous regulatory criteria should not warrant perpetual suspension of project 

development. A policy of reasonable turnaround titncs for EPA review of state permitting actions or SIP 

amendments should ,!so be instituted and EPA held accountable to it. 

Tbe CEQ NEPA Guidance on greenhouse gas emi.<sions should be rescinded, and Congre,<s should 

cons1'der providiilg clearer direction vla tttatutc regarding ho"'7 clin1ate impacts ttbould be conttidered 

in NEPA rcvicwtt and regulatory costs. 

Page 15 
43 


25128.029

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16) 2017 

As discussed, the CEQ NEP.\ Guidance is unclear and exposes federal agencies and, more importantly, vital 

infrastructure projects to unnecessarily delay due to litigation from third-parties. ~TI1e Guidance is vague \vith 

respect to its effective date as well as to the extent agencies should weight climate-related impacts. ll1e 

Trump Administration should retract the guidance. 

Congress should "speak clearly" nith respect to ambiguities of the Clean Air Act. 

The late Justice Antonin Scalia famously remarked in the 2014 Utility Air Regulatory Group IJ. EPA decision that 

the Court expects Congress to "speak clearly>) regarding \vhat regulatory powers and duties the legislative 

branch has delegated to an agency. Throughout the years, each administration has continually rescinded and 

then reissued interpretive memoranda on issues such as source aggregation, new source review, and navigable 

waters. On these issues, Congress should amend the stah1tcs m eliminate a need for EPi\ to interpret andreinterpret ambiguities. \Xlith regard to source aggregation, the Obama administration should be applauded for 

their fmal rule regarding the oil and gas sector,.?:-1 which conforms to the historical and common-sense 

defmitions of the key terms contiguous, adjacent and common control. This is generally in keeping with an 

approach to the issue instituted by the Pennsylvania Department of Environmental Protection in 2011. 

Nonetheless, the statute should still codify the language to resoh~e the issue entirely. 

Congress should also be encouraged to embark on a robust stakeholder process to detennine whether the 

Clean Air _Act should be amended to explicitly state whether its provisions apply to greenhouse gases or not, 

and if they do, to direct EPA to address carbon emissions solely within the fenceline of facilities, in keeping 

with the historical approach to establishing standards of performance that are reflectiYc of controls that, with 

consideration to economic feasibility, can be installed. Absent such clarity, future adnUnistrations will be free 

to approach carbon enUssion controls similar to the sweeping approach proposed by the Obama 

administration's Clean Power Plan. 

The Clean Air Act should be amended to encourage "performance-based approaches" that rewards 

states and industry for attaining air qua/it)' goals. 

As discussed in this testimony, the Cle~n Air Act\; provisions and the implementation of them have resulted 

in states and industry having to control emissions to standards beyond what EPA has designated as protective 

of public health ~nd the environment. The CA1Vs anci-backsliding provisions do not allow for the relaxation 

24 Source Determination for Certain Emission Units in the Oil and Natural Gas Sector. Environmental 

Protection Agency, June 3, 2016. https:/lwww.gpo.gov/fdsys/pkg/FR-2ot6-o6-os/pdf!2ot6-ug68-Mlf 

Page 16 
44 


25128.030

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb. 16, 2017 

of controls. Congress could instead amend the statute to still require states to impletncnt and attain NAAQS 

but also allow states to relax regulatory irnpositions for areas that arc attaining air quality better than the 

national standard- of course~ only to the extent that the area docs not fall back into non-attainment. 

The Clean Air Act should be amended to allow for a more thoughtful implementation and review 

timeframe for all NAAQS pollutants, not just ozone. In addition, to tiJe extent modeling is used in 

attainment designations, EPA should adopt at1 air quality modeling approach that reflects actual 

and expected future source operations. 

\Vbilc recent revisions to the ozone NAAQS have justifiably drawn considerable attention and scrutiny, 

ozone is not the only pollutant that EPA and states manage via the NAAQS construct. The issues presented 

by the on-going implementation of the 2010 revision to the sulfur dioxide (S02) NAAQS also speak to a 

need for modernizing NAAQS implementation. The new 1-hour S02 standard of75 ppb was established 

June 2, 2010. 75 FR 35520. EP1\ published notice on Aug. 5, 2013 announcing designations of some areas in 

16 states; however, not all regions of the country were classified. Litigation was flied by an environmental 

group in the U.S. District Court for the Northern District of California, which resulted in EPA agreeing in a 

settlement on I\1arch 2, 2015 to an accelerated schedule to designate the remaining areas of the country. EPA 

agreed to, in just over a year's titne, tnake a fmal designation determination for any area of the country that 

contained stationary sources that emitted more than 16,000 tons ofS02 orernitted more than 2,600 tons of 

S02 with an annual average emissions rate ofOAS lbs S02/mmBtu or higher in 2012. In order to meet the 

deadline imposed by the date set in the settlement, EP1\ gave states a handful of months to meet a Sept. 28, 

2015 deadline to make propose designations to EPA (either attainment, non-attainment or unclassifiable). In 

its guidance n1en1o to states instructing them to n1eet this deadline, EPA noted that "we recognize that the 

titncline for designations by July 2, 2016 does not provide for establishment and use of new ambient 

n1onitors. Therefore, we anticipate that in many areas the tnost reliable information for informing these 

de,ignations will be based on source modeling."" 

\XIhile it is fair to question whether the tcrn1s contained in the settlement agreement were appropriate and 

whether EPA took the right path in its guidance to states, this outcOinc would have been avoided altogether 

had EPA and states been given more tUue under the statute to implement the 2010 standard. 

"Updated Guidance for Area Designations for the 2010 Primary Sulfur Dioxide National Ambient Air 

Quality Standard. Environmental Protection Agency, March 20, 2015. 

ht tps: //ww;v .e:pi\. gov /sites /production /files /20 lp-Qf)j_ doCJiill~I!t~}JliJJ5Q3_?.Qso2dG~ns.Iillf 

Page 17 
45 


25128.031

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

Feb, 16, 2017 

As such, Congress should amend the statutory timetables for reviewing all NAAQS criteria pollutants from 

f1ve to ten years and obligate that the EPA administrator publish simultaneously the necessary modeling and 

in1plernentation guidance within sLx n1onths of any new standard. These concepts ate embodied in the 

"Ozone Standards Implementation Act of 2017" (relating to timetables for reviewing NAAQS) and in the 

"Promot.ing New t-.ianufacturing Act" (introduced it1 the 1141h Congress as H.R. 2557 and relating to the 

simultaneous issuance of guidance and pcrrnitting). 

In addition, Congress should consider revising the Clean Air Act to allow states to establish reciprocity 

agreements that allow for the trading of emission reduction credits among their facilities. 

Congress should establish clearly in statute how costs and benefits of regula don are to be calculated. 

Out regulatory system is in need of reform, beginning with the process of how costs and benefits are 

calculated, First, EPA should be required to consider economic impacts when amending NAAQS 

requirements, as well as incorporate what is technologically feasible when establishing new NAAQS 

requirements. In addition, too often, EPA relies on co-benefitS, or a description of purported benefits of 

pollutants will be reduced as a result of a regolatory measure but that are not the pollutants the rule seeks to 

address, Perhaps the most egregious example of this was the final Mercury and 1\ir Toxics RLlle." The iVL\TS 

Rule was designed to reduce emissions of hazardous air pollutant.", including mercury, from existing power 

plants. According to the Summary of Monetized Benefits table provided in the final rule's Federal Register 

notice, the 11.1le would achieve only $4 million to $6 million in public health benefits as a result of the 

reduction of these pollutants, despite an estimated cost of $9.6 billion. But because EPA also incorporated 

estimated benefits from reductions of PM2.5, SC)2 and C02, the agency was able to claim benefits greatly 

outweighed the costs. 'W'hile this approach to cost-benefit was harshly criticized in the U/lRG z•. EPA 

decision in 2015, EPA's ability to enforce the rule stood. By April2016 (one year after the effect date of the 

l\11\TS rule some plants were granted one-year compliance extensions), about 20 G\'V of the nation)s coalftred generation was retired. EPA expected sligbtly less than 4.7 G\V of retirement to occur over that time. 

Congress should consider amending statutes relevant to regulatory development, such as the Administrative 

Procedure Act and the Regulatory Flexibility Act, to make dear how much a federal agency can rely on co-

' 6 National Emissions Standards for Hazardons Air Pollntants from Coal- and Oil-Fired Electric Utility 

Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, IndustrialCommercial-Institutional, and Small Industrial-Commercial Institutional Steam Generating Units. 

E;>;i~~~_rr:ent~l-~rot;;tion Agency, Feb. 16, 2012. https://www.gpo.gov/fdsys/pkg/FR-2012-02-
46 


25128.032

Testimony of Kevin Sunday, Pennsylvania Chamber of Business and Industry 

Before the House Energy and Commerce Committee Subcommittee on Environment 

Regarding Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Deve1opment and Manufacturing 

Feb. 16, 2017 

benefits that occur as a result of reductions or outcomes which occur but are not the direct aim of the 

mlemaking. 

Congress should also consider amending such statutes to make clear whether or not a proper cost-benefit 

calculation should recognize emission reductions that achieve pollution concentrations in ambient air quality 

that lower than NA,-\QS targets- values that EPA designed to be sufficiently protective of public health. In 

addition, Congress should also require EPA recognize the lifetime loss of earnings from displaced workers (as 

estitnated in the aforementioned i\fasur and Posner reports) "nd enforce EPA's requirements under the Clean 

Air Act's Section 321, regarding continual evaluation of job loss or cmployn1ent shift. 

EPA should also be required to convene panels with small businesses for all major rules, including any 

changes to N:\i\QS, as outlined in the Small Business Regulatory Fnforccment Fairness Act of 1996. These 

panels would bring to the table the voices of small businesses, many of whom have less flexibility than larger 

operations to adjust business practices in order to comply with new rcquirctnents. These panels \Vere not 

convened for NAAQS or the Clean Power Plan, despite significant impacts from these rules on small 

bus.incsses. 

In conclusion, it should be clear that significant opportunities lay before us to grow our economy and secure 

continued enYironrncntal progress. There arc unquestionably reforn1s needed to both the acmal text and the 

implementation of several env-ironmental statutes, starting with the Clean Air .. Act. \"'e have suggested a few 

reforms for Congre~s and the Trump administration to consider. \'\'e also note that these reforms arc not 

panacea: such reform must take place along with competitive tax, trade and labor policy. \"'{'e must also work 

to ensure a skilled and able workforce is continually being developed so that as new opportunities become 

available as a result of more thoughtful policy, the promise of a stronger, more productive econotny becomes 

a reality. 

Thanks you for the opportunity to bring the concerns and suggestions of our members before you and we 

look forward to working together on these issues in this Congress. 

Page 19 
47 

Mr. SHIMKUS. Thank you. 

Now I will turn to Ms. Melissa Mays, Founder of Water You 

Fighting For, obviously from the Flint, Michigan, area. You are recognized for 5 minutes. Thanks for coming. 

STATEMENT OF MELISSA MAYS 

Ms. MAYS. Thank you. 

Today is day 1,028 since we have had clean and safe water in 

the city of Flint, Michigan. We are coming up on the third anniversary of the irresponsible switch of our water source and the subsequent failure of our government to properly treat and protect our 

ageing infrastructure and, more importantly, our lives. 

The last 1,028 days have been nothing short of a living hell for 

the 100,000 residents of Flint. The lack of stronger, enforced environmental regulations allowed our state Department of Environmental Quality to get away with loopholes in the Lead and Copper 

Rule for testing and reporting. In the effort to save just a few dollars per day, they exploited the weak existing rule, the defunded 

EPA, and poisoned 100,000 innocent people, people who depended 

on their government to provide the simplest of services: clean, safe 

water. 

Children like mine were never warned to not go get a glass of 

water out of the taps because there might be hidden neurotoxins 

in the water that are invisible to the naked eye. Senior citizens 

never stopped to think twice about the dangerous unwanted chemicals they were drinking while taking their prescribed medication. 

I never imagined that the water I was filling my workout bottle 

with before heading to the gym could possibly kill me. 

Because of the travesties like the hugely outdated Lead and Copper Rule and the absence of bathing and showering standards, 

nearly 200 people have died from pneumonia caused by bacteria in 

our water. For the past four weeks I have been suffering from a 

respiratory infection, plus ear infections because of the bacteria 

pseudomonas aeruginosa which is present in my shower at a plate 

count of 2.9 million. 

Before 2014, before we were poisoned, I had three happy, 

healthy, active sons. My oldest, Caleb, tested into a dual-enrollment school where he could take high school and college courses at 

the same time and be able to graduate with a diploma and an Associate’s Degree. 

My middle child, Christian, is sharp. His teachers have wanted 

to accelerate him a grade since elementary school. 

My youngest, Cole, is the sweetest boy you could ever meet with 

his little dimples, adorable baby voice, and his everlasting innocence, which is now lost because he knows he is poisoned by politicians who wanted to save money. 

Fast forward to today after our poisoning. Caleb almost failed his 

junior year because he could not remember his homework he had 

done the night before and would fail his tests. He called it brain 

fog. And so he had to relearn how to learn. Imagine going through 

12 years of school and having a teacher bring a different way to 

remember because of being exposed to lead; copper; aluminum; 

total trihalomethanes; chloroform; 1,4, Dichlorobenzene; 

Bromodichlormethane; acetone; bacteria; and numerous other conVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
48 

taminants through drinking water and showering in your own 

home. 

Christian and Cole have severe bone and joint pain, as lead settles in your bones as well as your growth plates. For kids ages 9 

to 14, the growth plates are open and spongy to accommodate their 

muscles and joints to be able to stretch as their bones hit those typical 4-inch growth spurts. Both he and Cole are to start their second round of painful physical therapy since their growth plates are 

hardening prematurely. 

Christian and Cole talk about the brain fog as well. And it terrifies me. Because even I know that your brain continues to develop 

until you are 25. My sons are also seeing a rheumatologist, which 

comes with a lot of blood work. Unfortunately, Christian passes out 

when it comes to needles. This will carry on for the rest of my sons’ 

lives because someone wanted to save money. 

My husband is 41 and has dizzy spells to where he nearly faints 

and is in constant pain. I am 38. I have a rheumatologist for my 

brand new autoimmune disorder that looks like lupus. I have a 

neurologist for my new seizures, as lead and copper are stored in 

your brain. I have a gastroenterologist because drinking caustic 

water tears up the pipes in the ground as well as your intestines, 

so I have IBS and diverticulosis. 

I have consulted with a toxicologist and environmental physician 

who helped us develop a detox plan, but says it is moot since we 

are still being exposed in the shower to the dangerous toxins as our 

pipes crumble in the ground. And now I have an infectious diseases 

doctor to help with the bacterial infections I am now fighting. 

We use only bottled water to cook with, drink, brush our teeth, 

and give our pets because the water is too unsafe. We spend so 

much time either sick, going to the doctor, taking tons of medication, or buying shower filters. Try to picture that in your head before suggesting that protecting your family’s health and mine is too 

expensive. 

Tell that to the restaurants in Flint that closed down because 

residents don’t want to drink lead in their coffee or eat bacteria in 

their chicken noodle soup. Tell that to the dentist who lost patients 

because no one wanted a cleaning with a neurotoxin-laced water. 

Tell that to the families of the people that have died from Legionnaire’s Disease, which is entirely preventable with tougher environmental laws and investment in infrastructure. Tell them their 

loved ones’ lives are not worth businesses taking the proper precautions to not poison their customers. 

Since the infrastructure in Flint is still failing, mains break, and 

pipes leak into the ground, our sidewalks are crumbling, our 

streets are caving in causing huge sink holes that makes it dangerous for ambulances to rush down the street, my street, to the 

hospital on emergencies. And our homes have flooded basements as 

the water table fills up. 

There is no amount you can place on the safety, health, and wellbeing of tax-paying human beings and pets living in this country. 

So before cutting back on environmental regulations and infrastructure funding, find somewhere else. We pay our taxes so our 

government can do their job and ensure something as simple as 

life-sustaining clean, safe water. Seeing and suffering first-hand 

49 

the devastation that can and will happen with reduced or weakened environmental regulations and decreased funding for infrastructure updates has opened my eyes as to where we are as a 

country, and it is scary. 

The health, safety, futures, and lives of the residents have fallen 

far beyond the desire to cut costs and pocket more money. This is 

short-term thinking, and it is reckless. If you want to protect your 

constituents’ lives, you must implement updated and stringent, environmentally sound regulations and pollution restrictions, otherwise you will just be ushering in thousands of more Flints across 

this great country of ours. 

I hope that the pain and suffering of my family, my sons, is a 

lesson and a warning to each of you. Put yourself in our shoes before you slash regulations to make a profit. 

Thank you. 

[The prepared statement of Ms. Mays follows:] 

50 


25128.033

Testimony of Melissa Mays, Flint Resident and Founder, Water You Fighting For? 

Congressional Committee on Energy and Commerce 

"Modernizing Environmental Law: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing" 

February 16, 2017 

Main points: 

• Human Cost of Neglecting Infrastructure and weak environmental regulations 

Benefits to investing in all infrastructure 

• Importance of updating, strengthening, and enforcing environmental regulations, 

protective laws, and environmental agencies 

We must plan to invest in the safety and well-being of all consumers and ensure 

these laws are health-based. 
51 


25128.034

Testimony of Melissa Mays, Flint Resident and Founder, Water You l<'ighting For? 

Congressional Committee on Energy and Commerce 

"Modernizing Environmental Law: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing" 

February 16,2017 

Today is Day# I 028 since we have had clean and safe water in the city of Flint, 

Michigan. We arc coming up on the 3'd anniversary ofthe irresponsible switch of our water 

source and the subsequent failure of our government to properly treat the water and protect our 

aging infrastructure and more importantly, our lives. The next 1028 days have been nothing short 

of a living hell for the 100,000 residents of Flint. 

The lack of stronger, enforced environmental regulations allowed our State Department 

of Environmental Quality to get away with loopholes in the Lead & Copper Rule for testing and 

reporting. In the effort to save just a few dollars per day, they exploited the weak existing rule, 

and the dcfunded EPA, and poisoned 100,000 innocent people. People who depended on their 

government to provide the simplest of services: clean, safe water. Children like mine were never 

warned not to go get a glass of water out of their taps because there might be hidden neurotoxins 

in that water that are invisible to the naked eye. Senior citizens never stopped to think twice 

about the dangerous, unwanted chemicals they were drinking while taking their prescribed 

medication. I never imagined that the water I was filling my workout bottle with before heading 

to the gym, could possibly kill me. 

Because of travesties like the hugely outdated Lead & Copper Rule and the absence of 

bathing and showering standards, nearly 200 people died from pneumonia caused by bacteria in 

our water. For the past 4 weeks, I have been suffering from a respiratory infection plus ear 

infections caused by the bacteria pseudomonas aeruginosa, which is present in my shower at a 

plate count of2.9 million. 
52 


25128.035

Before 2014, I had 3 happy, healthy, active sons. My oldest, Caleb, tested into a dual 

enrollment school where he could take high school and college courses at the same time and be 

able to graduate with a diploma and an Associate's Degree. My middle son, Christian, is sharp. 

His teachers wanted him to accelerate a grade since elementary school. My youngest, Cole, is 

the sweetest boy you could ever meet with his little dimples, adorable baby voice, and his 

everlasting innocence, which is now lost as he knows he was poisoned by politicians who want 

to save money. 

Fast forward to today, Caleb almost failed his Junior year because he could not remember 

the homework he had done the night before and would fail his tests. He calls it "brain fog" so he 

had to re-learn how to learn. Imagine going through 12 years of school and having to teach your 

brain a diflercnt way to remember because of being exposed to lead, copper, aluminum, total 

trihalomethanes, chloroform, I, 4 Dichlorobenze. Bromodichlormethane, acetone, bacteria, and 

numerous other contaminants through drinking water and showering in your own home. 

Christian and Cole have severe bone and joint pain as lead settles in your bones as well as 

your growth plates. For kids ages 9-14, their growth plates are open and spongy to accommodate 

their muscles and joints to be able to stretch as their bones hit those 4-inch growth spurts. Both 

he and Cole get to start their second round of painful physical therapy since their growth plates 

are hardening prematurely. Christian and Cole also talk about the brain fog and it terrifies me, 

because even I know that your brain contim1es to develop until you are 25. My sons are also 

seeing a rheumatologist, which also comes with a lot of blood work. Unfortunately, Christian 

passes out when it comes to needles. This will carry on through the rest of my sons' lives. 

Because someone wanted to save money. 
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My husband is 41 and has dizzy spells to wear he nearly faints and is in constant pain. I 

am 38 and have a rheumatologist for my autoimmune disorder that looks like Lupus. I have a 

neurologist for my new seizures, as lead and copper are stored in your brain. I have a 

gastroenterologist because drinking caustic water tears up pipes in the ground as well as your 

intestines and I have IBS and diverticulosis. I have consulted with a toxicologist and an 

Environmental Physician who helped us develop a dctox plan but says it's moot since we are still 

being exposed in the shower to dangerous toxins as our pipes crumble in the ground. As now an 

infectious diseases doctor to help with the bacterial infections. 

We use only bottled water to cook with, drink, brush our teeth, and give our pets because 

our water is too unsafe. We spend so much time either sick, going to the doctor, taking baggies 

full of medications, or buying shower filters. Try to picture that in your head before suggesting 

that protecting your family's health and mine is too expensive. Tell that to the restaurants in Flint 

that closed down because residents don't want to drink lead in their coffee or eat bacteria in their 

chicken noodle soup. Tell that to the dentists who lost patients because no one wants a cleaning 

with neurotoxin-laced water. Tell that to the families of the people that have died from 

Legionnaires Disease, which was entirely preventable with tougher environmental laws and 

investment in infrastructure. Tell them their loved ones' lives were not worth businesses taking 

the proper precautions to NOT poison their customers. 

Since the infrastructure in Flint is still failing, as mains break and pipes leak in the 

ground, our sidewalks arc crumbling, our streets are caving in and causing huge sinkholes that 

make it dangerous for ambulances to rush down my street to the hospital in an emergency. And 

our homes' have flooded basements as the water table fills up. 
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There is no amount you can place on the safety, health, and well-being of the taxpaying 

human beings and pets living in this country. So before cutting back on environmental 

regulations and infrastructure funding, find another area to make cuts. We pay our taxes so our 

government can do their job and ensure something as simple and life-sustaining: clean, safe 

water. 

Seeing and suffering firsthand the devastation that can and will happen with reduced or 

weakened environmental regulations and decreased funding for infrastructure updates has 

opened my eyes to where we are as a country. The health, safety, futures, and lives of the 

residents have fallen far behind the desire to cut costs and pocket more money. This is short-term 

thinking and reckless. If you want to protect your constituents' lives, you must implement 

updated and stringent environmentally sound regulations and pollution restrictions. Otherwise 

you will just be ushering in thousands of more Flints across this great country of ours. I hope that 

the pain and suffering of my family, my sons, is a lesson and a warning to each of you. Put 

yourselves in our shoes before you start slashing regulations to make a profit. Thank you. 
55 

Mr. SHIMKUS. Thank you. 

The Chair now recognizes Ms. Emily Hammond, Professor of 

Law at George Washington University Law School. You are recognized for 5 minutes. 

STATEMENT OF EMILY HAMMOND 

Ms. HAMMOND. Thank you, Chairman, Ranking Member Tonko, 

and distinguished members of the subcommittee for the opportunity to testify today. 

Make no mistakes about where we started. The Cuyahoga River 

really did catch fire. Toxic waste really did ooze into homes and 

schoolyards in Love Canal. Millions have suffered from lung disease, heart attacks, and premature deaths because of our dirty air. 

And, as Ms. Mays just testified, we cannot afford to let our memories grow short. 

I use the word ‘‘afford’’ intentionally because I will begin today 

by discussing how environmental law has helped our economy 

thrive. Next, I will describe why efforts to tamper with our regulatory process, efforts like the 2 for 1 Executive Order, systematically undermine not just the benefits we have gained but our prospects for the future. 

Look what decades of experience show. Between 1970 and 2011, 

air pollution dropped 68 percent but the gross domestic product increased 212 percent. During that same period, private sector jobs 

increased by 88 percent. 

Consider as well that the rules issued by EPA undergo a rigorous 

cost-benefit analysis. EPA is required by the Office of Management 

and Budget to follow accounting principles and assess both the 

costs and the benefits of regulations. These constrained analyses 

badly underestimate the benefits of environmental regulations. 

After all, how can you value a human life with the staggering 

beauty of the nature world. 

Because of this under valuation, however, OMB-driven cost-benefit analyses are very conservative. I will use the Clean Air Act as 

an example. 

Air pollutants have numerous adverse health and environmental 

effects. Ozone, for instance, is linked to respiratory illnesses, heart 

attacks, premature death, and negative effects on forests and crops. 

When people are sick, when they are caring for their ill loved ones 

or dying too early, they cannot work, they cannot go to school. That 

hurts business. 

By contrast, environmental protections offer savings. EPA’s 

Clean Air Act rules saved over 164,000 lives in 2010. And they are 

projected to save 237,000 lives in 2020. These same rules saved 13 

million days of work, and 3.2 million days of missed school in 2010. 

By 2020, these numbers will increase to 17 million days of work 

and 5.4 million days of school. 

A study published in the proceedings of the National Academies 

of Sciences found the cumulative benefits to the economy of Clean 

Air Act air toxic regulations alone to be over $104 billion by 2050. 

Why are we reaping these benefits? Because our air, water, and 

soil are cleaner than they were decades ago. There is, however, 

very much still to do. And I urge this institution to ensure full 

funding for our environmental regulatory programs, including enVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
56 

forcement, for critical infrastructure upgrades, for Brownfields 

funding, and for efforts to fight climate change. 

As we move forward with strengthening our environmental protections we must also ensure that our regulatory process is sound. 

The White House’s January 30th 2 for 1 Executive Order is an example of sloppy regulatory policy that will be harmful to the public, 

especially with respects to environmental law. The order systematically disfavors the critical prevention protections that we need to 

ensure a thriving economy and healthy future. Most stunningly, it 

appears to direct agencies to count regulatory costs but not consider their benefits. This ignores this institution’s directions. This 

institution enacted those environmental laws to secure their many 

benefits. 

Environmental laws were enacted to ameliorate classic market 

failure. Polluters do not like to pay for the consequences of their 

actions. But these laws do more. They represent our society’s recognition of a moral obligation to protect our neighbors, our children, our natural environment, and our future. There is still a 

great deal more to do, and we cannot afford complacency, whether 

in our environmental laws or in the regulatory process. 

Thank you. 

[The prepared statement of Ms. Hammond follows:] 

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TESTIMONY OF EMILY HAMMOND 

PROFESSOR OF LAW 

THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL 

BEFORE THE HOliSE COMMITTEE ON ENERGY AND COMMERCE 

SliBCOMMITTEE ON ENVIRONMENT 

FEBRUARY 16, 2017 

Thank you, Chairman Shimkus, Vice-Chairman McKinley, Ranking Member Tonko, and 

distinguished Members of the Subcommittee, for the opportunity to testify today about the 

importance of both environmental law and a rational regulatory process. 

I am Professor of Law at the George Washington University Law School, a memberscholar of the not-for-profit regulatory think-tank, the Center for Progressive Reform, and pastChair of the Administrative Law Section of the Association of American Law Schools. I am 

testifying today, however, on the basis of my expertise and not as a partisan or representative of 

any organization. As a professor and scholar of environmental law, energy law, and 

administrative law, I specialize in the role of these laws in society. My work is published in the 

country's top scholarly journals as well as in many books and shorter works, and I am a coauthor of textbooks on both environmental law and energy law. Early in my career, I practiced 

environmental engineering; that experience and training inform my assessment of the role of 

environmental law in bettering our society. 

In my testimony today, I will begin with an overview of the immense cost-justified 

benefits that environmental law has bestowed on our citizens and economy. Indeed, the available 

data reflect that environmental law and progress have successfully come hand-in-hand for 

decades. Second, I will turn to another matter related to valuing the benefits of environmental 

regulation: unwise efforts to tamper with the rationality of the regulatory process. A recent 

example is the so-called "2-for-l" Executive Order issued January 30, 20 I 7. This Order 
58 


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undermines agency efforts to ensure that environmental regulations protect public health, safety, 

and welfare and provide continuing cost-justified benefits. 

I. Environmental Laws Have Strengthened Our Country 

To properly appreciate the extraordinarily beneficial impact of environmental laws, one 

must appreciate the direness of the time before. The Cuyahoga River was so polluted that it 

caught fire. Toxic waste leaked into homes and schoolyards in Love Canal. Pollutants traveled 

far across state lines, damaging everything from drinking water supplies to forests. and causing 

cancer, heart and lung disease, birth defects, and premature deaths. This was not so long ago, and 

we can't afford our memories to become short. 

Today environmental law safeguards our health and environment-and there is still much 

to do. But history has another lesson, going to the heart of this hearing: environmental protection 

is itself an economic good that contributes to a thriving economy. 1 

First, look at our progress over time. Between 1970 and 2011, aggregate emissions of air 

pollutants dropped 68% while the U.S. Gross Domestic Product (GOP) increased 212%. During 

that same period, private sector jobs increased by 88%.1 Our population has increased, we have 

used more energy, and we have built more infrastructure-all while improving our environment. 

Second, consider that rules issued by the Environmental Protection Agency (EPA) 

undergo a rigorous cost-benefit analysis. EPA is required to follow Office of Management and 

Budget (OMB) accounting principles and assess both the costs and the benefits of regulations. 

Many researchers have concluded that these constrained analyses "vastly understate" the benefits 

of environmental regulations.3 Thus, OMB-driven cost-benefit analyses should be understood as 

very conservative because they systematically undervalue things like human life and a clean 

enviromncnt 4 Even with this caveat, the results are compelling. For example, OMB reported to 

2 
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Congress that fi·om 2004 through 2014, the economic benefits of all of EPA's major rules 

exceeded the costs by a ratio of nearly 21 to I. 5 

Third, consider in more detail just what those conservatively estimated benefits arc. The 

Clean Air Act (CAA), in particular, has had an enormous beneficial impact on our economy. Air 

pollutants have considerable adverse health and environmental effects: ozone, for instance, is 

linked to respiratory illnesses, heart attacks, premature death, and negative effects on forests and 

crop yiclds. 6 When people arc sick, caring for ill loved ones, or dying too early, they cannot 

work, which is detrimental to the economy. By contrast, environmental protections offer savings: 

• OMB reports that the monetized benefits ofCAA regulations accounted tor 80% ofthc 

benefits of all regulations analyzed for its 2015 report to Congress. 7 

A 2011 peer-reviewed EPA study showed that the benefits of the 1990 CAA 

Amendments and implementing regulations exceed costs by a factor of more than 30 to 

1.8 

The 2011 study also revealed that EPA's CAA rules saved over 164,000 lives in 2010, 

and are projected to save 237,000 lives in 2020.9 

These same rules saved 13 million days of lost work and 3.2 million days of missed 

school in 20 I 0. By 2020, these numbers will increase to 17 million and 5.4 million days, 

respectivcly. 10 

Since EPA began regulating lead as a criteria pollutant under the CAA, the median 

concentration of lead in the blood of children between 1 and 5 years old has decreased 

93% as of2011-12. Moreover, several studies have documented an association between 

reducing exposure to lead and a reduction in criminal behavior. 11 

A study published in the proceedings of the National Academies of Sciences found the 

cumulative benefits to the economy ofCAA air taxies regulations by 2050 to be over 

$104 billion. 12 

Numerous additional studies reveal that we are improving in our efforts to protect human 

health and the environment. Just a few of the relevant recent findings include: 

3 
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Thanks to agencies' efforts to inform pediatricians about preventing, diagnosing, and 

treating environmental health illnesses in children, over 700,000 medical care providers 

have had outreach and training between 1999 and 2014. 13 

• Thanks to EPA, environmental risk assessments geared at children now consider their life 

stages, enabling a more fine-tuned approach to regulating exposure to carcinogens. 14 

The climate benefits of programs that have reduced methane emissions from 1993 to 

2013- prior to many of the most recent programs-include a cumulative savings of more 

than 5 times the methane emissions in 2013, for monetized benefits of$255 billion 

dollars. 15 

• A new comprehensive study has documented "large declines in most pollutants the Clean 

Water Act targeted" since the Act's enactment. 16 Notably, declines in mercury and pH 

are also attributable to CAA regulations. 17 

Air quality for the major criteria pollutants has improved between 1980 and 20 I 5: for 

example, 8-hour ozone levels have declined 32%, 1-hour nitrogen dioxide levels have 

declined 59%, and 1-hour sulfur dioxide levels have declined 84%. 18 

Despite these successes, there is much more to do. The crisis in Flint, Michigan 

demonstrates the importance of ensuring that compliance with our existing regulations must be 

monitored and enforced. As we continually introduce new compounds into our environment, 

which find their way into our air, food, soil, and drinking water, we need a robust system of 

environmental laws, regulations, and enforcement to ensure our safety. And as all of us 

increasingly experience the tremendous impacts of climate change, we must have a foundation of 

environmental law on which to build our future. 

II. The Flaws of Tampering With Rational Regulation: The 2-for-1 Executive 

Order 

As we move forward with strengthening our environmental protections, we must also 

ensure that our regulatory process is sound. The White House's January 30, 2017 Executive 

Order on Reducing Regulation and Controlling Regulatory Costs (the so-called "2-for-1 Order") 

is an example of sloppy regulatory policy that will be harmful to the public, especially with 

4 
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respect to environmental law. This Order, as interpreted by the Acting Administrator of the 

Office of In formation and Regulatory Affairs (OIRA), 19 provides that executive agencies must 

rescind 2 rules for every I promulgated, such that the net cost of any new rule is zero20 

The Order raises numerous concerns, but here I focus the most alarming: the overall 

impact of this Order is to ,ystematically disfavor the critical environmental, health, and safety 

protections that we need to ensure a thriving economy. Most stunningly, it appears to direct 

agencies to count regulatory costs but not bcnefits 21 Given that most major federal regulations 

are cost-justified, it is utterly arbitrary and contrary to law to ignore the beneficial impacts of 

protective regulations. Indeed, such an approach is an affront to this institution, which has 

enacted our environmental laws to secure their many benefits discussed above. 

Other systematic means of undermining the regulatory process are more subtle but no 

less nefarious. In carrying out the Order, agencies are permitted to bundle rescissions with new 

regulations. 22 But suppose that during notice-and-comment rulemaking, commentators 

demonstrated that the proposed rescissions were unwarranted. The agency would be caught in an 

anti-regulatory trap: It could not issue the new regulation while rescinding the other two because 

doing so would be contrary to the record, making the agency vulnerable on judicial review. And 

the agency could not issue the new regulation by itself because it would be barred by the Order. 

The result? A chilling effect on necessary new regulations meant to ensure our future. 

III. Conclusions 

Environmental laws were enacted to ameliorate a classic market failure: polluters have 

every incentive to impose costs that they have created on public health and the environment 

rather than taking responsibility for those impacts themselves. I contend, however, that these 

laws do more: they represent our society's recognition of a moral obligation to protect our 

5 
62 


25128.043

neighbors, our children, our natural environment, and our future. There is still a great deal more 

to do, and we cannot afford complacency. 

We must also be vigilant about protecting the integrity of our regulatory process. The 2-

for-1 Order is just one example of how failing to do so trades naked, arbitrary politics for our 

country's future. We cannot afford a systematic undoing of the environmental, health, and safety 

protections that Congress wisely established. 

Thank you again for the opportunity to testif}' today. !look forward to your questions. 

1 See generally Sidney A. Shapiro et al., Saving Lives, Preserving the Environment, Growing the 

Economy: The Truth About Regulation, CrR. FOR PROGRESSIVE REFORM WlllTE PAPER# II 09 

(July 2011), at http://www.progressivercform.org/articles/RegBenefits_1109.pdf.; see also 

Stephen M. Meyer, Environmentalism and Economic Prosperity: Testing the Environmental 

impact Hypothesis, MIT PROJECT ON ENVIRONMENTAL POLITICS AND POLICY iv (Oct. 5, 1992) 

(measuring economic performance of all fifty states as compared to state environmental rank, 

and concluding that "states with stronger environmental policies did not experience inferior rates 

of economic growth."). 2 ENVTL. PROTECTION AGENCY, TilE CLEAN AIR ACT AND TilE ECONOMY, at 

https ://www .epa.gov/clean-air-act-overview/clean-air-act-and-economy# _ ednref6 (last visited 

Feb. 15, 20 16). 3 E.g., Elsie M. Sunderland et al., Benefits of Regulating Hazardous Air Pollutants from Coal 

and Oil-Fired Utilities in the United States, 50 ENVTL. Sci. & TECH. 2117, 2117 (Feb. 5, 2016); 

see generally FRANK ACKERMAN & LISA HEINZERLING, PRICELESS: ON KNOWING TilE PRICE OF 

EVERYTHING AND THE VALUE OF N OTIIING (2004 ). 4 The Congressional Research Service and others have demonstrated that a September 2010 

report widely cited by opponents of environmental regulations like the Small Business 

Administration relied on flawed methodology. Curtis W. Copeland, ANALYSIS OF AN ESTIMATE 

OF TilE TOTAL COSTS OF FEDERAL REGULATIONS, CONG. RESEARCH SERV. NO. 7-5700 (Apr. 6, 

2011). In fact, the report's authors failed to even consider regulatory benefits.Jd. at 25. 5 0FFC. OF MGMT. & BUDGET, EXECUTIVE OFFICE OF TilE PRESIDENT, 2015 REPORT TO CONGRESS 

ON THE BENEFITS AND COSTS OF FEDERAL REGULATIONS AND AGENCY COMPLIANCE WITH THE 

UNFUNDED MANDATES REFORM ACT 9 (2015). 6 See generally Final Rule, National Ambient Air Quality Standards for Ozone, 80 Fed. Reg. 

65,292 (Oct. 26, 20 15). 7 OMB, supra note 5, at 12. 8 ENVTL. PROTECTION AGENCY, TilE BENEfiTS AND COSTS OF THE CLEAN AIR ACT FROM 1990 TO 

2020,7-1 (Mar. 2011). 9 ld.at7-9. 

6 
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10 !d. at 5-25 (Tbl. 5-6). 

II !d. at A216. 12 Amanda Giang & Noelle E. Selin, Benefits of mercury controls for the United States, 113 

PNAS 286 (Jan. 12, 2016). 13 Michael Firestone et al., Two Decades of Enhancing Children's Environmental Health 

Protection at the US. Environmenlal Protection Agency, 124 ENVTL. HEALTH PERSPECTIVES 

A214, A215 (Dec. 2016). 14 ld. at A216. 15 At a 3% discount rate. See April M. Melvin et al., Climate Benefits of US. EPA Programs and 

Policies That Reduced Methane Emissions 1993-2013, 50 ENVTL. SCI. & TECH. 6873, 6876, 6879 

(May 26, 2016). 16 David A. Keiser & JosephS. Shapiro, Consequences of the Clean Water Act on the Demand 

jiJr Water Quality, NAT'L BUREAU OF ECON. RESEARCH WORKING PAPER 21-23 (Jan. 2017). 17 !d. at 23. 18 ENVTL. PROTECTION AGENCY, AIR QUALITY-NATIONAL SUMMARY, at 

https://www.epa.gov/air-trcnds/air-quality-national-summary (last visited Feb. 15, 20 17). 19 Memorandum from Dominic J. Mancini, Acting Administrator, OIRA, Re: Interim Guidance 

Implementing Section 2 of the Executive Order of January 30, 2017, Titled "Reducing 

Regulation and Controlling Regulatory Costs," Feb. 2, 2017 (hereinafter, "Memorandum"). 20 2-for l Order § 2. 21 See, e.g., Memorandum at 4 (referring only to costs for accounting purposes). 22 Memorandum at 5. 

7 
64 

Mr. SHIMKUS. Thank you. 

The Chair now recognizes Mr. Thomas Sullivan, Vice President 

of Small Business Policy at the U.S. Chamber of Commerce. You 

are recognized for 5 minutes. Welcome. 

STATEMENT OF THOMAS SULLIVAN 

Mr. SULLIVAN. Thank you, Mr. Chairman, and Ranking Member 

Tonko, members of the subcommittee. 

My name is Tom Sullivan and I run the Small Business Council 

at the U.S. Chamber of Commerce. The Chamber is the world’s 

largest business federation. We represent the interests of three million businesses as well as state and local chambers, and industry 

associations. The majority of our business members are small 

firms. In fact, approximately 96 percent of Chamber members’ companies have fewer than 100 employees, and 75 percent have fewer 

than ten. 

Maxine Turner, who is the founder of Cuisine Unlimited in Salt 

Lake City, chairs our Small Business Council, which works to ensure the views of small business are considered as part of the 

Chamber’s policy making process. 

I am especially pleased to join our partners at the Pennsylvania 

Chamber of Commerce on this panel. The U.S. Chamber was 

founded by a group of chambers in 1912. They are the backbone 

of our institution. And that is as true today as it was 105 years 

ago. 

I have spent most of my professional career advocating for small 

business, first at NFIB, and then from 2002 to 2008, I was honored 

to serve as the Chief Counsel for Advocacy at the Small Business 

Administration. That office is charged with independently representing the views of small business. And it oversees agency compliance with the Regulatory Flexibility Act, which is also sometimes called the Small Business Regulatory Enforcement Fairness 

Act, or an acronym called SBREFA. 

It is the purpose of those laws that guides my testimony this 

morning, that early input by small businesses in the development 

of legislation and regulatory policy should serve as a model for 

modernizing environmental statutes, as well as the government’s 

role implementing the law. Many times federal laws and regulations that may work for large corporations don’t work for small 

firms. 

Several years ago I worked with a group of small businesses in 

Quincy, Illinois, who found themselves in the crosshairs of Superfund. The authors of Superfund never intended to target small 

business owners like Greg Shierling, who owned two McDonald’s, 

and Mack Bennett, who owned a furniture store, or Barbara Williams, who owned a diner in Gettysburg, Pennsylvania. The unintended consequences of a one size fits all statute forced small business owners to spend thousands in legal fees for settlements when 

they really had not done anything wrong. 

Thankfully, Congress took action and exempted innocent small 

businesses from Superfund in 2001. 

Whether it is reauthorizing a new law, creating a new agency, 

or when agencies craft new regulations, government is well advised 

to solicit input and work with small businesses to devise solutions 

65 

that maximize benefits of laws and regulation and minimize harmful economic impact. Recent figures show that there are over 28 

million small businesses in the United States, and that small business has been responsible for creating about two-thirds of the net 

new jobs over the past 15 years. However, the United States has 

experienced a decline in start-ups, and that trend threatens a full 

economic recovery. 

According to data from the Census Bureau, there were 700,000 

fewer net businesses created from 2005 to 2014 than from 1985 to 

1994. More worrisome is recent evidence that suggests the number 

of transformational start-ups, those that contribute disproportionately to job and productivity growth, has been in decline since 

2000. 

This decline in entrepreneurship and small businesses’ increasing concern with regulatory burden are trends that should be reversed in order for the United States to experience growth. When 

agencies and small businesses work together and constructively 

find solutions, better regulation happens. There are examples of 

those win/win situations in my full written testimony. I would be 

happy to cite some of them during the questions. 

Congress is on the right track, looking at ways to modernize the 

regulatory process. The Regulatory Accountability Act, which is 

H.R. 5, as well as the Regulatory Flexibility Improvements Act, 

H.R. 33, have already passed the House of Representatives. Together these reforms, that passed with bipartisan support, that 

help ensure agencies rely on credible science and data, and bringing greater transparency to the rulemaking process, and bolster the 

involvement of small businesses in policy making, should do the 

job. 

America needs the economic strength job-creating power and innovative genius of small business in order to get back on track economically. Improvements to existing statutes will help calm the 

regulatory headwinds that prevent small business from being the 

economic engine of growth here in the United States. 

[The prepared statement of Mr. Sullivan follows:] 

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Statement of the U.S. Chamber of Commerce 

Modernizing Environmental Laws: Challenges and 

Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing 

U.S. Chamber of Commerce 

Thomas M. Sullivan 

Vice President, Small Business 

Before the Energy & Commerce Committee 

Environment Subcommittee 

U.S. House of Representatives 

February 16, 2017 

1615 H Street NW I Washington, DC I 20062 

The Chamber's mission is to advance human progress through an economic, 

political, and social system based on individual freedom, 

incentive, initiative, opportunity, and responsibility. 
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The U.S. Chamber of Commerce is the world's largest business 

federation representing the interests of more than 3 million businesses of all 

sizes, sectors, and regions, as well as state and local chambers and industry 

associations. The Chamber is dedicated to promoting, protecting, and 

defending America's free enterprise system. 

More than 96% of Chamber member companies have fewer than 100 

employees, and many of the nation's largest companies are also active 

members. We are therefore cognizant not only of the challenges facing 

smaller businesses, but also those facing the business community at large. 

Besides representing a cross-section of the American business 

community with respect to the number of employees, major classifications 

of American business-e.g., manufacturing, retailing, services, construction, 

wholesalers, and finance-are represented. The Chamber has membership in 

all 50 states. 

The Chamber's international reach is substantial as well. We believe 

that global interdependence provides opportunities, not threats. In addition to 

the American Chambers of Commerce abroad, an increasing number of our 

members engage in the export and import of both goods and services and 

have ongoing investment activities. The Chamber favors strengthened 

international competitiveness and opposes artificial U.S. and foreign barriers 

to international business. 
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Good morning Chairman Shimkus and Ranking Member Tonko, Members of the 

Subcommittee. My name is Tom Sullivan and I run the Small Business Council at the 

U.S. Chamber of Commerce. The Chamber is the world's largest business federation. 

We represent the interests of over 3 million businesses of all sizes, sectors, and 

regions, as well as state and local chambers and industry associations. The majority 

of our business members are small firms. In fact, approximately 96 percent of 

Chamber member companies have fewer than 100 employees and 75 percent have 

fewer than ten. Maxine Turner, who is the founder of Cuisine Unlimited in Salt Lake 

City, Chairs our Small Business Council, which works to ensure the views of small 

business are considered as part of the Chamber's policy-making process. 

I am especially pleased to join our partners at the Pennsylvania Chamber of 

Business and Industry on this panel. Kevin Sunday and his colleagues are on the 

front line of advocating on behalf of job creation and growth in their state. They are 

best in class and we are honored to work alongside them on this issue, as well as a 

number of others. The U.S. Chamber was founded by a group of chambers of 

commerce in 1912. They are the backbone of our institution and that's as true today 

as it was 105 years ago. 

1 have spent most of my professional career advocating for small business. First, at 

the National Federation of Independent Business (NFIB), and then more recently at 

a law firm where I represented coalitions of small businesses and service providers. 

From 2002-2008, I was honored to serve as the Chief Counsel for Advocacy at the 

U.S. Small Business Administration (SBA). That office is charged with independently 

representing the views of small business before Congress and the Administration 

and oversees agency compliance with the Regulatory Flexibility Act.l It is the 

purpose of the Regulatory Flexibility Act that guides my testimony to the 

Subcommittee this morning- that early input by small businesses in the 

development of regulatory policy should serve as a model for modernizing 

environmental statutes as well as the government's role implementing the law. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act requires federal agencies to satisfY certain 

requirements when they plan new regulations, including (1) identifYing the small 

entities that will be affected, (2) analyzing and understanding the economic impacts 

that will be imposed on those entities, and (3) considering alternative ways to 

achieve the agency's regulatory goal while reducing the economic burden on those 

1 Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164 [1980), as amended by the Small 

Business Regulatory Enforcement Pairness Act of 1996. Pub. L. No. 104-121, 110 Stat. 857 (1996) 

[codified as amended at 5 U.S.C. Sec. 601-612), also amended by Sec. 1100 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 2112 [July 21, 2010). 

1 
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entities. 2 The Regulatory Flexibility Act was amended in 1996 by the Small Business 

Regulatory Enforcement Fairness Act (SBREFA).3 SBREFA requires the 

Occupational Safety and Health Administration (OSHA), U.S. Environmental 

Protection Agency (EPA), and the Consumer Financial Protection Bureau (CFPB) to 

convene small business review panels (I refer to the panels as "SBREFA panels") 

whenever their planned rules are likely to have a significant economic impact on a 

substantial number of small entities. SBREFA panels include representatives from 

SBA's Office of Advocacy, the Office of Management and Budget's Office of 

Information and Regulatory Affairs (OIRA) and the agency proposing the rule. The 

panel prepares a report containing constructive recommendations for the agency 

planning the rule and that report is made publicly available prior to the public 

providing comment on the agency's proposed rule. 

There are three basic reasons for the Regulatory Flexibility Act. 

(1) One-size-fits-all federal mandates do not work when applied to small business; 

(2) Regulations disproportionately harm small businesses; and 

(3) Small businesses are critically important to the American economy. 

Prevention of one-size-fits-all federal mandates 

Many times federal laws and regulations that may work for large corporations 

simply do not work for small firms. Several years ago, I worked with a group of 

small businesses in Quincy, Illinois, who found themselves in the cross hairs of 

Superfund. The Comprehensive Environmental Response, Compensation, and 

Liability Act of 1980 (referred to here as, "Superfund") was designed to fund 

cleanups of the nation's most polluted sites. 4 Rather than wait years and years to 

figure out what caused the pollution and who polluted, the Superfund law allowed 

the EPA to get funding from one or two ofthe largest companies that were 

responsible. The law then allowed those companies to seek reimbursement, 

through lawsuits, from other companies and individuals who may have contributed 

to the polluted site. While the liability scheme did expedite payment to the 

government and cleanup, it did not anticipate how small businesses could get 

caught up in a liability web with almost no choice but to pay significant fees, even if 

their only fault was responsibly sending household garbage, food scraps, and benign 

waste to their landfill. The authors of Superfund never intended to target small 

business owners like Greg Shierling who owned two McDonald's and Mac Bennett 

who owned a furniture store in the Quincy area, or Barbara Williams who owned a 

diner in Gettysburg, Pennsylvania. The unintended consequences of a one-size-fitsall statute forced small business owners to spend thousands in legal fees or 

2 Keith W. Holman, the Regulatory Flexibility Act at 25: Is the Law Achieving Its Goal?, 33 Fordham 

Urban Law journall119 (2006). 

3 Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, 110 Stat. 857 

(1996). 

4 Compressive Environmental Response, Compensation, and Liability Act of 1980, Pub. L. No. 96-510, 91 

Stat. 2767 (1980). 

2 
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settlements when they really had not done anything wrong. Thankfully, Congress 

took action and exempted innocent small businesses from Superfund in 2001. 

Whether it is reauthorizing a new law, creating a new agency 5, or when agencies 

craft new regulations, government is well advised to solicit input and work with 

small businesses to devise solutions that maximize the law's or regulation's benefits 

and minimize harmful economic impact. 

Small firms are disproportionately impacted by federal regulation 

Research published in 2010 by Nicole Crain and W. Mark Crain of Lafayette College 

represents the latest of four government studies on the impact of federal regulations 

on small busincss.6 The total cost of complying with federal regulations was 

estimated above $1.7S trillion. Four years later, Professors Crain and Crain updated 

their research for the National Association of Manufacturers and estimated the 

burden at $2.028 trillion, an amount that equaled 12% of GDP.7 

The latest Crain study found that small businesses shoulder costs that are 2 1

/z times 

more per employee than their larger business competitors. Firms with fewer than 

SO employees paid $34,671 per employee per year and firms with 100 or more 

employees paid $13,7SO per employee to comply with federal regulations. The cost 

difference is most severe when the study examined environmental regulations, 

where firms with fewer than SO employees paid more than 3 times the amount per 

employee than those with 100 or more employees. a 

Importance of small business to the U.S. economy and the threat of overregulation 

Recent figures show there arc over 28 million small businesses in the United States.9 

The 62 million people employed at small firms represent about half of America's 

private sector workforce and small business is responsible for creating about 2/3 of 

5 Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act created the Consumer 

Financial Protection Bureau [CFPB). Section 1100G requires small business input in CFPB 

rulemaking. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203 (July 

2010). 

6 Nicole V. Crain and W. Mark Crain, The Impact of Regulatory Costs on Small Firms, written for the 

Office of Advocacy, U.S. Small Business Administration [September 2010), available at: 

h tlps: I /www.sba.gov /sites I defau It/files /The%20 Impact%20of%2 ORegulato ry%20Costs%20on%2 

0Small%20Firms%20(Full).pdf 

7 W. Mark Crain and Nicole V. Crain, The Cost of Federal Regulation to the U.S. Economy, 

Manufacturing and Small Business, A Report for the National Association of Manufacturers 

[September 2014), available at: http://www.nam.org/Data-and-Reports/Cost-of-FederalRegulatio ns /Federal-Regulation-Full-Study.pdf. 

8 ld. 

9 Office of Advocacy, U.S. Small Business Administration, Frequently Asked Questions (June 2016), 

available at: https: //www.sba.gov /sites/default /files/advocacy/SB-FA0-20 16 WEB.pdf. 

3 
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the net new jobs over the past 15 years. 10 However, the United States has 

experienced a decline in start-ups over the past decade and that trend threatens a 

full economic recovery.u According to data from the U.S. Census Bureau, there were 

700,000 fewer net businesses created from 2005 to 2014 than from 1985 to 1994. 

More worrisome is recent evidence that suggests the number of transformational 

startups, those that contribute disproportionately to job and productivity growth, 

has been in decline since 2000. 12 

At the same time start-ups are struggling, regulation is a growing concern for small 

businesses. A quadrennial survey of 20,000 small business owners in August found 

that "unreasonable government regulations" is the second-most pressing concern, 

up from 5th in the last survey taken in 2012. Regulation's placement as the secondmost serious issue for small business is the issue's highest ranking in the 34-year 

history of the survey.13 Last month, the National Small Business Association (NSBA) 

released its survey and found that more than half of small business owners held off 

hiring a new employee due to regulatory burdens. 14 

The decline in entrepreneurship and small businesses' increasing concern with 

regulatory burden are trends that should be reversed in order for the United States 

to experience growth. 

Small Business Input Can Work 

When agencies and small businesses work together and constructively find 

solutions, better regulation happens. There are numerous examples of win/win 

solutions to real environmental challenges. One of my favorite examples of 

cooperation between small businesses and the EPA occurred shortly after I was 

confirmed by the Senate as Chief Counsel for Advocacy at the SBA. EPA wanted to 

reduce pollution from nonroad diesel engines (mostly diesel tractors). Prior to 

issuing a proposed rule, EPA convened a SBREFA panel and I recall one meeting we 

hosted between small engine manufacturers from Michigan and EPA engineers. EPA 

walked us through their plans that basically would have mandated a pollutionreduction device (it looked like a big muffler) attached to the engine. A small 

10 /d. 

11 Ryan Decker, john Haltiwanger, Ron jarmin and Javier Miranda, The Secular Decline in Business 

Dynamism in the U.S., Working Paper, 2014, available at: 

http://econweb.umd.edu/-haltiwan/DHIM 6 2 2014.pdf. 

12 Ryan A. Decker, john Haltiwanger, Ron S. jarmin, and Javier Miranda, Where Has all the Skewness 

Gone? The Decline in High-Growth (Young) Firms in the U.S., (NBER Working Paper No. 21776 

(December 2015)), as described in the National Bureau of Economic Research Digest On-Line 

(February 2016), available at: http://www.nber.org/digest/feb16/w21776.html. 

13 Holly Wade, Small Business Problems and Priorities, NFIB Research Foundation (August 2016), 

available at: http://www nfib.com/assets/NFIB-Problems-and-Priorities-2016.pdf. 

14 2017 NSBA Small Business Regulations Survey, National Small Business Association (January 18, 

2017), available at: http-//www.nsba.biz/wp-content/uploads/2017 /01 /Regulatory-Survey2017.pdf. 

4 
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business owner, at the meeting, pointed out that the John Deere engine hood would 

not fit over the device and the small businessman feared that John Deere would 

simply source the manufacturing overseas instead of waiting for EPA to revise its 

regulations. Because of that conversation, EPA re-thought their approach. EPA's 

decision probably saved the sector, and the revised rules still reduced pollution 

from diesel tractors by close to 90 percent. 

Exercise Oversight to Ensure Fair Enforcement 

While the bulk of my testimony focuses on policy development through legislation 

and regulation, I also want to strongly advise the Subcommittee to exercise its 

oversight to ensure EPA fairly enforces its regulations once they are finalized and 

small businesses are able to understand their responsibilities. Several years ago, I 

helped the National Association of the Remodeling Industry (NARI) partner with 

EPA to bolster the agency's enforcement efforts against non-certified remodelers 

who were putting families, and especially young children, at risk of lead poisoning 

by unsafe work practices when remodeling homes built before 1978. NARI worked 

hard to make sure its remodeler members became EPA lead paint certified and the 

remodelers became frustrated with the number of non-certified crews who were 

underpricing work and creating dangerous situations. Dave Merrick of Merrick 

Design and Build in Maryland and Bruce Case of Case Design/Remodeling in Virginia 

helped lead an effort to bolster EPA's crackdown on non-certified remodelers. The 

frustration remodelers like Dave and Bruce felt is a good example of why small 

business input is critical at the legislative stage, the regulatory development stage, 

and the implementation stage. 

Conclusion 

Congress is on the right track, looking at ways to modernize the regulatory process. 

The Regulatory Accountability Act (H.R. 5) has already passed the U.S. House of 

Representatives along with the Small Business Regulatory Flexibility Improvements 

Act of 2017 (H.R. 33). Together, these reforms that passed with bipartisan support 

will help ensure that agencies rely on credible science and data, bring greater 

transparency to the rulemaking process, and bolster the involvement of the small 

business community in regulatory policymaking. 

America needs the economic strength, job-creating power, and innovative genius15 

of small business in order to get back on track economically. These bills, along with 

improvements to existing media-specific statutes, will help calm the regulatory 

headwinds that prevent small business from being the economic engine of growth 

here in the United States. 

15 Research by the U.S. Small Business Administration revealed that small firms produce 16 times the 

number of patents per employee than large patenting firms. Anthony Breitzman and Diana Hicks, An 

Analysis of Small Business Patents by Industry and Firm Size, written for the Office of Advocacy, U.S. 

Small Business Administration, Contract No. SBAHQ-07-Q-0010 (November 2008), available at: 

https: //works.bepress.com /anthony-breitzman/1 5 /. 

5 
73 

Mr. SHIMKUS. The Chair thanks the gentleman. 

The Chair now recognizes Mr. Ross Eisenberg, Vice President of 

Energy and Resources Policy of the National Association of Manufacturers. You are recognized for 5 minutes. Welcome. 

STATEMENT OF ROSS EISENBERG 

Mr. EISENBERG. Thank you very much. Good morning, Chairman 

Shimkus, Ranking Member Tonko, members of the subcommittee. 

I am very pleased to be here today representing the views of the 

12 million men and women who make things in America. 

We are in the midst of what we call a manufacturing moment. And it is really easy to see why. Manufacturing contributed $2.17 

trillion to the U.S. economy in the most recent year that we have 

data for, 2015. That is up from $1.7 trillion in 2009. For every dollar spent in manufacturing, another $1.81 is filtered 

throughout the economy, which is the highest multiplier factor of 

literally any sector in the economy. Manufacturing has helped lift 

the country out of the Great Recession, and we have ignited a new 

generation economy. 

Manufacturers have sharply reduced our impact on the environment through a very wide range of innovations. The results benefit 

not only consumers but the broader communities beyond the manufacturing shop floor. And the overall numbers are indisputably 

good. 

I have included in my written statement EPA’s latest air trends 

chart. And that is right off the EPA Web site. And you can see, I 

mean for criteria pollutants the trend lines for every single pollutant go straight down. And they have been doing straight down 

since, since 1990. 

When you add in the progress we have made on greenhouse gasses, where we have reduced more greenhouse gasses in this country 

than any other nation on Earth, we have a very good, and I would 

say tremendous story to tell. 

Now, environmental laws have been largely successful in reducing pollution. I don’t think anybody really disputes that. In many 

cases they have been so successful that pollutants have been reduced to trace or even background levels. At the same time, these 

statutes were written four or five decades ago, and their drafters 

really couldn’t have possibly envisioned how best to use these laws 

to tackle some of the environmental challenges in the 21st Century. 

These challenges include the West Coast being in perpetual 

ozone non-attainment because of emissions coming over from Asia, 

or states literally running out of controls needed to meet some of 

the newest air quality standards, or the fact that EPA often uses 

computer models in lieu of real monitoring, and they conflict at 

times, or how to possibly categorize different kinds of lands and 

water features in this country as simply waters of the United 

States, or how to handle climate change and greenhouse gas emissions. 

For example, in the vehicle sector we have three different agencies which lay claim to often very conflicting regulatory authority. 

Regulators are increasingly unable to adapt stringent programs to 

the progress that has been made and easily reshape them on their 

own to confront new environmental challenges. And when they try, 

74 

they risk imposing requirements that are just simply not legally 

justifiable. History is littered with a long list of creative EPA regulations that have been held up by the courts. And that transcends 

politics and administration. 

Several recent regulations threaten to set new records for compliance costs, collectively strapping manufacturers with hundreds of 

billions of dollars in new regulatory burdens per year. From a manufacturing perspective we have lost a critical balance in our federal 

environmental policies between furthering progress and limiting 

unnecessary economic impacts. In our view, it doesn’t have to be 

that way. 

The NAM recommends that Congress modernize outdated environmental laws to make them perform better, or require federal 

agencies to regulate the environmental challenges better, or even 

better, both. We understand these are not remotely simple tasks. 

But neither was modernizing TSCA. And this committee did that 

last year. It was an overwhelming success. We hope the committee 

can leverage the success it had on TSCA and turn to other statutes 

and modernize them as well. 

My written statement contains a long list of proposals to improve 

the way we regulate things like criteria pollutants and greenhouse 

gasses and surface water and drinking water and permitting. And 

we believe that doing that will help those emissions guidelines 

keep going down while preserving manufacturers’ overall competitiveness. 

In my testimony I also provide a long list of proposals to clear 

the way for new infrastructure, particularly in the energy space. As 

this committee knows, this is a very exciting time for energy in the 

U.S. Our abundance of all sources is driving a manufacturing renaissance which is, in turn, creating a major need for new and improved energy delivery infrastructure. 

A recent report by the NAM found the total natural gas demand 

is poised to increase about 40 percent over the next ten years. That 

is double or I would say that is, that is double what, what happened the ten years before that. But, realistically, we have had a 

geographic mismatch. Where the gas is being produced now does 

not necessarily match where the pipes are going and where the energy needs to go. And that needs to be resolved. 

In addition, energy infrastructure increasingly suffers from what 

we call permitting paralysis. Federal, state and local permitting 

hurdles continue to impede projects across the energy landscape. It 

is a challenge. It is something that continues to be a challenge despite some very, very good efforts by Congress and the executive 

branch that we really want to see continued attention to. 

So we are happy for the measures in the FAST Act that was 

passed last year. We are excited about the President’s recent executive memorandum on high priority infrastructure projects. I applaud this committee for your leadership on the recent passage of 

the bipartisan Water Infrastructure Improvements for the Nation 

Act, which is a first step to addressing our current drinking and 

wastewater infrastructure crisis. We hope this momentum continues. 

Manufacturers are committed to a strong, healthy, sustainable 

environment. But there has to be a balance. Environmental laws 

75 

and regulations should be designed to ensure they are effective in 

achieving their desired outcomes without creating unnecessary adverse economic or social impacts. 

Thank you very much. 

[The prepared statement of Mr. Eisenberg follows:] 

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Manufacturers 

Testimony 

of Ross Eisenberg 

Vice President 

Energy and Resources Policy 

National Association of Manufacturers 

before the House Committee on Energy and Commerce 

Subcommittee on Environment 

hearing on "Modernizing Environmental Laws: Challenges and Opportunities for 

Expanding Infrastructure and Promoting Development and Manufacturing" 

February 16,2017 
77 


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SUMMARY OF TESTIMONY 

Manufacturers have sharply reduced our impact on the environment 

through a wide range of innovations, and have helped to usher in a new era of a 

cleaner and more sustainable environment. The overall numbers are indisputably 

good. However, in spite of best-in-class efforts, the United States and the world 

continue to face serious environmental and sustainability challenges. There are 

forces far beyond the capability of manufacturers in the United States that are 

driving changes to the global environment. 

Our environmental indicators are steadily improving. However, they are 

coming at an ever-increasing cost. Federal environmental regulations-many 

based on statutes that are decades old-are increasingly rigid, costly and harm 

our global competitiveness. Several recent regulations threaten to set new 

records for compliance costs, collectively strapping manufacturers with hundreds 

of billions of dollars in new regulatory burdens per year. We have lost the critical 

balance in our federal environmental policies between furthering progress and 

limiting unnecessary economic impacts. The state of our national economy, the 

manufacturing sector and the environment are considerably different than they 

were 20, 30 or 40 years ago. However, we are still operating with policies 

designed to address the environmental challenges of a previous era. It is time to 

modernize our environmental policies to better reflect and address current 

issues, technologies and opportunities to ensure a more sustainable future. 

When agencies try to adapt laws written in the 1960s and 1970s to 

modern-day problems, they risk imposing requirements that are not legally 

justifiable. The NAM recommends that Congress modernize outdated 

environmental laws written in the 1960s and 1970s and make them perform 

better, or require federal agencies to regulate environmental challenges betteror both. 

America's vast energy resources are spurring major investment by 

manufacturers. Our energy-fueled manufacturing renaissance has created a 

major need for new and improved energy delivery infrastructure. On the 

electricity side, innovation, regulations and market dynamics are driving rapid 

changes to the electric grid and the way electricity is produced in the U.S. 

Increased dependence on natural gas in the manufacturing and electric power 

sectors has also brought about a need for new pipeline infrastructure. More often 

than not, new energy infrastructure suffers from "permitting paralysis" that 

Congress can help resolve. In the case of water infrastructure, communities 

across the country are relying on water infrastructure that is approaching the end 

of its useful life. 

This testimony provides the NAM's recommendations on practical ways to 

modernize environmental laws and regulations to improve manufacturing and 

i nfrastru ctu re. 
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TESTIMONY OF Ross EISENBERG 

BEFORE THE HOUSE COMMITTEE ON ENERGY AND COMMERCE 

SUBCOMMITTEE ON ENVIRONMENT 

Hearing on: 

"Modernizing Environmental Laws: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing" 

FEBRUARY 16,2017 

Good morning, Chairman Shimkus, Ranking Member Tonko, and 

members of the Subcommittee on Environment. My name is Ross Eisenberg, 

and I am vice president of energy and resources policy at the National 

Association of Manufacturers (NAM). The NAM is the nation's largest industrial 

trade association, representing nearly 14,000 small, medium and large 

manufacturers in every industrial sector and in all 50 states. I am pleased to 

represent the NAM and its members at today's hearing examining the nation's 

environmental laws and regulations and how we can modernize them to improve 

infrastructure and manufacturing. 

We are in the midst of a "Manufacturing Moment"-and it is easy to see 

why. Manufacturing has fueled America's rise like no other sector of our 

economy. Manufacturers in the United States are the most productive in the 

world, far surpassing the worker productivity of any other major manufacturing 

economy, leading to higher wages and living standards. 

Manufacturers contributed $2.17 trillion to the U.S. economy in 2015, the 

most recent data available. 1 This figure has risen since the second quarter of 

1 http://www.nam.org/Newsroom/Facts-About-Manufacturing/. 

2 
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2009, when manufacturers contributed $1.70 trillion. For every $1.00 spent in 

manufacturing, another $1.81 is added to the economy-the highest multiplier 

effect of any economic sector. In addition, for every one worker in manufacturing, 

there are another four employees hired elsewhere. Manufacturing has helped lift 

the United States out of the Great Recession and ignited a new-generation 

economy capable of keeping American Exceptionalism alive long into the future. 

Background on NAM's Policy Recommendations 

Heading into 2017, the NAM and its members recognized the growing 

focus from Congress and the Executive Branch on upgrading the nation's 

infrastructure and enacting policies that will make manufacturers more 

competitive. To help drive these discussions, we released Competing to Win, a 

detailed road map for the President and the 115th Congress, with a series of white 

papers containing policy recommendations on tax, trade, energy, environment, 

transportation and infrastructure, labor, immigration, workforce, health care, 

technology, and regulatory and legal reform. The Competing To Win white 

papers can be read at http://www.nam.org/competingtowin/. We also released 

Building to Win, a blueprint for policymakers to repair and upgrade our 

infrastructure and make the American Dream possible. Building to Win can be 

found at http://www.nam.org/buildingtowin/. 

My testimony today draws heavily from the Competing to Win energy and 

environment white papers and from Building to Win. I encourage you to read the 

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full set of white papers and follow up with NAM policy experts with questions on 

the issue areas not contained in my testimony. 

Environment: Manufacturers are Driving Continual Improvement But Laws 

and Regulations Aren't Keeping Pace 

Manufacturers have sharply reduced our impact on the environment 

through a wide range of innovations, such as increasing energy efficiency, saving 

and recycling water and implementing successful initiatives to reduce pollution 

and waste. Through these traditional and innovative measures, manufacturers 

have helped to usher in a new era of a cleaner and more sustainable 

environment. 

The overall numbers are indisputably good. Since 1990-a period 

spanning four different presidential administrations and 14 different 

Environmental Protection Agency (EPA) Administrators-national pollutant 

concentrations have dropped dramatically. Carbon monoxide concentrations are 

down 77 percent; lead 99 percent; nitrogen dioxide 54 percent; ozone 22 

percent; coarse particulate matter 39 percent; fine particulate matter 37 percent; 

and sulfur dioxide 81 percent. 2 The United States has reduced more greenhouse 

gases (GHGs) over the past decade than any other nation on earth. 

Manufacturers have done their part as well, reducing our emissions 10 percent 

over the past decade while increasing our value to the economy by 19 percent. 

2 U.S. EPA, "Our Nation's Air: Status and Trends Through 20 15," available at 

https:l/gispub.epa.gov/ai r/trendsreport/20 16/. 

4 
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Manufacturers will continue to lead by minimizing environmental footprints, 

reducing emissions, conserving critical resources, protecting biodiversity, limiting 

waste and providing safe products and solutions so others in the economy can 

do the same. Sustainability drives the efficient use of resources so that economic 

value to society can continue to grow while businesses remain profitable 

enterprises. The results benefit not only customers but also broader communities 

beyond the manufacturing floor. 

Here are a few good examplesa Covestro, formerly Bayer 

MateriaiScience, committed to reduce its 2005 carbon dioxide (C02) levels by 40 

5 
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percent by 2020. The company has already beaten that goal and set a new goal 

to cut C02 emissions in half again by 2025. It accomplished this by making 

numerous production improvements at Covestro facilities across the globe, 

including a $120 million investment at its largest facility in Baytown, Texas to 

improve energy efficiencies, minimize waste and reduce natural resource 

consumption. Covestro developed a new manufacturing process that allows it to 

replace petrochemical feedstock with C02 and recently opened a new plant that 

will utilize this technology to make polyurethane foam for mattresses and 

furniture. 

Engineers at Kohler recently introduced a line of flush toilets that reduce 

water use by 38 percent compared to a traditional 1.6 gallon flush toilet. This 

product is the result of Kohler's Design for Environment (DfE) principles, which 

are incorporated into each phase of new product development. Kohler engineers 

also developed a manufacturing process that saves more than six million pounds 

of iron in bathtubs from being melted each year-as well as a 20 percent 

improvement in the efficiency of the energy needed to melt it. 

UPS Corporation focuses its sustainability efforts on creating the most 

efficient network possible, using everything from multi-modal shipping, a "rolling 

laboratory" of alternative fuel vehicles, and even (in one test case) electric 

tricycles, all designed to reduce congestion and environmental impact around the 

world and improve the communities UPS serves. UPS' fleet of 8,100 alternative 

fuel vehicles has already driven more than 1 billion miles. 

6 
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Smithfield Foods has set 2020 goals for water, energy, GHGs, solid waste 

and grain procurement and has almost met several of these targets three years 

early. More recently, it set a 2025 goal to cut its GHG emissions by a quarter, 

from 17 million metric tons to 12.5 million tons. 4 The company has created new 

markets for grain sorghum, a sustainable feed, and has found industry-leading 

solutions to manure management. Smithfield's fertilizer and soil control practices, 

which include working hand-in-hand with grain farmers, providing free agronomy 

advice and fostering on-farm conservation practices, have benefitted more than 

100,000 acres of land in the Southeast United States and are on track to benefit 

more 450,000 acres nationwide as the program expands. 

In 2007, steel and mining company ArcelorMittal helped launch the 

Sustain Our Great Lakes public-private partnership with EPA and several other 

agencies with the goal support the Great Lakes region, where 70 percent of the 

company's employees live and work. The partnership has contributed to restoring 

nearly 33,000 acres and nearly 200 miles of marine and riparian habitat. 

ArcelorMittal also helped launch the Millennium Reserve public-private 

partnership in 2012 designed to advance sustainable development initiatives in 

the Calumet region of Indiana and Illinois. 

Among a wide range of sustainability initiatives, General Motors recycled 

more than 2 million tons of waste in 2015 and has 131 landfill-free facilities. The 

company has taken a truly innovative approach to waste and recycling, even 

reusing many of these products in new and exciting ways. For example, GM 

4 https://www. wsi .com/articles/smithfield-scts-plan-to-cut-carbon-emissions-bv-a-quarter-1480870861. 

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recycles cardboard packaging into Buick Verano headliners to keep the cabin 

quiet; it recycles water bottles from some GM facilities to provide V6 engine 

covers for the Chevrolet Equinox; it recycles test tires into the manufacturing of 

air baffles for a variety of GM vehicles; it reused 1 ,600 shipping crates as raised 

garden beds in Detroit; and it converted 800 scrap Chevrolet Volt battery cases 

into wildlife nesting boxes. 

These are just a few stories that highlight the leadership and innovation 

manufacturing provides to protect our environment However, in spite of best-inclass efforts, the United States and the world continue to face serious 

environmental and sustainability challenges. There are forces far beyond the 

capability of manufacturers in the United States that are driving changes to the 

global environment Mitigating the impacts of climate change, protecting the air, 

feeding the world's growing population and ensuring adequate supplies of 

drinking water are just a few of the significant issues facing current and future 

generations. 

Our environmental indicators are steadily improving. However, they are 

coming at an ever-increasing cost. Federal environmental regulations-many 

based on statutes that are decades old-are increasingly rigid, costly and harm 

our global competitiveness. Several recent regulations threaten to set new 

records for compliance costs, collectively strapping manufacturers with hundreds 

of billions of dollars in new regulatory burdens per year. We have lost the critical 

balance in our federal environmental policies between furthering progress and 

limiting unnecessary economic impacts. The state of our national economy, the 

8 
85 


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manufacturing sector and the environment are considerably different than they 

were 20, 30 or 40 years ago. However, we are still operating with policies 

designed to address the environmental challenges of a previous era. It is time to 

modernize our environmental policies to better reflect and address current 

issues, technologies and opportunities to ensure a more sustainable future. 

Recommendations on Environment: Modern, Balanced Laws and 

Regulations That Achieve Environmental Goals Without Holding 

Manufacturers Back 

The choice between environmental protection and a strong economy is 

not an either/or proposition. We can have both. Environmental laws and 

regulations should be updated and designed to ensure they are effective in 

achieving desired objectives without creating unnecessary adverse economic or 

social impacts. 

Environmental laws have been largely successful in reducing pollution-in 

many cases, so successful that pollutants have been reduced to trace or 

background levels. At the same time, these statutes were written four to five 

decades ago, and their drafters could not possibly have envisioned how best to 

tackle the environmental challenges of the 21st century. As a result, regulators 

are increasingly unable to adapt stringent programs to the progress that has 

been made and easily reshape them on their own to confront new environmental 

challenges. When agencies try to adapt laws written in the 1960s and 1970s to 

modern-day problems, they risk imposing requirements that are not legally 

justifiable. History is littered with a long list of "creative" EPA regulations that 

have been held up by the courts, including Bush-era programs like the Clean Air 

9 
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Interstate Rule and Clean Air Mercury Rule and Obama-era regulations like the 

Clean Power Plan and Waters of the United States. 

The NAM recommends that Congress modernize outdated environmental 

laws written in the 1960s and 1970s and make them perform better, or require 

federal agencies to regulate environmental challenges better-or both. We 

understand these are not simple tasks. Neither was modernizing the Toxic 

Substances Control Act (TSCA), which this Committee accomplished just last 

year. We hope the Committee can turn the success it had reforming TSCA into 

broader modernization efforts. 

The NAM specifically recommends the following: 

• Modify the National Ambient Air Quality Standards (NAAQS) review 

cycle to more closely align with the pace of implementation of 

existing standards and consider cost and technological feasibility 

when conducting NAAQS policy assessments and during 

implementation. 

• Require the Clean Air Scientific Advisory Committee (CASAC) to 

comply with Section 1 09(d) of the Clean Air Act and "advise the 

Administrator of any adverse public health, welfare, social, 

economic, or energy effects which may result from various 

strategies for attainment and maintenance" of NAAQS. 

• Amend Clean Air Act Section 1798 to more clearly provide relief for 

states that cannot meet federal air quality standards due to 

contributions from emissions from outside the United States. 

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• Provide flexibility to NAAQS nonattainment areas so that offset 

requirements are tied to reasonable and available reduction 

opportunities, with consideration to reasonable cost thresholds. 

• Harmonize motor vehicle GHG regulations and programs issued by 

the EPA, Department of Transportation and California Air 

Resources Board to avoid inconsistencies. 

• Withdraw the EPA's 2016 midnight regulation "determination" for 

the 2017-25 corporate average fuel economy standards for lightduty vehicles and require a new, proper midterm review. 

• Led by the International Civil Aviation Organization, commit to a 

single global approach to reducing aircraft GHG emissions that 

preserves a level playing field for aircraft manufacturers. 

• Specify that forest biomass energy is considered carbon neutral as 

long as forest carbon stocks are stable or rising on a broad 

geographical scale, and recognize the forest products industry's 

use of forest products manufacturing residuals for energy as carbon 

neutral regardless of forest carbon stocks. 

• Simplify the New Source Performance Standards (NSPS) process 

to provide certainty for manufacturers that they are in compliance 

with the law. NSPS should be set using criteria that ensure optimal 

cost effectiveness and do not hinder economic growth. EPA should 

also allow adequate timing to demonstrate compliance once an 

NSPS is triggered. 

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• Cease using the Social Cost of Carbon, Social Cost of Methane 

and Social Cost of NOx calculations until they are subjected to a 

rigorous, unbiased third-party review and revised accordingly. 

• Improve the New Source Review (NSR) process to reduce barriers 

to installation of energy efficient technologies. 

• Streamline and reform NSR requirements, including the 

development of practical routine repair, replacement and 

maintenance exemption provisions. 

• Base any Hazardous Air Pollutant (HAP) regulations on sound 

scientific data that clearly demonstrate a need to protect public 

health and consideration of welfare, energy and economic impacts. 

The EPA's inability to meet arbitrary deadlines should not trigger 

automatic regulation. 

• Integrate a cumulative analysis of regulations' impacts on regulated 

industries, manufacturers and the economy, including the impacts 

on the environment and employment. 

• Require federal agencies to perform an analysis of any new major 

rulemaking on the reliability and cost of energy for manufacturers. 

• Reinforce local responsibility by clearly defining waters covered 

under the Clean Water Act (CWA). 

• Foster cooperation by providing a means of just compensation to 

private property owners for regulatory takings that result from the 

CWA or other environmental laws. 

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• Adopt a balanced approach to point and nonpoint problems that 

focuses on the water quality of the watershed. 

• Hold municipalities responsible for storm water and sewage 

discharges and support equitable user charges based on the true 

cost of treating each user's wastewater. 

• Support programs that incorporate the flexibility needed to respond 

to local conditions in cost-effective ways to more fully meet the 

goals of the CWA. 

• Ensure state governments retain the principal control and 

management responsibility for groundwater. 

• Adopt a risk-based approach to water quality regulations that fully 

assesses the technical feasibility and economic practicability of 

attaining the water quality standard based on the social and 

economic impacts of the costs of compliance of discharges and 

water returns. 

Energy and Water: New Manufacturing Needs New Infrastructure 

America's vast energy resources are spurring major investment by 

manufacturers. For instance, abundant natural gas and natural gas liquids 

(NGLs) from shale resources have driven the chemical industry to invest in 264 

new projects representing $164 billion in capital investment in the United States. 5 

5 "U.S. Chemical Investment Linked to Shale Gas: $164 Billion and Counting," American Chemistry 

Council, Inc., April 2016. Available a/ https://www.americanchemistry.com/Policy/Energv/Shale-Gas/FactSheet-US-Chcmical-lnvcstment·Linked-to-Shale-Gas.pdf. 

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These energy-related chemicals are the primary building blocks for a wide range 

of manufacturing sectors, including, but not limited to, fertilizer, plastics, rubber, 

building and construction, paint and coatings, automotive and electronics. 

An NAM-supported study by PricewaterhouseCoopers recently predicted 

that by 2040, the shale gas boom could create 1.41 million new manufacturing 

jobs in the United States and generate annual cost savings for manufacturers of 

$34.1 billion due to lower energy and feedstock costs. 6 

The energy renaissance is not limited to oil and gas. More than 100,000 

workers contribute to the energy production at the nation's 99 nuclear power 

plants,? including manufacturers providing on-site repair, operations and 

maintenance, as well as replacement components, modifications and upgrades 

when necessary. Pending retirements are spurring the industry to hire another 

25,000 employees over the next few years, and in anticipation of new nuclear 

plant construction, U.S. companies have created in excess of 15,000 new U.S. 

jobs since 2005, which include manufactured products like turbines, polar cranes, 

pumps, valves, piping and instrumentation and control systems8 Renewable 

energy sources have also steadily grown-consumption from wind, solar and 

geothermal energy sources have increased more than 400 percent over the past 

decade9

-now accounting for about 10 percent of total U.S. energy consumption 

6 "Shale Gas: Still a Boon to US Manufacturing?" PWC, December 2014. Available at 

http://www.pwc.comluslen/industrial-products/publications/shale-gas-transformingmanufacturing.html. 

7 https://www.nei.org/\Vhy-Nuclear-Energy/Economic-Growth-Job-Creation/Economic-Benefits. 

8 "Nuclear Energy's Economic Benefits-Current and Future,'' Nuclear Energy Institute, April2014. 

Available at http://www.nei.org/CorporateSiteimediaitilefolder/Poliey/Papers/jobs.pdf?ext=.pdf. 9 "Renewable Energy, Monthly Energy Review," U.S. Energy Information Administration, June 2016. 

Available at http://www.eia.gov/totalenergy/dataimonthlv/. 

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and about 13 percent of electricity generation. 10 Overall energy intensity in 

manufacturing (i.e., energy consumed per each dollar of goods produced) has 

steadily improved as manufacturers have grown more energy efficient. 11 Finally, 

while the coal industry has faced its share of headwinds in the electric power 

sector, coal use in the non-electric-generation manufacturing sector has 

remained relatively consistent, at around 43 million short tons of coal per year. 12 

Our energy-fueled manufacturing renaissance has created a major need 

for new and improved energy delivery infrastructure. On the electricity side, 

innovation, regulations and market dynamics are driving rapid changes to the 

electric grid and the way electricity is produced in the U.S. The electric grid has 

traditionally been a one-way system: power plants make electricity, and 

consumers use it. The grid of the future-and, increasingly, the present-is multidirectional, relying on traditional electric generation but also combined heat and 

power (CHP) technologies, distributed resources like rooftop solar, energy 

storage and microgrids, and demand-side management technologies like smart 

metering. The utility sector expects to invest more than $300 billion over the next 

three years to enhance the grid and reshape the nations' electric generation 

fleet. 13 

A transforming grid provides opportunities and challenges. Utilities have 

expressed concerns about cost recovery when implementing demand-side 

10 http://www.eia.gov/tools/faqs/fag.ctin?id=92&t=4. 11 "Tracking Energy Efficiency Performance in the United States," 2016. Available at http://aceee.org/eemetrics. 

i2irttP:/iwww.eia.gov/coal/annual/pdti'table26.ndf. 

11 

http://www.eei.org/resourcesandmcdiaiindustrydataanalysis/industryfinancialanalvsis/Documents/Wall Str 

eet Brieting.pdf. 

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management programs and integrating distributed resources onto the grid. 

Manufacturers must also adapt to new options and rules, which must be 

reconciled with a need for consistent, reliable energy at all times. 

Increased dependence on natural gas in the manufacturing and electric 

power sectors has also brought about a need for new infrastructure. A recent 

NAM-commissioned report by IHS Economics found that total natural gas 

demand is poised to increase by 40 percent over the next decade-double the 

growth of the past 10 years. 14 

By improving technology and increasing productivity, supply growth 

continues at a strong pace despite falling prices for both gas and oil and 

significantly lower rig activity. But, according to IHS, "[t]here is a mismatch, 

geographically, in the growth in natural gas demand and supply in the U.S. lower 

48." The rapid growth of low-cost production out of the Marcellus and Utica plays 

has created a bottleneck, as producers are unable to find pipeline capacity to 

move gas from the well to consumer markets. 

When pipeline access is not available, manufacturers suffer. Several NAM 

members, who were required to install natural gas boilers to meet the EPA's 

recent Boiler MACT regulations, have struggled to meet the EPA's deadlines 

because they were unsure they could gain timely approval for additional gas 

capacity. In the northeastern U.S., some manufacturers are forced to truck 

compressed natural gas (CNG) to their facilities due to stiff local opposition to 

new pipelines; this imposes a significant competitive disadvantage on the 

14 lilll?://www.nam.org/Data-and-Reports/Rel?orts/Natural-Gas-Study/Energizing-Manufacturing/. 

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manufacturer, who could have relatively easy natural gas access in other parts of 

the country. 

More often than not, new energy infrastructure suffers from "permitting 

paralysis." Federal, state and even local permitting hurdles continue to impede 

projects across the energy landscape, including but not limited to oil and gas 

pipelines, electric transmission lines, crude by rail facilities, coal, nuclear and 

liquefied natural gas (LNG) exports, and even new renewable energy 

installations. Opposition groups are better funded and more driven than ever 

before, and the regulatory process to permit energy infrastructure affords 

opponents too many opportunities to delay decisions and stop agencies from 

doing their work. 

In the case of water infrastructure, communities across the country are 

relying on water infrastructure that is approaching the end of its useful life. The 

Flint, Michigan water crisis is a stark reminder of the damage that can result 

when communities, states and the federal government fail to maintain 

fundamental infrastructure systems-but Flint is not the only community 

struggling with aging water infrastructure. Without major investments, 

breakdowns in water supply, treatment and wastewater capacity are projected to 

cost manufacturers and other businesses $7.5 trillion in lost sales and $4.1 trillion 

in lost GOP from 2011 to 2040. 15 

15 American Society of Civil Engineers. "Failure to Act: The Economic Impact of Current Investment 

Trends in Water and Wastewater Treatment Infrastructure." 2011. Available at 

http://www.asce.org/uploadedFiles/lssues and Advocacy/Our Initiatives/Infrastructure/Content Pieces/fai 

I ure-to-act-water-wastewater-report.pdf. 

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Recommendations to Improve Energy and Water Infrastructure 

Manufacturers have been encouraged by recent efforts from Congress 

and the President to improve the regulatory process for infrastructure projects, 

such as permit streamlining measures in the FAST Act and the President's 

recent executive memorandum for high-priority infrastructure projects. 

Additionally, I applaud this Committee for your leadership on the recent passage 

of the bipartisan Water Infrastructure Improvements for the Nation (WI IN) Act, 

which is a first step to addressing our current drinking and wastewater 

infrastructure crisis. We hope this momentum continues and policymakers 

continue to focus on practical solutions to improve project delivery. 

The NAM's specific recommendations include: 

• Fill all vacancies at the Federal Energy Regulatory Commission 

(FERC) so that a quorum can be obtained and regular FERC 

procedures can resume. 

• Provide FERC additional tools to quickly and efficiently issue 

certificates of public convenience and necessity for new natural gas 

pipelines. 

• Provide a consistent, reasonable scope and timeline for 

environmental analysis of energy projects subject to the National 

Environmental Policy Act (NEPA) that includes deadlines for 

decision making and a firm statute of limitations on actions to 

challenge a final record of decision. 

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• Expedite the licensing and permitting process for liquefied natural 

gas (LNG) and remove regulatory barriers to the export of nuclear, 

coal and clean energy technologies. 

• Modify the process by which the Department of Energy sets and 

revises its conservation and energy-efficiency standards to allow for 

greater stakeholder input and more flexibility. 

• Update the Nuclear Regulatory Commission's permitting process to 

enable faster approvals. 

• Require the federal government to fulfill its legal obligation to 

remove used fuel from commercial nuclear power plants and 

manage its long-term disposal. 

• Craft a coherent national coal strategy that provides a stable 

regulatory structure for the leasing, transport and use of coal in 

electric power and industrial sectors. 

• Commit to research, development and demonstration of carbon 

capture, beneficial use and storage technology for all fossil fuel 

applications. 

• Improve the presidential permit process set forth in Executive Order 

13337-the executive order that sets forth the approval process for 

cross-border pipelines and other energy delivery projects-to 

accelerate decision-making time and eliminate delays. 

• Promote new energy infrastructure investments as a means of 

increasing U.S. infrastructure's resilience to climate change by 

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designing for projected future climate conditions. Regulators should 

work to more quickly approve smart investments. 

• Examine innovative financing mechanisms for new energy 

infrastructure to encourage private investment. 

• Coordinate underground infrastructure work for road, water, gas, 

electric and broadband to yield construction savings and reduce 

traffic disruptions from construction work. 

• Invest in regions without a developed pipeline network to bring 

down home heating costs in places like New England and make 

manufacturers more competitive. 

• Promote significant investments to modernize the national utility 

grid and utilize advanced metering infrastructure, distributed energy 

resources and other advanced technologies to improve efficiency, 

affordability, reliability and security. 

• Invest in grid improvements to ensure manufacturers have secure, 

flexible and competitive energy options. 

• Issue model best practices for states to address barriers to 

combined heat and power (CHP) deployment, including guidance 

for assigning reasonable fees and rates for interconnection to the 

local distribution grid, supplementary power, backup or standby 

power, maintenance and interruptible power supplied to facilities 

that operate CHP systems that also allow for reasonable cost 

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recovery by an electric utility based on the costs to provide these 

services and do not shift costs to non-CHP customers. 

• Promote cost-effective demand-side management services by 

customer and aggregator programs, energy-efficiency measures 

and distributed energy resources. Allow electric and natural gas 

utilities to meet future energy needs with these technologies and 

measures. 

• Expand the use of public-private partnerships for drinking and 

wastewater projects, through programs like the Water Infrastructure 

Finance and Innovation Act, to bring added resources above and 

beyond current EPA State Revolving Funds and other programs. 

• Eliminate state volume caps on private activity bonds for drinking 

and wastewater projects to leverage private capital to multiply the 

impact of federal efforts. 

• Stem the loss of clean water by replacing pipes at the end of their 

useful life and introducing technology-enabled monitoring for leaks. 

• Promote new technologies and engineering solutions to reduce 

pollution from sewer overflows and protect water sources, public 

health and aquatic resources. 

• Promote innovative storm water solutions to enhance the resilience 

of U.S. cities, while also providing new public assets like waterfront 

parks that also serve as flood protection zones. 

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Conclusion: The United States Wins When Manufacturers Lead 

Manufacturers are committed to a strong, healthy, sustainable 

environment; less waste and greater energy efficiency support competitiveness 

and make manufacturers good community partners. However, there must be a 

balance. Poorly conceived or crafted policies that fail to balance environmental, 

social and economic impacts will limit the ability of current generations from 

realizing their full potential or compromise the ability of future generations to 

meet theirs. To be truly sustainable means to commit not only to a strong 

environment but also a strong economy. For years, the scales have consistently 

been tipped too far in one direction or the other. Environmental laws and 

regulations should be designed to ensure they are effective in achieving their 

desired objectives without creating unnecessary adverse economic or social 

impacts. 

22 
99 

Mr. SHIMKUS. Thank you. 

And the Chair would like to ask a unanimous consent request 

that the chairman of the full committee get an opportunity to give 

an opening statement. 

Hearing none, Chairman Greg Walden is recognized for 5 minutes. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Thank you very much, Mr. Chairman. Thank you, 

colleagues. I was detained in another important matter so I 

couldn’t be here at the beginning. But I appreciate the testimony 

of all the witnesses. 

Yesterday the Energy Subcommittee began to explore the great 

potential for American economic growth from modernizing our electricity and energy infrastructure, which is really important to do. 

Today this subcommittee, the Environment Subcommittee, with its 

expanded jurisdiction under Chairman Shimkus’ experienced and 

able leadership, turns to the economic and environmental benefits 

that will flow from modernizing some key environmental laws. 

The common goal here is to identify what steps are necessary to 

responsibly reduce the barriers to a more productive U.S. economy, 

and then to develop targeted legislative reforms that will provide 

for this economic expansion and create good-paying jobs. Doing this 

will ultimately benefit American consumers. 

To begin delivering clear results, though, we must craft policies 

that will expand our infrastructure and help accelerate innovation, 

investment, and spur manufacturing growth. It also means taking 

the necessary steps to ensure our laws do what they were intended 

to do as efficiently and cost-effectively as possible. And it means 

making sure regulations are developed and implemented with 

transparency and predictability. 

There are plenty of opportunities to make common sense changes 

to environmental laws and the way we implement those laws that 

will reduce unnecessary barriers, disincentives and delays, permitting new infrastructure and manufacturing. This is particularly the 

case with implementation of some of our air laws. 

And there are additional opportunities for environmental cleanup 

that can turn old environmental dead zones into healthy, revitalized spaces for our local communities. And all of that can help spur 

some new economic growth. 

Some barriers and burdens to development come from outdated 

assumptions going back decades, as some of you have testified, 

when many of our laws were developed. We have learned much 

since then about what works and what doesn’t work. 

Other roadblocks come from regulatory practices that have proven impractical or become outdated as environmental quality has 

improved to the point that additional refinements have become 

more costly to obtain. And the digital age has produced analytical 

tools that were not available when the Clean Air Act was last 

amended in 1990. Just look at the computing power packed in an 

iPhone or the developments in nanotechnology and bioscience, or 

all the modern technology that companies use to respond successfully to what consumers want in the information age. 

100 

Clearly, we have seen tremendous advances all around us, and 

we must embrace as we modernize our laws to increase the speed, 

effectiveness and quality of environmental decision making, all of 

which can produce cleaner air, cleaner water and cleaner soils. 

That is our common goal. 

Our challenge is this: can we go bold and actually harness these 

new tools and technology in partnership with the inherent advantages of more localized decision making? 

Can we refocus our resources on cleanup efforts rather than 

courtroom brawls and bureaucratic bungling? 

Are there analytical tools and modeling approaches that can 

make for more practical risk-informed decision making that will 

ease unnecessary burdens and reduce the costly delays in business 

development? 

Can analysis and decision making be decentralized to enable innovative approaches to improving public and environmental 

health? 

We have enormous opportunities to make meaningful improvements in our environmental laws and regulations. We can join the 

twin engines of modern science and common sense and produce 

better public health and a better economy, too. They are not mutually exclusive. They do not have to be that way. 

Today we will begin to identify these opportunities. Again, I appreciate the witnesses before us. 

I would just say on a final note, I remember several years ago 

in a community that I represent there was this whole issue about 

what is a wetland and what is not. And we went out on this area 

with cheatgrass and basalt and some dirt. It was clearly a pond 

with some willows and all. That, to me, is a wetland. 

And then the local community showed me what the agency had 

said was a wetland which were these two tracks left behind from 

a utility truck that had gone out there when the ground was soft. 

That had now been determined to be a wetland. And they could not 

work around that, they could not disturb that. And they literally 

were the ruts from a utility truck that had been out there a year 

or so before. 

This is the kind of stuff that doesn’t make sense at home to our 

communities. This is why we lose support for some of these efforts. 

These are the sorts of things we should be able to come together 

on without a lot of extreme rhetoric and figure out, can we find a 

better way? We want to protect these wetlands. We want to protect 

our drinking water. We had problems in Portland public schools 

where they knew about lead in the drinking water there and didn’t 

tell the parents for a year or so. It is happening all over our country. None of us wants to drink that. 

So let’s find a good way through this and we will get better, we 

will harness this technology, we will add in common sense, and together in our communities we will get to a better place. 

Thank you. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Yesterday, the Energy Subcommittee began to explore the great potential for 

American economic growth from modernizing our electricity and energy infrastrucVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00104 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
101 

ture. Today, this Environment Subcommittee—with its expanded jurisdiction under 

Chairman Shimkus’ experienced and able leadership—turns to the economic and environmental benefits that will flow from modernizing some key environmental laws. 

The common goal here is to identify what steps are necessary to responsibly reduce the barriers to a more productive U.S. economy and then to develop targeted 

legislative reforms that will provide for this economic expansion and create good 

paying jobs. Doing this will ultimately benefit American consumers. 

To begin delivering clear results, we must craft policies that will expand our infrastructure and help accelerate innovation and investment and spur manufacturing 

growth. It also means taking the necessary steps to ensure our laws do what we 

intended them to do, as efficiently and cost-effectively as possible. And it means 

making sure regulations are developed and implemented with transparency and predictability. 

There are plenty of opportunities to make commonsense changes to environmental 

laws and the way we implement those laws that will reduce unnecessary barriers, 

disincentives and delays to permitting new infrastructure and manufacturing. This 

is particularly the case with implementation of some of our air laws. 

And, there are additional opportunities for environmental cleanup that will turn 

old, environmental dead zones into healthy, revitalized spaces for our local communities and all of that can help spur new economic growth. 

Some barriers and burdens to development come from outdated assumptions going 

back decades-when many of our laws were developed. We’ve learned much since 

then about what works best and what doesn’t work at all. Other roadblocks come 

from regulatory practices that have proven impractical or have become outdated as 

environmental quality has improved to the point that additional refinements have 

become more costly to obtain. 

The digital age has produced analytical tools that were not available when the 

Clean Air Act was last amended in 1990. Just look at the computing power packed 

into an iPhone, or the developments in nanotechnology and bioscience, or all the 

modern technology that companies use to respond successfully to what consumers 

want in the information age. Clearly, we’ve seen tremendous advances all around 

us that we must embrace as we modernize our laws to increase the speed, effectiveness, and quality of environmental decision-making. All of which can produce cleaner air, water and soils. 

Our challenge is this: Can we go bold and actually harness these new tools and 

technologies in partnership with the inherent advantages of more localized decisionmaking? Can we refocus our resources on clean up efforts rather than court-room 

brawls and bureaucratic bungling? Are there analytical tools and modeling approaches that can make for more practical, risk informed decision-making that will 

ease unnecessary burdens and reduce the costly delays in business development? 

Can analysis and decision-making be decentralized to enable innovative approaches 

to improving public and environmental health? 

We have enormous opportunities to make meaningful improvements in our environmental laws and regulations. We can join the twin engines of modern science 

and common sense and produce better public health and a better economy. Today 

we will begin to identify those opportunities. Let me thank the witnesses for their 

thoughtful testimony. You are doing a great service in helping to guide our examination of these important issues. 

Mr. SHIMKUS. The gentleman yields back his time. 

So here is the deal, I am going to recognize myself for 5 minutes 

to start asking questions. And we will just bounce back and forth. 

And I will just start by saying, you know, there are some issues 

that we always deal with: How clean is clean? In fact, Mr. 

Eisenberg, you talked about trace and background. Those are 

words we use in this committee all the time. 

And I appreciate my colleagues and their testimony. There is a 

desire to be efficient, use new technologies, make sure we are protecting human health, but also making sure that we can create 

jobs. 

So I want to start with Mayor Mitchell because you have the experience. You have been taking Brownfield sites, you have been 

able to put solar panels on there. 

102 

From your experience as a mayor trying to help redevelop areas 

that are blighted or listed as you can’t touch, what are some of the 

hurdles and what would you recommend us look at so that we can 

ease some of those hurdles so we can move in the redevelopment 

of these sites quicker? 

Mr. MITCHELL. Yes, thank you, Mr. Chairman. No, it is a great 

question. 

And, I guess the way I would start is to say that much of the 

low-hanging fruit, certainly in New Bedford and certainly from 

what I hear from other mayors in the way of Brownfield sites have 

been picked over in recent years. That is to say, the easy sites, that 

is the less contaminated sites, have been taken care of and what 

remains are more complicated sites, dirtier sites that in many 

cases across the country have economic value. There is untapped 

value there that, in the absence of contamination, would lead to the 

redevelopment of those sites. 

Mr. SHIMKUS. They could be right on the shoreline. They could 

be right down Main Street. 

Mr. MITCHELL. Yes. 

They can be anywhere. We have, for example, on our waterfront, 

one of the, in one of the busiest ports on the East Coast, a 28-acre 

site that was, that had been for over a century the location of a 

power plant. And back in the late ’90s the power plant was decommissioned and the utility continued to use it. And the utility offered it up to the city for a dollar to redevelop, right. It has enormous value but to the fact that it is soaked with 100 years’ worth 

of oil and PCBs and other really bad things. 

And the city had to turn that opportunity down. And so it has 

sat and continues for some 15 years later to sit there. And we’re 

working on a number of plans to try to kickstart interest in redevelopment. But there is a hugely valuable site that could be put to 

any kind of purpose: mixed use development, industrial development, maritime development. But it can’t move because the cleanup proposition is, to the market at least, insurmountable. 

I think that is a story that has been told in a lot of cities across 

the United States. In the cities that right now are dotted with construction cranes, in the private sector there is less of a need for 

government to step in and close a funding gap. But in many cities, 

including, I presume, many of the districts that committee members, subcommittee members represent, there is a need for government to step in and close that gap. It has been doing so successfully in so many places across the United States, but that gap still 

persists for many valuable properties across the land. 

Mr. SHIMKUS. So when we were talking earlier, New Bedford is 

about 100,000 people, and probably most communities in this country are less than that. I live in one that is about 25,000. Springfield, Illinois has got about 100,000. So, but in these communities 

of that size and smaller you have small business. 

And I turn to Mr. Sullivan to give us the small business perspective of some of the hurdles that they have to face in this compliance because, you know, we used to quote 50 percent of all new 

jobs is created by small business. And if there are hurdles that are 

making that impossible, then we need to know what those could be. 

Mr. SULLIVAN. Thank you. Thank you, Mr. Chairman. 

103 

I think the answer actually is very simple. And that is engage 

the small business owners toward the constructive solutions. It 

works. And when the agencies, whether they are the state or federal agency, when agencies ignore that opportunity for constructive 

input toward solutions then bad things happen and unintended 

consequences happen. 

So, the answer to your question, Mr. Chairman, is you need commitment to engage those small businesses before the ink is dry on 

regulatory policies that affect our communities. 

Mr. SHIMKUS. So my time is expired. And I will just sum up. 

So you are saying get with them and talk to them earlier about 

what is the desire to achieve a blend and see how the small business can work to obtain that before the heavy hammer of government comes down? 

Mr. SULLIVAN. Yes. That is correct, Mr. Chairman. 

Mr. SHIMKUS. My time is expired. 

The Chair now recognizes the ranking member of the subcommittee Mr. Tonko for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

Ms. Mays, again I thank you for being here today and sharing 

your family’s story. I know it must be difficult. But I, for one, am 

very grateful that you are giving a voice to your community. 

I cannot imagine what it must feel like to turn on your faucet 

and not expect safe water. So if I could ask you a series of questions to which you could either say yes or no. 

Do you believe the situation in Flint could have been prevented 

had stronger environmental laws been in place? 

Ms. MAYS. Absolutely. And in my personal opinion, and how the 

residents feel, is that had the EPA had a stronger presence the 

state Department of Environmental Quality could not have gotten 

away with exploiting these loopholes. 

And the rule is outdated. There are limited resources with the 

EPA. And there are all of these lawsuits that EPA has been hit 

with and not allow them to come in and say what you are doing 

is wrong. Stop it. They are still, because we are stuck in an emergency situation instead of a disaster situation, the state, the people 

who poisoned us, are still in control of our recovery, which is why 

we are not having a recovery. 

So, yes, I do not agree with you, Mr. Barton, because it was a 

failure on all levels. But because we did not have more stringent 

laws, and the fact that we don’t have bathing and showering standards is ridiculous. Europe does. Other countries do. Because that 

is where we find most of our exposure. 

You get two times the exposure to toxic chemicals in a 10-minute 

shower than you do drinking two liters of the same water because 

you are dealing with inhalation and absorption. So the fact that we 

are not even regulating this or testing for these contaminants is 

terrifying. 

Mr. TONKO. Ms. Mays, do you believe if there had been more investment to improve and replace unsafe infrastructure these problems may have been avoided? 

Ms. MAYS. Absolutely. If there was money available, if there 

were better revolving fund grants, if there were issues, our city 

would have been able to start fixing this a lot sooner. 

104 

Mr. TONKO. OK. 

Ms. MAYS. We have 700 lines replaced out of about 39,000. 

Mr. TONKO. What about the ability to pay? A community like 

Flint and the affordability to pay for necessary infrastructure upgrades is what raised concerns, so with additional rate increases to 

water bills, does it not? 

Ms. MAYS. It is. We, the state just stopped offering credits because Governor Snyder said that our water meets federal regulation which, of course, doesn’t mean, say, 12 parts per million can 

poison a child by far. But, yes, we really have no money. We don’t, 

because we are a struggling city. And so the money was not available in the water fund to do this. 

Plus, we are losing 40 percent of our treated water because of 

main line breaks. So our water costs are through the roof. 

Mr. TONKO. So, therefore, is it necessary for the Federal Government to provide funds to communities so that they can address systems that are failing? 

Ms. MAYS. Absolutely. And Congressman John Conyers introduced the WATER Act which, by taxing corporate offshore profits, 

they would be able to fund $37 billion a year for infrastructure 

across the U.S. So they would be helping cities like ours that are 

struggling, as well as reservations, hospitals, nursing homes, day 

cares, the places where the most vulnerable are. 

Mr. TONKO. And so it becomes apparent that it is impossible for 

some of these communities to respond to those needs and federal 

investment is required. And there are many communities like Flint 

across the nation. 

When it comes to the negative health effects from unsafe water, 

can you talk about the impacts on work productivity for you and 

you family, children’s education and the city’s economy? 

Ms. MAYS. Oh, absolutely. I was on unpaid sick leave for quite 

some time because of the seizures until we could get them under 

control. We missed so much work because we have to go outside 

of the city to find specialists to deal with what my sons are going 

through, what I am going through. We spend so much time and 

money on medication. And I miss a ton of work because I have to 

take my kids to constant doctor and specialist appointments. 

And my husband is the same way. He gets up in the morning 

and has dizzy spells and so he can’t go to work. And he has got 

two jobs. And so when he misses work it is a huge hit to our family. 

Mr. TONKO. Ms. Hammond, thank you for explaining how the 

benefits of these protections significantly outweigh the costs. Would 

you say these benefits are oftentimes understated? 

Ms. HAMMOND. They are. As I mentioned in my testimony, and 

I have some various citations in my written testimony, the benefits 

of many of the things that come about from environmental regulation are very difficult to value, or perhaps even priceless. We might 

be able to put a price tag on the cost of a new piece of pollution 

equipment, but how do we put a price on the kinds of stress, the 

dignitary harm, the lives that are impacted when they are, when 

people are harmed by environmental pollution? Those things, we 

try to price them, but we undervalue them. 

105 

Mr. TONKO. And what about strengthening the Safe Drinking 

Water Act or EPA issuing an improved Lead and Copper Rule? 

What benefits do you see? And, again, is it that same theory of benefits outweighing costs? 

Ms. HAMMOND. Yes. Certainly I think that we would see far 

greater benefits than costs by updating the Safe Drinking Water 

Act to make it safer, to give EPA more authority with the funding 

to carry out that authority, and to direct EPA to enact these stricter regulations to ensure that our treated water is safe, that the infrastructure, the pipelines that carry that water, aren’t picking up 

contaminants on the way to people’s homes. 

Mr. TONKO. Thank you. I have got to yield back. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Barton, for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

I am primarily going to ask Mr. Eisenberg some questions. But 

I feel I should talk to you a little bit, Ms. Mays, because you are 

obviously personally experiencing a problem, a huge problem with 

your family. 

What is the population of Flint? 

Ms. MAYS. One hundred thousand people. 

Mr. BARTON. What is the expected cost? Is the problem the crumbling water lines or is the problem reprocessing or processing of the 

water supply? Which is it or is it both? 

Ms. MAYS. Because of the loopholes in the Lead and Copper Rule 

the state did not have to require corrosion control, which is absurd. 

When water goes through a metal pipe, so what is happening, basically, is that that corrosive acidic water ate our infrastructure. It 

literally ate the metal. So we have holes, we have leaks, we have 

gushes, all the way up into people’s homes. We have pipes exploding in people’s walls as well. 

Mr. BARTON. OK. Well, that doesn’t help answer my question. I 

know you are trying to. 

Ms. MAYS. Well, I am having hearing issues because of the ear 

infections from bacteria, so you have to talk a little louder. 

Mr. BARTON. I can’t do that. 

Is it the water itself? Is it the way it is processed? Or is it the 

fact that the pipes that take it to your home have deteriorated and 

there is material in the ground around Flint that gets into the 

water? 

Ms. MAYS. It was all of the above. The water was caustic. The 

water source was caustic. It was not treated properly to make it 

less acidic. It ate our infrastructure. 

So we switched back to a cleaner water source. But it doesn’t 

matter because the crumbling infrastructure is still releasing the 

toxins and re-poisoning that new water. 

Mr. BARTON. Then why can’t the city of Flint and the state of 

Michigan put the money in to do that, to clean, to put in new lines 

and to put in a new processing plant? Every other city in the country does, every other county, every other state. 

Ms. MAYS. Well, because our state. 

Mr. BARTON. Because if it is a federal issue, if you are absolutely 

correct and I know you have got a real problem. I am not disparVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00109 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
106 

aging that. But if it is the Federal Government’s fault, then every 

city, every county, every state in the country would have the same 

situation. They would have thousands and thousands of these. We 

don’t. 

Ms. MAYS. Well, that is not true. We actually have about 5,300 

cities in the United States that are cheating and using loopholes 

in the Lead and Copper Rule. 

Mr. BARTON. But we don’t have 5,300 cities that have the problem that Flint apparently has? 

Ms. MAYS. Not yet. No, not yet. 

And the reason we don’t have our city, first of all, our city is near 

bankrupt. Our state took over our city in 2011 and decided to sell 

off assets under the Public Act 436, which you guys know as the 

Emergency Manager Law. And our Republican governor feels that, 

the same thing as you, that if he had to spend the money to fix 

Flint, even though the state did it, that he would have to fix all 

the cities. So, therefore, he is not. 

Mr. BARTON. Yes, I am not saying it is not a problem. I am not 

saying the Federal Government shouldn’t have a role in it. What 

I am saying is that it is not the total responsibility of the Federal 

Government. If it were, we would have this replicated 100,000 

times. 

Ms. MAYS. And I am not aware that I actually said it was totally 

a Federal Government subject. 

Mr. BARTON. And we don’t, we don’t have that. Your county, your 

city, your state could correct this problem. They don’t need the Federal Government. May need some assistance in terms of infrastructure. 

Ms. MAYS. Well, someone needs to regulate what our state is 

doing. They poisoned us and they are in control of our lack of recovery. And there is no one to make our governor do the right 

thing. So we have no oversight ourself. 

Mr. BARTON. It is called voters. It is called elections. You control 

who your governor is. 

Ms. MAYS. It is called he is in there till 2018. He is not up for 

reelection, and so we are stuck. 

Mr. BARTON. Mr. Eisenberg, do you believe that CO2 should be 

a criteria pollutant under the definition of the Clean Air Act? 

Mr. EISENBERG. A criteria pollutant that we haven’t asked for, I, 

as an association I don’t believe we would be for something like 

that. That would be a tough thing to implement. But it is regulated 

under the Clean Air Act and under 111 and various other statutes. 

Mr. BARTON. Because of the 5-to-4 Supreme Court decision and 

a very faulty endangerment finding by the Obama Administration 

within the first 90 days, you are correct. That might be, and I 

think is an error. 

Would you support, if we were to reopen the Clean Air Act to 

clarify some things, the inclusion of a true cost-benefit analysis on 

major environmental regulations? 

Mr. EISENBERG. We absolutely would. We absolutely would. 

Our goal is that those analyses be done as well as possible. And 

strengthening them for everybody involved on the cost side and the 

benefit side could only help get the best information possible to us, 

the regulating community, and to everybody at the agency. 

107 

Mr. BARTON. My time has expired, Mr. Chairman. 

Mr. SHIMKUS. The gentleman now recognizes the ranking member of the full committee Mr. Pallone for 5 minutes. 

Mr. PALLONE. Thank you, Mr. Chairman. 

There is a lot that has been discussed about what we disagree 

on. But I want to thank the Chairman for inviting Mayor Mitchell 

to talk about the Brownfields Program because I do think we can 

get bipartisan support. 

I have been a strong proponent of the Brownfields Program from 

the start and have always welcomed bipartisan support. And I believe that reauthorizing and increasing the funding for Brownfields 

should be a part of any effort this committee moves on infrastructure. 

So, Mayor Mitchell, do you agree with that, yes or no? 

Mr. MITCHELL. When you phrase it that way, Congressman, absolutely. 

Mr. PALLONE. OK. 

Mr. MITCHELL. But, yes. And let me just elaborate. I think it is 

an area where there could be broad agreement here. And I say 

that, I come here wearing two hats. I am the Mayor of New Bedford but I am also the Chair of the Energy Committee of the U.S. 

Conference of Mayors. And so we talk, we, the mayors of America, 

talk about this. 

There is broad unanimity about across America’s cities for additional funding for Brownfields. And I think what most mayors 

would tell you is that the Brownfields Program has been very helpful in kickstarting the development of certain properties. But there 

are so many grants out there, so many grant applications that go 

unfunded. According to the EPA there have been some 1,700 viable 

projects that have not been issued grants in the last 5 years. 

That is pretty significant. I have a list in my city. And I am sure 

every American could come up with a list of projects that have economic value but the negating factor is contamination. And that although some cities do have, a handful of cities in this country do 

have the resources on hand to help close the gap themselves or 

that the real estate markets are so hot that the private sector 

takes care of it, in the majority of American cities that is still not 

the case. Even in places like New Bedford, where we have had a 

lot of success recently in economic development, we still don’t have 

the resources to close those gaps. 

Mr. PALLONE. And I have more of these sites than any other 

state in New Jersey, and more in my district than any other part 

of New Jersey. So I understand. 

I assume you support more funding for Superfund cleanups as 

well, obviously, as a Superfund city? 

Mr. MITCHELL. Well, as a city that has two Superfund sites, the 

one that I mentioned, Sullivan’s Ledge, but also New Bedford Harbor, which is the nation’s first marine Superfund site, absolutely 

they could use more funding. 

Mr. PALLONE. Well, when you mention the harbor I wanted to 

mention in my district we have a place called Laurence Harbor 

which is also on the national priority list. So I know first-hand how 

difficult and expensive it is to clean up these waterfront sites. 

108 

Now, in the case of New Bedford Harbor, a settlement was 

reached with the responsible party in 2013. And the funds from 

that settlement have increased the pace of cleanup considerably. 

That is correct? 

Mr. MITCHELL. That is correct. 

Mr. PALLONE. So, I only mention that because it illustrates what 

we have seen at numerous Superfund sites: when more funding is 

available, these cleanups can be done more quickly and more efficiently, which is so important to the communities around the 

Superfund sites. 

But I want to, I wanted to turn to the issue of environmental 

protections. My Laurence Harbor Superfund site is contaminated 

with lead and other heavy metals that were used to build the seawall. That is something that wouldn’t happen today because of the 

environmental protections we have in place. 

And the same is true, to my understanding, for New Bedford 

Harbor, environmental protections ensure that PCBs are not being 

dumped into our rivers and harbors. 

My question is if these kinds of environmental protections had 

been in place decades ago, I think a lot of these Superfund sites 

probably would never have been contaminated. So do you think it 

is important to preserve environmental protections so that your 

successor is not cleaning up new Superfund sites 50 years from 

now? 

Mr. MITCHELL. Yes. I think the contamination that occurred in 

New Bedford, and many other places similarly situated, were the 

poster children for the whole suite of environmental legislation in 

the early ’70s. I wish it hadn’t happened. But we are living with 

that legacy. 

And I can tell you, again just speaking as a mayor who talks to 

a lot of other mayors, there isn’t a mayor in America that thinks, 

that will tell you that we should be loosening up on the kinds of 

regulations that would have protected us from those outcomes 

years ago. 

Mr. PALLONE. And just one last question for Ms. Mays. What 

would you say to those who suggest that we need to weaken our 

environmental protections? 

Ms. MAYS. That that is going to bring in more Flints. Had we 

had tighter regulations we wouldn’t be where we are at now. If 

those loopholes didn’t exist, we wouldn’t be sick and poisoned at 

this point in time. And we don’t want to see any other city go 

through what we are going through right now. 

Mr. PALLONE. Well, thank you. 

We are looking at, and hopefully on a bipartisan basis some 

major infrastructure initiatives for both water infrastructure, 

Brownfields, Superfund. So, I think that I really appreciate your 

testimony. And, hopefully, those initiatives will be bipartisan. 

Thank you. 

Thank you, Mr. Chairman. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from West Virginia Mr. 

McKinley for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

109 

I would ask unanimous consent that we could introduce into the 

record a letter from the Association of General Contractors of 

America and their concern for the infrastructure and modernization of our regulatory reform. 

Mr. SHIMKUS. Hearing no objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. MCKINLEY. Thank you very much. 

Mayor Mitchell, we have in West Virginia over 200 Brownfield 

sites. And there are 60 in my district. I have got one in a building 

nearly adjacent to my office in Wheeling. So I am quite familiar 

with some of the problems with it. 

And I would agree from your testimony the concern that it is a 

blight in your community to have one. We have had over the last 

6 years since I have been in Congress a lot of discussion about 

that, about how we can motivate that from happening. 

But what are you suggesting we do so that we can move this 

along through the process? Because we know like the one you were 

referring to is 15 or 20 years. I know the site that I am referring 

to is 30 or 40 years has been abandoned. And it is right on the 

riverfront. So what do we do about addressing the bureaucratic inefficiencies and delays and judicial delays, what would you suggest 

we do on Brownfields? 

Mr. MITCHELL. So, putting additional funding aside, I think there 

are a couple of things. So one is increasing the flexibility of the use 

of grants. So, there are many communities, and I suspect Wheeling 

is like New Bedford in this way, an older manufacturing city, that 

have many Brownfield sites. And grants are issued to cities that, 

like mine and yours, was the qualification with fewer restrictions. 

In other words, the money wouldn’t be site specific but would be 

city specific, and so that we might be able to use them on different 

sites, depending how the market shifts. 

Here is what we want to avoid: we want to avoid a situation 

where we go through the process of applying for a Brownfield 

grant, getting the grant, and then the developer says we are not 

interested anyway. Right? And so that we have to, we, the city, 

have to start over again and reapply for another site through EPA’s 

grant cycle to address somewhere else that might be developable. 

So that is one. 

The other thing is, I think the treatment under CERCLA of the 

municipal ownership of sites I think would matter. If cities had the 

ability to take control of sites and to do planning and do environmental assessment and put through those efforts sites in the market, we would be in a better place. And one might way. 

Mr. MCKINLEY. Thank you. 

Mr. MITCHELL [continuing]. So wherein lies the accountability 

there? 

Mr. MCKINLEY. I hope we can have further conversation. 

Mr. MITCHELL. Sure. 

Mr. MCKINLEY. I would like to go beyond those two I think, because I want to get in the timeframe down to Mr. Sunday. 

You had referenced in your prepared testimony about 321(a) of 

the Clean Air Act. And you said that it is in the language of the 

statute, there is language that says continued evaluation. The EPA 

110 

is to conduct ‘‘continued evaluation of potential loss of employment 

that may result from administration or enforcement of the Act.’’ 

And you expressed some concern that that is not being upheld. 

A federal judge in October confirmed that it is not being upheld. 

And you said in your paper that Congress should do something. 

What are you suggesting we do? 

Mr. SUNDAY. Well, I think, I appreciate the question, sir, the language of that opinion was I think a pretty strong upbraiding of the 

agency. I think Congress should step in and maybe there is administrative penalties, maybe there is some sort of sanctions against 

the agency if they are not done. At the very least there should be 

some sort of oversight. 

And it is important that the continuing evaluation happens, one, 

because Congress said it should. And I think we should have respect for the rule of law, when Congress issues a directive to the 

agency that the agency carries that out. 

And second, we need to consider that there are substantial public 

health impacts on an individual who loses their job. I reference 

that in my testimony that we don’t fully account for the lifetime 

loss of earnings with the declining quality of life for somebody that 

loses their job. 

Mr. MCKINLEY. Yes, sir, thank you. 

I found it incredible, though, when I read the testimony that the 

EPA recognized that they were just not going to do it. Just not 

going to do it, even though it was a statute. So I am questioning. 

How about any of the others? Mr. Sullivan, would you agree that 

this is a problem when the EPA chooses to enforce some portions 

of law and not others? 

Mr. SULLIVAN. Congressman, I think it is a huge problem. And, 

in particular, there are instances where EPA is supposed to consult 

with small business prior to finalizing a proposed rule. And it does 

not. 

I will give you one example. In the risk management plan that 

this subcommittee has jurisdiction over in the Clean Air Act, the 

Environmental Protection Agency submitted their rule to the Office 

of Management and Budget before the panel report that summarizes small business input was even finished. That is an example 

of the agency going through a check-the-box exercise versus what 

Congress’ intent was, a constructive dialog for solutions. 

And I think that this subcommittee is well situated to bring 

some oversight to make sure that that doesn’t continue. 

Mr. MCKINLEY. Sorry, my time has expired. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentlewoman from Colorado Ms. 

DeGette for 5 minutes. 

Ms. DEGETTE. Thank you, Mr. Chairman. 

Back in 1994 when I was in the Colorado legislature I passed a 

bill called the Voluntary Cleanup and Redevelopment Act. And this 

was a Brownfields bill that was targeted at cleaning up environmentally contaminated sites in Colorado. 

And I remember when I did the bill, the Chamber of Commerce 

and the Sierra Club both supported this bill because what was happening was people who owned these contaminated sites but were 

not, and the mayor knows this well, these were not Superfund sites 

111 

but they were old dry cleaners, they were old mining sites, they 

were leaking tanks. And because of the threat of enforcement action by the state, people were just sitting on these pieces of property, fearful of cleaning them up. 

And so, really until 21st Century Cures came up this was my 

piece of legislation that I passed in my career that I was the proudest of because what it did was it took a real problem that I described, and then it put together a regulatory framework that encouraged businesses to clean up these sites and to make them economically viable, but it also protected environmental regulation. 

And every so often I talk to my colleagues in the Colorado Department of Public Health and Environment, and now, all these 

years later, it has been used thousands of times in my state of Colorado to clean up environmental contamination. So I have always 

been a big proponent of federal Brownfields legislation. And I also 

think that we can be doing much more at the federal level to try 

to figure out a way where we can enforce environmental regulations while at the same time incentivizing cleanups. 

And that is sort of what I want to talk about today because it 

seems to me that in this Congress, and particularly with this new 

presidential administration, we look at environmental regulation as 

a blunt instrument. So we either, what we say, and I am looking 

at this executive order that President Trump signed which says 

that any federal agency issuing a new regulation must rescind at 

least two existing regulations to offset the cost of complying with 

the new regulation. 

Talk about a blunt instrument. Rather than saying what regulations do we have that maybe don’t exactly work and could be repealed or could be modified to work in our economy today, and how 

do these all work together, we just, we just make the value judgment that all these regulations are the same. So regulations are 

bad and so we will just repeal two of them for every one that we 

have. Which is, frankly, if you think about it, absolutely ridiculous 

from a public policy perspective. 

I think Ms. Mays could completely agree with that when she sees 

what happened in Flint, Michigan. 

So I just want to ask you, Professor Hammond, about this. I 

don’t think there are academic underpinnings of the order but I 

want to ask from an academic perspective, new regulations are developed to deal with new problems or new scientific understanding. 

When an agency develops a regulation does that mean that existing 

safeguards are no longer needed? 

Ms. HAMMOND. Not at all. And I think you have really characterized this 2 for 1 order quite well. It trades our future for the benefits that we have right now. It really traps agencies. They can’t justify taking important existing regulations off the books, regulations 

that still operate to protect people. And, yet, that means they can’t 

issue new regulations that are needed to guard against the many 

new risks that we face today. It really puts them in a bind. 

And I argue it is a bind that is contrary to law. 

Ms. DEGETTE. And you are not saying that if we have a new regulation that we should never repeal old, outdated regulations; 

right? 

112 

Ms. HAMMOND. Not at all. In fact, agencies are already required 

under many circumstances to do look-backs, to assess the regulations they have on the books, see how they are working, and see 

if any of them need to be rescinded. And agencies do rescind rules 

that they find to be outdated, or they update those rules. 

So, this is not to say that we shouldn’t improve what we have, 

it is simply to say that an unthinking rescission of very good regulations hampers progress. 

Ms. DEGETTE. Thank you. 

Thank you very much, Mr. Chairman. 

Mr. SHIMKUS. The gentlelady’s time has expired. 

The Chair now recognizes the gentleman from Texas Mr. Olson 

for 5 minutes. 

Mr. OLSON. I thank the Chair. And welcome to our six witnesses. 

I hope this is not news to you all, but since I have been elected 

to Congress in 2009 I have been the leader in the House to fix our 

broken ozone rule system. It takes EPA 7 years to put out new 

rules for new ozone standards. And then starts the broken process 

over with new standards seven months later. There is no chance, 

no chance for local communities and businesses to comply. 

When the person charged with ozone emissions in the San Joaquin Valley, in this very room right around where Ms. Hammond 

and Ms. Mays are sitting, tells us that nearly every single gasoline 

powered car in San Joaquin Valley will be banned because of those 

new ozone standards, there is a big problem. 

When Houston, Texas, my hometown, goes from being the ozone 

capital of America in 1972 to within 1 year of full attainment, this 

year 2017, and the rules change, Houston, we have a problem. And 

it is not just Houston’s problem, it’s the San Joaquin Valley’s problem. Almost 400 counties across America have that same problem. 

EPA is effectively saying you can never, ever comply with those 

standards because they will change. And that is why I reintroduced 

the bill, bipartisan, bicameral bill H.R. 806 to address this problem. 

I am proud to have the co-sponsorship of, Chairman, of Mr. Latta, 

Mr. Flores; Democrats Mr. Cuellar, Mr. Bishop, and Mr. Costa; and 

across The Hill on the Senate side we have the West Virginia duo, 

Mr. Manchin and Mr. Capito. 

Along those lines, my first question is for you, Mr. Eisenberg. 

Page 11 of your testimony you recommend that Congress require 

the Clean Air Scientific Advisory Committee, CASAC, to comply 

with the Clean Air Act, Section 109(d), and ‘‘advise the Administrator of any adverse public health, welfare, social, economic, or energy effects which may result from various strategies for attainment and maintenance of air quality standards.’’ 

I thought CASAC had to comply with the law, the Clean Air Act. 

Can you explain why that is so important? 

Mr. EISENBERG. We think it is extremely important. So, they 

complied with pretty much everything you said except for the economic part, and never bothered to look at what the economic impact of this rule was. 

And as you guys know, we measured it, and it was hundreds of 

billions to trillions of dollars. So that was something we would have 

liked on the front end going in. Obviously it helps, on the implementation side it helps in terms of technological feasibility. 

113 

Because, like I said, we would do it. We were just never asked 

to do it, so we didn’t. And, obviously, that is one of the recommendations we would like to see put into place and something 

that becomes mandatory. 

Mr. OLSON. I think that is our job to make sure the Executive 

Branch calls, the law will be passed. That is kind of what Article 

I of the Constitution says. 

Next question is for you, Mr. Sunday. There is a study by a man 

named Michael Greenstone, National Bureau of Economic Research. It was over the time period 1972 to 1987. He did a study 

about the cost of non-attainment to local counties. He said counties 

lose $37 billion in capital, $75 billion in economic production, and 

590,000 jobs if there in non-attainment. That was 30 years ago. 

In your testimony you referenced a paper called ‘‘EPA’s New 

Source Review Program: Time For Reform?’’ That was on page 14, 

footnote 23. The authors say that changing ambient standards, air 

quality standards carries delays, and in some cases canceled 

projects. 

What is your experience back home about these delays with 

these changing standards over and over, are you losing jobs, losing 

projects? 

Mr. SUNDAY. Yes. We have had, we have had economic impacts. 

Most recently we have had frustrations, not just with those but 

with the 1-hour SO2 standard. When you go to shorter and shorter 

time frames it becomes really hard for states to say that if we permit a new source we are never going to have an exceedence in that 

1-hour frame. 

EPA promulgated the 1-hour SO2 in 2010. Five years later they 

settled with Sierra Club in a sue and settle arrangement. They basically said monitoring for your designations is off the table. We 

have got new modeling. Modeling is extremely conservative. And, 

again, as I mentioned, it requires plans to account for emissions 

that they are not going to produce. 

Mr. OLSON. How much has the Chamber lost in Pennsylvania by 

county? Do you think $30-some billion in capital, like in 1979, or 

’87, I am sorry, $75 billion in economic production? Anything like 

that in Pennsylvania, those type numbers? Because that is incredible, 30 years ago, billions. 

Mr. SUNDAY. I don’t have a specific number for you. But as I 

mentioned, we have site selection if we see non-attainment, for a 

lot of companies the location just gets crossed right off the list, before you even evaluate workforce, location, infrastructure, et cetera. 

Mr. SHIMKUS. The gentleman’s time has expired. 

Mr. OLSON. That is when you get back to control ozone coming 

from overseas sources. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Texas, the other 

gentleman from Texas Mr. Green for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank you and our 

ranking member for holding the hearing today on infrastructure 

and modernizing our nation’s environmental laws. Congress needs 

to use this opportunity to invest in our nation’s infrastructure and 

rebuild America. And this is a bipartisan area that our subcommittee, I hope, can work together on. 

114 

Mr. Chairman, I would like to ask unanimous consent to place 

into the record a letter to the House of Representatives in opposition to H.J.R. 59. It comes from a number of different groups, labor 

groups. And ask unanimous consent to place it into the record. 

Mr. SHIMKUS. Seeing no objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. GREEN. Thank you. 

One, I want to welcome our panel. On any given day coming from 

the district I have in Houston, Texas, I can either be mad as can 

be at EPA or be thankful they are there. And so we have that battle. 

But I am glad they are there because I have a very industrial 

area. We have environmental challenges in east Harris County. I 

have now three refineries and a lot of chemical plants. At one time 

I had all five in east Harris County. So we have challenges. But 

we need that product that those plants produce. But I also want 

them to comply with the law. And that is what we try to do. 

Mayor Mitchell, I am glad you are here because having an older 

part of Houston, we have had Brownfields we have been able to 

utilize and turn into really something that is productive for our 

community. Although right now we are in the middle of a battle 

in our area on a Superfund site. We had a paper mill back in the 

’60s who they took the docks and the mash from cleaning up our 

paper and disposed of it, but it was abandoned. And it was done 

long before we had an EPA, probably in 1964 and ’65. 

But we are trying. EPA worked with the community. We got a 

good ruling on the need for the complete cleanup of that. It’s called 

the San Jacinto Waste Pits. And I know my colleagues on the committee have heard me because whenever we had the EPA administrator for the last number of years I explained to her my first question will be What are you going to do about the San Jacinto Pits? 

It was in Ted Poe’s district. Now it is Congressman Babin’s district. But it was in my district originally, so that is why I got to 

know all the people there. And but EPA took longer than I think 

they should have. But we did get a decision to actually remove that 

docks. And it is going to be very expensive. And the good news, we 

have a responsible party and it is not just on the taxpayers to do 

it. 

Mayor Mitchell, in your program, in the Brownfields Program, 

how has that benefitted your city? 

Mr. MITCHELL. Well, in general, Congressman, we have been 

able to generate jobs and save taxpayer dollars by smart use of 

available federal funds, including Brownfields funds. So I mentioned in my testimony briefly a Superfund site called Sullivan’s 

Ledge that we were able to turn into, from a truly nasty pollution 

site into a premier solar farm that generated an awful lot of local 

jobs, inner-city jobs for guys who put together solar panels and 

build things, as well as to save taxpayer dollars because it is on 

a city-owned site. And the electricity that is generated from it, it 

is about a 1.8 megawatt site, allows the city to save substantially 

on its electricity bill. So it is really a marquee project that we are 

very proud of. 

That is one example. 

115 

Mr. GREEN. Well, in the rules that you can do, because some of 

the restorations we have, you are not going to build apartments or 

habitats on that property? 

Mr. MITCHELL. No. 

Mr. GREEN. But you can use it as solar farm. 

We encapsulated, and it is a community college, but it is completely covered by concrete, and but it is a community college sitting there now that, in a neighborhood, a very inner city neighborhood. So it works. 

Have you all, have you worked with project labor agreements to 

do those kind of restorations? 

Mr. MITCHELL. They can be used. We did use a project labor 

agreement on another Brownfields site that we turned into, with 

state funding, a state-of-the-art marine terminal that will be used 

specifically for the offshore wind industry, which is about to arrive 

on the East Coast, and New Bedford will be the launching pad for 

it. 

But there was a project labor agreement on that site. And it 

works, it works very well. It was done, done very quickly and ready 

for the offshore wind industry which is really setting up shop just 

now. 

Mr. GREEN. OK. Well, thank you. I am almost in my time. 

But my colleagues from Texas on the Republican side brag about 

how we produce more wind power. So I am hoping the East Coast 

can catch up with us. 

Mr. MITCHELL. That is right. 

Mr. GREEN. And I yield back my time. 

Mr. SHIMKUS. There is a lot of hot air in Texas. We know that 

here. 

So the Chair recognizes the gentleman from Michigan Mr. 

Walberg for 5 minutes. 

Mr. WALBERG. I thank the Chairman. And thank you for this 

hearing and thanks to the panel for being here, each of you. 

And, Ms. Mays, it is appreciated to see you again. Sitting in oversight during the last Congress and having you and others in front 

of us numerous times to deal with the Flint issue is very important. So I don’t plan to ask any questions. I think I used plenty 

of time in those hearings. 

But I do want to say something, and hadn’t planned to say this. 

But I want to make it very clear, the comments of one of my colleagues, that this wasn’t just a local/state situation. And I want to 

say thank you to my colleagues that are still here, colleagues here 

in Congress who joined with in helping the Michigan delegation as 

we worked together to try to bring some resources back to deal 

with this issue. 

It was an important issue to deal with. Certainly there were 

egregious failures at the local level for years, allowing a great city 

like Flint, probably could be defined as an auto capital, economic 

engine in Michigan, to go downhill to the point that we see today 

with infrastructure and all of the rest. So, significant blame is 

there at the local level, significant blame is at state DEQ in letting 

things slip. 

Fortunately, a professor like Mark Edwards from Virginia Tech 

came in, brought in, assisted, bringing to light the problem that 

116 

went on with our environmental concerns there. But ultimately he 

said, and this is what I want to make a point of, that the number 

one most difficult party and party at fault was the EPA. And that 

is the reason why the administrator, the Region 5, resigned and 

left office. 

But it bothered me that never did we ever get an apology or an 

admission of guilt from the EPA administrator or otherwise in this 

issue. And that resulted, along with all of the process, resulted in 

significant human impact, as evidenced by Ms. Mays today as well. 

And so it is important for me to say this was failure at all levels. 

And we do well in looking at how we make sure in the future that 

we use our resources wisely and our powers appropriately to make 

sure that we carry out what we are supposed to be doing. 

Having said that, let me move on here. 

Mr. Eisenberg, thank you for being here. In the past, EPA has 

assured the public that states will have multiple years to comply 

with stringent air standards such as ozone standards. But what 

impact do those standards, like the recently issued ozone standards, have on permitting? And more specifically, is this a ‘‘few 

years in the future problem’’ or a ‘‘now problem’’ for domestic manufacturing? 

Mr. EISENBERG. It was a 2015 problem for domestic manufacturing. So the minute, literally the minute that the new standards 

had the goalposts removed and the new ozone standards come into 

place, for permitting that is, that is what you have to hit. And so 

even though you have a couple years, and it really isn’t that many 

years, but a couple years to start working on state implementation 

plans, for permitting purposes day one, the day EPA goes final, 

you’ve got to hit those limits. 

And they are tough limits to hit. I mean they, in a lot of places 

half the states. 

Mr. WALBERG. Even if they haven’t put the full parameters in 

place? 

Mr. EISENBERG. Yes. Even if they haven’t finished their implementation guidance. And so you just have to figure out way to get 

there. 

Mr. WALBERG. Guessing at it? 

Mr. EISENBERG. Yes. Computer models and things like that. 

And it is frustrating. I mean, I personally went to EPA a couple 

of years ago with a member of mine who was struggling with that 

exact same issue in PM2.5, particulate matter. They were building 

a green roof facility in the middle of Missouri, where there is literally nothing. I mean it is just open space. They were going to 

make green roof components. I mean, generally pretty good for everybody. It’s a win across the board. 

They couldn’t figure out how to model a payment for PM2.5. 

They just couldn’t figure it out. And the state couldn’t figure it out. 

EPA couldn’t figure it out. Nobody could figure it out. 

Eventually that story had a happy ending. But it hung up the 

permit for a bunch of months. The company was thinking about 

pulling out, moving to a different site. 

That is the kind of thing we need to avoid. And that is the kind 

of thing that you can do by just updating the Clean Air Act, updatVerDate Nov 24 2008 14:44 Jan 29, 2018 Jkt 037690 PO 00000 Frm 00120 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-8 CHRIS
117 

ing some of these provisions, making them perform a little bit better. 

Mr. WALBERG. And putting the parameters in place clearly. 

Mr. EISENBERG. Without a doubt. 

Mr. WALBERG. Yes. Yes. 

Mr. Sunday, in the context of permitting under the Clean Air Act 

you raised concerns that EPA’s modeling is based on unrealistic assumptions. Explain a little bit more. 

Mr. SUNDAY. Right. When we say it is unrealistic or conservative 

what we mean is that if you compare these same expectations in 

the model versus actually monitoring data you will come to two different conclusions. And that is monitoring shows what the real 

world impacts are. And the modeling is really conservative, it assumes that a facility is cranking out emissions as high as possible, 

as often as possible around the clock. And then it has to account 

or order its operations in a way to account for those emissions, 

even though those emissions aren’t actually going to be created. 

And so when you rely on modeling, your, your outcomes are only 

as good as your expectations. And the current structure under modeling is the impressions or expectations that you are putting into 

it, those inputs, aren’t reflective of real world practice. 

Mr. WALBERG. Thank you. My time has expired. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from California Mr 

McNerney for 5 minutes. 

Mr. MCNERNEY. Well, I thank the Chairman. 

The U.S. has clearly made environmental progress since the 

Clean Air and Clean Water Act. And it is clear that this progress 

has produced significant innovation and economic growth. So the 

question we now face is, are the regulations promulgated under the 

Clean Air Act and Clean Water Act still producing innovation and 

economic growth? Or is it time to revise the laws to reflect the kind 

of flexibility that Mr. Eisenberg advocates? 

But the problem with revising the laws, from my point of view, 

is that we hear extreme views from the Republican party of eliminating the EPA. And so there is no way we can open up that box. 

There is no way we can do that because a fear that the progress 

we made will be lost in a deregulatory frenzy. 

So the Republicans have forced us into an absolute determination 

to block and obstruct all and any efforts to revise these laws. That 

is simply where we are. 

Now, Ms. Hammond, I loved your quote, and I may not get it exactly right, that the environmental regulations help correct market 

failures. Would you expand on that a little bit, please? 

Ms. HAMMOND. Yes. Classic economic theory provides that we 

have these things called externalities. So, essentially, when, let us 

say, a manufacturing facility bears many costs internally, it fields 

those costs, but when it pollutes the air it is imposing the costs of 

the pollution on the public at large. That is a negative externality 

because it makes its costs external. 

Environmental laws force those costs back into the entities who 

created them. And so it is a simple market failure and it is a very 

rational way of working to correct that failure. 

118 

Mr. MCNERNEY. Well, a few years ago the Center for Progressive 

Reform published a short article examining the question of whether 

regulations were resulting in job loss. The article concluded that 

there was no evidence to support the assertion of substantial job 

losses versus environmental trade-off. Could you elaborate on that 

one a little bit? 

Ms. HAMMOND. Yes. And I am familiar with that article. The fact 

is, economists have been looking for decades for support for this 

urban myth, this false dichotomy that environmental regulation 

hurts our economy. The history, the facts show otherwise. 

And so I think it is important to remember many of the figures 

that we have heard today that focus on regulatory costs don’t account at all for regulatory benefits. So perhaps there are some costs 

imposed; again, that is a false way of looking at it because we are 

actually asking people to bear the costs of what they create, of 

their behavior. 

But let’s say, OK, they are bearing a cost they didn’t bear before. 

But we have to remember what the benefits of doing that are. The 

benefits are the health benefits, the days that people can go to 

work, the days that kids can stay in school. And so, even this discussion today has focused very much on costs, but hasn’t at all attempted to net the benefits into that figure. If you net the benefits 

in, we will find net benefits, not net costs. 

Mr. MCNERNEY. Thank you. 

Ms. Mays, you said that the state used a weak rule to save pennies a day and poisoned 100,000 people. What are the weak rules? 

And how were those used to poison? 

Ms. MAYS. Well, one of the loopholes in the Lead and Copper 

Rule they exploited was that they could take up to a year to evaluate whether corrosion control was necessary once they switched the 

water source. 

The next was the testing. There is no strict testing to say you 

have to identify a service line. I mean it is in there, it is in the 

wording, but there is no follow-up. So they were testing people, like 

my home, and saying that, oh, she has got a lead service line. Her 

lead at this point in time is 8 parts per billion. It’s safe. Which, 

of course, it is not. But I have a copper service line. 

So there was that. There was the capping stagnation on how long 

the water can sit in the pipes. 

The small bottles, they had small-mouth bottles to encourage 

people to use a lower flow. All these little loopholes that are being 

exploited in those 5,300 cities I talked about before. And if these 

are not tightened up and closed up, these 5,300 cities are going to 

be looking at a problem like Flint. Hopefully not as devastating. 

But, again, you can’t put a price on a child’s learning capabilities. 

You can’t put a price on my liver or my lungs. 

So these need to be closed up so this never happens again. 

Mr. MCNERNEY. Is there a specific proposal to close those loopholes? 

Ms. MAYS. We have been working on trying to reform the Lead 

and Copper Rule on a federal and state level. And we run into so 

much opposition because all we hear is how much it is going to 

cost. They do not talk about the health benefits, the life benefits. 

119 

All we hear is, nope, this is going to cost too much money. Nope, 

this person is going to have to pay. And so nothing happens. 

Mr. MCNERNEY. Well, if you have specific proposals, work with 

us and we will try to work with you. 

Ms. MAYS. Thank you. 

Mr. MCNERNEY. Thank you. 

I yield back, Mr. Chairman. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Georgia Mr. Carter, a new member of the committee, for 5 minutes. 

Mr. CARTER. Thank you, Mr. Chairman. And thank all of you for 

being here today. We appreciate your participation in this. 

Mr. Chairman, I have a statement from the American Forest and 

Paper Association and the American Wood Council that I would 

like to submit for the record. 

Mr. SHIMKUS. I hear. Give me a minute. 

Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. CARTER. Thank you. 

Mr. Eisenberg, I want to start with you if I could. In your testimony you mention the carbon neutrality of forest-based biomass. 

And that really piqued my interest because, as you know, in the 

state of Georgia we have quite a bit of forests and forest products 

industry, and specifically in the 1st District of Georgia that I have 

the honor and privilege of representing. So it is very important to 

me. 

And that statement really did pique my interest. I was very interested in that. 

Many of the European countries consider forest-based biomass to 

be carbon neutral. However, the EPA seems to have taken a different opinion of that and a different approach, and they are treating it much like fossil fuel source. Do you agree with the EPA’s assessment of forest-based biomass? 

Mr. EISENBERG. I do not. And until 2010 the EPA did consider 

forest biomass carbon neutral. In 2010 they kind of created this 

problem. And now we don’t necessarily have an answer. 

So, no, the forest products industry is reusing a resource to make 

energy that otherwise wouldn’t be used for, really, anything valuable. So it is our position that forest biomass produces, it is a part 

of the sustainable carbon cycle. It harnesses this energy that would 

otherwise be lost. And it should absolutely be considered carbon 

neutral, particularly if you are seeing forest stocks rising at the 

same time. 

Mr. CARTER. What happened? Why did the EPA change? At one 

time they were considering it carbon neutral. And then you said in 

2010 it kind of shifted? 

Mr. EISENBERG. That is exactly what happened. I wish I had a 

good answer for you. But they changed their position after, I think, 

significant external pressure. And it is, obviously, something we 

would like to see changed back. 

Mr. CARTER. Well, it is really a problem because a lot of the forest product facilities in the state of Georgia and specifically, again, 

in my district they use self-generated energy as opposed to going 

120 

to the power grid that uses natural gas and coal. They use this. 

And it is somewhat of a byproduct. 

And that seems to me to be what we would encourage and what 

we would want them to do. But, again, when they are using a renewable, carbon neutral biomass that is a byproduct of their manufacturing process, wouldn’t you agree that EPA should recognize 

that as being carbon neutral? 

Mr. EISENBERG. Without a doubt. I mean the Chairman said 

something about, How clean is clean? How renewable is renewable? 

This is renewable energy; let’s treat it as such. You can’t distinguish between different kinds. They are all good for our policy. 

They are part of, frankly, an all-of-the-above policy. And we should 

absolutely be finding ways to get these manufacturers to use something that would otherwise be waste. 

Mr. CARTER. And that is very vital. In the state of Georgia we 

have over 200 manufacturing facilities, in Georgia alone, many of 

them in my district. And, again, for them to be able to use this as 

a reliable power source, that is essential and it is very important. 

Now, Mr. Eisenberg, if I could, I want to switch gears for just 

a moment. A constituent with a manufacturing facility in my district has expressed to me their concern and their very real concern 

that energy costs are, and energy bills, the high costs of energy, are 

really one of the obstacles that they are having to overcome. We 

have struggled with this in the state of Georgia. 

I served for 10 years in the Georgia state legislature. Some years 

ago we had a sales tax on energy that was just devastating to manufacturing. We took that off. I want to give credit where credit is 

due. We acknowledged that and took it off. Yes, we should have 

had it off long before then. But it did. And it helped immediately. 

It was an immediate relief to our, to our manufacturers. 

But again, how can we look at energy costs? Would you agree 

that that is a real obstacle for businesses and manufacturers in 

particular? 

Mr. EISENBERG. Without a doubt. For many manufacturers it is 

their biggest cost. In some of these very energy-intensive sectors. 

Chemicals, iron, steel, aluminum, things like that, it is their most 

significant cost. And so it is a driver for whether or not they are 

going to expand facilities, build facilities. 

The big reason you see sort of a manufacturing boom in the Gulf 

region is, quite frankly, because of the energy down there. And so, 

so it is absolutely a cost. It is a driver, one of the many drivers, 

and for a lot of these companies the biggest driver. 

One of the recommendations we make in our proposals here is 

that when EPA is putting out new regulations on manufacturing 

it needs to take into account energy. I mean there are certain provisions of the Clean Air Act that require that. They get danced 

around. 

And as EPA, and realistically it has become in many ways a regulator of energy in some of these areas, OK, let’s take a look at how 

that is impacting manufacturers’ energy use. This is something 

they should absolutely deal with that. 

Mr. CARTER. And as we talk more about—— 

Mr. SHIMKUS. The gentleman’s time has expired. 

121 

Mr. CARTER [continuing]. Keeping manufacturing in America, energy costs should be considered. 

Mr. EISENBERG. Absolutely. 

Mr. CARTER. Thank you, Mr. Chairman. Appreciate your indulgence. 

Mr. SHIMKUS. The Chair now recognizes the gentlelady from 

Michigan, Congresswoman Dingell, for 5 minutes. 

Mrs. DINGELL. Thank you, Mr. Chairman. And thank you for 

hosting this hearing. It is a really important topic. And thank you 

to all the witnesses. I want you to know I read all of your testimonies last night, and I will not have time to ask all the questions 

that I want to. 

I want to build on my colleague from Michigan’s comments. I 

want to thank Melissa Mays for being here today. And really the 

comments that my colleague made, and I wish that Mr. Barton was 

still here, and I want to talk to him about it, I met Ms. Mays before 

any of you had ever heard the word Flint. And when I met her and 

some other people from Flint and understood what was happening, 

I very quickly developed a position that I still have today and, I 

think, really gets at what this part of this hearing is about, which 

is at the time, we need to figure out how we keep the people of 

Flint safe and what did we need to do immediately? 

How did we fix the problem long term? 

And how do we make sure that it never happens again in another community in this country? 

Like my colleague from Michigan, I do believe the government 

was responsible at every level. I think the federal, state and local 

level all failed the people of Flint, period. 

But Mr. Barton was asking questions about what happened in 

Flint and was it the delivery, was the lines, was it? The reality is 

there was a canary in the coal mine and General Motors stopped 

using the water in the plant long before anybody realized what was 

happening. And nobody shared the fact that GM’s engines were 

being corroded. And they were given the opportunity that no Flint 

resident or any other Flint business was offered, which was to go 

to an alternate water system. 

So, and as we have been talking, and I don’t want to ask the 

same question, though I was going to, does EPA need to strengthen 

the Lead and Copper Rule to ensure what happened doesn’t happen in any other? Everybody agrees. The question is, how do we 

have that discussion? How do we balance that cost-benefit ratio? 

So, I think that is really an important question. And I think 

today reinforces the water in Flint still is not safe. And I want to 

ask Ms. Mays some questions about that. But how do we make 

sure that what is the proper role at the federal level for these other 

5,300 communities? 

Let me ask you this question, Ms. Mays: How are the residents 

of Flint taking all of this? And do they have any remaining faith 

the government will help remedy the situation? 

Ms. MAYS. Every day that ticks by we lose our hope. We lose a 

bit of self worth because, like Mr. Barton was talking about, it is 

an argument over who is responsible instead of let’s get on it and 

fix it. Let’s save these people’s lives. And let’s put in the laws that 

are going to make sure it doesn’t happen again. 

122 

And as time goes on, again, today is 1,028 that we have had to 

go through this. And to see that there has been very little change 

is terrifying. Because now I am hearing from cities all over the 

place. I am actually going to East Chicago to talk to them about 

their crisis and try to help rebuild their morale as well. 

We have had an increased number of suicide attempts. We have 

people that have given up. People are walking away from their 

homes that they worked so hard to pay for. And they are just giving up. And they just can’t deal with this anymore because it has 

gone on for so long and with such little being done. And people saying, well, we don’t want to help; it is not our responsibility. While 

we’re sitting here suffering in our showers, watching people that 

we love die and suffer and fall apart in front of us because, though 

it has been 21 years since there has been any kind of update to 

the laws that should have protected us. It is heartbreaking. 

Mrs. DINGELL. Let me ask you one more question quickly. 

We just had an incident down river, which is where I am front, 

where the water smelled and it was colored. It is colored and there 

was a number of issues. Having gone through Flint, I was not shy 

or retiring and immediately got on the phone with the governor. 

But one of the things that concerned us is that the water authority 

did not call us back. They were doing testing and not making it 

transparent. And I could go on and on and on. 

But my question is, do you think we need to strengthen the Safe 

Drinking Water Act to provide more information to consumers 

about what is in their water for all contaminants? And how quickly 

do we tell people we are testing? How do you give that information 

to the consumers, et cetera? 

Ms. MAYS. Absolutely. It needs to be immediate. As soon as there 

is an issue people need to know. If they would have told us that 

they failed their first Safe Drinking Water Act test in May of 2014, 

we could have gotten filters, we could have stopped drinking the 

water, and we wouldn’t be where we are at. So transparency is crucial. 

We need to know what is in our water because we are paying for 

it and we are relying on it. But, also, we need to know what 

changes are being made and why they are being made? What is 

being tested for? Because we are intelligent people. Just give us the 

facts and we will be able to protect our own families. 

Mrs. DINGELL. Out of time. But I do want to tell Mr. Barton that 

there were two problems in Flint. Because nobody told people what 

was going on, the infrastructure corroded. Got to keep that from 

happening in this country. 

Mr. SHIMKUS. My guess is you will, you will talk to him. 

Mrs. DINGELL. I think you are right. 

Mr. SHIMKUS. The Chair now recognizes the gentleman from 

Texas Mr. Flores for 5 minutes. 

Mr. FLORES. Thank you, Mr. Chairman. I want to thank the 

panel for joining us today. 

Mr. Eisenberg, you recommended in your testimony that Congress consider modifying the national ambient air quality standards review cycle to more closely align with the actual pace of implementation of existing standards. So the question on that: Can 

you explain what this would look like and why it is important? 

123 

Mr. EISENBERG. Sure. 

Mr. FLORES. And, Mr. Sunday, I will have a follow-up for you in 

a second. 

Mr. EISENBERG. So we have spent a lot of time over the years 

talking with air directors and the folks in the state that are actually doing the work to try to implement these things. And I think 

if you ask most of them whether or not 5 years is the right amount, 

I think they would say no. They are generally understaffed and 

have a lot of different regs that they are dealing with all at the 

same time. And in terms of the pace of when EPA gets them guidance and their ability to comply with it, we constantly wind up in 

this sort of, this Groundhog Day scenario. 

Mr. FLORES. Right. 

Mr. EISENBERG [continuing]. Where every 5 years we are barely 

implementing the last one. 

And so, I think if you asked them, would you like more time? I 

think they would probably say yes. 

It would probably look at lot like what is the bill you support, 

the bill that you and Congressman Olson put forward which, if it 

is signed into law, would basically ensure that all the ozone standards stay, you know, everybody basically meets, other than a few 

counties, by 2025. 

Mr. FLORES. Right. 

Mr. EISENBERG [continuing]. With less economic penalties. You 

get to the same place. Those numbers keep trending down, like I 

have been saying all morning, except there are less economic penalties. It is kind of a win for everybody. 

Mr. FLORES. Yes. Based on when we looked at this last year, I 

mean the actual pace of implementation from the EPA was actually 

10 years versus the 5 years that the law provides for. About 80 percent of the language in Mr. Olson’s bill came from my bill last 

cycle. And H.R. 4000 did also, it resets that to fit sort of the real 

world. That way we could actually get to a place where we are having success versus our communities always being behind and suffering an economic penalty from that. 

Also, Mr. Eisenberg, you testified that ‘‘the shale gas boom could 

create 1.4 million new manufacturing jobs in the United States and 

generate annual cost savings for manufacturing of $34.1 billion due 

to lower energy and feed stock costs.’’ So, why is it important that 

we maintain or that we establish, rather, a more balanced and predictable permitting and review process for complex infrastructure 

projects like pipelines? 

Mr. EISENBERG. Because manufacturing is coming back and we 

need the pipes to get the natural gas where it goes. We are relying 

on all fuels as manufacturing, but especially natural gas. 

Mr. FLORES. Right. 

Mr. EISENBERG. We use it as feed stock. 

Mr. FLORES. So, so it helps manufacturing. Can you give us some 

granularity about what types of manufacturing jobs would be particularly benefited by this? 

Mr. EISENBERG. Absolutely. Certainly on the back end it is the 

sort of energy-intensive, the chemicals, the petrochemicals. Everything that is a building block for everything that we, that we make 

124 

and use here: trash bags and carpet, and everything that natural 

gas goes into. 

On the front end there is the entire supply chain. There’s the 

compressors, and valves, and paints and coatings, and cement, and 

all of these components that go into a large infrastructure project 

like that. 

We have a number that we use, about 32 to 37 percent of a pipeline is manufacturing inputs. So those are all manufacturing jobs. 

That is straight across the supply chain. It is across the country. 

It is just a great story. And that is a big reason why we support 

some infrastructure. 

Mr. FLORES. OK, thank you. 

Mr. Sullivan, as an advocate for small business. Are there parts 

of executive orders that could address the balance between cost and 

benefits in a regulation that you think are worth considering putting in the statute? 

Mr. SULLIVAN. Thank you, Congressman. Yes, there are provisions that should be enhanced in the executive orders and perhaps 

looked to by this committee legislating. 

Any time an agency is required to look at costs they then need 

to speak with small businesses to come up with solutions. And 

many times that doesn’t happen. So the idea of taking those costbenefit executive orders and writing them into law, so for instance, 

when you are looking at updating the Clean Air Act, have tremendous benefits for small business input. 

And we think that that would lead, for Main Street small businesses, to actually come up with more constructive solutions to 

many of the things that we were talking about this morning. 

Mr. FLORES. What I would like you to do, if you could, following 

this hearing is send us some specific recommendations, if you don’t 

mind. That way we can begin the statutory process of advancing 

the ball on these executive orders into statute that help provide the 

right balance between regulations and cost and benefit and economic growth. 

Thank you. I yield back. 

Mr. SULLIVAN. Thank you. 

Mr. SHIMKUS. The gentleman yields back his time. 

The Chair now wants to welcome Congressman Ruiz to the committee and recognize him for 5 minutes. 

Mr. RUIZ. Thank you. I appreciate that, Mr. Chairman. 

The Clean Air and Clean Water Act protect our basic necessities: 

clean, breathable air, and safe, drinkable water, fundamental elements we all need to survive. And we need to prioritize protecting 

our health. 

I am an emergency medicine physician. I take care of asthma. 

And the worst moments I think are kids who have come in with 

an asthma exacerbation and gone into cardiac arrest and have 

passed away. And those moments of me having to tell their parents 

that their child just died still haunt me to this day. 

Asthma is exacerbated by air pollution. It is one of the most common preexisting diseases among children in the U.S., and a leading 

cause of hospitalizations and school absences. There are over 34 

million asthmatics in the U.S., including 7 million children. Annually, nationwide there are over 10.5 million physician visits due to 

125 

asthma, 2 million emergency room visits due to asthma, and $11 

billion spent on asthmatic treatments. 

While asthma can be debilitating, or even life threatening, it can 

be a controllable disease. Asthma intensifies by environmental conditions such as outdoor air pollution. So why would we want to 

make it harder for asthmatic children in vulnerable populations to 

breathe clean air? 

We also know many of the water systems that serve low income 

communities have drinking water contamination levels above federal guidelines, which can lead to a number of developmental and 

behavioral health issues. In my district we have rural communities 

that rely on well water because there is no water infrastructure, 

and there is high levels of contaminated arsenic. 

Funding improvements to water systems would improve the lives 

of these families and children. Many of these families live in underserved areas and rely on healthcare, Medicaid, to get access to take 

care of their asthma and all of the other developmental problems 

that they have. 

Ms. Mays, tell me, are you in Medicaid? 

Ms. MAYS. Yes. We are covered by the Flint water Medicaid expansion. 

Mr. RUIZ. So that was part of the expansion? 

Ms. MAYS. Yes. 

Mr. RUIZ. OK, lead can have acute toxicity. It can cause irritability, behavioral changes, headache, abdominal pain, nausea, vomiting, all these things. That is just if somebody takes a big swig of 

lead toxicity. 

That is not what is happening in Flint. That is more of a higher 

dose but doesn’t cause acute symptoms. It is more chronic in nature. Those are the silent killers, the silent things where people 

may have developmental delays; they have hearing problems; nervous systems; injuries to kidney, speech, language; even growth, 

muscle, bone development; and eventually seizures, which can be 

life threatening. 

So if you didn’t have Medicaid, what would happen to your children? 

Ms. MAYS. We would not be able to take them to the 

rheumatologist, to the osteo specialists they have to see because of 

their growth plates and growth problems. They would not be able 

to get the blood work done to consistently see what is going on. 

I deal with seizures at this point. So I wouldn’t be able to see 

my neurologist, my gastroenterologist, my rheumatologist, our infectious diseases doctor, our toxicologist and environmental physician. We wouldn’t be able to see any of them because we couldn’t 

afford it. We just do not have that money. So if we did not have 

the health coverage, we wouldn’t be able to try to manage the side 

effects of these permanent damages. 

Mr. RUIZ. And are your neighbors in the same place, the other 

parents of children that have these calamities? 

Mr. RUIZ. Absolutely. Flint is 41 percent at or below the poverty 

line. So we are a struggling city as it is. And access to quality medical care if you do not have Medicaid is slim to none. So we have 

so many people that never got tested so they don’t even know how 

high their blood lead levels were during that first crucial 28 days. 

126 

So, we have people that are dying from seizures. There was a 29- 

year-old school security guard who had a seizure and died at the 

school. 

Mr. RUIZ. Wow. 

Ms. MAYS. And we have no idea what it was caused by because 

he didn’t have insurance. 

So we are absolutely terrified right now. 

Mr. RUIZ. Any kids that you know of with renal failure on hemodialysis or anything? 

Ms. MAYS. We have a lot. We have several different dialysis clinics that are full. There is a waiting list. 

Mr. RUIZ. Oh dear. 

Ms. MAYS. My oldest son now has high blood pressure because 

he has kidney damage. All three of my sons have low vitamin D 

levels because their kidneys are not producing enough because they 

have been hit by this. 

Mr. RUIZ. That is one of the primary reasons why I ran for office 

to begin with. I didn’t grow up in the political world, guys. I didn’t 

run for city council and then work my way up. I came straight from 

the emergency department because I take care of these patients 

that I care so much about. And it breaks my heart to know how 

sometimes politicians up here are so removed from the human face 

of failed policies. And they are not smiling. They are on hemodialysis. They are worried. 

And if we don’t start prioritizing correctly our funding to help patients and help real people with real problems and kind of make 

that our focus instead of prioritizing, putting at the top of our list 

removing these protections in order to benefit, you know, some of 

the companies, then I think we are just going to have a worse 

human tragedy. 

And with that, I am sorry you are going through this. 

Ms. MAYS. Thank you. 

Mr. RUIZ. I will be praying for you and your family. Thank you 

so much. 

Ms. MAYS. Thank you. 

Mr. SHIMKUS. The gentleman yields back his time. 

A couple pieces of business. I ask unanimous consent that a letter from the American Road and Transportation Builders Association be submitted for the record. 

Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. SHIMKUS. And a February 2015 Resources for the Future 

white paper entitled ‘‘EPA’s New Source Review Program: Evidence 

on Processing Time 2002 to 2014.’’ 

Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. SHIMKUS. Also ask unanimous consent to submit for the 

record a letter from the Center for Progressive Reform, dated February 10, 2017; a Washington Post article reporting that American 

households have a $15,000 regulatory burden, dated January 14, 

2015; and a report from the Congressional Research Service, 

‘‘Methods of Estimating the Total Cost of Federal Regulations,’’ 

dated January 21, 2016. 

Without objection, so ordered. 

127 

[The information appears at the conclusion of the hearing.] 

Mr. SHIMKUS. That should be all the business. 

We do appreciate your testimony. These are tough issues. When 

we were successful in the last Congress, I think we have just got 

to get on the same page of what are real numbers, whether it is 

job loss or the science. I think we have to have transparency and 

trust that the numbers we bring forward are legitimate. 

I think we have to have a recognition of the time frame of implementation and the burdens of changing that. 

This was a committee hearing that was really broad. And I think 

my colleagues and I after this will start focusing down on stuff like 

Brownfields and some other things that we might be able to move 

in a more collaborative, comradely manner. And maybe we will 

look at some of the other tough, tough issues, too. 

But we do appreciate your testimony. And I call this hearing to 

a close. 

[Whereupon, at 12:17 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

128 


25128.075

MARK KNIGHT, Pr€sident 

ART DANIEL, Senior Vice President 

B.E. STEWART, JR., Vice President 

SCOTT W!LUAMS, Treasurer 

STEPHE.N E. SAND HERR, Chief ExecutilJe Officer 

DAVID LUKENS, Chief Operating Officer 

February 15. 2017 

Subcommittee on Environment 

Committee on Energy and Commerce 

U.S. House of Representatives 

2125 Rayburn House Office Building 

Washington, DC 20515 

AGC of America THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA 

Quality People. Quality Projects. 

Re: Hearing on "Modernizing Environmental Laws: Challenges and Opportunities for 

Expanding Infrastructure and Promoting Development and Manufacturing," held on 

February 16, 2017 

Dear Chairman Shimkus: 

The Associated General Contractors of America (AGC) appreciates the opportunity to provide 

written testimony in consideration of the implementation of the Clean Air Act (CAA), the 

Brownfields Program, and other environmental laws in the jurisdiction of the Environment 

Subcommittee. AGC supports modernizing environmental laws to address current challenges 

and create opportunities for today's businesses while continuing to safeguard our country's 

natural resources. AGC hopes that the 115'h Congress and the new administration will look to 

the construction industry as an "industry partner" as opposed to an "industry opponent" in the 

process - recognizing that construction plays a vital role in improving our soil, water and air 

pollution problems. The aforementioned hearing is an important step in this paradigm shift. 

AGC represents more than 26,000 firms engaged in building, heavy, civil, industrial, utility and 

other construction for both public and private property owners and developers. AGC members 

construct commercial buildings, shopping centers, factories, warehouses, highways, bridges, 

tunnels, airports, waterworks facilities, and multi-family housing units; and they prepare sites 

and install the utilities necessary for housing development. AGC and its nationwide network of 

92 chapters have sought to improve and advance the interests of the construction industry for 

nearly a century. 

AGC has reached ~ut 1 to the Trump administration and Congress with recommendations that 

highlight the need for fewer and smarter regulations, greater industry assistance and 

involvement, and reduced barriers to approving and moving forward on important infrastructure 

projects. The llS'h Congress plays an important and vital role in this process, and we applaud 

the subcommittee for holding hearings such as the one scheduled for February 16, 2017. 

1 http://advocacy.agc.org/agc-~lwres-regulatory-plan-with~trum!;Hransition-team/ 

VA 22201-3308 

Phone: 703.548.3118 • Fax: 703.837.5400 • www.agc.org 
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AGC of America to the U.S. House of Representatives 

Subcommittee on Environment, Committee on Energy and Commerce 

February 1S, 2017 

Page 2 of 5 

Regulatory Challenges to the Expansion of Infrastructure and Domestic Manufacturing 

For every perceived problem, many federal agencies have sought regulatory "solutions." 

Oftentimes, those solutions fail to adequately-let alone comprehensively-solve the alleged ills 

they seek to address. Instead, a new regulation is generally stacked on top of a host of existing 

regulatory requirements without sufficient consideration of its overall impact on the greater 

regulatory compliance and enforcement scheme. The result is a chaotic patchwork of federal 

mandates that often create considerable economic hardship on the construction industryespecially small businesses-amounting to fewer construction projects built and fewer 

construction jobs available. 

AGC seeks to ensure that new requirements are neither cost-prohibitive nor overly and 

needlessly burdensome for the construction industry, which improves our nation's infrastructure 

and quality of life. 

Construction Industry Regulatory Burdens Falling under this Subcommittee's Jurisdiction 

Looking at environmental programs that are under the jurisdiction of this subcommittee: The 

day-to-day operations of individual construction firms typically are not directly regulated under 

CAA stationary source permitting programs and Brownfields redevelopment decisions often 

occur before a contractor is brought onto a project. However, AGC members undertake 

redevelopment, construction, and renovation activities of industrial facilities and properties that 

are heavily regulated under these programs. The construction industry is sensitive to the 

concerns of investors who make the business decisions to build (or not build) new structures or 

to expand and make improvements on existing facilities. Additionally, construction costs are 

closely tied to materials costs, which are often adversely impacted by increases in business 

expenses resulting from regulatory measures necessary to receive pre-construction or operation 

permits. It is also noteworthy that the CAA's National Ambient Air Quality Standards and each 

state's ability to comply with those federal air limits and planning requirements- can jeopardize 

funding for highways and limit new construction in areas that desperately need to be revitalized 

and repaired. 

There are numerous other environmental programs under the jurisdiction of this subcommittee 

that have a direct impact on the means-and-methods of the construction process. Construction 

firms face huge civil penalties under federal environmental statutes for violations of the 

Resource Conservation and Recovery Act (RCRA) hazardous waste storage, management, and 

disposal requirements (reaching $71,264 per day, per violation); for Toxic Substances Control 

Act (TSCA) chemical (e.g., lead-based paint dust) management, reporting, and recordkeeping 

violations ($38,114 per day, per violation); and for violations under the Spill Prevention Control 

and Countermeasure regulations ($44,539 per day, per violation). 

Over the last decade, the U.S. Environmental Protection Agency has either promulgated a myriad 

of rules to expand the scope and complexity of the above-referenced programs or initiated efforts 

to do so. Regulations related to hazardous and non-hazardous materials affect the use and 
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AGC of America to the U.S. House of Representatives 

Subcommittee on Environment, Committee on Energy and Commerce 

February 15, 2017 

Page 3 of 5 

disposal of these and other construction materials. Ongoing regulatory efforts to expand the 

Lead Renovation Repair and Painting (LRRP) Program requirements could lead to onerous and 

redundant costs for commercial building renovations. Recent efforts to map out a brand new rule 

that will expand the SPCC Program beyond oil to address other hazardous substances could 

easily become unworkable on many jobsites without industry input. Across the board, 

permitting and mitigation requirements add costs and delays to new construction. The industry 

also is effected by a host of additional environmental regulations that are not the focus of 

discussion for the aforementioned hearing of the Subcommittee on Environment. 

AGC Priorities for this Subcommittee's Consideration 

AGC seeks legislative and regulatory solutions within many of these programs, including but not 

limited toAir Quality Controls -National Ambient Air Quality Standards Should be Scientifically 

Based, Attainable, and Economically Feasible. For example, AGC recommends 

legislation to: arfjust the schedule for implementation of the 2015 ozone standard; long -

term NAAQS reform to move the five-year review cycle to 10 years; expand "Exceptional 

Events" to cover ozone inversions; and provide more "tools" for states to implement 

compliant state implementation plans. 

Diesel Emissions Reductions- Oppose Diesel-Powered Construction Equipment Retroflt 

or Replacement Mandates that Put Unreasonable Financial Burdens on Contractors; 

Promote Full Funding of Voluntary Grant Programs that Provide Support to Interested 

Firms. 

Hazardous Materials- Ensure Spm Prevention, Control & Countermeasure (SPCC) 

Rules for Hazardous Substances Make Sense for the Construction lndustq. 

• Lead Paint Oppose EPA Efforts to Expand Lead-Based Paint Regulation to Areas 

Beyond What is Currently Regulated. 

Mitigation Ensure that as Many Environmental Mitigation Options as Possible are 

Available to the Contractor, and that Mitigation is Not a Barrier to Construction. 

In addition to reviewing and correcting the regulatory misadventures of the past, AGC seeks 

overall regulatory process reform that will help right the regulatory ship of the future. There are 

many reform efforts that require legislative action. AGC is supportive of reforms that enable 

greater congressional checks on rulemaking, increase public participation in the regulatory 

process, instruct agencies to choose the least costly regulatory options, require on-the-record 

hearings to help ensure sound scientific and economic data is put forth by agencies, and 

providing for more rigorous legal review of costly regulations, among other things. 
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AGC of America to the U.S. House of Representatives 

Subcommittee on Environment, Committee on Energy and Commerce 

February 15, 2017 

Page 4 of 5 

Implementation Reform: Improved, Cooperative Relationship with Industry 

To help the over-regulated construction industry hire more people to build infrastructure, federal 

agencies must reengage with the construction industry again to develop workable regulations and 

effective compliance tools. Over the past several years, many federal agencies engaged with the 

construction industry as opponents rather than partners seeking a sensible regulatory path 

forward. They have not always engaged the construction industry. Yet, they have regulated it 

immensely. Together, the llS'h Congress and the Trump administration can quickly implement a 

paradigm shift within federal agencies that allows them to regulate the industry and enforce the 

law in a coherent and reasonable manner. Policies must additionally be put forth to recalibrate 

enforcement initiatives and focus more agency resources on compliance education and industry 

collaboration efforts. 

Reduce Barriers to Infrastructure Investment through Permitting Reform 

AGC and the construction industry challenge the llS'h Congress and this administration to put 

America on a path towards truly "shovel-ready" construction projects. Although not specifically 

on the agenda for the aforementioned hearing, foremost on the list should be permitting reforms 

that establish a six month time limit for completing all federal National Environmental Policy 

Act reviews. If no decision has been made by the end of those six months, the project should 

automatically be allowed to move forward. In addition, the administration and Congress should 

establish a loser-pays provision requiring any plaintiff who files a legal challenge to block an 

infrastructure project to pay all related legal fees if their challenge is unsuccessful. 

AGC does not recommend the new administration or this Congress stop there. Opportunities 

exist to reduce permitting and regulatory review delays within the operations of U.S. 

Environmental Protection Agency, U.S. Army Corps of Engineers, and the Fish and Wildlife 

Service, among other agencies. Congress and the administration should work hand ·in-hand on 

efforts to reduce the number of agencies involved in the various approval processes to allow 

construction projects to move forward. It's difficult enough to have one agency make a decision. 

But, when dozens are involved-at a federal, state and local government level-it's no wonder 

why we wail decades to undertake significant infrastructure improvements. Not only should the 

number of agencies needed to conduct the countless regulatory and permitting reviews be 

limited, one agency should be authorized to and held accountable for moving projects through 

the process. 

AGC looks forward to working with the llS'h Congress and the new administration on these 

initiatives and others to make review and permitting processes meet today's infrastructure 

demands and needs. 

Conclusion 

In sum, AGC appreciates the opportunity to offer its insight on modernizing environmental laws 

to help build infrastructure. encourage job growth and cut red tape as well as fix the broken 
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AGC of America to the U.S. House of Representatives 

Subcommittee on Environment, Committee on Energy and Commerce 

February 15, 2017 

Page 5 of 5 

project review and permitting system. We hope the liSth Congress supports our efforts to 

change within federal agencies the paradigm of "construction industry opponent" to 

"construction industry partner." We encourage Congress to help remove the roadblocks to 

investment in infrastructure, development, and manufacturing. 

Thank you for your consideration. 

Respectfully, 

Jimmy Christianson 

Regulatory Counsel 

Associated General Contractors of America 
133 


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February 1 5, 2017 

U.S. House of Representatives 

Washington, D.C. 20515 

RE: Opposition to House Joint Resolution 59 

Dear Member of Congress: 

On behalf of our millions of members and supporters, we urge that you stand up for workers, 

first responders, and fence-line communities by opposing any the etTort to use the Congressional 

Review Act (CRA) to overturn the Environmental Protection Agency's (EPA) recently finalized 

amendments to the Accidental Release Prevention Requirements for Risk Management Programs 

(RMP). 

Americans look to Congress to protect our air, water, and families. We are counting on you to 

reject this ill-advised move to block safeguards that would save lives and better protect 

communities from facing a preventable chemical disaster. 

The need to update the RMP standards became clear on April 17, 2013, when a fertilizer plant 

explosion in West, Texas ripped through that small town killing IS people, injuring hundreds, 

and leveling dozens of homes and buildings. Among the dead were 12 first responders. Among 

the damaged and destroyed buildings were a nursing home and three of West's four schools. The 

property damage was approximately $100 million with insurance-related losses pegged at $230 

million. 

Unfortunately, there arc thousands of industrial facilities throughout our country that pose a 

substantial risk to facility workers, emergency personnel, and neighboring communities. 

Tragedies like this arc preventable and the need is great. From 2004 to 2013 alone, there were 

over 1,500 reported incidents, including chemical gas releases, liquid spills, fires, or explosions 

at RMP-covered facilities that caused harm to workers and communities. 1 These incidents 

caused over $2 billion in property damage, resulted in orders to evacuate or shelter in place for 

half a million people, and caused 17,099 injuries and 58 deaths. Today, at least one in three 

schoolchildren in America attends a school in the vulnerability zone of a hazardous facility. At 

least 50 percent of students in the states of Utah, Rhode Island, Texas, Louisiana, Nevada, 

Delaware, and Florida are in these danger zones.2 The record is clear that too frequently, too 

many Americans have had to evacuate, shelter in place, or race to pick up their child from school 

as an industrial fire burns or a toxic plume heads their way. 

The public, particularly fence-line communities- often low income neighborhoods and 

communities of color who already bear the greatest burden of living next to polluting and highrisk facilities are looking to Congress for actions to make them safer. Congress should not roll 

1 Data that chemical facilities reported to EPA show a total of 2,291 industrial incidents from 2004~20 13, including releases 

where impacts on-site or to local communities were not knovm, not measured, or not reported to EPA, EPA-HQ-OEM-2015-

0725-0002. 

2 Ctr. for Ell'ectivc Govt, Kids in Danger Zones (Sept. 2014), http://www.foretTectivegov.org/sites/defaultlfiles/kids-in-dangerzones~reportpdf. 
134 


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back the years of progress and bipartisan, interagency work it took to secure stronger chemical 

facility protections. 

EPA's RMP updates provide modest improvements that were transparently and collaboratively 

crafted with expert input and are supported by overwhelming majorities of the American public. 

These updates would improve coordination with first responders, require analysis of serious 

accidents to ensure we learn fi·om past mistakes, and ensure that plants with the worst accident 

records at least assess a range of options to improve their safety performance and planning. 

Further, please oppose any effort to use the extreme instrument of the Congressional Review Act 

here. A CRA action will chill and likely cripple industrial safety protections for years to come. 

We cannot wait for basic federal safeguards from industrial incidents, particularly when many 

industry leaders have demonstrated that alternatives to the status quo are possible and arc already 

implementing advancements in process safety, and other improvements are underway in some 

states, which arc taking steps to ensure that high-risk industries make safety a top priority. 

We request that you protect first responders, industrial workers, communities and our nation's 

infrastructure by vigorously opposing the CRA resolution and any other similar efforts to 

weaken national protections from chemical disasters. 

Sincerely, 

AFL-CIO 

Alaska Wilderness League 

Asbestos Disease Awareness Organization (ADAO) 

BlueGrecn Alliance 

Center for Biological Diversity 

Center for Science in the Public Interest 

Clean Air Watch 

Clean Water Action 

Coming Clean 

Communications Workers of America 

Earthjustice 

Elders Climate Action 

Environmental Justice Health Alliance 

Food & Water Watch 

Green Latinos 

Grecnpeace USA 

Institute for Agriculture and Trade Policy 

Interfaith Worker Justice 

International Association of Fire Fighters 

International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) 

International Union of Bricklayers and Allied Craftworkers 

Jean-Michel Cousteau's Ocean Futures Society 

League of Conservation Voters 

Made Safe 

Mi Familia Vota 

National Employment Law Project 

2 
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25128.082

Natural Resources Defense Council 

Physicians for Social Responsibility 

Protect All Children's Environment 

Rachel Carson Council 

Safer Chemicals Healthy Families 

Sierra Club 

Sustain US 

Students for a Just and Stable Future 

Union ofConcerned Scientists 

United Steelworkers 

U.S. PlRG 

Utility Workers Union of America, AFL-ClO 

Alaska 

Alaska Community Action on Taxies 

California 

American Veterans (AMVETS) 

Apostolic Faith Center 

Azul 

California Communities Against Taxies 

California Kids Indoor Air Quality 

California Safe Schools 

Coalition for a Safe Environment 

EMERGE 

National Association for the Advancement of Colored People San-Pedro Wilmington Branch 

#1069 

Ricardo Pulido 

San Pedro & Peninsula Homeowners Coalition 

St. Philomena Social Justice Ministry 

Wilmington Improvement Network 

Worksafe 

Florida 

Earth Action, Inc 

Illinois 

Citizens Against Ruining the Environment 

Respiratory Health Association 

Louisiana 

Louisiana Bucket Brigade 

Massachusetts 

MassCOSH - Massachusetts Coalition for Occupational Safety & Health 
136 


25128.083

Montana 

Montana Environmental Information Center 

New Jerscv 

NJ Work Environment Council 

New York 

Citizens' Environmental Coalition 

Greater Syracuse Council on Occupational Safety and Health 

Oklahoma 

Bold Oklahoma 

Pennsylvania 

Clean Air Council 

Texas 

Downwinders at Risk 

Washington 

SafcWork Washington 

West Virginia 

People Concerned About Chemical Safety 

4 
137 


25128.084

I American 

Forest & Paper 

• Association AMERICAN WOOD COUNCIL 

Testimony of 

American Forest & Paper Association 

and 

American Wood Council 

Subcommittee on the Environment, House Energy and Commerce Committee 

Hearing Entitled: "Modernizing Environmental Laws: Challenges and 

Opportunities for Expanding Infrastructure and Promoting Development and 

Manufacturing." 

February 16, 2017 

We appreciate the opportunity to submit testimony on the challenges and opportunities 

for promoting development and manufacturing. 

The American Forest & Paper Association (AF&PA) serves to advance a sustainable 

U.S. pulp, paper, packaging, tissue and wood products manufacturing industry through 

fact-based public policy and marketplace advocacy. AF&PA member companies make 

products essential for everyday life from renewable and recyclable resources and are 

committed to continuous improvement through the industry's sustainability initiative -

Better Practices, Better Planet 2020. The forest products industry accounts for 

approximately 4 percent of the total U.S. manufacturing GOP, manufactures over $200 

billion in products annually, and employs approximately 900,000 men and women. The 

industry meets a payroll of approximately $50 billion annually and is among the top 10 

manufacturing sector employers in 45 states. 

The American Wood Council (AWC) is the voice of North American wood products 

manufacturing, representing over 75 percent of an industry that provides approximately 

400,000 men and women in the United States with family-wage jobs. AWC members 

make products that are essential to everyday life from a renewable resource that 

absorbs and sequesters carbon. Staff experts develop state-of-the-art engineering data, 

technology, and standards for wood products to assure their safe and efficient design, 

as well as provide information on wood design, green building, and environmental 

regulations. AWC also advocates for balanced government policies that affect wood 

products. 

The forest products industry is of critical importance to the U.S. economy. More than 75 

percent of U.S. pulp, paper and wood product mills are located in rural counties where 
138 


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they often serve as an economic driver for the community, and every person directly 

employed by the paper industry supports 3.25 jobs in supplier industries and local 

communities and every job in the wood products industry supports another 2.25 jobs 

In addition to facing the challenges of an increasingly competitive global economy, 

American manufacturing must wrestle with an economy here at home that has become 

distorted by an ever-growing patchwork of mandates and incentives. The vast majority 

of these mandates and incentives are not enacted by elected representatives in 

Congress but instead are promulgated by agencies as regulations, which accumulate at 

the rate of roughly 3,500 each year. In addition, the cumbersome federal permit process 

has stymied new investment and the expansion and modernization of manufacturing 

facilities. 

The paper and wood products manufacturing industry has met many costly regulatory 

challenges over the years, spending billions of dollars as part of its environmental 

stewardship. Those investments have led to major improvements in air quality, including 

a 29 percent reduction in emissions of nitrogen oxide and 53 percent for sulfur dioxide 

by our pulp and paper facilities since 2000. Unfortunately, the industry faces challenges 

from new and existing regulations -driven by lawsuits under the Clean Air Act- that 

together could impose more than $10 billion in new capital obligations on the industry 

over the next 10 years. This cumulative regulatory burden is unsustainable. 

The following are a small but important sample of the environmental regulatory 

challenges currently facing the U.S. forest products industry, and attached to this 

statement is a letter submitted to House and Senate Leadership detailing a broader 

picture of the cumulative regulatory burden faced by the industry. 

Carbon Neutrality of Biomass 

Paper and wood products mills sustainably use biomass residuals from their 

manufacturing operations to generate bioenergy. The energy is used to make products, 

and it provides significant greenhouse gas reduction benefits to the environment 

Prior to 2010, the U.S. clearly recognized forest-based biomass energy as carbon 

neutral, as the rest of the world does. In EPA's Greenhouse Gas (GHG) Tailoring Rule, 

for the first time, no such designation was made, subjecting biomass energy used in 

stationary sources to Clean Air Act permit program requirements. In 2011, EPA issued a 

rule deferring regulation of biogenic COz emissions while it studied the issue and 

pledged to complete an accounting framework for biogenic emissions from stationary 

sources by July of 2014. To date, EPA has not completed its work, and the issue 

remains in regulatory limbo. 

EPA's policy shift on biogenic COz emissions ignores the manner in which the forest 

products industry produces and uses biomass energy as part of the sustainable carbon 

cycle, harnessing energy value that would otherwise be lost. EPA has missed multiple 

opportunities to resolve the regulatory uncertainty it created. 

2 
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Forest biomass energy should be considered carbon neutral as long as forest carbon 

stocks are stable or rising on a broad geographical scale. EPA also should recognize 

the forest products industry's use of forest products manufacturing residuals for energy 

as carbon neutral regardless of forest carbon stocks because they would emit 

greenhouse gases anyway if not used for energy, and they displace fossil fuels. AF&PA 

and AWC urges policymakers to clearly recognize our industry's use of biomass for 

energy as carbon neutral. 

Modernize Air Permitting to Enable Manufacturing 

EPA's out of date, rigid, and time-consuming permitting process results in unnecessary 

delays for American manufacturing growth. Regulated industries that want to expand or 

modernize their manufacturing plants after installing the latest controls are approaching a 

permitting gridlock. 

Every five years, EPA must decide whether the National Ambient Air Quality 

Standards (NMOS) are sufficiently protective of public health. NMOS (for particulate 

matter, ozone, sulfur dioxide and nitrogen oxides) have dropped closer to background 

levels and it has becoming increasingly difficult to demonstrate that air quality 

standards will continue to be achieved with the current permit and air quality modeling 

process that must be followed. The challenges with the ever-tighter NMOS are 

exacerbated by a lack of (or inappropriate) emission measurement methods, poor 

estimates of emissions and inappropriate use of air dispersion models where 

performance has not been validated. 

EPA should establish a new permitting process and adjust its modeling criteria to be 

more reflective of actual impacts. Regulatory air quality models have the capabilities 

to calculate ambient air concentrations based on variable emissions, background, 

and meteorological conditions; however, long-standing policies that are obsolete 

considering present-day standards preclude their use. Simply stated, regulatory 

implementation of stringent new standards has outpaced the availability of reliable 

implementation tools and appropriate guidance. 

EPA should address the rapidly developing air permitting gridlock by committing 

sufficient resources and adopting more flexible policies to allow use of more realistic 

emissions and modeling data within the next year. In addition, states should be given 

more discretion in running their permitting programs including advancing new tools, 

models and permitting approaches through guidance to the states and Regional 

Administrators. 

In addition, EPA should not revise current NMOS unless evidence shows a 

significant public health concern and previous NMOS revisions have been fully 

implemented. Moving these multiple regulatory goal posts every five years creates 

significant business investment uncertainty when the air quality in the U.S. is some of 

the best in the world and will continue to get better under current programs and trends. 

A ten year review cycle would be much more appropriate. 

3 
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Elimination of Start-up, Shut-down, and Malfunction Provisions, including 

Affirmative Defense 

EPA has systematically eliminated long-standing provisions in various air rules under 

section 111 and 112 of the Clean Air Act governing how emissions during start-ups, 

shutdowns and malfunctions (so-called SSM events) are treated. In the past, EPA has 

acknowledged that even the best operating facilities have brief periods of higher 

emissions during SSM events. 

In June 2015, EPA finalized a rule that directed 36 states to revoke SSM-related 

provisions in their state rules, even though it is not required by law or necessary to meet 

air quality standards. The rule set a November 2016 deadline for state submittals that 

about twenty states met. There is a six month grace period for other states to respond. 

Facilities already have a duty to minimize the occurrence and duration of SSM events, 

but these releases are necessary to protect process and pollution control equipment, 

and above all, worker safety. EPA has failed to demonstrate that these brief periods of 

emissions are causing any harm. No Clean Air Act regulation should treat companies as 

violators and subject them to possible citizen suits for events that are unavoidable even 

when facilities are operated according to best practices. 

EPA should return to previous SSM policies where SSM emissions are covered 

separately from the limits governing "normal operations." In the case of the SSM SIP 

call, EPA should revisit the merits of the rule and in the meantime accept flexible SSM 

work practices and allow site-specific provisions to be incorporated in Title V permits 

rather than in the State Implementation Plans. 

Federal Regulatory Reform 

The president and Congress have an historic opportunity to dramatically improve the 

regulatory process to serve the public interest, promote jobs, and increase the 

competitiveness of the American pulp, paper, packaging, and wood products industry. 

We recognize that sensible regulations provide important benefits, such as the 

protection of the environment, health and safety. Unfortunately, poorly designed 

regulations unintentionally can cause more harm than good, waste limited resources, 

undermine competitiveness and jobs, and erode the public's confidence in government. 

It therefore is essential that regulations be designed to provide net benefits to the public 

based on the best available scientific and technical information, with due consideration 

of the cumulative regulatory burden. 

To support the goal of increased competitiveness of the industry, AF&PA and AWC 

recommend the following policy proposals: 

Do More Good Than Harm: Congress should enact a judicially enforceable 

benefit-cost decision rule to ensure that regulations do more good than harm. 

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Sound Science: Regulatory decisions should be based on the best available 

scientific and technical information. 

• Transparency: Agencies should disclose data to the public early, outline models 

and other key information used in high-impact rulemakings and provide an 

adequate opportunity for meaningful public input Moreover, court settlements 

between regulators and interest groups to require rulemakings should be 

published and disclosed to the public and reviewed by OIRA before going finaL 

Retrospective Review of Rules: There should be an institutionalized, 

retrospective review to streamline and simplify existing rules and to remove 

outdated and duplicative rules. The retrospective review process should be the 

beginning of a bottom-up analysis of how agencies can best accomplish their 

statutory goals. This should include a careful analysis of regulatory requirements 

and their necessity, as well as an estimation of their value to achieve needed 

outcomes. 

• Accountability: The president should direct all regulatory agencies, including the 

independent agencies, to promptly implement the preceding policy proposals. As 

all regulation starts with the delegation of lawmaking authority from Congress, 

Congress should elevate these proposals into binding law. 

The quality of air in the U.S. is among the best in the world. Implementing the changes 

suggested above will allow for the continued improvement of our environment while at 

the same time allowing American business to thrive and grow. Thank you for the 

opportunity to submit this statement 

5 
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American 

Forest & Paper 

Association 

Majority Leader Mitch McConnell 

United States Senate 

S-230, The Capitol 

Washington, DC 20510 

Office of the President 

December 16, 2016 

Speaker Paul Ryan 

US House of Representatives 

H-232, The Capitol 

Washington, DC 20515 

Dear Majority Leader McConnell and Speaker Ryan: 

Congratulations on an historic election. Paper and wood products manufacturers across 

the country are looking forward to working with the 1151h Congress and the Trump 

administration to tackle the numerous regulatory challenges confronting the U.S. forest 

products industry. The coming year offers tremendous opportunity to make lasting 

changes to the regulatory structure that will help the economy reach its full potential for 

the benefit of all Americans. 

The American Forest & Paper Association (AF&PA) represents U.S. manufacturers of 

pulp, paper, packaging, tissue and wood products with fact-based public policy and 

marketplace advocacy. More than 75 percent of forest products industry facilities are 

located in predominantly rural counties across America and are often the economic 

driver for their communities, large and small. The approximately 900,000 family wage 

jobs in our industry represent a $50 billion annual payroll, making our industry among 

the top 10 manufacturing sector employers in 45 states. AF&PA member companies 

make products essential for everyday life from renewable and recyclable resources and 

are committed to continuous improvement through the industry's sustainability initiativeBetter Practices Better Planet 2020. 

We believe that the American free enterprise system has been the greatest engine for 

prosperity and liberty in history, and we are optimistic about the future. We also 

recognize that sensible regulations provide important benefits, such as the protection of 

the environment, health and safety. Unfortunately, poorly designed regulations 

unintentionally can cause more harm than good, waste limited resources, undermine 

competitiveness and jobs, and erode the public's confidence in government. It therefore 

is essential that regulations be designed to provide net benefits to the public based on 

the best available scientific and technical information, with due consideration of the 

cumulative regulatory burden. To that end, we hope that the following list of regulatory 

challenges and recommended solutions are constructive for your work in the coming 

year. 

1101 K Street. N.W., Suite 700 • Washington, D.C. 20005 • {202)463·2700 • afandpa.org 
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Majority Leader McConnell 

Speaker Ryan 

December 16, 2016 

Page 2 

We would be happy to discuss the examples provided in the attached document in 

greater detail or to provide further information. If you have any questions, please feel 

free to contact me at (202) 463-5151. 

Enclosure 

cc: 

Senator Mike Crapo, Chair 

Best Regards, 

J{j~ cl·fi)tmtWLDonna A. Harman 

President and Chief Executive Officer 

American Forest & Paper Association 

Senate Committee on Banking, Housing and Urban Affairs 

Senator John Barrasso, Chair 

Senate Committee on Environment and Public Works 

Senator Orrin Hatch, Chair 

Senate Committee on Finance 

Senator Lamar Alexander, Chair 

Senate Committee on Health, Education, Labor, and Pension 

Senator Ron Johnson, Chair 

Senate Homeland Security and Governmental Affairs Committee 

Representative Virginia Foxx, Chair 

House Committee on Education and the Workforce 

Representative Greg Walden, Chair 

House Committee on Energy and Commerce 

Representative Jason Chaffetz, Chair 

House Committee on Oversight and Government Reform 

Representative Bill Shuster, Chair 

House Cornrnittee on Transportation and Infrastructure 

Representative Kevin Brady, Chair 

House Committee on Ways and Means 
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American 

Forest & Paper 

Association 

Summary of Key Regulations of the Forest Products Industry 

and Needed Reforms 

The regulations and reforms enumerated below cut across many regulatory areas such 

as the environment, energy and product specific issues. While the specific regulations 

have their own technical aspects, a common thread across them all is the impact they 

have on the competitiveness and viability of the paper and wood products 

manufacturers, which provide family wage jobs that support rural communities from 

coast to coast The forest products industry employs 900,000 men and women, and 

those men and women manufacture necessary paper and wood products that 300 

million Americans depend on in their daily lives, as well as billions more around the 

world. 

Environmental Protection Agencv: 

Air and Water Rules: 

• Carbon Neutrality of Biomass: 

EPA's recent policy shift, beginning in 2010, on biogenic C02 emissions ignores the 

manner in which the forest products industry produces and uses biomass energy as 

part of the sustainable carbon cycle, harnessing energy value that would otherwise be 

lost. EPA has missed multiple opportunities to resolve the regulatory uncertainty it 

created. 

;.. Forest biomass energy should be considered carbon neutral as long as 

forest carbon stocks are stable or rising on a broad geographical scale. 

EPA also should recognize the forest products industry's use of forest 

products manufacturing residuals for energy as carbon neutral regardless 

of forest carbon stocks because they would emit greenhouse gases 

anyway if not used for energy, and they displace fossil fuels. 

• Federal Human Health Water Quality Criteria (HHWQC): 

Under the Clean Water Act, states have the primary responsibility for issuing water 

quality standards and establishing the acceptable risk levels in those standards. After 

already pressuring Oregon, EPA Region X has pressured Washington and Idaho to 

adopt EPA's preferred Fish Consumption Rate (one of the variables in the HHWQC 

derivation formula) and acceptable risk levels, which would result in extremely stringent 

HHWQC. In turn, those HHWQC would result in water permit limits that would impose 

very high compliance costs or are simply unattainable, all while not providing 

meaningful human health benefits. If applied to other programs, these policies will 

determine "how clean is clean" for Superfund cleanups and make other standards 
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unfeasibly stringent and expensive, without a commensurate improvement in human 

health. 

EPA recently issued a final rule partially disapproving Washington's recently-revised 

criteria and imposing federal HHWQC in their place. The agency will soon do the same 

in Maine, based on its earlier disapproval of Maine's water quality standards. Maine 

sued EPA over that disapproval. 

> EPA should amend the federal rule for Washington (RIN: 2020-AF59) to 

fully approve the Washington water quality standards, including the 

HHWQC that were submitted for EPA approval, and rescind the 

approval/disapproval letter. 

> Similarly, EPA should amend the Maine rule (RIN 2040-AF56) and issue a 

federal rule approving the existing water quality standards and HHWQC, 

and rescind the disapproval letter. 

> As soon as possible, EPA should signal its intent to reconsider the rules so 

that Washington and Maine do not feel compelled to move forward with 

permitting under the federal rules. 

> EPA also should stop insisting on overly conservative HHWQC that impose 

virtually no additional human health protection at enormous cost. 

• Air Permit Gridlock: 

Every five years, EPA must decide whether the National Ambient Air Quality Standards 

(NAAQS) are sufficiently protective of public health. As NAAQS (for particulate matter, 

ozone, sulfur dioxide and nitrogen oxides) have dropped closer to background levels, it 

is becoming increasingly difficult to pass the test and get an approved permit. Regulated 

industries are approaching a permitting gridlock. EPA should establish a new permitting 

process and adjust its modeling criteria to be more reflective of actual impacts. The 

challenges with the ever-tighter NAAQS is exacerbated by a lack of (or inappropriate) 

emission measurement methods, poor estimates of emissions, use of unrealistic air 

dispersion models, and several rigid permitting policies. 

> EPA should address the rapidly developing air permitting gridlock by 

committing sufficient resources and adopting more flexible policies to 

allow use of more realistic emissions and modeling data within the next 

year. States should be given more discretion in running their permitting 

programs. One simple action EPA could take is to not require sourcespecific photo-chemical modeling for ozone that would thwart even more 

projects. Another improvement would be to allow adjustments in the 

modeling locations around facilities where barriers, such as roads and 

rivers, make exposure very unlikely. Finally, EPA should embrace the use 

of probabilistic methods in air modeling rather than always assume worst 

case. 

> EPA also should not revise current NAAQS unless evidence shows a 

significant public health concern and previous NAAQS revisions have been 

fully implemented. 

2 
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• Clean Power Plan: 

Increases the costs of electricity and natural gas and creates reliability challenges, 

putting American manufacturers at risk in a globally competitive economy. Vastly 

expands EPA's traditional authority far beyond specific source categories, reaching into 

the entire electricity supply and demand chain, and could serve as a model for future 

direct regulation of manufacturing industries, hitting manufacturers twice. Currently 

stayed by U.S. Supreme Court until litigation is resolved. 

~ EPA's Clean Power Plan (RIN: 2060·AR33) should be repealed. 

• Risk Management Plan Rule: 

This pending final EPA rule requires a Safer Technology and Alternatives Analysis for 

paper mills and a few other industries, including evaluation of inherently safer 

technologies; third-party audits rather than internal audits; evaluation of "root causes" 

for incidents; additional procedures around emergency response coordination; and new 

information sharing. The final rule is expected in December 2016. 

~ EPA's Risk Management Plan Rule (RIN: 2050-AG82) should be repealed. 

• Elimination of Start-up, Shut-down, and Malfunction Provisions, including 

Affirmative Defense: 

EPA is in the process of systematically eliminating long-standing provisions in various 

air rules under section 111 and 112 of the Clean Air Act governing how emissions 

during start-ups, shutdowns and equipment or process malfunctions (so-called SSM 

events) are treated. In the past, EPA has acknowledged that even the best operating 

facilities have brief periods of higher emissions during SSM events. 

On June 12, 2015, EPA finalized a rule that would direct 36 states to revoke SSMrelated provisions, even though it is not required by law or necessary to meet air quality 

standards and will impose large burdens on states with limited resources. The rule set 

a November 22"d deadline for state submittals that few states met 

Facilities already have a duty to minimize the occurrence and duration of SSM events, 

but these releases are necessary to protect process and pollution control equipment, 

and above all, worker safety. No Clean Air Act regulation should treat companies as 

violators and subject them to possible citizen suits for events that are unavoidable even 

when facilities are operated according to best practices. 

'» EPA should either return to previous SSM policies, Q! where SSM 

emissions are inappropriately lumped into limits covering "normal 

operations," set separate work practices and put site-specific provisions in 

Title V permits and establish the framework in the State Implementation 

Plans. 

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• Regional Haze: 

States have been working to implement the Regional Haze (RH) program under the 

Clean Air Act based on EPA guidance to improve visibility, especially in National Parks. 

The statute gives states the primary role for implementing air quality programs, 

including for regional haze. Recently, ENGOs have sued EPA for failing to act on state 

RH proposals. As a result, EPA is now second guessing state judgments in Texas, 

Oklahoma and Arkansas by issuing Federal Implementation Plans (FIPs) that could 

result in millions of additional expenses for an imperceptible visibility improvement. 

~ EPA should leave states to implement the Regional Haze program unless 

there are egregious oversights by states. 

Council on Environmental Quality: 

• Procurement Guideline for Paper and Paper Products Containing Recovered 

Materials: 

President Obama's Executive Order 13693 directs agencies to plan for federal 

sustainability for the next decade. Section 3(i) of E.O. 13693 requires federal agencies 

to be consistent with statutory mandates for purchasing preference, and then consider 

sustainable products with specifications, labels or standards recommended by EPA. 

The White House Council on Environmental Quality (CEQ) is evaluating increasing the 

minimum required recycled content for printing papers. Such a change would lead to 

negative economic and environmental consequences, including: 

• Fewer, not more, producers of recycled content printing paper; 

• Forcing recovered fiber to uneconomic end uses, which in turn will have negative 

ripple effects on the economics of the market-based recovery system; 

• Increased virgin fiber use in some products that currently use recovered fiber; and 

• Less paper recovery as a result of market distortion. 

In addition, E.O. 13693 has resulted in the implementation of Interim Guidelines for 

Environmental Standards and Ecolabels that will be required for federal purchasing that 

have the potential to add costs and restrict the federal market for American-made 

products. 

~ The interim guidelines on Environmental Standards and Ecolabels should 

be repealed or amended to reflect all credible labeling systems; and EPA 

should not increase the current recycled content mandate for paper 

products and should eliminate the distinction between "pre-consumer" and 

"post-consumer" recovered fiber content in the Comprehensive 

Procurement Guidelines. By doing so, it would align the Comprehensive 

Procurement Guidelines with leading market-based certification systems, 

such as the Sustainable Forestry Initiative and the Forest Stewardship 

Council, which give equal weight to "pre-consumer" and "post-consumer" 

recycled content in paper products. 

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• NEPA Guidance for Greenhouse Gases: 

On August 2, 2016, the White House Council on Environmental Quality (CEQ) released 

final guidance on how federal agencies should consider the effects of greenhouse gas 

(GHG) emissions in National Environmental Policy Act (NEPA) reviews. NEPA requires 

federal agencies to disclose and consider potential environmental effects of proposed 

actions, and analyze alternatives to mitigate these effects. The guidance expanded the 

scope of environmental impact statements and environmental assessments under 

NEPA and provides additional grounds for legal challenges to federal approvals, permits 

and licenses, including a wide variety of infrastructure projects such as energy projects. 

Advocates already have cited the guidance as an additional basis to oppose needed 

natural gas pipelines. CEQ fails to address the unique and diverse challenges that 

NEPA reviews of land and resource management actions face, overlooks the negative 

effect this one-size-fits-all guidance will have on the land management decision-making 

process, and exacerbates the risk that NEPA challenges will prevent agencies from 

fulfilling their statutory mandates to promote and authorize multiple, diverse uses of 

federal land. 

>- CEQ should repeal the NEPA guidance. 

• Social Cost of Carbon: 

EPA, the Department of Energy, and other federal agencies use the social cost of 

carbon (SCC) to estimate the climate benefits of rulemakings. The SCC is an estimate 

of the economic damages associated with a small increase in carbon dioxide (C02) 

emissions (one metric ton) in a given year. This dollar figure also represents the value 

of damages avoided for a small emission reduction (i.e. the benefit of a C02 reduction). 

The integrated assessment models used to develop SCC estimates do not currently 

include all of the important physical, ecological, and economic impacts of climate 

change recognized in the climate change literature due to a lack of precise information 

on the nature of damages and the delay in incorporating the most recent science into 

these models 

>- The sec calculation should be withdrawn and not be used in any 

rulemaking and/or policymaking until it undergoes a more rigorous notice, 

review and comment process. 

Securities and Exchange Commission: 

• Proposed SEC Rule 30e-3: 

The U.S. Securities and Exchange Commission (SEC) has issued a proposed 

regulation (Rule 30e-3), which would eliminate the current default requirement for 

mutual funds to transmit important information to investors in paper form. The new rule 

would: (1) permit funds to satisfy shareholder report requirements by making 

shareholder reports and quarterly portfolio holdings available online; (2) shift the burden 

on investors by requiring them to "opt-in" to paper delivery of important fund information 

as opposed to the current option of "opting-in" to electronic delivery; and 

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(3) potentially confuse millions of investors who suddenly stop seeing important fund 

performance material from investment firms. Shareholder reports are important 

investment tools, and implementing this change could harm millions of investors- the 

majority of whom have already expressed a preference for paper-based reports. 

>- The SEC should withdraw proposed Rule JOe-3 (RIN: 3235-AL42). 

Food and Drug Administration: 

• Proposed E-Labeling Rule for Prescription Drug Inserts: 

FDA's proposed rule, "Electronic Distribution of Prescribing Information for Human 

Prescription Drugs, Including Biological Products," would allow distribution of the 

prescribing information intended for health care professionals electronically and, with 

few exceptions, not in paper form. This information currently is distributed in paper form 

on or within the package from which the medicine is dispensed, as Congress required 

by statute. Relying on electronic labeling as a complete substitute for paper labeling 

could adversely impact public health by limiting the availability of drug labeling for some 

physicians, pharmacists, and patients by requiring them to access drug labeling through 

an electronic medium with which they might be uncomfortable, might find inconvenient, 

or that might be unavailable. The net result could seriously harm public health. If paper 

drug labeling ceases to exist, costs also undoubtedly will shift from drug manufacturers 

to pharmacies to obtain and/or provide this information to patients who ask for it. 

>- The FDA has failed to make a reasonable case for this proposed rule (RIN: 

0910-AG18), and it should be withdrawn promptly. 

Occupational Safe tv and Health Administration: 

• Combustible Dust Rulemaking: 

OSHA is currently conducting a combustible dust rulemaking. An ANPRM was issued in 

2009, and recently OSHA indicated it intends to convene a Small Business Regulatory 

Enforcement Fairness Act panel sometime in the near future. 

Such a rulemaking is unnecessary because on April 21, 2015, OSHA provided new 

guidance to inspectors that more accurately reflects real world dust properties. The 

revised guidance explicitly acknowledges that low bulk density dust, including many 

types of paper and wood dust, may not create a hazard even at an accumulation level 

of% inch or more. Instead of relying on the old 1/32 inch maximum accumulation 

criterion, OSHA inspectors are now asked to send dust samples collected at the site to 

a laboratory for bulk density determination if: (1) the material is light (such as paper dust 

or fabric fibers); (2) the layer thickness is greater than %inch and not more than one 

inch; and (3) the accumulation extends over five percent of the floor area of a room or a 

building or 1000 ft2, whichever is less. 

>- OSHA should withdraw the combustible dust rulemaking (RIN: 1218-AC41) 

and adhere to the practical combustible dust guidance issued in 2015. 

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• Globally Harmoni;z:ed Ha;z:ard Communication Standard: 

OSHA's 2012 Hazard Communication Standard seeks to align workplace hazard 

communication in the U.S. with the Globally Harmonized System (GHS). The new 

regulation requires products that are shipped as articles (such as rolls or sheets of 

paper or lumber/wood panels) that may be processed by downstream users in such a 

way that combustible dust could be generated to include an HCS-compliant label 

warning with the first shipment. However, companies that ship these products do not 

necessarily know with certainty how the products will be used/processed by customers 

and should not be required to provide such warnings unless they are shipping a material 

that is itself a combustible dust. 

:l- OSHA should amend its Hazard Communication Standard (RIN: 1218-AC20) 

so that only materials that present a combustible dust hazard in the form in 

which they are shipped need to carry a warning label. 

Internal Revenue Service: 

• Proposed Section 385 Regulations: 

The IRS on April4, 2016 issued proposed debt-equity regulations under Section 385 of 

the Internal Revenue Code which would overturn long-standing tax principles and wellestablished case law and regulations, significantly increase the cost of doing business 

in the United States, and create further obstacles to much needed investment, job 

creation and economic growth. The proposed regulations go far beyond cross-border 

mergers and apply to a wide range of ordinary business transactions by global and 

domestic companies both in and outside the U.S. The proposed 385 regulations affect 

all aspects of both a company's capital structure and the funding of its ordinary 

operations and fundamentally alter the U.S. tax rules on intercompany debt by 

overturning the well-established facts and circumstances analysis used by the courts 

and the IRS to determine whether an instrument is debt or equity. Whether an 

instrument is debt or equity has significant, collateral consequences to business 

operations that go well beyond the interest deduction on the instrument and include the 

legal classification of an entity, eligibility for withholding tax exemptions under tax 

treaties and the ability to file a consolidated tax return. These issues present a severe 

impediment to the use of intercompany financing for even normal operations and will 

significantly increase the cost of capital and limit the amount of capital available to 

invest in the United States. 

Y The IRS should withdraw the proposed Section 385 regulations (RIN: 1545-

BN40). 

The American Forest & Paper Association (AF&PA) serves to advance a sustainable 

U.S. pulp, paper, packaging, and wood products manufacturing industry through factbased public policy and marketplace advocacy. AF&PA member companies make 

products essential for everyday life from renewable and recyclable resources and are 

committed to continuous improvement through the industry's sustainability initiative -

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Better Practices, Better Planet 2020. The forest products industry accounts for 

approximately 4 percent of the total U.S. manufacturing GOP, manufactures over $200 

billion in products annually, and employs approximately 900,000 men and women. The 

industry meets a payroll of approximately $50 billion annually and is among the top 10 

manufacturing sector employers in 45 states. 

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~~ American Road & r/8/' TranSf!Of!ation Builders iiiiilii•,.,.. . Assoctatton 

Statement 

On Behalf of the 

American Road and Transportation Builders 

Association 

Submitted to the 

United States House of Representatives 

Energy and Commerce Committee 

Subcommittee on Environment 

Hearing on Modernizing Environmental Laws: Challenges and 

Opportunities for Expanding Infrastructure and Promoting 

Development and Manufacturing 

February 16,2017 

Chairman Shimkus and Ranking Member Tonko thank you for holding this hearing on 

Modernizing Environmental Laws: Challenges and Opportunities for Expanding Infrastructure 

and Promoting Development and Manufacturing. ARTBA, now in its 115'h year ofservicc, 

provides federal representation for more than 6,000 members from all sectors of the U.S. 

transportation construction industry. ARTBA's membership includes private firms and 

organizations, as well as public agencies that own, plan, design, supply and construct 

transportation projects throughout the country. Our industry generates more than $380 billion 

annually in U.S. economic activity and sustains more than 3.3 million American jobs. 

Because of the nature of their businesses, ARTBA members undertake a variety of activities that 

are subject to environmental laws and regulations. ARTBA's public sector members adopt, 

approve, or fund transportation plans, programs, or projects which are all subject to multiple 

federal regulatory requirements. ARTBA's private sector members plan, design, construct and 

provide supplies for federal-aid transportation improvement projects. As the committee 

examines the various environmental laws under its jurisdiction, ARTBA wishes to highlight 

areas in the federal Clean Air Act (CAA) where we have been a consistent advocate for sensible 

regulatory reform. 

National Ambient Air Quality Standards (NAAQS) 
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Under the CAA, the United States Environmental Protection Agency (EPA) must review the 

NAAQS for six different pollutants every five years. NAAQS compliance is a particularly 

important issue for the transportation construction sector as counties which do not meet CAA 

standards can have federal highway funds withheld. These funds are important to areas aiming 

to improve air quality through transportation improvements which ease congestion. 

Overall, EPA must reform the manner in which it reviews NAAQS. Local officials need some 

sense of predictability in order to develop long-range transportation plans to achieve emissions 

reduction goals. In many instances, counties are focusing on addressing existing NAAQS and 

any additional changes to the standards are akin to "moving the goalposts in the middle of the 

game." If counties are to effectively comply with current NAAQS, new requirements will only 

serve to hamper these efforts by opening the door to possible litigation and sanctions potentially 

resulting in the withholding of federal funding for transportation improvement projects. 

Regulations do not operate in a vacuum. Before deciding whether or not to tighten existing 

standards, EPA should take account what has already been achieved as well as expected air 

quality improvements from already approved initiatives. EPA's own data indicates overall 

concentrations of the pollutants monitored through the NAAQS have dropped "significantly" 

since 1990 and "[d]uring the same period the U.S. economy continued to grow, Americans drove 

more miles and population and energy use increased." 1 

Further, EPA should also consider the consequences of proposed NAAQS changes on other 

federal activities that promote puhlic health and economic stability. Tightening CAA standards 

could result in the withholding of federal highway funds in areas forced out of compliance with 

the new standards. This, in turn, would have negative effects on both employment and 

development for impacted counties where transportation improvements are delayed or cancelled. 

In many instances, these federal-aid projects are intended to improve demonstrated public safety 

threats. Once completed, transportation improvements can reduce congestion and improve air 

quality. Such improvements will not be realized if projects cannot go forward. A complete 

analysis of potential NAAQS revisions should include the effects of the potential for increased 

unemployment, reduced congestion relief and weakened public safety. 

Transportation Conformity 

Transportation conformity refers to the efforts of counties to conform to CAA standards and is 

arguably one of the most confusing aspects of the statute. The problem with the existing 

conformity process is caused by the fact that some have tried to turn these determinations into an 

exact science, when they arc not. Rather, conformity findings are based on assumptions and 

"modeling of future events," not often reflecting reality. Very few conformity lapses occur 

because a region has a major clean air problem. They occur because one of the parties involved 

cannot meet a particular deadline. Thus, the conformity process has become a top-heavy 

bureaucratic exercise that puts more emphasis on "crossing the t's and dotting the i's" than on 

engaging the public in true transportation planning that is good for the environment and the 

mobility of a region's population. 

1 United States Environmental Protection Agency. Our Nation's Air: Status and Trends through 2015, available at 

https :1/gisoub.epa.gov /ai r/trendsreport/20 16/. 

2 
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The problems with the conformity process are amplified by transportation plans and the State 

Implementation Plans (SIPs) with which they arc intended to conform often being out of sync 

with one another. Largely, this is due to transportation plans having very long planning horizons 

requiring frequent updates, while most air quality plans have very short planning horizons and 

are updated infrequently. As a result, many of the planning assumptions used for conformity 

determinations of transportation plans and programs are not consistent with the assumptions used 

in the air quality planning process to establish emissions budgets and determine appropriate 

control measures. In other words, because transportation plans must use the most recent air 

quality data, a perceived increase in emissions and possible conformity lapses can occur simply 

because the numbers of models relied on in the transportation plan differ from those in the air 

quality plan-not because an area's air quality has changed. 

Additionally, according to Federal Highway Administration (FHW A) guidance, "transportation 

conformity regulations specify that an air quality conformity determination can only be made on 

a fiscally constrained metropolitan transportation plan."2 In practical terms, this means an area 

trying to achieve CAA standards can only do so through projects where the funding has already 

been fully committed. This type of restriction actually discourages long-range planning by 

forcing counties to forego long-term solutions in favor of stop-gap measures because they may 

not have enough dedicated funding. 

Conclusion 

The NAAQS process and transportation conformity are just hvo areas of the CAA in need of 

reform- there are many others. As the subcommittee continues its discussion of modernizing 

the CAA it should do so with a view towards maximizing results while minimizing excessive 

regulatory requirements. 

With air quality already improving, further regulation may not be necessary and, perhaps, 

thought should be given to altering existing requirements in a manner which would reduce 

regulatory burdens without sacrificing the success which has already been achieved. We look 

forward to continuing to work with the subcommittee towards achieving cleaner air through 

efforts which strike the proper balance between environmental protection and our nation's 

infrastructure needs. 

2 Federal Ilighway Administration, "l'inancial Planning and Fiscal Constraint for Transportation Plans and Programs 

Questions & Answers," available at: https://www.fhwa.dot.gov/planning/guidlinconstr ga.cfm. 

3 
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EPA's New Source 

Review Program: 

Evidence on 

Processing Time, 

2002-2014 

1616 P S,. NW 

DC 20036 RESOURCES 
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EPA's New Source Review Program: 

Evidence on Processing Time, 2002-2014 

Art Fraas, Mike Neuner, and Peter Vail 

Abstract 

As the United States moves forward with future energy policy, it must address and resolve issues 

associated with a shift away from coal and toward natural gas. While natural gas offers a significant 

opportunity as an abundant and relatively clean fuel source, optimum development and use of this 

resource requires an efficient and effective permitting process. A long and difficult permit approval 

process unnecessarily hinders progress toward energy and environmental goals by delaying or even 

cancelling both additions to new capacity as well as the upgrading of existing capacity. This study 

provides information on the time required to obtain permits through the Environmental Protection Agency 

(EPA) New Source Review (NSR) program for refineries and for coal-fired and natural gas-fired electric 

generating plants. The study finds that processing times for NSR permits for the 2002 to 2014 period 

varied significantly across EPA regions. They were also significantly longer for coal-fired and combined 

cycle electric generating units as compared to that for combustion turbines. Finally, processing times 

were significantly longer over this period for electric generating units and refinery projects as compared 

to reported permitting times for projects from 1997 to 2001. 

Key Words: regulatory policy, energy, electricity 

t") 2015 Resources for the Future. All rights reserved. No portion of this paper may be reproduced without 

permission of the authors. 

Discussion papers are research materials circulated by their authors for purposes of information and discussion. 

The)'· have not necessarily undergone formal peer review. 
157 


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Contents 

I. Introduction ......................................................................................................................... 1 

II. EPA's New Source Review ................................................................................................ 2 

A. Background .................................................................................................................... 2 

B. Costs of the NSR Process and Permitting Delays .......................................................... 5 

C. NSR Processing Time .................................................................................................... 6 

D. Data Summary ................................................................................................................ 7 

E. Results ............................................................................................................................ 8 

III. Summary ......................................................................................................................... 14 
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EPA's New Source Review Program: 

Evidence on Processing Time, 2002-2014 

Art Fraas, Mike Neuner, and Peter Vail• 

I. Introduction 

The production and use of coal, oil, and natural gas are critical elements in the continued 

economic performance of the United States. As the country moves forward with future energy 

policy, it must address and resolve issues associated with a shift away from coal and toward 

natural gas. 1 In his State of the Union Address, President Obama acknowledged the importance 

of natural gas as it relates to the present and future of US energy: 

It's the bridge fuel that can power our economy with less of the carbon 

pollution that causes climate change .... I'll cut the red tape to help states get 

[natural gas factories] built. ... My administration will keep working with the 

industry to sustain production and job growth while strengthening protection of 

our air, our water, and our communities. 2 

While natural gas offers a significant opportunity as an abundant and relatively clean fuel 

source, optimal development and use of this resource require an efficient and effective permitting 

process for development, infrastructure, and industrial and electric generation use. A long and 

difficult permit approval process unnecessarily hinders progress toward energy and 

environmental goals by delaying or even canceling both additions of new capacity and the 

upgrading of existing capacity. 

• Art Fraas is a visiting fellow at Resources for the Future (RFF), fraas@rff.org. Michael Neuner is a JD candidate 

(May 2015) at the Louisiana State University Paul M. Hebert Law Center. He joined the RFF staff fbr a 2014 

summer internship. with support by the LSU John P. Laborde Energy Law Center. Peter Vail is a research assistant 

at RFF. The authors acknowledge helpful comments from Keith Delton. JctTHo!mstcad, and Richard Morgenstern. 

We are solely responsible for any errors in the paper. 

1 The mix offuels for electricity generation in the United States is changing. US ENERGY INFORMATION 

ADMINISTRATION (Nov. 8. 20 13). available at http://www.cia.gov/todayinenergv/detail.efm?id~ 13731. See also 

Fuel \l!ix j(,r U.S. Electricity Generation, US ENYIRO;;MENTAL PROTECTION AGENCY (last updated Feb. 2. 2014), 

available at http://www.epa.gov/cleanenergy/energy-and-you/. In 2013. coal constituted 39% of the fuel for 

electricity generation. while natural gas \vas second, at 27%. EPA's proposed Clean Climate Plan will continue this 

shit\ in fuel mix. Under its proposed rule, EPA mandates a 30% cut in carbon emissions by 2030 (from 2005 levels). 

The agency projects that utility response to its proposed program \vould also reduce particle, nitrogen oxide, and 

sulfur dioxide emissions by more than 25%. 

2 Press Release, President Barack Obama·s State of the Union Addre,, OFFICE OF THE PRESS SECRETARY (Jan. 28, 

2014 ), available at http://www. wh itehousc. ~ov/thc-press-office/20 14/0 1/28/prcsidcnt-barack-obamas-statc-unionaddress. 
159 


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The purpose of this study is to provide information on the time required to obtain permits 

through the US Environmental Protection Agency (EPA) New Source Review program tor 

refineries and for coal-fired and natural gas-fired electric generating plants. 

II. EPA's New Source Review 

A. Background 

In the 1977 Amendments to the Clean Air Act (CAA), Congress established regulations 

affecting the permitting of all new major sources of pollution.3 The basic goal of New Source 

Review (NSR) is to ensure that "air quality does not worsen where the air is currently unhealthy 

to breathe [nonattainment areas], and air quality is not significantly degraded where the air is 

currently clean [attainment areas]."4 New major sources located in nonattainment areas must 

provide offsets for their emissions and must show that they will install and operate pollution 

controls that achieve the lowest achievable emission rate (LAER). 5 In attainment areas, New 

Source Review requires preconstruction review to ensure that all new major sources and major 

modifications of existing sources usc the best available control technology to limit emissions. 6 

This review also requires air quality modeling to ensure that there is no significant deterioration 

in air quality in attainment areas. Section 165(c) of the CAA requires EPA to complete NSR 

within one year. 7 

New Source Review construction permits may be issued by state environmental agencies 

under State Implementation Plans (SIPs) approved by EPA. These SIPs must he at least as 

3 New Source Review (NSR) applies to new facilities, additions to existing facilities. and modifications to existing 

facilities and processes. 

4 NSR 90-Day Review Background Paper, "Jt,TIONAL ENERGY POLICY DEVELOPMENT GROUP, all (June 22, 2001), 

available at http://www.epa.gov/nsr/documents/nsr-review.pdf. (llereinafler, NSR 90-Day Review Background 

Paper). 

5 Nonnttainmcnt areas arc those EPA has determined to have air quality levels that do not meet the National 

Ambient Air Quality Standards (NAAQS). 

6 Attainment areas are those EPA has determined to have air quality levels that meet (or are better than) the 

N/\AQS. For new sources~ NSR is triggered if the emissions qualify as •·major,'' whereas existing sources making 

modifications trigger NSR only when the modification results in a significant increase in emissions. See NSR 90-

Day Review Background Paper, at 2. 

7 Applicants have only rarely gone to court to force EPA action. For example, see Avenel Avenal Power Ctr .. LLC 

v. EPA, 787 F. Supp. 2d I (D.D.C. 2011). There is no comparable requirement in the nonattainment provisions of 

the CAA. 

2 
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25128.107

stringent as the federal regulations. 8 In nonattainmcnt areas. a state's NSR program must be an 

EPA SIP-approved program meeting the criteria in EPA's NSR regulations. 9 Where the state has 

failed to develop an approved SIP, NSR permits may be issued by the states through delegated 

programs. 10 Where EPA has delegated permit authority to a stale, the state must use EPA's 

permitting regulations. 11 In some cases, states have approved SIPs for some conventional 

pollutants but must rely on delegated authority for other pollutants. 12 Finally, some states have 

on occasion refused to operate an NSR permitting program, and in such cases, EPA has carried 

out NSR review under its NSR regulations. 

Whether NSR applies to a particular construction project depends on the location 

(attainment or nonattainment area), amount of the emissions, and type of facility (new 

construction or a modification to an existing facility). 13 Generally, New Source Review in 

Prevention of Significant Deterioration (PSD) areas applies to facilities that will emit over I 00 

tons/year if the facility falls into one of28 specific industrial categories or 250 tons per year for 

other sources. 14 In nonattainment areas, the trigger for NSR ranges from I 0 to I 00 tons per year, 

depending on the air quality in the area. 15 New sources under construction are subject to NSR if 

their potentia! emissions will exceed the major threshold. 16 For existing sources, only "major 

modifications" that result in a physical change in the plant or the method of operation that results 

in an increase in emissions are subject to NSR rcvicw. 17 With existing sources, NSR is triggered 

only when the change results in a significant net emissions increase that surpasses the 

8 See id at2. 

9 Id. 

IO Where You Live, lJS ENVIRONMENTAL PROTECTION AGENCY (last updated Dec. 11, 2013), ami/able at 

http://www.epa.gov/nsr/where.html. Agencies at the state or loca11cvcl develop individual plans for NSR permitting 

and submit the plans to EPA. If EPA approves the plan. the state reviews and issues permits according to its State 

Implementation Plan (SIP). Though SIPs may differ among states, each must be at least as stringent as the standards 

set by EPA. A large majority of states have permitting authority through their SIPs. 

11 /d. Currently Washington. Minnesota, Illinois. the District of Columbia. Massachusetts. Hawaii, Puerto Rico. and 

the US Virgin Islands are delegated authority to permit according to EPA standards. 

12 Currently, California, Arizona, Nevada, and New Jersey have NSR programs with combined SIP and EPA 

permitting authority. 

13 ,)'ee supra note 7, at 3. 

14 !d. 

15 !d. 

16/d. 

17 ,)'ee id. However, these types of changes exclude routine maintenance or repair. increase in hours of operating, 

and so on. 

3 
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25128.108

significance level for the PSD or nonattainment area. 18 The facility may avoid NSR if it can 

''offer past or future emission decreases at its other units to counterbalance the increase from the 

proposed change." 19 Thus the net increase from the facility as a whole-instead of the projected 

emissions increase of the modified unit(s)-is compared with the significance level for the 

facility. 20 

New Source Review will play an important role as the United States moves forward in 

addressing climate change. 21 The Environmental Protection Agency has proposed to lower 

carbon emissions from the electric generating sector-the largest single source of carbon 

pollution in the United States.22 EPA's proposed Clean Power Plan aims to cut carbon emissions 

from the electricity generating sector by 30% from 2005 levels.23 EPA projects that the electric 

utility sector will shift away from coal and rely more heavily on relatively cleaner-burning 

natural gas to implement the proposed rule.24 An efficient NSR permit process will be important 

in facilitating this transition. 

18 See id at 3-4. 

19 NSR 90-Day Review Background Paper, at 4. 

20 /d. 

21 See Justin Gillis & Henry Fountain, Tt)•ing to Reclaim Leadership on Climate Change, THE NEW YORK TIMES 

(J unc I, 20 14), available at http://www.nytimcs.com/20 !4/06/02/us/politics/obama-trics-to-rcclaim-lcadership-onclimatc-change.html? r~O. 

22 See Orerview of Greenhouse Gases, US ENVIRONMENTAL PROTECTION AGENCY (last updated July 2, 2014), 

available at http://\VWW.cpa.gov/c!imatechange/ghgemissions/gascs/co2.html. Electric generating power plants emit 

2.2 billion tons of carbon dioxide per year, accounting for about 40% of US emissions. See also Section 1II(d), 42 

US Code§ 7411: "The Administrator shall prescribe regulations which shall establish ... a plan which (A) 

establishes standards of performance for any existing source for any air pollutant (i) for which air quality criteria 

have not been issued or which is not included on a list published under section 7408(a) ofthis title or emitting from 

a source category which is regulated under section 7412 of this title but (ii) to which a standard of performance 

under this section would apply if such existing sources \".'ere a nevv source." 

23 See Press Release, EPA Proposes First Guidelines to Cut Carbon Pollution from Existing Power Plants/Clean 

Pmver Plan is flexible proposal to ensure a healthier environment, spur innovation and strengthen the economy, US 

ENVIRONMENTAL PROTECTION AGENCY (June 2, 2014), available at 

http ://vosem ite.epa.gov I opaladmpress.nsf!bd4 3 79 a92ceceeac8 5 2573 5 900400c2 7/5 bb6d2066 8h9a 184 85257 eeb0049 

Oc98!0penDocument. EPA also projects that shifts in the fuel mix within this sector will reduce sulfur dioxide, 

nitrogen oxides, and particulate pollutants by 25%. 

24 lfmr Much Carbon Dioxide Is Produced When Differenr Fuels Are Burned7 . ENERGY !~FORMATION 

ADMINISTRATION (last updated June 4, 2014), ami/able at http://www.eia.gov/tools/faqs/faq.cfm?id~73&t~1I. This 

report states that coal produces 228.6 pounds of C02 per million Btu of energy. compared with 117.0 pounds of C02 

per million Btu of energy for natural gas. 

4 
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25128.109

B. Costs of the NSR Process and Permitting Delays 

The permit application process can involve up to five different stages: permit preparation; 

determination of application "completeness"; public notice and comment; response to comments; 

and possible administrative and judicial appeals. 25 EPA's 200 I NSR Report notes that "most 

developers describe [NSR] permitting as an extremely complex and time-consuming process."26 

The NSR process imposes direct costs in terms of the time and resources required to prepare the 

permit application (and to provide responses to questions and issues that arise in the permitting 

process). In addition, this multistep process may impose additional costs associated with the 

uncertainty and delay that attend the permitting process. For example, EPA's 2001 NSR 

Background Report provides the following description of the indirect costs associated with 

permitting delays: "Permitting (including required public hearings and comment processes) can 

be costly not only because of the time and human resources involved, but also because of 

uncertainty and delay."27 

These costs could include both financial costs and penalties, as well as the opportunity 

costs-additional production forgone and lower emissions from these well-controlled new or 

retrofitted facilities-associated with delays in the project. 28 Longer delays and uncertainty from 

intangibles such as local opposition to certain types of projects could lead to suboptimal 

decisions in upgrading existing capacity and installing new capacity.29 

Some economists and industry representatives have argued that the focus ofNSR on 

preconstruction review of new or modified plants-resulting in a "new source bias"-has 

penalized the construction of new plants and the retrofit of existing plants because of the 

significant costs associated with the NSR program. Thus it has arguably been more economic in 

25 NSR 90-Day Review Background Paper. at 5. 

26 ld. at II. 

27 See id at 22. 

29 EPA's 2001 NSR Report notes that "delay, tor example, can cause a developer to miss advantageous financial 

circumstances when interest and equity costs are low." !d. at 11. In addition~ the applicants may have penalty clauses 

associated \Vith delays in the start of construction in their contracts with engineering and construction firms. These 

penalties could be as much as $35,000 to $40,000 per day. Private communication !i·om Jeffllolmstead. 

29 These time-cost considerations may be particularly important in the petroleum refining industry) where the 

National Petroleum Council claimed that ''the most critical factor in the U.S. refining industry's ability to meet new 

fuel requirements in a timely manner is the ability to obtain permits. !d. at 44. National Petroleum Council, US. 

Petroleum Refining: Assessing the Adequacy and A.flordability ~f'l!eaner Fuels, June 2000. EPA's 200 I 

Background Report also cited statements by several oil company executives claiming that the NSR process impedes 

the US refinery industry's capacity to expand. See NSR 90-Day Review Background Paper, at 44. 

5 
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25128.110

some cases to continue to operate older, inefficient, dirtier plants than to install new facilities or 

to upgrade existing facilities with the best pollutant control technology. 30 EPA's 200 I NSR 

Report found some evidence to support this argument, reporting that NSR for existing sources 

"has impeded or resulted in the cancellation of projects which would maintain and improve 

reliability, efficiency, and safety of existing energy capacity."31 In these cases, NSR review had 

the perverse effect of delaying reductions in pollutants like S02 and NOx. 32 

C. NSR Processing Time 

For the time required to obtain an NSR permit, we have chosen to focus on the 

processing time as measured by the number of days from the date when EPA determined that the 

permit application was complete to the date of final approval for the NSR permit. The primary 

data source for this study is the Environmental Protection Agency's RACT/BACT/LAER 

Clearinghouse (clearinghouse ).33 

We identified the following as factors potentially affecting the time required by EPA to 

issue NSR permits: 

30 Gruenspecht and Stavins, New Source Review under the Clean Air Act: Ripe for Review, 20-21 RESOURCES FOR 

Tl IE FCTCRE, Spring 2002, Issue 147, available at http://mvw.rfT.org/RFF/Documents/RFF-Resources-147.pdf; and 

NSR 90-Day Review Background Paper. The direct costs to add pollution controls at existing facilities arc oiten 

significantly greater than the corresponding control cost for a new plant, hecause pollution controls can be 

incorporated in the initial design of a new facility, whereas compatibility problems and space constraints at existing 

facilities often complicate the retrofit of controls at these facilities. See supra note 7, at 18. 

31 EPA, New Source Review: Report to the President. June 2002, at I, available at 

http://wv,'\V,epa.gov/nsr/documcnts/nsr report to president. pdf. Cited by NATIONAL ACAD!::MY OF SCIENCES, New 

Source Review for Stationary Sources of Air Pollution (2006), at 45. 

32 Clean Air Act Requirements and History, US ENVIRONMENTAL PROTECTION AGENCY (last modified Aug. 15, 

2013), available at http://www.epa.gov/air/caa/requirements.html. To be sure, supporters of the current NSR 

program argue that NSR review yields important reductions in the covered pollutants. For example. EPA's 2001 

NSR Report estimated that PSD best available control technology (BACT) permitting over the period 1997-1999 

avoided 1.4 million tons per year in conventional pollutant emissions (largely reductions in S02 and SOx emissions). 

NSR 90-Day Review Background Paper. at 8. 

33 US ENVIRON\1ENTAL PROTECTION AGENCY RACT/BACT/LAER Clearinghouse (last visited July 16, 

2014), available at http://cfpub.cpa.gov/rblc/indcx.cfm?action-llomc.Home. RACT stands for "reasonably 

available control technology," BACT for "best available control technology," and LAER for "lowest achievable 

emission rate." 

6 
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25128.111

• Type of Project: natural gas simple cycle combustion turbines, natural gas combined 

cycle turbines, natural gas-fired boilers and furnaces, coal-fired boilers and furnaces, or 

petroleum and natural gas refineries 34 

• Throughput: the size or capacity of the project, measured in million British thermal 

units per hour (mmBtu/hr).35 

• Year: the year in which approval for the permit was granted. 36 

• PSD: designation of the location of the facility in an attainment area (where the air 

quality is better than the NAAQS) versus a nonattainment area (where the air quality is 

worse than the NAAQS). 37 

• Region: EPA region (or group of EPA regions) where the facility is Iocated.38 

• Type of Permit: new greenfield facilities, modifications to existing processes, new 

additions to existing facilities, a combination of modifications and additions to existing 

facilities, or unspecified. 

We also used a simple ordinary least squares (OLS) regression to help identify the efTects of 

these factors on processing time. The OLS results are presented for coal and natural gas-fired 

EGUs and for the full sample, including refinery projects, in Table 9. 

D. Data Summary 

The primary data for this study arc from the EPA's clearinghouse database. The 

clearinghouse is a compilation of the NSR permits that have been approved by local and state 

permitting agencies and submitted to EPA for the clearinghouse database. Our sample, covering 

34 Utility-grade coal and natural gas boilers and furnaces arc those with a capacity greater than 250 mmBtu/hr. 

Industrial-size coal and nat mal gas boilers and furnaces have a capacity greater than 100 but less than 250 

mmBtu/hr. The natural gas turbines in the dataset are all considered large combustion turbines if they have a 

capacity greater than 25 megawatts (MW). 

35 Size is listed in the clearinghouse data as mmfltu/hr. megawatts, or horsepower (though the third is rare). We 

have converted megawatts and horsepmver to mmBtu/hr. 

36 The year can also be used to identify potential differences in NSR permitting for the Bush administration (2002-

2008) and the Obama administration (2009-prescnt). 

37 While attainment versus nonattainment status differs by pollutant group, where a facility falls in both attainment 

and nonattainment areas JOr diftCrcnt pollutants, we treat the facility as being located in a nonattainment area. Note 

that the RBL data suggests that all the permits for a facility arc approved at the same time. 

3S We used a grouping of northeastern states (EPA regions 1, 2, and possibly 3). 

7 
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25128.112

the period from January 2002 to September 2014, includes 686 NSR permits: 104 coal, 416 

natural gas, and 166 refinery projects. 39 

Reporting to the clearinghouse is mandatory for projects in nonattainment areas; 

however, states are not required to report PSD permitting information. Because of this, EPA 

believes that the actual reporting rate to the clearinghouse is only approximately 50% of eligible 

NSR projects. We believe, however, that our sample is representative of the EPA permit process. 

We compared the clearinghouse information with permitting information provided by 

individual state agencies, specifically those in Mississippi, Iowa, Virginia, Georgia, Missouri, 

Texas, Illinois, and Oregon. Cross-checking the state-level permit data showed that the permits 

available online from state databases were largely consistent with the clearinghouse data. The 

few exceptions largely involved permits that had only recently been issued and had not yet been 

added to the clearinghouse database. While the state-level data proved useful for verification and 

cross-checking purposes, the clearinghouse data proved to be much more complete and 

comprehensive than any of the state databases. 40 Thus, although the clearinghouse reporting rate 

may be only about 50%, we believe the clearinghouse data accurately reflect the available statelevel data and that a further effort to collect data from state sources would not substantially 

augment the clearinghouse data. 

E. Results 

Over the period from 2002 to 2014, the nationwide average time to obtain an NSR permit 

for coal and natural gas-fired electric generating units (EGUs) and refineries in PSD areas was 

420 days. 41 The permitting time varied by the type of facility; for example, it took 377 days for 

natural gas-fired plants and 404 days for coal-fired plants. In PSD areas, there was a three-month 

difference in permitting times between combined cycle EGU (419 days) and combustion turbines 

(319 days). Finally, the NSR permitting time for refinery modifications and additions in PSD 

areas was 537 days (Table 1). The distributions arc skewed-median values are less than the 

mean-with some projects requiring substantially longer to obtain NSR approval. Our OLS 

39 We excluded 47 permits identified as "\mspecificd." 

-IO For example~ many state~levcl agencies list only the name of the applicant company and the date of permit 

approval. 

41 Calculated from the date the application was determined to be complete to final agency approval. This calculation 

docs not include any potential delays facilities faced before the permitting agency deemed the application complete. 

Court challenges to the approved permits-and any associated delays to the start of construction-have not been 

included in this calculation. 

8 
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25128.113

results indicate that average processing times for approval of coal-fired and combined cycle 

EGUs are significantly longer than for combustion turbines. 

Table 1. Permitting Time (Days) by Project Type in PSD Areas 

Mean Median Number 

Coal 404 265 96 

Natural gas 377 290 388 

Simple cycle 319 247 120 

Combined cycle 419 369 131 

Refineries 537 297 154 

~-erage 420 294 638 

The time required to obtain an NSR permit in PSD areas was significantly longer during 

the 2002 to 2014 period than from 1997 to 2001.42 Table 2 presents a comparison ofNSR 

permitting times over the two periods. EPA reported an average time to obtain an NSR permit 

over the 1997-200 l period of 7.2 months, or 219 days. 43 The average processing time over the 

1997-2001 period was 228 days for simple cycle gas turbines and 304 days for a new coal-fired 

EGU, as compared with approval times of 319 days for combustion turbines and 496 days for 

new coal-tired EGU projects over the more recent 2002-2014 period.44 The most dramatic 

difference has occurred for NSR projects at refineries. EPA reported that over the 1997-2001 

period, the average approval time for modifications at refineries was only 160 days,'5 but over 

the more recent 2002-2014 period, the time to obtain approval for refinery NSR projects 

averaged 480 days. Sources familiar with the NSR program have suggested several factors that 

may account for this substantial increase in processing time: the NSR review has become a more 

complex process over time; states have reduced the resources for NSR review because of budget 

pressures; and environmental groups are better funded and more aggressive in contesting NSR 

permit applications.46 

42 2001 NSR 90-Day Review Background Paper. 

43 /d. at 7. 

44 !d. at 9. 

45 !d. at 30. 

46 Appeals of a permit decision to EPA's Environmental Appeals Board by interested parties may also contribute to 

a delay in a final NSR permit action. 

9 
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25128.114

Table 2. Comparison of PSD Permitting Time 

I Mean -- I Median Number 

EPA's Clearinghouse Database: 2002-2014 

Natural gas: simple 319 247 120 

cycle 

Coal: new construction 496 367 43 

~! Retlnery: modit!cation 480 286 Ill 

or additiOJUl()_rmit 

EPA's 2001 NSR RcJ?.Cll!; 1997-2001 

Natural gas: simple ~ >250 

cycle 

Coal: new construction 304 10 

permit 

Retlnery: modification 160 10 

or addition permit 

The OLS results also show a statistically significant difference in permitting times across 

some of the EPA regions. 47 NSR projects in EPA regions 7 and 8 were approved with the 

shortest average permitting times-as short as 217 days for projects in region 7. Region 9 had 

the longest average processing time, at 777 days (Table 3). This general pattern across EPA 

regions also applies to PSD permitting times for natural gas-fired EGUs (Table 4). Again, the 

distributions are skewed, with some projects having experienced substantially longer delays in 

obtaining NSR approval. 

Table 3. Permitting Time for All Facilities in PSD Areas by EPA Region 

Mean Median Number 

Regions 1 ,2,3 443 386 59 

Region 4 321 237 78 

Region 5 386 258 94 

Region 6 427 336 234 

Region 7 217 182 41 

Region 8 317 282 42 

Region 9 777 562 52 

Region 10 468 311 38 

Averal(e 420 294 638 

47 EPA regions l, 2. and 3 were combined fOr analysis purposes because the state programs in these regions have 

been coordinated to achieve regional air quality objectives (e.g., the OTC NO., budget program and RGGl). In 

addition. the RACT/BACT/LAER Clearinghouse database included relatively fewer entries lor these regions. 

10 
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25128.115

Table 4. Permitting Time for Natural Gas Permits in PSD Areas by EPA Region 

Figure 1. Map of EPA Regions 

Substantial differences in processing times occurred for new versus existing combined 

cycle and coal-fired plants. Average processing times were 483 days for new combined cycle 

plants and 413 days for projects at existing sites. (Table 7.) There was an even greater difference 

in the average permitting times [or new versus existing coal plant projects: 495 days for new 

greenfield coal-fired facilities compared with 322 days for projects at existing facilities. (Table 

8.) The OLS results indicate that these dillcrences are statistically significant. 

11 
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25128.116

Year 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

20I3 

2014 

Table 5. Average Permitting Time for Natural Gas 

(Including PSD and Nonattainment Areas) 

All natural gas New permits Additions Modifications 

Mean Number Mean Number Mean Number Mean Number 

321 73 324 47 299 25 769 1 

379 64 362 36 406 27 267 I 

612 46 521 27 829 13 551 6 

463 27 665 15 124 3 241 9 

290 23 355 6 286 II 231 6 

343 24 371 16 393 3 223 5 

377 21 384 3 715 4 278 14 

409 33 439 25 364 5 233 3 

468 24 554 14 372 5 321 5 

436 21 587 8 415 5 297 8 

268 31 245 I4 223 II 403 6 

225 26 270 II 228 7 161 8 

235 3 - 0 - 0 235 3 

Average 384 416 411 222 391 119 293 75 

Table 6. Average Permitting Time for Simple Cycle Natural Gas 

(Including PSD and Nonattainment Areas) 

Year New permits Additions Modifications 

Mean Number Mean Number Mean Number 

2002 241 I8 17I 5 - 0 

2003 255 I7 272 7 - 0 

2004 501 8 811 5 311 3 

2005 386 6 124 3 190 3 

2006 78 3 263 4 153 I 

2007 332 4 435 2 114 2 

2008 260 1 620 I 142 3 

2009 369 5 303 2 241 2 

2010 576 4 673 I - 0 

2011 432 2 432 2 317 2 2012 ___ 128 3 128 1 631 1 -

2013 472 1 245 2 118 3 

2014 - 0 - 0 - 0 

Average 315 72 357 35 221 20 

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25128.117

Table 7. Average Permitting Time for Combined Cycle Natural Gas 

(Including PSD and Nonattainment Areas) 

Year New permits Additions Modifications 

Mean Number Mean Number Mean Number 

2002 378 25 305 II 769 I --- 2003 523 14 522 11 - 0 

2004 804 11 1262 1 790 I 

2005 547 4 - 0 319 3 

2006 -- 0 330 3 281 3 

2007 623 2 - 0 92 I 

2008 881 1 964 2 323 7 

2009 449 7 - 0 218 1 

2010 550 8 167 1 241 2 

2011 437 3 174 I 330 4 

2012 305 6 216 4 417 4 

2013 206 5 184 2 - 0 

2014 - 0 - 0 193 l 

Average 483 86 413 36 364 28 

Table 8. Average Permitting Time for Coal (Including PSD and Nonattainment Areas) 

Year All coal New permits Additions Modifications 

Mean Num Mean Numbe Mean Number Mean Number 

ber r 

2002 596 9 283 5 987 4 - 0 

2003 787 7 874 6 - 0 265 I 

2004 I 465 12 338 6 804 3 379 3 

2005 306 12 302 4 90 6 961 2 

2006 311 13 405 4 173 5 389 4 

2007 269 13 258 6 212 5 446 2 

2008 249 8 115 3 170 4 366 I 

2009 579 7 

~ 4 329 3 - 0 

2010 391 10 6 162 4 - 0 

2011 908 5 72 2 599 3 - 0 

2012 215 5 164 I 228 4 - 0 

2013 131 2 - 0 131 2 - 0 

2014 73 1 - 0 73 1 - 0 

Average 419 !04 495 47 322 44 472 13 --

13 
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The data also show substantial year-to-year variation in processing times, with markedly 

longer processing times over the 2003-2005 and 2009-2011 periods. (Tables 5 and 8.) The 

increase in permitting time over the 2003-2005 period may reflect the uncertainty in the NSR 

program with the DC Circuit Court review of EPA's 2002 and 2003 revisions to the program. 48 

The longer processing times over the 2009-20 II period may reflect a transition as the Obama 

administration put its climate policy in place. Note that the clearinghouse database contains very 

few NSR projects for EGUs in the last few years 

Across all project types, average permitting time for projects located in nonattainment 

areas was roughly five and a half months longer than the time required for projects located in 

attainment areas. (Table 9.) This difference was particularly marked for refinery projects in 

nonattainment areas. For coal-fired and natural gas-tired EGUs, the difference in processing 

times between nonattainment and attainment areas was roughly three months, but the difference 

was not statistically significant. 

Finally, processing times were not sensitive to the size of the project. Instead, variations 

in the required time to obtain an NSR permit appear to be related to the type of project (e.g., 

combustion turbine or coal-fired EGU) and to site-specit1c factors such as location. (Table 9.) 

Ill. Summary 

Regarding the 2002-2014 period, the clearinghouse data suggest the following: 

• Significant variation occurred across EPA regions in the processing time required for 

approval of energy-related projects at refineries and coal- and oil-fired EGUs. 

• Average processing times for new combined cycle EGUs were roughly comparable to the 

times for new greenfield coal-fired plants. (Note, though, that the clearinghouse database 

had only one additional NSR permit approved for a new coal-fired plant in 2012 and no 

additional permits for these plants in 2013 and 2014.) 

• Average processing times for NSR permits issued over the 2002-2014 period were 

substantially longer than the reported permitting times for the 1997-200 l period. 

48 The DC Circuit largely upheld EPA's 2002 revisions to its NSR program in June 2005. New York v. EPA, 413 

F.3d 3 (DC Cir., June 24, 2005). On December 24,2003, however, the DC Circuit blocked the 2003 NSR rule 

revising the routine maintenance) repair, and replacement provisions from going into effect until the court reached a 

final decision. In New York II, the DC Circuit held that the 2003 NSR revision was invalid. New York v. EPA, Case 

};o. 03-1380 (DC Cir., March !7, 2006). 

14 
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Resources for the Future Fraas, Neuner, and Vail 

Table 9. OLS Regression Results 

Regressors Coal and NG Full sample facilities only 

EPA_regionl23 -15.852 -30.046 

(53.77) (50.93) 

EPA _region4 -58.501 -91.374** 

(40.74) (39.02) 

EPA_region5 -20.606 -8.945 

(51.14) (44.46) 

EPA _region? -175.881 *** -168.572*** 

(44.59) (44.5) 

EPA_region8 -130.258*** -121.281** 

(49.37) (53.5) 

EPA_rcgion9 157.708** 329.438*** 

(77.65) (78.43) 

EPA_regionlO -41.933 -2.867 

(47.65) (68.04) 

ycar_2003 58.358 5.272 

! (47.31) ( 49.94) 

year_2004 235.938*** 154.465** 

(74.29) (67.66) 

year_2005 84.499 288.606*** 

(72.96) (85.33) 

year_2006 ---68.103 --160.745*** 

(58.2) (52.05) 

year_2007 -14.148 -45.468 

(56.45) (72.73) 

year_2008 9.709 -23.739 

(69.58) (61.18) 

year_2009 58.649 -134.019** 

(61.2) (54.42) I 

I year_2010 58.596 62.322 

(58.5) (63.73) 

year 2011 132.413 38.401 

(96.34) (90.79) 

I year 2012 -92.399** -138.021 *** 

I - (43.28) (46.1) 

15 
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Resources for the Future Fraas, Neuner, and Vail 

year2013 -88.342* -112.916** 

(47.09) (48.55) 

year2014 31.026 42.238 

(67.42) (55.73) 

permit_addn -69.748* -78.348** 

(40.54) (38.18) 

permit_ mod 8.502 41.108 

(36.77) (36.5) 

NG_combined_cycle 117.707*** 106.724*** 

(33.98) (36.16) 

N G _other _process 

120.628** 140.848** 

(53.75) (57.56) 

size_1arge 36.128 43.846 

r-------------------- -· _ _,_ (48.49) (53.83) 

coal 199.334** 214_784** 

(80.13) (85.6) 

coalXpcrmit_ addn 94.763 l 05.44 

(118_84) (110.77) 

coa1Xpermit_ mod -162.164* -219.287** 

(91.22) (99.51) 

nonattainment 108.254 165.601* 

(79.52) (82.33) 

refinery nla 252.626*** 

nla (6524) 

261.037*** 263.390*** 

1 cons i- (58.24) (65.18) 

Notes: Dependent variable is the number of days between 

an NSR permit application and approval for coal and 

natural gas facilities.*** p < 0.01, ** p < 0.05, • p < 

0.1 0_ Standard errors in parentheses. Region 6 served as 

the "baseline" region; the regression results for the other 

regions are differences from the mean permitting time for 

region 6. The mean permitting time for Region 6 for the 

full sample is 443 days and for coal and natural gas the 

mean permitting time is 406 days. 

16 
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Board of Directors 

John Applegate 

Alyson Flournoy 

Robert Glicksman 

Alice Kaswan 

Alexandra Klass 

Thomas McGarity 

Sidney Shapiro 

Amy Sinden 

Robert R.M. Verchick 

February 10, 2017 

Via email to reducingregulation@omb.eop.gov 

Dominic J. Mancini 

Acting Administrator 

Office of Information and Regulatory Affairs 

725 17th Street, NW 

Washington, DC 20503 

Re: Interim Guidance Implementing Section 2 of the Executive 

Order of January 30, 2017, Titled "Reducing Regulation 

and Controlling Regulatory Costs" 

Dear Acting Administrator Mancini: 

Advisory Council President Donald Trump's disregard of his oath to faithfully execute the 

Patricia Bauman Office of the President and preserve the Constitution's separation of 

Frances Beinecke powers has wedged you between a rock and a hard place. The interim 

Eula Bingham guidance the Office of Management and Budget (OMB) developed 

w Thompson Comerford, Jr. regarding the President's Executive Order on Reducing Regulation and 

Sally Greenberg Controlling Regulatory Costs fails to extricate your office or any other 

John Passacantando federal agency covered by the Executive Order from that tight spot. 

Henry Waxman The only way out is in reverse. President Trump should revoke the 

Robert Weissman Executive Order and you should revoke the interim guidance. 

The comments below provide examples of the fatal flaws in the 

Executive Order and the interim guidance. Both the Order and the 

guidance are rooted in false assumptions and regressive attitudes that 

cut against American values. The fact is that regulations rarely slap 

costs on blameless actors. Instead, they prevent careless actors from 

cutting costs in ways that harm innocent people. So a regulation that 

limits air pollution from power plants is not really adding new costs to 

an industry's balance sheet; it is just transferring back to the power 

plants the costs they should never have externalized to begin with. It 

has never been right to inflict serious harm like asthma or heart 

disease on people just because it is profitable. 

Implementing the Executive Order would force agencies to reintroduce 

major risks of harm into our society and unjustly shift the burden of the 

www.progressivereform.org 

455 Massachusetts Ave., NW #150-5131 Washington, DC 120001 

202-747-06981 @CPRBiog 
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Center for Progressive Reform 

Comments on regulatory budgeting EO and interim guidance 

underlying hazards from risk producers onto the shoulders of vulnerable communities. For 

example, regulations that protect our children from lead exposure have compliance costs -

Congress recognized these costs as acceptable trade-offs for the benefits that these and 

other regulations produced. Deregulatory action encouraged by the Executive Order could 

reduce those costs for the companies that produce the hazard, but doing so would transfer 

the burden from the polluting companies to families, causing irreparable harm to the 

children left unprotected. At the same time, the Executive Order would produce an uneven 

playing field for businesses that believe in protecting consumers, the public, and our 

environment from harm. In short, President Trump's Executive Order does exactly the 

opposite of what a responsible government that works for the people and believes in a 

strong economy should be doing. 

Before getting into the details, it is important to note the blatant inadequacy of the oneweek public comment period provided for this action. If they are not revoked, the Executive 

Order and the interim guidance for implementing it will have profound effects on the entire 

federal regulatory apparatus, not to mention downstream impacts on states, tribes, 

businesses, and the public. As the President himself noted, the Order is the "most 

significant administrative action in the world of regulatory reform since President Reagan 

[sic] created the Office of Information and Regulatory Affairs (OIRA) in 1981." (Actually, it 

was President Carter who created OIRA.) Rushing the process for public participation in 

developing policies of such national importance is a mistake that will lead to confusion and 

mismanagement. 

By any reasonable measure, the regulatory system has been one of our country's most 

successful governing institutions. In the last 50 years, federal regulatory agencies have 

done a remarkable job protecting people and the environment from unreasonable risks. 

During the 1960s and '70s, rivers caught fire, cars exploded on rear impact, steel workers 

inhaled benzene as a condition of employment, and smog sent legions of urban and 

suburban children to the emergency room. But today, the most visible manifestations of 

these threats are under control. Millions of people have been spared early deaths and 

terrible injury as a result. Rates of environmental degradation have been slowed in many 

cases, and even reversed. In short, the United States is much better off because of 

regulations adopted over the past half century. The undeniable effect of this Order is to 

undo this progress and to halt future steps toward building on these past successes. 1 

Indeed, it is unlikely that many of these successes would have ever been achieved had 

this Executive Order been in place. 

1 For more about the important successes of the U.S. regulatory system, see 

http://www.progressivereform.org/articles/RegBenefits 11 09.pdf. 

Page 2 of 6 
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Center for Progressive Reform 

Comments on regulatory budgeting EO and interim guidance 

The Executive Order and interim guidance ignore the reality that regulatory lookback 

programs of all shapes and sizes already abound in our governmenV The Regulatory 

Flexibility Act requires agencies to review every rule that has "a significant economic 

impact upon a substantial number of small entities" within 10 years after the final rule is 

published. Executive Order 12866 requires agencies to develop a program "under which 

the agency will periodically review its existing significant regulations to determine whether 

any such regulations should be modified or eliminated." Executive Order 13563 builds 

upon the Executive Order 12866 periodic review program and adds, among other things, 

time-consuming and resource-intensive procedures for carrying out the lookback program 

on an ongoing basis. Some regulatory lookback programs are baked right into the statutes 

that authorize the regulations. For example, the Clean Air Act directs the U.S. 

Environmental Protection Agency (EPA) to "complete a thorough review" of the agency's 

existing National Ambient Air Quality Standards (NAAQSs) and "to make such 

revisions ... as may be appropriate" at least once every five years. In the end, these existing 

programs take a scalpel to accomplish, through careful analysis, what President Trump's 

Executive Order and the interim guidance might attack with an axe. 

Upon even cursory review of the details of the Executive Order and interim guidance, it 

quickly becomes clear that the proposed regulatory budget and "pay-go" requirements are 

unworkable. 

Legal Problems 

Carrying out the President's stated intent behind the order would violate numerous 

consumer protection, environmental, and public health laws. Public interest groups and a 

union whose members would be harmed if the Executive Order were implemented have 

helpfully laid out some of those legal infirmities in a lawsuit seeking an injunction against 

implementation3 Among them: 

"Y The EPA may not consider implementation costs when establishing national 

ambient air quality standards for ozone, soot, and other criteria air pollutants;' 

"Y The Mine Safety and Health Administration (MSHA) may not reduce the protections 

afforded to miners by an existing mandatory health or safety standard when it 

promulgates a new one; 5 and 

2 Examples here drawn from Rena Steinzor, "The Real 'Tsunami' in Federal Regulatory Policy," REGBLOG, 

http://www. regblog.org/20 14/05/22/22-steinzor-the-real·tsunami·in·federal-regulatory-policy/ (May 22, 2014 ). 3 http://www.citizen.org/documents/Complaint-Public-Citizen-NRDC-CWA-v-Donald-Trump.pdf 

4 Whitman v. Am. Trucking Ass'ns, 531 U.S. 457 (2001). 

'30 U.S.C. § 811 (a)(9) 

Page 3 of 6 
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Center for Progressive Reform 

Comments on regulatory budgeting EO and interim guidance 

>- The National Highway Traffic Safety Administration (NHTSA) must consider a 

variety of issues when creating new vehicle safety standards, but the cost savings 

associated with repealing other vehicle safety standards is not among them.s 

If the Trump administration wants to alter these laws, it cannot do it by executive order. 

Congress will need to pass new legislation in the bright light of public scrutiny. 

The Administrative Procedure Act, as the Executive Order notes, would be legally binding 

on any offsetting deregulatory actions that an agency might propose. It is unclear whether 

agencies would be able to articulate a legal and policy basis, as required by the 

Administrative Procedure Act, in support of the deregulatory actions. This Executive Order 

by definition does not amend existing laws and thus cannot provide such a basis. In the 

end, the Administrative Procedure Act, in conjunction with the authorizing statutes that 

supply the legal basis for agencies' existing regulations, may pose too high a legal bar for 

agencies to overcome in implementing the Order's regulatory "pay-go" requirements_? 

Administrative Problems 

Beyond these conflicts with existing law, which are fatal to implementation of the Executive 

Order, the interim guidance has major flaws. 

The interim guidance fails to define the scope of the Executive Order in a comprehensible 

fashion. The application of the Order's requirements to all "significant" regulatory actions, 

as that concept is defined by Executive Order 12866, raises major concerns. In particular, 

many of the components of the Executive Order 12866 definition are exceedingly vague 

and, if read broadly, could cover nearly any regulatory action an agency might issue. For 

example, the "elastic clause" of the definition includes any rule that might "Raise novel 

legal or policy issues arising out of legal mandates, the President's priorities, or the 

principles set forth in this Executive order." Through the broad application of this clause 

alone, OMB could unilaterally determine that almost any regulatory action is "significant" 

and thus subject to the new onerous regulatory "pay-go" and budgeting requirements. The 

broad definition that the Order adopts risks sweeping in too many regulatory actions, 

threatening to unduly impede the important work agencies must perform. 

The vague nature of the definition and its exceptions risks creating substantial regulatory 

uncertainty, and in particular uncertainty over the enforcement and implementation of 

agencies' statutory missions. For instance, would a climate-related rulemaking by the EPA 

be covered by the Executive Order? Or would it fall within the Executive Order's stated 

exemption for "regulations issued with respect to ... national security?" After all, the 

6 49 U.S. C.§ 30111(a), (b). 7 For more on the implementation problems of the Order's regulatory "pay-go" requirements, see 

http://progressivereform.org/articles/Regulatory Pay-Go 1214.pdf and 

http:! /progressiveretorm. org/a rticlesN erchickT estimonyR eg Bu dgetSenateBud Co mm 12 0915. pdf. 

Page 4 of 6 
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Center for Progressive Reform 

Comments on regulatory budgeting EO and interim guidance 

Pentagon has identified global climate change as "an urgent and growing threat to our 

national security." 8 

Applying the Executive Order's onerous requirements to "significant guidance or 

interpretive documents" on a "case-by-case basis" also raises major concerns. Neither the 

Order nor the interim guidance explains how such case-by-case determinations will be 

made. Rather, by instructing agencies to consult with an OIRA Desk Officer, this guidance 

suggests, albeit ambiguously, that the Desk Off1cer has unilateral discretion over whether a 

guidance or interpretive document is deemed "significant" and whether the agency may or 

may not issue it. The failure to explain the criteria for such determinations obscures critical 

aspects of regulatory decision-making, thereby systematically defeating procedural 

transparency and the meaningful public accountability it would provide. Even if those 

failures were cured in later guidance from OMB, the basic model proposed here puts 

extraordinary power in the hands of Desk Officers, taking it away from agencies that have 

both the statutory authority and expertise to carry out the laws enacted by Congress. 

The interim guidance also thoroughly fails to elucidate the basic procedures for important 

issues like the processes and standards by which waivers will be granted, and the 

processes and standards by which cross-agency trades will be approved and enforced. 

The regulatory budget and "pay-go" requirements also appear to be unmanageable from 

an administrative standpoint. In essence, they transform every rulemaking action into at 

least three rulemaking actions (one for the new rule and at least two more for the 

elimination of the existing rules). As many administrative law scholars have described over 

the years, the rulemaking process is extremely time-consuming and resource-intensive. 

Nevertheless, President Trump's Executive Order would triple that burden, and it would do 

so while the administration and Congress are considering steep reductions in agencies' 

budgetary resources. It is unclear how agencies would be able to fulfill their responsibilities 

under this Order while at the same time fulfilling even the barest minimum of their statutory 

missions. Whether by accident or by design, the result of the Executive Order would be 

even more of the same "paralysis by analysis" that is already undermining our regulatory 

system, bringing to a halt the creation of health, safety, and economic safeguards needed 

and desired by consumers, businesses, communities, and the environment. 

As experts in law and public policy, our best assessment of the Executive Order and the 

guidance documents reveals an unworkable concept. No amount of fiddling at the margins 

will transform them into a coherent design for guiding our complex regulatory system. 

8 Department of Defense Response to Congressional Inquiry on National Security Implications of ClimateRelated Risks and a Changing Climate (July 23, 2015). available at http'/larchive.defense.gov/pubs/150724-

congressional-report-on-national-implications-of-climate-chanqe.pdf. 

Page 5 of6 
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Center for Progressive Reform 

Comments on regulatory budgeting EO and interim guidance 

The goal of regulatory policy should not be concerned with the "quantity" of regulations but 

with the "quality" of regulations. No matter how hard one tries to spin it- and the 

President certainly has tried it is fundamentally irrational and counterproductive to 

attempt to divorce the costs of regulation from the benefits. This Executive Order and the 

interim guidance, in an attempt to limit costs of regulation, will also ration benefits. They 

would do so without regard for the limits on rationing that Congress has created and 

sustained for decades. They are tools of Executive Branch overreach and should be 

rescinded. 

Sincerely, 

David E. Adelman 

Harry Reasoner Regents Chair tn Law 

University of Texas at Austin Schoo! 

of law 

William L. Andreen 

Edgar L. Clarkson Professor of Law 

University of Alabama School of Law 

Rebecca Bratspies 

Professor, CUNY School of Law 

William W. Buzbee 

Professor of Law 

Georgetown University Law Center 

Alejandro E. Camacho 

Professor of Law and Director, 

Center for Land, Environment, and 

Natura! Resources 

University of California, Irvine 

Carl F. Cranor 

Distinguished Professor of 

Philosophy, Faculty Member, 

Environmental Toxicology 

University of California, Riverside 

David M. Driesen 

University Professor, 

Syracuse University 

Victor B. Flatt Tom & Elizabeth Taft Distinguished 

Professor of Environmental Law 

University of North Carolina School 

of law 

David Flores, Policy Analyst 

Center for Progressive Reform 

Alyson Flournoy 

Professor and Alumni Research 

Scholar 

University of Florida Levin College of 

Law 

Eileen Gauna Professor of Law Emerita 

University of New Mexico Law 

School 

Dale Goble 

University Distinguished Professor, 

Schimke Distinguished Professor of 

Law 

University of Idaho 

James Goodwin 

Senior Policy Analyst 

Center for Progressive Reform 

Evan Isaacson, Policy Analyst 

Center for Progressive Reform 

Alice Kaswan 

Professor, and Dean's Circle Scholar 

University of San Francisco School 

of Law 

Christine Klein 

Professor 

University of Florida Levin College of 

Law 

Mary L. Lyndon Professor of Law 

St. John's Unlverslty School of Law 

Martha McCluskey Professor of Law 

University at Buffalo, SUNY 

Thomas 0. McGarity 

Long Endowed Chair in 

Administrative Law 

University of Texas School of Law 

Nina A. Mendelson 

Joseph L. Sax Collegiate Professor 

of Law 

University of Michigan Law School 

Page 6 of 6 

Joel A. Mintz, Professor of Law 

Nova Southeastern University College 

of Law 

Catherine O'Neill Professor of Law 

Seattle University School of Law 

Noah Sachs 

Professor 

University of Richmond School of Law 

Sid Shapiro 

Fletcher Chair in Administrative Law 

Wake Forest University 

Matthew Shudtz 

Executive Director 

Center for Progressive Reform 

AmySinden 

James E. Beasley Professor of Law 

Temple University Beasley School of 

Law 

Rena Steinzor 

Edward M. Robertson Professor of Law 

University of Maryland Francis King 

Carey School of Law 

Joseph P. Tomain 

Dean Emeritus and the Wilbert & Helen 

Ziegler Professor of Law 

University of Cincinnati College of Law 

Katherine Tracy, Policy Analyst 

Center for Progressive Reform 

Robert R.M. Verchick 

Gauthier- St. Martin Eminent Scholar 

Chair in Environmental Law 

Loyola University, New Orleans 

Sandra Zellmer Robert B. Daugherty Professor of Law 

University of Nebraska College of Law 
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The claim that American households 

have a $ts,ooo regulatory 'burden' 

By Glenn Kessler 

"That [regulatory] burden adds up to $15,000 per American 

household, nearly thirty percent of average household income in 

2013." 

-Rep. Bob Goodlatte (R-Va.), introducing the Regulatory 

Accountability Act, Jan. 7, 2015 

"A recent study suggests every family has a burden of close to 

$15,000 every year due to regulation. And the total cost to our 

economy exceeds $1.8 trillion due to regulation." 

-Rep. Lynn Jenkins (R-Kan.), during a news conference, 

Jan. 13, 2015 

When the same talking point starts echoing through the halls of 

Congress, The Fact Checker's antenna goes up. There's usually some 

think tank that has produced a report that, conveniently, comes up 

with a sound-bite that will grease the wheels of publicity for a 

particular legislative initiative. 

Where does this $15,000 statistic come from? 

The Facts 

The factoid comes from an annual report, Ten Thousand 

Commandments, put out by the Competitive Enterprise Institute, a 
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25128.128

free-market group founded in 1984 to combat what it considered 

excessive government regulation. So already you have to take the 

analysis with a large grain of salt. Indeed, the report is billed as "An 

Annual Snapshot ofthe Federal Regulatory State." 

The $15,000 is derived from an estimate that regulations cost at least 

$1.8 trillion a year, the figure cited by Rep. Jenkins. (This number is 

calculated in a CEI working paper titled "The Tip ofthe Costberg.") 

Then $1.8 trillion is simply divided by the number of American 

households. Presto, each household "pays" $14,974 annually in a 

hidden regulatory tax. 

Those aren't our quotation marks around "pays." That's exactly how it 

appears in the report. The word "spent" also appears in quotation 

marks when the report tries to argue that "more is 'spent' on 

embedded regulation than on health care, food, transportation, 

entertainment, apparel and services, and savings. Embedded 

regulatory costs can be said to absorb up to 29 percent of the typical 

household's expenditure budget." 

The report admits this number is "not scientific," but says "the 

comparison is a useful back-of-the-envelope way of reflecting on the 

magnitude of regulatory costs." 

But there is one huge element missing-the benefit side of the 

analysis. The report concedes that the $1.8 trillion figure purposely 

does not subtract any potential benefits from regulations. But that's 

unbalanced. Every regulations has costs-but also benefits. 

Look at cars, for example. Seat belts are a regulation, but they also 

result in fewer deaths, which is presumably a benefit. Higher fueleconomy standards raise the initial cost of a car, but also result in 

savings on gasoline over time. (Note: We have previously 
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faulted President Obama for touting the benefits of fuel-economy 

standards, without mentioning the costs.) 

It could well be that the costs exceed the benefits (though the 

annual Office of Management and Budget annual report on the issue 

frequently shows benefits far exceeding costs) but it seems to make 

little sense to completely ignore the cost side of the ledger. The 

"Costberg" report makes impassioned defense of the need not to 

consider benefits, but also, somewhat tongue in cheek, admits its tally 

consists of "apples and oranges," "haphazard distinction behveen 

consumer and employer impacts," "old data sets" and the like. 

In other words, the number is simply an idiosyncratic guesstimate. 

Annie Dwyer, a CEI spokeswoman, pointed out that the $1.8 trillion is 

similar to a $1.7 trillion estimate made by a study for the Small 

Business Administration and a $2 trillion estimate made by National 

Association of Manufacturers. Four years ago, The Fact Checker had 

looked at the SBA study, and both the SBA study and the NAM study 

have the same limitation oflooking only at the cost side ofthe ledger. 

(The NAM study, however, appears to have a more sophisticated effort 

at trying to estimate the impacts of regulations on various sizes of 

businesses, rather than a broad-brush per-household figure.) 

Dwyer said "it was a good question to ask" about the benefits, but 

insisted it was a complex undertaking and not enough information is 

available. "We are not saying that someone should not do the same 

analysis for benefits," she said. "CEI would support more cost-benefits 

analysis." (OMB, in its congressionally mandated report, focuses on 

major regulations over a 10-year period; it does not consider rules 

issued by independent agencies which, after all, are not bound by 

administration policy.) 
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25128.130

Dwyer added that the CEI report was not suggesting that the $15,000 

figure was direct cost that families had to pay. "CEI does not say 

households actually pay this much money out of pocket- that's why 

the word is in quotation marks ('pay')- because regulatory costs are 

embedded and spread across the economy," she said. "We're trying to 

explain a really complicated topic." 

The Pinocchio Test 

When we had looked at SBA figure of $1.7 trillion back in 2011, we 

noted that Thomas Donohue, president ofthe U.S. Chamber of 

Commerce, added this useful caveat when he cited it: "Now, look, 

many of these rules we need, they're importantfor the economy, and 

we support them." In other words, he conceded that there were indeed 

benefits to the regulations and that such benefits need to be 

acknowledged. 

The $15,000 figure has serious methodological problems- even the 

report admits it is "not scientific" and "back of the envelope" - and we 

fear these caveats are being forgotten as it is repeated in Capitol Hill 

news conferences and then in news reports. 

In blindly citing the $15,000 figure as a "burden,' without realizing its 

limitations or even admitting that there are indeed benefits that might 

offset at least some of the costs, lawmakers are making a misleading 

statement worthy of at least Two Pinocchios. These talking points are 

incomplete without a Donahue-like caveat. 
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;;:;;; 

~Congressional • ~ • Research Service ~ ' Informing the legislative debate since 1914--------------

Methods of Estimating the Total Cost of 

Federal Regulations 

Maeve P. Carey 

Analyst in Government Organization and Management 

January 21, 2016 

Congressional Research Service 

7-5700 

CRS REPORT 

Prepared for Members and 

www.crs.gov 

R44348 

Committees of Congress---------------------------
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Methods of Estimating the Total Cost of Federal Regulations 

Summary 

Federal agencies issue thousands of regulations each year under delegated authority from 

Congress. Over the past 70 years, Congress and various Presidents have created a set of 

procedures agencies must follow to issue these regulations, some of which contain requirements 

for the calculation and consideration of costs, benefits, and other economic effects of regulations. 

In recent years, many Members of Congress have expressed an interest in various regulatory 

reform efforts that would change the current set of rulemaking requirements, including 

requirements to estimate costs and benefits of regulations. As part of this debate, it has become 

common for supporters of regulatory reform to comment on the total cost of federal regulation. 

Estimating the total cost of regulations is inherently difficult. Current estimates of the cost of 

regulation should be viewed with a great deal of caution. 

Scholars and governmental entities estimating the total cost of regulation use one of two methods, 

which are referred to as the "bottom-up" and the "top-down" approach. The bottom-up approach 

aggregates individual cost and benefit estimates produced by agencies, arriving at a governmentwide total. In 2014, the annual report to Congress from the Office of Management and Budget 

estimated the total cost of federal regulations to range between $68.5 and $101.8 billion and the 

total benefits to be between $261.7 billion and $1,042.1 billion. The top-down approach estimates 

the total cost of regulation by looking at the relationship of certain macroeconomic factors, 

including the size of a country's economy and a proxy measure of how much regulation the 

country has. This method estimates the economic effect that a hypothetical change in the amount 

of regulation in the United States might have, considering that economic effect to represent the 

cost of regulation. One frequently cited study estimated the total cost of regulation in 2014 to be 

$2.028 trillion, $1.439 trillion of which was calculated using this top-down approach. 

Each approach has inherent advantages and disadvantages. The bottom-up approach relies on 

agency estimates of the effects of specific regulations and can also be used to estimate benefits, 

because agencies typically estimate both costs and benefits under current requirements so that 

they may be compared and evaluated against alternatives. The bottom-up approach does not, 

however, include estimates of costs and benefits of all rules, nor does it include costs and benefits 

of regulations that are not monetized-meaning that the bottom-up approach is likely an 

underestimate of the total cost of regulation. Furthermore, the individual estimates produced by 

agencies and used in the bottom-up approach may not always be accurate. 

The top-do\\'!1 approach can be used to estimate effects of rules that are not captured by the 

bottom-up approach--such as indirect costs and costs of rules issued by independent regulatory 

agencies, which are not included in the bottom-up approach-thus theoretically capturing the 

whole universe of regulatory costs. Its results are, however, entirely reliant upon a number of 

methodological challenges that are difficult, if not impossible, to overcome. The biggest 

challenge may be finding a valid proxy measure for regulation: proxy measures of the total 

amount of regulation in a country are inherently imprecise and cannot be reliably used to estimate 

macroeconomic outcomes. Because of this difficulty in identifying a suitable proxy measure of 

regulation, even if the total cost of regulation is substantial, it cannot be estimated with any 

precision. The top-down method is intended to measure only costs; measuring costs without also 

considering benefits does not provide the complete context for evaluating the appropriateness of a 

country's amount of regulation. 

For these and other reasons, both approaches to estimating the total cost of regulation have 

inherent-and potentially insurmountable-flaws. The discrepancy between the two approaches 

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and their associated estimates raises the question of the utility of using such figures in the 

regulatory reform debate. 
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Contents 

Estimating the Total Costs and Benefits of Federal Regulation ...................................................... I 

"Bottom-Up" Method: Aggregating Existing Cost Estimates ......................................................... 2 

What Is the Bottom-Up Approach? ........................................................................................... 2 

Why Use the Bottom-Up Approach? ........................................................................................ 4 

Case Study: The Annual OMB Report on the Total Costs and Benefits of Federal 

Rules ...................................................................................................................................... 5 

Background on the OMB Report to Congress .................................................................... 5 

Summary of 2014 OMB Report on Costs and Benefits ...................................................... 5 

Analysis of Bottom-Up Approach to Aggregating Costs and Benefits ..................................... 7 

Costs Not Estimated for Every Rule ................................................................................... 7 

Potential Uncertainties in Individual Cost-Benefit Analyses ............................................. II 

Questions Over Accuracy oflndividua! Cost and Benefit Estimates ............................... 12 

Measuring Costs over Time .............................................................................................. 14 

"Top-Down" Method: Estimating Costs Using Macroeconomic Modeling .................................. 15 

What Is the Top-Down Approach? .......................................................................................... 15 

Why Use the Top-Down Approach? ....................................................................................... 15 

Case Study: Crain and Crain Report ....................................................................................... 15 

Background on the Crain and Crain Report ...................................................................... 16 

Summary of the 2014 Crain and Crain Report ................................................................. 17 

Analysis of Top-Down Approach to Estimating Costs and Benefits ....................................... 19 

Importance of Accurate Measures of Regulation in Top-Down Approach ....................... 19 

Questions About Proper Model Specification ................................................................... 22 

Other Potential Methodological Issues ............................................................................. 24 

Potential for Double-Counting Costs ................................................................................ 25 

No Discussion of Benefits of Regulations ........................................................................ 25 

Summary: Advantages and Disadvantages of Two Approaches .................................................... 26 

Issues for Congress ................................................................................................................. 27 

Contacts 

Author Contact Infonnation .......................................................................................................... 28 

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Estimating the Total Costs and Benefits of Federal 

Regulation 

Federal agencies issue thousands of regulations every year. These regulations are often the means 

through which various government policies and programs are implemented. Many of these 

regulations are administrative or routine in nature and have little or no compliance cost associated 

with them. 1 A number of these regulations can, however, have a substantial effect on the economy 

in the form of costs, benefits, and transfer payments. Over the past 70 years, Congress and 

various Presidents have created a set of procedures agencies must follow to issue these 

regulations, some of which contain requirements for the calculation and consideration of costs, 

benefits, and other economic effects of regulations.' 

Federal regulations are the product of delegated legislative authority from Congress-agencies 

may promulgate regulations only with the authority from Congress to do so. As such, Congress 

has shown an interest in conducting oversight of those regulations, both on the individual level 

for particular regulations and also for the regulatory system as a whole. One way for Congress to 

conduct oversight of the regulatory system as a whole, some say, is to monitor the total cost and 

benefits of federal regulation. Comparing the estimated costs against the benefits would provide 

some insight into the potential tradeoffs of regulation. 

In recent years, many Members of Congress have expressed interest in various regulatory reform 

efforts that would change the rulemaking process.3 Proponents of these efforts argue that the 

system under which agencies currently issue federal regulations is outdated, and that federal 

agencies should be required to conduct more rigorous economic analysis of their regulations.' 

Opponents of these regulatory reform efforts argue that adding to federal rule making 

requirements could cause fewer regulations to be issued by federal agencies or could create 

delays in the issuance of federal regulations.5 As part of this debate, it has become common for 

supporters of regulatory reform to comment on the total cost of federal regulation. 

1 See CRS Report R43056, Counting Regulations: An Overview ofRulemaking, Types of Federal Regulations, and 

Pages in the Federal Register, by Maeve P. Carey for a more detailed discussion of the nature and quantity of 

regulations issued each year. 

2 For an overview of the federal rulemaking process, see CRS Report RL32240, The Federal Rulemaking Process: An 

Overview, coordinated by Maeve P. Carey. 

3 For example, in January 2015, the House of Representatives passed H.R. 185, the Regulatory Accountability Act of 

2015, which would make several changes to the current rulemaking process, including instituting more extensive costbenefit analysis requirements. 

4 For example, see U.S. Congress, House Committee on the Judiciary, Subcommittee on Courts, Commercial and 

Administrative Law, APA at65: Is Reform Needed to Create Jobs, Promote Economic Growth, and Reduce Costs?, 

1121

h Cong., I" sess., February 28,2011, 112-17 (Washington: GPO, 2011); and Business Roundtable, Using CostBenefit Analysis To Create Smart Regulation: A Primer and Key Considerations for Congress and Federal Agencies, 

December 20 14, http://busincssroun dtable.org!sites/defaultlfiles/reports/B RTo/o20Cost-Benefito/o20Anal ysis.pdf. 

5 See, for example, the debate over rulemaking "ossification," which suggests that the addition of analytical 

requirements-along with other procedural requirements-has slowed the rulemaking process, See Thomas 0. 

McGarity, "Some Thoughts on 'DeossifYing' the Rulemaking Process," Duke Law Journal, vol. 41, no. 6 (June 1992), 

pp. 1385-1462; Jason Webb Yackee and Susan Webb Yackee, "Administrative Procedures and Bureaucratic 

Performance: Is Federal Rule-making 'Ossified'?" Journal of Public Administration Research and Theory, vol. 20 

(201 0), pp. 261-282; and Richard J. Pierce, Jr., "Rulemaking Ossification Is Real: A Response to Testing the 

Ossification Thesis," George Washington Law Review, vol. 80, no. 5 (July 2012), pp. 1493-1503. 
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Estimating the total cost of regulations is inherently difficult. Current estimates of the cost of 

regulation should be viewed with a great deal of caution. 

Scholars attempting to identify an estimate for the total cost of regulation have taken two primary 

approaches that lead to radically different conclusions about the total economic effect of 

regulation. In this report, these two approaches are referred to as the "bottom-up" and the "topdown" approaches or methods. In short, the bottom-up approach aggregates individual cost 

estimates produced by federal agencies. The top-down approach relies on macroeconomic 

modeling to find a causal relationship between larger economic factors, such as gross domestic 

product (GDP), and a proxy measure intended to represent the overall amount of regulation.6 

The two approaches use entirely different methods and produce radically different results. In 

2014, the most frequently cited cost estimates resulting from each of these studies ranged from 

$57-$87 billion (using the bottom-up method) to $2 trillion (the majority-almost $1.5 trillionof which was arrived at using the top-down method).7 

This report analyzes these two approaches for estimating the total cost of federal regulations. In 

discussing each approach, the report provides an overview of the advantages, a brief case study, 

and an analysis of the potential issues or inherent problems using the case study to illustrate the 

concepts. 

The objective of this report is not to provide an estimate of the total costs and benefits of federal 

regulations, but rather, to inform the broader regulatory reform debate by identifying the 

difficulties in providing such estimates and potential problems inherent in the methods that exist. 

#Bottom-Up" Method: Aggregating Existing Cost 

Estimates 

The first approach to aggregating the total costs and benefits of federal rules is generally referred 

to as a "bottom-up" approach. 

What Is the Bottom-Up Approach? 

This method relies on estimates of costs and benefits that agencies produce during the rulemaking 

process, pursuant to several requirements." The bottom-up approach aggregates these estimates of 

costs and benefits that agencies calculate in individual rulemakings, using the sum as a 

government-wide total. Understanding the requirements under which agencies conduct these 

estimates-specifically, knowing when agencies are required to estimate costs and benefits, and 

when they are not-is important for understanding the advantages and disadvantages of the 

bottom-up approach. 

The primary requirement for most agencies to calculate estimates of costs and benefits when 

issuing rules is under Executive Order 12866.9 That executive order requires covered agencies to 

6 A proxy measure is a figure that is used to represent the value of something in a calculation or a model. 

7 To compare these figures, CRS adjusted the bottom-up numbers to be in 2014 dollars. 

'For a detailed explanation of these requirements, see CRS Report R41974, Cost-Benefit and Other Analysis 

Requirements in the Rulemaking Process, coordinated by Maeve P. Carey. 

9 Executive Order 12866, "Regulatory Planning and Review," 58 Federal Register 51735, October 4, 1993. For more 

detailed information about this and other cost-benefit analysis requirements in the rulcmaking process, see CRS Report 

R41974, Cost-Benefit and Other Analysis Requirements in the Rulemaking Process, coordinated by Maeve P. Carey. 

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assess costs and benefits for "economically significant" rules at the proposed and final rule 

stage. 10 Economically significant rules are defined in the executive order as those that may "have 

an annual effect on the economy of $100 million or more or adversely affect in a material way the 

economy, a sector of the economy, productivity, competition, jobs, the environment, public health 

or safety, or State, local, or tribal governments or communities."" The term "effect on the 

economy" means that a rule may be considered economically significant if it has costs or benefits 

of over $100 million. 12 Other provisions of Executive Order 12866 encourage agencies to 

consider costs and benefits during the rulemaking process for all rules, although those other 

provisions do not require a complete, detailed cost-benefit analysis for non-economically 

significant rules. 13 Executive Order 12866, issued by President Clinton, has remained in effect 

since I 993, and it was reaffirmed in 2011 by President Obama in Executive Order 13563. 14 The 

estimates that agencies produce under Executive Order 12866 are subject to review by the Office 

of Management and Budget (OMB). Specifically, agencies submit their rules and cost-benefit 

analyses to OMS's Office oflnformation and Regulatory Affairs (OIRA), the agency within 

OMB responsible for reviewing regulations and cost-benefit analyses. OMB has issued a number 

of guidance documents agencies are required to follow when estimating costs and benefits of 

regulations." 

In addition to these executive order requirements, certain statutory requirements for cost-benefit 

analysis, or other types of regulatory impact analysis, sometimes require agencies to calculate 

costs, benefits, and other economic effects of rules. The Regulatory Flexibility Act (RFA) requires 

regulatory impact analyses for proposed and final rules that will have a "significant economic 

impact on a substantial number of small entities. " 16 Title !I of the Unfunded Mandates Reform 

Act (UMRA) requires agencies to analyze and reduce costs associated with federal mandates 

10 This requirement for cost-benefit analysis in Executive Order 12866 does not extend to the independent regulatory 

agencies listed at 44 U.S.C. § 3502(5), which includes, for example, the Federal Reserve and the Securities and 

Exchange Commission. For more information about the exclusion of the independent regulatory agencies from this 

cost-benefit analysis requirement, see CRS Report R42821, independent Regulatory Agencies. Cost-Benefit Analysis. 

and Presidential Review of Regulations, by Maeve P. Carey and Michelle D. Christensen. 

11 Executive Order 12866 § 3(1)(1). 

12 'Ibis phrase also includes transfer rules that transfer sums of over $100 million. For a more detailed analysis of the 

definition of"major" rules, see CRS Report R41651, REINS Act: Number and Types of "Major Rules" in Recent 

Years, by Maeve P. Carey and Curtis W. Copeland. 

IJ For example, Section l(b)(6) requires agencies to "assess both the costs and the benefits of the intended regulation 

and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a 

reasoned determination that the benefits of the intended regulation justify its costs." Section l(b)(ll) requires agencies 

to "tailor [their] regulations to impose the least burden on society," while "obtaining the regulatory objectives, taking 

into account, wnong other things, and to the extent practicable, the cost.:; of cumulative regulations." These provisions 

are considered to be more like guiding principles, however, rather than specific requirements for cost-benefit analysis. 

14 Executive Order 13563, ''Improving Regulations and Regulatory Review," 76 Federal Register 3821, January 21, 

2011. 

15 For example, in 2003, OMD issued Circular A-4 to provide guidance to agencies on how to conduct cost-benefit 

analysis. See Office of Management and Budget, Circular A-4, "Regulatory Analysis," September 17,2003, at 

http://www.whitehouse.gov/omb/assets/regulatory_matters_pd!la-4.pdf. 11tis guidance provides information such as 

what discount rates agencies should use, how to choose a time period for estimating future costs and benefits, etc. Since 

2003, OMD has issued several additional guidance documents to provide instruction to agencies on complying with 

regulatory analysis requirements. 

16 The phrase "small entities" is considered in the RFA to include small businesses, local governments, and not-forprofit organizations. 5 U.S. C. §§601-612. For more information about requirements of the Regulatory Flexibility Act, 

see CRS Report RL34355, The Regulatory Flexibility Act: Implementation Issues and Proposed Reforms, coordinated 

by Maeve P. Carey. 

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upon state, local, and tribal governments and the private sector. 17 However, in practice, the RF A 

and UMRA apply to a fairly small number of rules. Finally, agencies may be required under their 

own authorizing statutes to calculate and/or consider the costs and benefits of their rules. 

The bottom-up approach for estimating costs and benefits aggregates the estimates produced 

under these requirements, producing a total, government-wide figure for the costs and benefits of 

regulation. 

Why Use the Bottom-Up Approach? 

The bottom-up approach to estimating the costs and benefits of federal regulation has several 

potential benefits. First, this approach sums up actual estimates of costs and benefits that agencies 

have calculated for individual regulations, and, as described above, most of these estimates have 

undergone review from OMB. 

Second, under the requirements discussed above, agencies estimate both costs and benefits, which 

allows the bottom-up approach to compare total estimated costs to total estimated benefits. Such 

information can be valuable for evaluation of cost-effectiveness of regulation generally (i.e., what 

the benefits received are for the costs invested) and it allows for calculation and evaluation of a 

ratio of costs to benefits. 

Third, the components of the bottom-up approach to measuring costs and benefits could be 

validated by conducting analysis ex post, or after the fact, of what the costs and benefits of 

specific regulations actually turned out to be. 1a This could be done, for example, as part of 

agencies' retrospective review process, in which agencies reanalyze existing rules and may 

consider making amendments to those rules in light of the ex post analysis. Agencies do not 

always conduct retrospective review of their regulations, however, and a retrospective review 

does not necessarily include a reevaluation of the initial cost-benefit analysis to test its accuracy. 19 

But some such studies have been conducted in recent years by scholars and observers of the 

regulatory process?0 

Despite these and other potential advantages of using a bottom-up approach to aggregating costs 

and benefits, certain issues-and potential caveats--should be taken into consideration. To help 

illustrate some of these issues, this report first introduces a case study: the most well-known and 

widely cited bottom-up study of the total costs and benefits of regulation. The report then uses the 

case study to analyze and discuss some of the problems with a bottom-up study. 

17 2 U.S.C. §§ 1532-1538. For more information about UMRA, see CRS Report R40957, Unfunded Mandates Reform 

Act: History, Impact, and Issues, by Robert Jay Dilger and RichardS. Beth. 

" Ex ante estimates are those conducted by agencies prior to a regulation being issued or taking effect, and they reflect 

the agency's prediction of what the effects of the regulation will be. Ex post estimates are done retrospectively-that is, 

after the regulation has been issued and taken effect-and they are used to evaluate the accuracy of the initial estimate 

and/or the effectiveness of the regulation. 

19 Government-wide retrospective reviews have been required since the Carter Administration, and most recently have 

been required by the Obama Administration in Executive Order 13563. 

20 See the section below entitled "Questions Over Accuracy oflndividual Cost and Benefit Estimates" for an overview 

of this literature. 

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Case Study: The Annual OMB Report on the Total Costs and 

Benefits of Federal Rules 

The most well-known bottom-up study is the report to Congress on the benefits and costs of 

federal rules, which OMB compiles annually. 21 

Background on the OMB Report to Congress 

Since the 1990s, OMB has estimated the total costs and benefits of federal regulations pursuant to 

various federal requirements. The initial requirement was in Section 645 of the Treasury, Postal 

Service and General Government Appropriations Act, 1997,22 which required the Director of 

OMB to submit a report by September 30, 1997, that provided-among other things-"estimates 

of the total annual costs and benefits offederal regulatory programs, including quantitative and 

nonquantitative measures of regulatory costs and benefits." Similar requirements were contained 

in other appropriations bills in subsequent years; as of 2015, the current requirement for OMB to 

report on the total annual costs and benefits of federal regulations is under the Regulatory Rightto-Know Act, which was enacted in 2000 as part of the Treasury and General Government 

Appropriations Act for FY200 1.23 That provision required OMB to submit to Congress each year, 

along with the President's budget, 

An accounting statement and associated report containing-

(!) an estimate of the total annual costs and benefits (including quantifiable and 

nonquantifiable effects) of Federal rules and paperwork, to the extent feasible- (A) in the 

aggregate; (B) by agency and agency program; and (C) by major rule; 

(2) an analysis of impacts of Federal regulation on State, local, and tribal government, 

small business, wages, and economic growth; and 

(3) recommendations for reform. 

OMB has submitted a report to Congress each year with a total of the costs and benefits produced 

by federal agencies pursuant to the requirements discussed above. 

Summary of 2014 OMB Report on Costs and Benefits 

The 2014 report to Congress on the costs and benefits of federal regulations was published in 

June 15, 2015.24 The principal findings of the 2014 report were as follows: 25 

The estimated annual benefits of major federal regulations reviewed by OMB 

from October I, 2003, to September 30,2013, for which agencies estimated and 

monetized both benefits and costs, are in the aggregate between $281.0 billion 

21 These reports are available on OMB's website. See http://www.whitehouse.gov/omb/ 

inforeg_regpol _reports_congress/. 

22 P.L. 104-208. 

23 P.L. 106-554, § l(a)(3) [title VI, §624], 114 Stat. 2763. 

24 The Draft 2015 report was released in October 2015, but had not yet been finalized as of the time of writing of this 

report. 

25 Office of Management and Budget, 2014 Report to Congress on the Benefits and Costs of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal Entities, available at https://www.whitehouse.gov/sites/defaultlfiles/ 

omb/inforeg/20 14 _ cb/20 14-eosl-benefit -report. pdf. 

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and $1,119.0 billion, while the estimated annual costs are in the aggregate 

between $73.6 billion and $109.3 billion.Z6 These ranges reflect uncertainty in 

the benefits and costs of each rule at the time that it was evaluated (prior to 

promulgation). 

The OMB reports demonstrate that agencies do not provide quantified and/or monetized 

information for every rule. For example, below is information on how frequently agencies 

provided quantified and/or monetized estimates of costs and benefits: 

• During FY2013, executive agencies promulgated 54 

major rules, of which 30 were "transfer" rules. 27 

Transfer rules usually implement federal budgetary 

programs as required or authorized by Congress, such 

as rules associated with the Medicare Program and 

the Federal Pell Grant Program, and are categorized 

differently by OMB because they cause income 

transfers from federally collected tax dollars to 

program beneficiaries-meaning they "may not 

impose significant regulatory costs on the private 

sector."28 In all but one of the 30 transfer rules listed 

in the report, the issuing agencies quantified and 

monetized the transfer amounts. 

In 7 of the remaining 24 major rules issued in 

Quantification vs. 

Monetization 

Quantification of costs and benefits 

involves identifying quantitative effects 

of regulations, such as identifying a 

number of persons or businesses likely 

to be affected by a rule. Monetization 

involves turning effects of rules 

specifically into dollar amounts so that 

they may be aggregated and compared. 

In some cases, a rule's effects may be 

easy to quantify but difficult to 

monetize. 

FY2013, the agencies quantified and monetized both benefits and costs. Those 

seven rules were estimated to result in a total of$33.2 billion to $87.4 billion in 

annual benefits, and $2.6 billion to $3.2 billion in annual costs.29 

• In two of the major rules, the agency was able to quantify and monetize only 

benefits. For these two rules, the agencies estimated annual benefits of $500 

million to $655 million.'0 

• In II major rules, the agencies quantified and monetized only costs, and in one 

case only partially. For these II rules, the agencies estimated total annual costs of 

about $1.6 billion to $2.3 billion.31 

• In four major rules, the agencies did not quantify or monetize costs or benefits. 

26 The numbers cited here in this CRS report are inflation-adjusted to 2014 dollars. OMB reported the totals in both 2001 

and 2010 dollars. 

27 As explained by OMB in the report, "budgetal)' transfer rules are rules that primarily cause income transfers usually 

from taxpayers to program beneficiaries" (p.8). Examples listed in the 2014 report included various education loan 

programs administered by the Department of Education, major capital investment projects administered by the 

Department of Transportation, and rules implementing the Supplemental Nutritional Assistance Program administered 

by the Department of Agriculture (see pp. 29-31 for a complete list of the major transfer rules). 

"2014 OMB Report, p. 8. 

29 1be numbers cited here were inflation-adjusted by CRS to 2014 dollars. OMB reported the numbers in 2001 and 2010 

dollars (seep. 24). 

30 It appears, though it is not entirely clear, that these numbers are reported in 2001 dollars (seep. 2). Adjusted for 

inflation to 2014 dollars, the estimated range ofbenefits for these two rules would be $648.8 million to $850.0 million. 

31 It appears, though it is not entirely clear, that these numbers are reported in 2001 dollars (seep. 2). Adjusted for 

inflation to 2014 dollars, the estimated range of costs for these 11 rules would be $2.1 billion to $3.1 billion. 

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Analysis of Bottom-Up Approach to Aggregating Costs and 

Benefits 

A bottom-up approach, such as that taken by OMB, is likely to result in an underestimate of the 

total cost of federal regulations. Agencies are not required to conduct a cost-benefit analysis for 

every rule, and the bottom-up approach can only include costs and benefits that have actually 

been estimated. Furthermore, estimates of costs and benefits that agencies produce are primarily 

intended to inform decisionmakers about an individual rule, but aggregating the information 

causes the context and understanding of potential uncertainties in each individual estimate to be 

lost. Finally, a decision must be made about how many years' worth of rules to include in the 

aggregated estimate of costs and benefits, but this is likely to leave out costs and benefits of rules 

that were issued prior to the period included. 

Costs Not Estimated for Every Rule 

One of the main challenges to calculating accurately the total costs and benefits of federal 

regulations is that agencies are not required to estimate costs and benefits for all regulations. 

Without an estimated cost or benefit for every rule, it is impossible to arrive at a total dollar 

amount for all rules--the aggregated costs and benefits will only include those rules for which a 

monetized estimate exists. 

Independent Regulatory Agencies Are Often Not Required to Estimate Costs and 

Benefits 

First, not all agencies are subject to cost-benefit analysis requirements. The cost-benefit analysis 

requirement does not apply to independent regulatory agencies, a class of agencies that were 

created by Congress to have various characteristics of independence from the President.32 

Although some of the independent regulatory agencies have agency-specitic instructions in 

statute to consider certain effects of their regulations, others are not specifically required to 

conduct cost-benefit analysis or monetize costs and benefits.33 According to OMB's 2014 report 

on costs and benefits, the independent regulatory agencies issued 18 major rules in FY2013. Of 

those 18 rules, the agencies appear to have provided some information on either costs or benefits 

in 12 rules. 34 

"These agencies arc listed at 44 U.S.C. 3502(5). When he issued Executive Order 12866, President Clinton chose not 

to include those agencies in the order's requirements for OMB review and cost-benefit analysis. President Reagan had 

made the same decision--to exclude the independent regulatory agencies-when he issued the predecessor order in 

1981. See Executive Order 12291, "Federal Regulation," 46 Federal Register 13!93, February 19, 1981. For more 

discussion of this decision, see CRS Report R4282l, Independent Regulatory Agencies, Cost-Benefit Analysis, and 

Presidential Review of Regulations, by Maeve P. Carey and Michelle D. Christensen. For a discussion of characteristics 

of agency independence more generally, see CRS Report R43391, Independence of Federal Financial Regulators, by 

Henry B. Hogue, Marc Labonte, and Baird Webel, and CRS Report R43562, Administrative Law Primer: Statutory 

Definitions of "Agency" and Characteristics of Agency Independence, by Jared P. Cole and Daniel T. Shedd. 

33 For a more detailed discussion about what agency-specific requirements may apply to these agencies, see CRS 

Report R42821, Independent Regulatory Agencies, Cost-Benefit Analysis, and Presidential Review of Regulations, by 

Maeve P. Carey and Michelle D. Christensen, and Curtis W. Copeland, Economic Analysis and fndependenl 

Regulatory Agencies, report prepared for the consideration of the Administrative Conference of the United States, April 

30, 20 13, https :/lwww.acus. gov/sitesldefaultlfiles/ documents/Copelando/o20Finalo/o20 BCA %20Reporto/o204-3 0-13. pdf. 

34 Office of Management and Budget, 2014 Report to Congress on the Benefits and Costs of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal Entities, available at https:l/www.whitehouse.gov/sitesldefaultlfilesl 

(continued ... ) 

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Because most cost-benefit analysis requirements do not extend to the independent regulatory 

agencies, the bottom-up approach to estimating the costs and benefits of regulation does not 

include costs and benefits of regulations issued by those agencies. This includes, for example, 

many of the financial regulations issued pursuant to the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010, which are primarily issued by the financial regulators-most 

of which are excluded from the cost-benefit requirement of Executive Order 12866.35 The 

exclusion of certain types of agencies from cost-benefit analysis requirements is a weakness in 

the annual OMB reports and presents a challenge to bottom-up approaches of estimating costs 

and benefits. The OMB reports generally identify the number of rules issued by independent 

regulatory agencies that provide some information on some costs and/or benefits, but they do not 

typically have infom1ation about the magnitude ofthose costs or benefits. 

Costs and Benefit Estimates Only Required for Economically Significant Rules 

Second, the agencies that are subject to cost-benefit analysis requirements are not required to 

conduct a cost-benefit analysis for every rule--only those rules that are deemed economically 

significant, as defined by Executive Order 12866. Specifically, the order defines economically 

significant rules as those that have an annual effect on the economy of at least $100 million. 36 

Rules that are significant, but not economically significant, are subject to requirements for OIRA 

review and may have a less formal assessment of costs and benefits, but agencies are not 

generally required to conduct a complete cost-benefit assessment for those rules. 37 As such, the 

rules included in the OMB reports' total estimates of costs and benefits are only economically 

significant rules. 38 

Monetizing Costs Can Be Challenging 

Third, quantifYing and monetizing certain costs and benefits can be very difficult, and agencies 

do not often monetize all of the expected effects of their regulations. The bottom-up approach, 

however, is limited to totaling only those costs and benefits that are actually monetized. Under 

current rulemaking requirements, agencies are encouraged, but not necessarily required, to 

( ... continued) 

omb/inforeg12014_cb/2014-cost-benefit-report.pdf. In the table, the report indicates that seven rules have monetized 

costs and benefits, but it appears that the table may have added the numbers incorrectly. 

"P.L.lll-203. 

36 Economically significant rules are those that may "have an annual effect on the economy of $100 million or more or 

adversely affect in a material way the economy! a sector of the economy, productivity, competition, jobs, the 

environment, public health or safety, or State, local, or tribal governments or communities" (Executive Order 12866 

§3(1)(1)). 

37 Rules that are "significant" but not ·~economically significant" are required to undergo OMB review under Executive 

Order 12866. OMB's website, www.Reginfo.gov, provides data on the number of"significant" rules that OMB reviews 

each year (but not on the number of those rules that agencies issue each year). The data on OMB reviews show that the 

number of such rules reviewed each year is approximately in the range of I 00-250; this is likely very similar to the 

number of such final rules issued each year. 

38 These rules are referred to in the OMB reports as ·'major" rules. Although the definitions of"major" rules and 

"economically significant" rules contain slight differences, the two tenus are often used interchangeably. 

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monetize costs and benefits.39 For example, Executive Order 12866 states that agencies should 

provide a quantification of costs and benefits "to the extent feasible."40 

Monetizing the effects of regulations involves converting expected effects, such as costs to 

consumers or changes to a population's health or behavior, into dollar terms. Monetizing the 

effects of regulations involves turning costs and benefits into a common unit-dollars-so that 

they can be compared against one another. This can allow for an evaluation of the costeffectiveness of a rule, such as a calculation of the cost of each life expected to be saved by a rule, 

or the cost-benefit ratio of a rule. 

Although some of the effects of a rule can be measured fairly easily in dollar terms, such as 

certain types of equipment or technologies for which a market value can be easily identified, 

other effects are more difficult to monetize. In cases in which dollar amounts are not readily 

available, agencies often rely on economic techniques that attempt to simulate market exchanges. 

One method agencies use to monetize certain concepts is based on a fonnula that includes 

monetized values known as "willingness-to-pay" or "willingness-to-accept" to measure the value 

that individuals place on the change resulting from a particular regulation.' 1 This allows an 

agency to assign a dollar value to a regulatory outcome that may not otherwise have an easily 

identifiable value, and then the estimate can be compared against the costs of obtaining that 

benefit. For example, agencies sometimes use the "value of a statistical life" or "VSL" to assign a 

monetized amount to the benefits per life saved from certain types of regulations. 42 The agency 

can then compare this monetized estimate of benefits against the costs of the rule to see whether 

the rule's costs were justified by its benefits. 

The executive orders and OMB guidance documents recognize that quantification and 

monetization can be difficult in some cases and allow agencies some flexibility in determining 

when effects can be quantified and monetized: 

39 Under Executive Order 12866, the term "significant" rule encompasses a much broader number of rules than those 

considered "'economically significant." For "significant" rules, agencies are asked to conduct an initial assessment of 

costs and benefits, but not a complete cost-benefit analysis. 

40 Executive Order 12866 §6(a)(3)(C)). 

41 In recent decades, as the use of cost-benefit analysis has increased, a debate has emerged about the appropriateness 

of monetizing certain costs and benefits in regulation. While economists generally favor the notion of assibtning a 

monetized value to certain things like risks to life and health, others have opposed the monetization of certain effects of 

regulation. See, for example, W. Kip Viscusi, "Monetizing the Benefits of Risk and Environmental Regulation," 

Fordham Urban Law Journal, vol. 33, no. 4 (2005); W. Kip Viscusi, "What's to Know? Puzzles in the Literature on 

the Value of a Statistical Life," Journal of Economic Surveys, vol. 26, no. 5 (2011); and Robert W. Hahn, In Defense of 

the Economic Analysis of Regulation, (AEI Press, 2005). Others argue against this type of valuation; see Frank 

Ackerman and Lisa Heinzer!ing, Priceless: On Knowing the Price of Everything and the Value of Nothing (New York: 

The New Press, 2004). 

42 The VSL is calculated based upon a willingness-to-pay model. For example, if 100,000 people are willing to pay $60 

to eliminate a I in I 00,000 risk of a certain event, such as dying from a particular type of disease, then an agency will 

multiply the $60 payment times the number of individuals in the population (100,000), yielding a total of$6 million. If 

a rule is expected to save I 00 lives, then the total benefits that can be expected to come from the rule would include 

$600 million in lives saved (100 lives times $6 million). According to a 2011 OMB guidance document, current agency 

practke uses a VSL ranging from "roughly $5 million to $9 million per statistical life." Office of Management and 

Budget, "Regulatory Impact Analysis: A Primer," August 15, 2011, p. 10. See also CRS Report R41140, How Agencies 

Monetize "Statistical Lives" Expected to Be Saved By Regulations, by Curtis W. Copeland. The author of that report is 

no longer at CRS; questions about its content may be directed to the author of this report. 

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Executive Order 12866 instructs agencies to provide information on the 

quantified costs of the anticipated costs and benefits of regulations "to the extent 

feasible."43 

• OMB Circular A-4, which OMB issued in 2003 to provide guidance to agencies 

on how to conduct cost-benefit analysis, states that agencies "should develop 

quantitative estimates and convert them to dollar amounts if possible. In many 

cases, quantified estimates are readily convertible, with a little effort, into dollar 

equivalents.'>'~4 

• Executive Order 13563, which President Obama issued in January 2011, stated 

that "Where appropriate and permitted by law, each agency may consider (and 

discuss qualitatively) values that are difficult or impossible to quantity, including 

equity, human dignity, fairness, and distributive impacts." 45 

• OMB's 2011 guidance document, "Regulatory Impact Analysis: A Primer," 

instructs agencies to quantifY the costs and benefits in terms of units-for 

example, the number of premature deaths avoided each year or the number of 

prevented nonfatal illnesses-as well as monetizing the costs and benefits 

associated with each of these effects, to the extent possible.46 

As OMB explained in its 2014 report, 

When agencies have not quantified or monetized the primary benefits or costs of 

regulations, it is generally because of conceptual and empirical challenges, including an 

absence of relevant information. Many rules have benefits or costs that cannot be 

quanti lied or monetized with existing information, and the aggregate estimates presented 

here do not capture those non-monetized benefits and costs. In some cases, quantification 

of various effects is highly speculative. For example, it may not be possible to quantify 

the benefits of certain disclosure requirements, even if those benefits are likely to be 

large, simply because the impact of some of these requirements cannot be specified in 

advance." 

Practitioners or observers of the rulemaking process do not necessarily agree on what effects are 

appropriate to monetize. For example, the Obama Administration has placed greater emphasis 

than earlier Administrations on the value of qualitative benefits such as equity and dignity.48 

Debates in the literature have raised questions over when it may be appropriate to quantifY or 

monetize certain qualitative effects of rules. For example, questions have been raised as to 

"Executive Order 12866 §6(a)(3)(C). 

44 Office of Management and Budget, Circular A-4, "Regulatory Analysis." September 17,2003. The circular is 

available at http://www .whitehouse.gov I omb/assets.lregulatory _matters _pdf/a-4.pdf. 

45 Executive Order 13563, "Improving Regulations and Regulatory Review," 76 Federal Register 3821, January 21, 

2011. 

46 See Office of Management and Budget, "Regulatory Impact Analysis: A Primer," August 15, 20 II, at 

http://www. whitehouse.gov/sites/default/files/omb/inforeglregpol/circular-a-4 _regulatory-impact-analysis-aprimer.pdf. 

"20!4 OMB Report, pp. l-3. 

"For a discussion of this and other differences between the Obarna, George W. Bush, and Clinton Administrations' 

priorities for cost-benefit analysis and OIRA review, see Art Fraas and Richard Morgenstern, "Identifying the 

Analytical Implications of Alternative Regulatory Philosophies." Journal of Benefit Cost Analysis, vol. 5, no. l (2014), 

pp. 137-171. 
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Methods of Estimating the Total Cost of Federal Regulations 

whether dignity and other psychological effects of rules, such as fear and anxiety, should be 

monetized in regulatory impact analyses.'9 

In sum, to achieve an accurate assessment of the total costs and benefits of regulations in dollar 

terms using a bottom-up method, one would have to monetize all possible effects of regulation, 

and such an undertaking is not consistent with current rulemaking requirements or practice. OMB 

did state in its 2014 report, however, that OMB believes "the benefits and costs of major rules, 

which have the largest economic effects, account for the majority of the total benefits and costs of 

all rules subject to OMB review."50 

Given that agencies do not estimate cost and benefits for every rule issued in every year, 

estimates that use the bottom-up approach are likely under-reporting costs and benefits. On the 

other hand, as discussed more below, some of the literature evaluating the quality and accuracy of 

cost-benefit analyses has suggested that costs and benefits for rules evaluated are overestimated 

by agencies. 

Potential Uncertainties in Individual Cost-Benefit Analyses 

Cost-benefit estimates are produced by agencies to assist with decisionrnaking in individual rules, 

and the estimates often contain some uncertainty from not knowing precisely the potential effects 

of rules. For example, consider a rule in which an agency conducts a risk assessment, such as an 

airline safety rule intended to lower the risk of a terrorist attack on the United States. The estimate 

of costs and benefits for this rule would contain a great deal of underlying uncertainty, because 

precisely estimating the projected decrease in the risk of a terrorist attack and the precise cost of 

the rule is likely impossible. On the other hand, a rule that would result in changes that can be 

more easily predicted and measured, such as a rule requiring the purchase of new safety 

equipment for a vehicle fleet, is likely to contain less uncertainty. 

To attempt to reduce uncertainty and produce high-quality, robust estimates, current requirements 

and guidance documents encourage agencies to base their estimates on the best reasonable 

obtainable scientific, technical, and economic information. With regard to uncertainties, agencies 

are instructed to analyze and present them as part of the overall regulatory analysis. 5

1 This 

generally results in the agencies producing a range of estimates of costs and benefits and using 

certain types of analytical techniques (e.g., sensitivity analysis) to identify how benefits and costs 

of a rule would change due to changes in key variables. 

As stated in a 1996 article outlining the challenges of uncertainty in cost-benefit analysis (also 

referred to as benefit-cost analysis), 

Benefit-cost analysis can help decision-makers better understand the implications of 

decisions by identifYing and, where appropriate, quantifYing the favorable and 

unfavorable consequences of a proposed policy change, even when information on 

benefits and costs, is highly uncertain. In some cases, however, benefit-cost analysis 

49 See Rachel Baycfsky, "Dignity as a Value in Agency Cost-Benefit Analysis," Yale Law Journal, vol. 123, no. 6 

(April 2014), pp. 1732-1782, at http:l/www.yalelawjoumal.org/pdfi'l732.Bayefsky.l782_u521ptmb.pdf; and Matthew 

D. Adler, "Fear Assessment: Cost-Benefit Analysis and the Pricing of Fear and Anxiety," Chicago-Kent Law Review, 

val. 79, no. 3 (January 2004), pp. 977-1053, at http:l/scholarship.kentlaw.iit.edu/cgi/viewcontcnt.cgi?article=3459& 

context=cklawreview, 

50 20!4 OMB report, p. 23. 

51 See, for example, Office of Management and Budget, "Regulatory Impact Analysis: A Primer," August 15,2011, p. 

14. 

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cannot be used to conclude that the economic benefits of a decision will exceed or fall 

short of its costs, because there is simply too much uncertainty. 52 

In adding the results of all the individual studies together, however, the context and uncertainties 

of each individual study may be lost. As OMB stated in its first report on costs and benefits, 

Studies that have attempted to total up the total costs and benefits of Federal regulations 

have basically added together a diverse set of individual studies. Unfortunately, these 

individual studies vary in quality, methodology, and type of regulatory costs included. 

Thus we have an apples and oranges problem, or, more aptly, an apples, oranges, kiwis, 

grapefruit, etc., problem. 5

3 

Adding together existing estimates of costs and benefits treats the individual estimates as though 

they are precise estimates, but they may be imprecise estimates. "CBA can sometimes produce an 

illusion of certainty," as one former OJRA Administrator stated. This illusion of certainty can be 

misleading in individual cost and benefits estimates, and it becomes even more so when such 

estimates are aggregated. 54 In any individual estimate of costs and benefits, "numerous technical 

judgments must be made, and technical analysts might well disagree."55 Aggregating all of the 

bottom-up estimates that agencies have produced can cause the context and any important caveats 

or reflections of uncertainty in each regulatory impact analysis to be lost. 

Questions Over Accuracy of Individual Cost and Benefit Estimates 

Uncertainty in how best to estimate costs and benefits leads to the question of whether the results 

are accurate-i.e., whether agencies overestimate or underestimate costs and benefits. Proponents 

of regulation tend to argue that agencies overestimate costs of regulation. 5

6 On the other hand, 

opponents of regulations tend to argue that agencies underestimate costs-agencies may have 

incentives to underestimate the costs of regulations and overestimate the benefits, which would 

help to make the case for promulgating a regulation because of its positive net benefits. 5

7 To 

address this important question, a number of studies have examined the accuracy of agency 

estimates of costs and benefits. One academic study published in 2000 compared ex ante studies 

to ex post studies and found that agencies frequently overestimated both costs and benefits of 

regulations. 5

8 In 20 l 0, the same authors performed a similar ex post study of several cost-benefit 

estimates that had been produced by agencies subsequent to their 2000 study. Again, they 

concluded that regulatory agencies tended to overestimate the total costs of regulations, 

explaining that "a variety of factors contribute to initial government agency cost estimates that 

52 Kenneth J. Arrow, Maureen L Cropper, George C. Eads, Robert W. Hahn, Lester B. Lave, Roger G. Noll, Paul R. 

Portney, Milton Russell, Richard Schmalensee, V. Kerry Smith, and Robert N. Stavins, "Is There a Role for BenefitCost Analysis in Environmental, Health, and Safety Regulation?" Science, April 12, 1996, vol. 272, pp. 221-222. 

53 Office of Management and Budget, Report to Congress on the Costs and Benefits of Federal Regulations, September 

30, 1997, ch. 2, at bttps:llwww.whitehouse.gov/omb/inforeg_chap2. 

54 Cass R. Sunstein, "The Arithmetic of Arsenic," Georgetown Law Journal, vol. 90, no. 7 (July 2002), p. 2258. 

55 Cass R. Sunstein, "Financial Regulation and Cost-Benefit Analysis," Yale Law Journal Forum, January 22,2015, p. 

266, at http://www.yalelawjoumal.org/pdfiSunsteinPDF _ 4nfld4ar.pdf. 

56 Sec, for example, Thomas 0. McGarity, "CPR Perspective: Estimating Regulatory Costs," Center for Progressive 

Reform, at http://wv.w.progressivereform.org/perspestimatingReg.cfm. 

57 See, for example, Stuart Shapiro, "How Much Is That Regulation In the Window?", The Hill, July 31, 2014, at 

bttp://thebill.com/blogs/pundits-blog/213538-how-much-is-that-regulation-in-the-window, stating that "agencies have 

clear motivations when it comes to making the assumptions that will determine their assessment of the cost of their 

regulations. They don't want a regulation to appear too costly or they risk losing political support for the regulation." 

"Winston Harrington, Richard D. Morganstern, and Peter Nelson, "On the Accuracy of Regulatory Cost Estimates," 

Journal of Policy Analysis and Management, vol. 19, no. 2 (Spring 2000), pp. 297-322. 
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Methods of Estimating the Total Cost of Federal Regulations 

may differ from the realized results, although in some cases this is coincident with differences in 

benefits produced by regulations."59 

In its 2005 report to Congress on the costs and benefits of regulations, OMB included a chapter 

on "validation" of cost estimates. 60 OMB examined a number of ex ante cost-benefit estimates 

and compared them with ex post estimates, when they were available. 61 OMB 's conclusions were 

that the costs of regulations were more often overestimated by the agency, but that the benefits 

were sometimes overestimated as well. 

A primary reason observers have given for the overestimation of costs is that agencies tend to 

underestimate industry's ability to innovate, and therefore compliance with regulations sometimes 

turns out to be less costly than expected. The ability to adapt to regulatory requirements and 

identifY more cost-effective methods of meeting compliance targets can result in lower 

compliance costs than initially anticipated by the agency. For example, consider the 

Environmental Protection Agency's acid rain (sulfur dioxide) program in the 1990s. Mandated 

under the Clean Air Act Amendments of 1990, the EPA issued regulations aimed at reducing 

sulfur dioxide emissions. Studies suggest that the EPA's initial cost estimates for these regulations 

were too high due to EPA's underestimation of how industry would adapt and find less costly 

means of achieving the reduction targets. In sum, as stated in one retrospective study, "When 

forecasting the costs of new environmental regulations, economic analysts have routinely ignored 

a primary economic lesson: Markets will cut costs through innovation."62 

A number of other reasons may contribute to inaccuracies in agency estimates of costs. For 

example, delays in implementation of regulations can help lower the compliance costs as it can 

allow industry more time to identifY cost-effective solutions.63 Over- or under-estimating certain 

effects of regulations can also result in inaccuracies, such as compliance rates among regulated 

entities. Finally, agencies first estimate costs and benefits while writing the proposed regulation, 

but the regulation may change in response to comments received during the public comment 

period. 64 As regulations are revised in response to comments, cost-benefit estimates are not 

always updated. Changes made in the rule after it has been proposed and before it is finalized 

could affect the likely costs and benefits of the rule-for example, if the final rule sets a standard 

that is less stringent as compared to the proposed rule, it will probably be less costly to comply. 

In short, the accuracy of the bottom-up approach relies heavily on the precision of the individual 

cost and benefit estimates, but the accuracy of these estimates is likely to vary. 

59 Winston Harrington. Richard D. Morganstern, and Peter Nelson~ "How Accurate Are Regulatory Cost Estimates?" 

Resources for the Future, March 5, 2010. 

60 Office of Management and Budget, Validating Regulatory Analysis: 2005 Report to Congress on the Benefits and 

Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities, available at 

https ://www. whitehouse.govlsites/defaultlfiles/ omb/assets/ omblin foreg/2005 _ cb!final_ 2005 _ cb _reportpd f. 

., As mentioned above, ex post estimates of costs and benefits arc not frequently conducted under current rulemaking 

requirements or practice. 

62 Gabriel Chan, Robert Stavins, Robert Stowe, and Richard Sweeney, "The S02 Allowance Trading System and the 

Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation," Cambridge, Mass.: Harvard 

Environmental Economics Program, January 2012, pp. 7-8, at http;llwww.hks.harvard.cdulm-rcbglhecplpapers/S02-

Brief_digital_finaLpdf. See also Eban Goodstein, The Trade-Of! Myth: Fact and Fiction about Jobs and the 

Environment (Washington, D.C.: Island Press, 1999), pp. 26-30. 

63 See Winston Harrington, Richard D. Morganstern, and Peter Nelson, "On the Accuracy of Regulatory Cost 

Estimates," Journal of Policy Analysis and Management. voL 19, no. 2 (Spring 2000), p. 310. 

64 Agencies are generally required to accept public comments on proposed rules under the Administrative Procedure 

Act (5 U.S.C. §553). 
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Methods of Estimating the Total Cost of Federal Regulations 

Measuring Costs over Time 

Another issue in aggregating the costs and benefits of individual regulations is identification of 

the appropriate time period. In other words, how many years' worth of regulations should be 

included in the total? Regulations issued many years ago typically still have some compliance 

costs, although the cost of complying with regulations is generally thought to decrease over time. 

For example, if compliance with a new regulation requires industry to invest in new types of 

technology, once these investments have been made, the majority of the costs may already have 

been incurred, and the ongoing costs will be less. The time frame under which these compliance 

costs are distributed varies among rules. Similarly, the distribution of benefits can vary widely as 

well, and benefits of regulations often are not realized until the regulation has been in place for 

some time. For example, this is typically the case with regulations that have health benefits, such 

as environmental regulations that are intended to improve air quality. 

Individual cost estimates of regulations are calculated by comparing the anticipated effects of a 

regulation against what would be expected to happen in a world without the regulation. These ex 

ante estimates that are conducted prior to the issuance of the regulation are usually the sole source 

of information on regulations' costs. Under current requirements and practice, an ongoing 

monitoring of the costs and benefits of rules is not required once a regulation has been issued. 

The annual OMB reports have typically included 10 years' worth of cost and benefit estimates. 

According to the 2014 report, "OMB chose a ten-year period for aggregation because preregulation estimates prepared for rules adopted more than ten years ago are of questionable 

relevance today."65 Similar reasons are cited in earlier versions of the OMB reports. 

In its 2014 report, OMB acknowledges this weakness in its approach, stating that because the 

estimates do not include non-major rules or rules issued more than 10 years ago, the total costs 

and benefits currently in effect are like to be "significantly larger" than the totals in the report.66 

Over time, however, measuring the effects of those rules issued more than 10 years ago will 

become increasingly difficult. As stated in a 2006 study that discussed OMB 's practice of 

including 10 years' worth of costs and benefits in its annual reports, 

If the regulation only requires small changes in behavior over a small time interval, then 

analysts feel confident of estimating the cost, hypothetical or not. But as the size or time 

interval increases, the shadow of the hypothetical looms ever larger. To take an extreme 

example, how would be begin to estimate the cost of federal child labor laws that were 

enacted during the 1930s?67 

It is certainly the case that some rules that are more than 10 years old still impose a cost, and 

therefore this I 0-year rule may result in a lower estimate of total costs over time because it 

excludes those rules. However, some cutoff probably should be made, as including estimates for 

costs of regulations made more than I 0 years ago becomes less practicable. 

These potential flaws have led some to attempt to use an entirely different approach to estimating 

the effects of regulations: the top-down method, which is discussed next. 6

s 

"20!4 OMB Report, p. 9. 

66 2014 OMB Report, p. 1&. 

67 Winston Harrington, "Grading Estimates of the Benefits and Costs of Federal Regulation: A Review of Reviews," 

Resources for the Future Discussion Paper, September 2006. 

68 In the Crain and Crain report discussed in detail below, the authors state that "In summary, the constraints under 

which OMB operates yield cost estimates for only a small proportion of regulations ... The measurement challenges lead 

us to adopt techniques in this study that facilitate reasonable approximations of regulatory costs that have been omitted 

(continued ... ) 

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11Top-Down" Method: Estimating Costs Using 

Macroeconomic Modeling 

Some scholars have adopted an approach to estimating the costs of rules that is referred to as a 

top-down approach. This section explains and analyzes the top-down approach, using a case 

study as an illustration for several of the concepts discussed. 

What Is the Top-Down Approach? 

The top-down approach uses macroeconomic variables and modeling techniques to measure the 

effect of regulation on the economy as a whole. Rather than aggregating existing cost estimates, 

the top-down method uses the results of an economic model that has been used to measure the 

relationship between the size of an economy, or economic growth, and some proxy of the level of 

regulation in a country, to measure the economic effects of regulation. This method typically 

compares the U.S. economy, as measured by some variable such as gross domestic product 

(GDP), to a hypothetical scenario in which the U.S. has less regulation. The approach takes the 

difference in the GDP under these two scenarios-the status quo and the scenario with less 

regulation-and calculates the change in GDP that might occur were the U.S. to reduce its overall 

amount of regulation. This potential change in GDP is considered to be the cost of regulation 

under the top-down approach and is explained in further detail below. 

Why Use the Top-Down Approach? 

The benefits of using a top-down approach, in many ways, are opposite from the bottom-up 

approach described above. Because the top-down approach uses measurements of various 

economic factors, it incorporates broader, more indirect effects that are not included in the 

bottom-up approach. This could include indirect economic effects, as wei! as direct effects that 

are not monetized. 

Case Study: Crain and Crain Report 

A commonly cited study using the top-down approach to totaling the cost of regulation is entitled 

"The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business," by 

W. Mark Crain and Nicole V. Crain, and it was most recently released in September 2014.69 

The Crain and Crain report estimates the total cost of regulation and also explores the distribution 

of those regulatory costs among regulated entities. The component of the report that is most 

discussed in the debate over regulatory reform is the estimate of the total cost ofregulation.70 

Hence, this CRS report focuses primarily on the components of the studies that describe the total 

( ... continued) 

in estimates by OMB and other studies" (pp. 5-6). 

69 W. Mark Crain and Nicole V. Crain, The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small 

Business, A Report for the National Association of Manufacturers, September 10, 2014, at http://www.nam.org/ 

Costo!Regulation/. 

70 See, for example, Cheryl Bolen, "Study Commissioned by NAM Finds Regulations Cost $2 Trillion," BNA Dai(y 

Report for Executives, September 10, 2014. 

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Methods of Estimating the Total Cost of Federal Regulations 

cost of regulation, and not on the portion of the report exploring the distribution of costs among 

different types offirms.71 

The Crain and Crain estimate ofthe total cost of regulation is not a purely top-down measure of 

the cost of regulations. It combines a top-down estimate-their estimate of the cost of economic 

regulation--with a bottom-up estimate of environmental, tax compliance, occupational safety, 

and homeland security regulation. However, the estimate of the cost of economic regulation 

resulting from their top-down methodology is almost 75% of the total estimate, totaling $1.439 

trillion out of$2.028 trillion in the 2014 study. This report only discusses that portion of their 

estimate, as it is the most widely cited top-down study in the regulatory reform debate, and 

therefore serves as a useful example for discussion. 

Background on the Crain and Crain Report 

The 2014 Crain and Crain report can be traced back to a report originally published in 1995 by 

Thomas D. Hopkins for the Small Business Administration's (SBA's) Office of Advocacy entitled 

"Profiles of Regulatory Costs."72 Each of the studies from 1995 through 20 l 0 was prepared for 

the Office of Advocacy. 

In the 1995 study, Hopkins estimated annual federal regulatory costs to be in the range of $416 

billion to $668 billion in 1995. Six years later, in 2001, W. Mark Crain and Hopkins issued a 

follow-up to the 1995 Hopkins study, estimating the total annual cost of regulations to be $843 

billion in2000.73 In 2005, Crain estimated annual regulatory costs to be about $1.1 trillion in 

2004.74 In 2010, Nicole V. Crain and W. Mark Crain issued another version of the study, which 

estimated the total cost of regulation to be $1.75 trillion in 2008. They explained the increase 

from $1.1 trillion in the 2005 report to $1.75 trillion as being, in part, the result of"new 

methodological techniques," meaning that "direct comparisons to the results in their prior studies 

should be made with caution."" 

A number of concerns were raised about the methodology used in the 2010 report-and primarily 

the methods used to arrive at the $1.75 trillion of the total cost of regulation. Some of the entities 

raising concerns included the Office of Advocacy itself, the entity that had granted the contract 

under which the study was conducted. For example, the Office of Advocacy posted a number of 

caveats on its website where the report was linked, stating that "the findings of the study have 

71 For example, earlier versions of the report written for the Small Business Administration's Office of Advocacy 

focused on the disproportionate cost of regulations on small businesses. The 2014 version, which was prepared for the 

National Association of Manufacturers, intended to fill an 4'information gap by quantifying the costs of regulatory 

compliance on firms. particularly manufacturers in the United States, and to extend some of the previous efforts to 

measure the aggregate regulatory costs.n Crain and Crain 2014. p. 1. 

72 Thomas D. Hopkins, "Profiles in Regulatory Cost,; Report to the U.S. Small Business Administration," November 

1995, available at http://www.sba.govlsitesldefaultlfileslfileslrsl995hoptot.pdf. 

13 The authors explained that "subsequent regulatory developments and the availability of new data clarify and in some 

cases amplify the basic 1995 findings: regulatory burdens continue to climb, and to disadvantage small businesses." W. 

Mark Crain and Thomas D. Hopkins, "The Impact of Regulatory Costs on Small Finns: A Report for the Office of 

Advocacy, U.S. Small Business Administration," 2001, available at http://www.sba.gov/sites/defaultltileslfiles/ 

rs207tot.pdf. 

74 Again, the increase over the earlier estimate appeared to be primarily due to a change in methodology from the 2005 

report. W. Mark Crain, "The Impact of Regulatory Costs on Small Finns," available at http://www.sba.gov/sites/ 

defaultlfiles/files/rs264tot.pdf. 

15 Crain and Crain re-estimated the numbers for 2004-which were presented in the 2005 report-using the 

methodology from the 2014 study. After the methodological adjustment, the estimate for 2005 increased by $445 

billion to a total of $1.7 trillion, converted into 2009 dollars. 
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been taken out of context and certain theoretical estimates of costs have been presented publicly 

as verifiable facts." 76 A 20 II CRS report called into question the methods used in the report to 

arrive at the total estimate of the cost of federal regulation. 77 A 2014 Government Accountability 

Office (GAO) report also raised issues with the study related to federal data quality standards, 

asserting that the Office of Advocacy failed to uphold those standards.78 

Summary of the 2014 Crain and Crain Report 

The 2014 Crain and Crain study estimated the total cost of federal regulation to be $2.028 trillion 

in 2012 (in 2014 dollars), an amount equal to 12% of U.S. GDP. This section summarizes the 

methodology used to arrive at this estimate, so that the estimate may be used as an illustration 

throughout the rest of the discussion of the top-down methodology. 79 

As mentioned above, economic regulation is the majority of the total cost of the Crain and Crain 

estimate: $1.448 trillion.80 According to Crain and Crain, economic regulations are those that 

76 These included the following: "The study is a top-down analysis of regulatory costs that uses certain assumptions to 

estimate totals. The study is not a bottom-up precise accounting of the overall cost of regulations. The overall figure of 

$1.75 trillion in costs is derived from a number of different assumptions and sources to create an estimate. As with 

almost any academic methodology, it was not intended to be considered a precise finding. The study demonstrated that 

small businesses bear a larger burden from regulations than large businesses. It was not intended to do more than 

provide an estimate of this disparity." See https://www.sba.gov/advocacy/impact-regulatory-oosts-small-firms for these 

and other caveats about the study. 

77 CRS Report R41763, Analysis of an Estimate of the Total Costs of Federal Regulations, by Curtis W. Copeland. The 

author of that report is no longer at CRS; questions about its content can be directed to the author of this report, Maeve 

P. Carey. 

78 Specifically, GAO said that Advocacy did not retain the underlying information for the Crain and Crain study, 

making it "much more difficult to assess the quality of that work, including its objectivity." When GAO asked to speak 

with Crain and Crain to ask them "a set of questions related to the criticisms of the methodologies, data, and models 

used," Crain and Crain "would not speak with us, stating that they were no longer contractually obligated to respond to 

our requests for infonnation." U.S. Government Accountability Office, Small Business Administration: Office of 

Advocacy Needs to Improve Controls over Research, Regulatory. and Workforce Planning Activities, GA0-14-525, 

July 2014, http://gao.gov/assets/670/665104.pdf; see especially pp. 13-16. 

79 The NAM study ineluded other elements not discussed at length here because they were not part of the estimate of 

the total cost of regulation and theretbre are not the focus of this report. For example, the study included a survey of 

NAM members given over a period of two weeks in 2014 that reported a number offinings, including, for example, (1) 

88% of respondents said that federal government regulations were a challenge that affected their businesses in the prior 

year or that their businesses would face in the future; (2) 72% of respondents indicated that their organizations 

employed outside advisers to ensure that their operations comply with federal rules-most of these advisers consisted 

of attorneys, accountants. and consultants; and (3) 48°/oofmanufacturing firms incurred operations and maintenance 

expenses for capital equipment and other tangible items purchased to comply with federal government requirements 

during the 12 months prior to the survey. 

80 As previously described, the remaining $580 billion in the Crain and Crain estimate is due to the remaining three 

categories-environmental, occupational safety and health and homeland security, and tax compliance regulation. 

Because they use the bottom-up approach to estimate each of these types of regulation, they are not discussed in this 

report. 

First, Crain and Crain arrive at a total estimate of the cost of environmental regulations using two sources: the OMD 

annual report to Congress on the costs and benefits of regulations, and a study from 1991 by Hahn and Hird that 

provides an estimate of the total costs of environmental regulations prior to 19&&. See Robert W. Hahn and John A. 

Bird, "The Costs and Benefits of Regulation; Review and Synthesis," Yale Journal on Regulation, vol. 8, no. l (Winter 

1991), pp. 233-278. Using these measures, they arrived at a total of$330 billion for environmental regulations. Second, 

to measure the occupational safety and health and homeland security regulations, they added the regulations 

promulgated by the Department of Homeland Security and the Occupational Safety and Health Administration (OSHA) 

in the Department of Labor, plus some additional calculations to measure and include the effects of passenger delays 

tied to Transportation Security Administration screening. Using these measures and calculations, they arrived at a total 

of $92 billion for occupational safety and health and homeland security regulations. Third, Crain and Crain measure the 

(continued ... ) 
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"govern decision-making in market transactions. These include markets for final goods and 

services; markets for physical and human resources; credit markets; and markets for the transport 

and delivery of products and factors ofproduction."81 

To arrive at this estimate of the total cost of economic regulation, Crain and Crain conducted a 

cross-country comparison of 34 Organization for Economic Cooperation and Development 

(OECD) countries, including the United States. Specifically, they looked at the relationship 

between each country's economy and a proxy measure of the amount of regulation in each 

country over eight years. The data Crain and Crain used for this proy measure were derived 

from the World Economic Forum's Global Competitiveness Report. 8 

Crain and Crain used three components of the Global Competitiveness Index, a component of the 

Global Competitiveness Report that measures various aspects of the institutions, policies, and 

factors that determine a country's level of productivity. These types of measures are sometimes 

referred to as governance indicators. The report uses an "Executive Opinion Survey," which 

captures the opinions of business leaders around the world to construct a number of its indicators. 

Crain and Crain selected three indicators, each of which was constructed using the survey, to 

represent the amount of economic regulation in each country. The three indicators were 

• burden of government regulation; 

• efficiency oflegal framework in challenging regulation; and 

regulation of securities exchanges. 83 

The survey respondents provided a value for each of these indicators ranging from one to seven. 

As Crain and Crain explained in their report, "higher values correspond to improvements in 

regulatory quality-that is, reductions in the regulatory burden on product, factor and credit 

markets."84 To construct their measure for each country and each year, Crain and Crain used the 

mean value of these three factors. The regulation index that Crain and Crain used combined these 

three factors into a single measure for each of the countries in each ofthe years for which the data 

were available--2006 to 2013. 

Using the mean value for the 34 countries over their eight-year period, Crain and Crain estimated 

a regression model in which they measured the effect of a number of variables-with their 

primary variable of interest being the measure of regulatory quality--on GDP per capita. The 

other variables, or "control" variables, were foreign trade as a share of GDP, population over 65 

( ... continued) 

cost of compliance with the federal tax code. To do so, they relied on the number of hours required to comply with tax 

requirements provided by the Internal Revenue Service. They multiplied that number of hours times an hourly wage 

rate of individuals who would be preparing the tax paperwork-accountants and auditors for individuals and human 

resources professionals for businesses. Using this method, they arrived at a total estimate of $159 billion for tax 

compliance. It is not exactly clear what the calculations for these figures were, because Crain and Crain did not appear 

to provide in their report the calculations or the hourly wages for these types of professionals. 

"Crain and Crain 2014, p. 28. 

82 Klaus Schwab, World Economic Forum, The Global Competitiveness Report2013-2014, Full Data Edition, Geneva, 

20 13, at http://reports. weforum.org/the-global-eompetitiveness-report-20 13-20 14/. 

83 According to Crain and Crain, not all three variables had observations for every year in their sample. For the years 

available, they used the average of the three components that were available. 

84 Crain and Crain 2014, p. 32. 

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relative to population aged 19 to 65 (the "dependency ratio"), new capital investment as a share 

of GOP, size of the labor force, and tax revenues as a share of GOP."' 

Based on the results of the regression model, Crain and Crain concluded that the effect of their 

purported proxy of economic regulation on GOP per capita was statistically significant. Further, 

they used the results of the regression model to estimate the total cost of the index on the GOP per 

capita in the United States. To do so, they compared the U.S. score on the regulation index with 

the average score of the five top performing (i.e., highest ranked) countries on the scale, which 

they referred to as the "benchmark countries." They used this "benchmark" measure as a 

hypothetical measurement of what a lower level of regulation in the United States could be. The 

difference between the U.S. score and the benchmark countries' average score was 26%. 

Crain and Crain concluded that this 26% difference in the regulation index in the United States 

"implies an impact on GOP equal to $1.439 trillion. In other words, if the burden of economic 

regulation in the United States matched the benchmark countries, U.S. GOP would be $1.439 

trillion higher than it was in 2012."86 To the $1.439 trillion estimate, Crain and Crain added 

another $8.3 billion, which was the estimated cost of import restrictions from the U.S. 

International Trade Commission.87 The total estimate of the cost of economic regulation they 

arrived at using this methodology was $1.448 trillion. 

Analysis of Top-Down Approach to Estimating Costs and Benefits 

A number of issues have been raised with the top-down approach, some of which are explained 

below using the Crain and Crain study as an illustration. 

Importance of Accurate Measures of Regulation in Top-Down Approach 

One challenge for the top-down approach to estimating the cost of regulation is that the accuracy 

of the findings is dependent on the validity of the proxy measure of regulation. The proxy is used 

to model the relationship between the size of the economy and amount of regulation, and then the 

parameter estimates resulting from the model are used to calculate the total cost of economic 

regulation. 

Identifying an accurate measure of regulation, however, is a challenge. As explained in a report 

by the Council on Foreign Relations (CFR) on federal rulemaking policy in the United States and 

other countries, as well as in previous CRS reports, quantifying the total amount of regulation is 

an inherently difficult task. 88 As stated in the CFR report, 

Economists have not settled on a good way to measure overall regulatory burden ... 

Because of these data limitations, the best empirical studies take on a specific regulation 

rather than the full stock of regulations. Largely unknown is how the average business is 

" Each of these independent variables was lagged by one year. Crain and Crain also included tax revenues as a share of 

GDP squared to allow for a nonlinear effect of tax policy. This choice of independent variables was different fi'om 

previous models they used, thougb they do not make clear why they chose different variables this time. 

"Crain and Crain 2014, p. 33. This value appears to be adjusted to 2014 dollars. 

87 Crain and Crain do not explain why they added the cost of import restrictions. It appears they may have added it 

because they did not believe it would be captured in their measure of economic regulation. 

88 Rebecca Strauss, Quality Control: Federal Regulation Policy, Council on Foreign Relations, Renewing American 

Progress Report and Scorecard, New York, NY, March 2015, http://www.crr.orglcorporate-regulation/quality-controlfederal-regulation-po!icy/p36110?cid=oth-partner _site-Reg_ Blog-Renewing_ America _Regulation _Policy-031 0 15; and 

CRS Report R43056, Counting Regulations: An Overview ofRu/emaking, Types of Federal Regulations, and Pages in 

the Federal Register, by Maeve P. Carey. 
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affected by the cumulative set of regulations, or whether certain regulations harm or help 

different kinds of business activity, such as innovation or entrepreneurship." 

Obtaining an accurate proxy measure of regulation is key in any economic model that uses 

regulation as an explanatory variable, because an inaccurate measure can introduce serious 

uncertainty into the model's results. The term economists use to refer to whether a measure of a 

construct correctly represents what it purports to represent is "content validity." To illustrate the 

importance of content validity in the top-down approach of measuring the cost of regulation, this 

section will more closely examine the measure of "regulatory quality" used by Crain and Crain. 

Crain and Crain referred to their measure of regulatory quality as the "Economic Regulation 

Index." They created the index from data from the World Economic Forum's (WEF's) annual 

Global Competitiveness Report-specifically, the report's Executive Opinion Survey.90 In that 

survey, the WEF captured the opinions of over 13,000 business leaders in 148 different 

economies during a five-month period. Most of the survey questions, including the three used in 

the Crain and Crain study to measure regulation, involved rating on a scale of one to seven a 

particular aspect of the operating environment in the respondent's country. The questions covered 

such topics as innovation and technology infrastructure, education and human capital, and 

tourism. To create a measure of regulation from this survey, Crain and Crain selected three 

questions, each of which included an explicit reference to regulation (which appears to be how 

they selected them): (I) burden of government regulation, (2) efficiency of legal framework in 

challenging regulation, and (3) regulation of securities exchanges. 

Are these three questions from the Executive Opinion Survey measuring this type of specific 

regulation--in other words, can the responses to these three questions be considered a useful 

proxy of the burden of economic regulation? This may be difficult to answer, but it is crucial to 

the validity of the study's conclusions. Crain and Crain state that "the reach of economic 

regulations is vast. This means that an encompassing methodology is required to derive an 

estimate of these costs."91 While their statement about the vastness of economic regulation is 

certainly true, whether their measurement and methodology measures it accurately is difficult to 

validate.92 

Proxy measures of governance indicators are inherently imprecise, and they cannot be reliably 

used to estimate macroeconomic outcomes. A recent article examining a similar cross-country set 

of indicators illustrates the difficulty in identifYing an accurate measure for certain inherently 

abstract concepts related to governance, such as the "rule of law," or, in this case, regulation.93 

The article specifically focused on the World Bank's "Worldwide Governance Indicators" (WGI), 

though it argued that "the concerns raised here about the WGI apply equally to other current 

governance indicators."94 The article stated that "both researchers and policymakers should 

"Quality Control: Federal Regulation Policy, p. 3. 

9

° For a more complete discussion of how Crain and Crain constructed this variable, see Appendix C of the 2014 report. 91 Crain and Crain 2014, p. 28. 

92 Furthermore, an incorrectly measured variable may cause some of the other estimates to be biased as well. 93 M.A. Thomas, "What Do the Worldwide Governance Indicators Measure?" European Journal of Development 

Research, vol. 22 (20 1 0), p. 37, stating that "A proposed measure of a construct, an inherently abstract concept like the 

'rule of law', is like a proxy measure in that it is a hypothesis about measurement. The hypothesis is that the proposed 

measure correctly measures the construct. Like proposed proxy measures, not all proposed measurements of constructs 

are equally valid." 94 The WGI were part of the 20 I 0 Crain and Crain study, and, although they used a different measure in 2014, are 

similar in construct to the 2014 measure described above. M.A. Thomas, "\VhatDo the Worldwide Governance 

Indicators Measure?" European Journal of Development Research, vol. 22 (2010), p. 47. 
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require evidence that governance indicators are valid before employing them. In the absence of 

such evidence, research results obtained using such indicators are uninterpretable and should not 

survive peer review. For policymakers, reliance on such indicators would be arbitrary."95 lt could 

be argued that the use of such indicators in the top-down model of total cost of regulation may 

suffer from this problem of questionable measurement. 

Specific concerns over this issue as it relates to top-down studies involving regulation were raised 

in 20 I 0 over the Crain and Crain report and arguably still apply to the 2014 report as well, due to 

the similarities of their measures. For example, economist Art Kraay, one of the creators of the 

World Bank's Regulatory Quality Index, the measure of regulation that Crain and Crain used in 

their 20 I 0 study, commented in response to their study that the measure of regulatory quality they 

created measured the perceptions of various regulatory environments, rather than the stringency 

of those environments.96 The index used in the 2014 study uses a different proxy, although its 

construction was similar-it measures business leaders' perceptions of the regulatory 

environment in various countries.97 Some research suggests that there may be key differences 

between perceptions of something and actual levels of it, however: 

There is a substantial difference between measuring a thing and measuring perceptions of 

it. In the context of governance, for example, perceptions of crime risk have been shown 

to be quite different than actual crime levels (see, for example, For gas, 1980; Pfeiffer, 

2005); perceptions of corruption have been shown to differ from actual corruption levels 

(see, for example, Olken, 2006; Seligson, 2006); and trust in government has been shown 

to differ from administrative performance (Van de Walle and Bouckaert, 2007)."' 

In sum, this question of whether a measurement based on survey responses of business leaders or 

other individuals, such as the Executive Opinion Survey, is measuring what it purports to 

measure, is an important one. With any top-down model of the economic effects of regulation, the 

validity of a proxy for regulation is essential-and measuring an inherently abstract concept like 

the stringency of regulation in a country is difficult. Without a valid proxy, which is difficult to 

identifY for the reasons discussed above (and possibly others), the findings of any top-down study 

could be brought into question. 

95 M.A. Thomas, "What Do the Worldwide Governance Indicators Measure?" European Journal of Development 

Research, vol. 22 (2010), p. 51. 

" For a summary ofKraay's comments, see CRS Report R41763, Analysis of an Estimate of the Total Costs of Federal 

Regulations, by Curtis W. Copeland. 

97 Crain and Crain did not explain why they used this different index as their main indicator in the 2014 study. They 

did, however, use the World Bank measurement that they had used in 20 !0 as an alternative proxy for the amount of 

regulation. The conclusions they reached with this alternative measurement were similar~ see p. 71. 

" M. A. Thomas, "What Do the Worldwide Governance Indicators Measure?" European Journal of Development 

Research, vol. 22 (201 0), p. 36. Referenced articles include Joseph P .. Forgas, "Images of Crime: A Multidimensional 

Analysis of Individual Differences in Crime Perception," International Journal of Psychology, vol. 15, no. I (1980), 

pp. 287 -299; Christian Pfeiffer, Michael Windzio, and Matthias Kleimann, "Media Use and its Impacts on Crime 

Perception, Sentencing Attitudes and Crime Policy," European Journal of Criminology, vol. 2, no. 3 (July 2005), pp. 

259-285; Benjamin A. Olken, "Corruption Perceptions vs. Corruption Reality," NBER Working Paper No. 12428, 

2006; Mitchell A. Seligson, "The Measurement and Impact of Corruption Victimization: Survey Evidence from Latin 

America," World Development, vol. 34, no. 2 (2006), pp. 381-404; and Steven Van de Walle and Geert Bouckaert, 

"Perceptions of Productivity and Performance in Europe and the United States," International Journal of Public 

Administration, vol. 30, no. II (2007), pp. 1123-1140. 

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Questions About Proper Model Specification 

Setting aside the question of how to undertake the difficult task of measuring regulation, and 

assuming that the measure of regulation is a valid measurement, another crucial question remains 

for the top-down approach to measuring the cost of regulation: how should one select the right 

model? 

In a regression model, such as the one used by Crain and Crain, a researcher is attempting to 

explain a relationship between variables by analyzing the extent to which the dependent variable 

can be explained by changes in the independent variables. Proper selection of all variables in the 

model is important, as discussed below. 

Selecting Independent Variables 

Selecting and including the proper independent and control variables in an econometric analysis 

is crucial to the validity of the model's results. For example, a researcher must include all 

variables that are thought to be theoretically relevant and take care not to omit variables that may 

help explain the outcome.99 Explaining and theoretically justifYing the components of economic 

models, including all independent variables, is important: "It is critical that researchers explain 

and justify the assumptions that underlie their model, which are presumed to be informed by 

theory." 100 

Failure to include all relevant variables in an economic model can result in omitted variable bias. 

Omitted variable bias can occur when one of the explanatory variables-those variables in the 

model that are helping to explain changes in the dependent variable-has its effects overstated 

because a variable that is related to that variable has been left out of the model. In other words, 

the omitted variable's explanatory power will be attributed to the variable that is included in the 

model, as long as the two variables arc correlated. As explained in one study, 

Because top-down methods [of estimating the cost of regulation] associate indicators of 

regulatory activity with changes in macroeconomic variables, they risk attributing to 

regulation the effects of other variables that are not considered in the analysis but that 

may be correlated with regulatory activity. There is a strong chance of omitted variable 

bias, in other words. 101 

In sum, were a top-down model of regulation to leave out some relevant variables, the effect of 

regulation could be overstated. 

Selecting a Dependent Variable 

Furthermore, identifying a theoretically sound dependent variable is crucial to the validity of a 

model's results. Crain and Crain used GOP per capita as their dependent variable, rather than 

GOP growth rate. Measuring GDP per capita does provide an indication of the size of a country's 

economy. However, it can potentially be problematic because it ignores the historical 

circumstances that have led each country's economy to its current size, and therefore it presumes 

99 See A.H. Studenmund, Using Econometrics: A Practical Guide, 6

1

h ed. (New York: Addison-Wesley, 2011), p. 167, 

stating that "the primary consideration in deciding whether an independent variable belongs in an equation is whether 

the variable is essential to the regression on the basis oftheory." 

100 M. A. Thomas, "What Do the Worldwide Governance Indicators Measure?" European Journal of Development 

Research, vol. 22 (20 l 0), p. 41. 

101 Winston Harrington, "Grading Estimates of the Benefits and Costs of Federal Regulation: A Review of Reviews," 

Resources for the Future Discussion Paper, September 2006, p. 12. 
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to explain the current size of each economy only based upon the factors in the model. Using the 

rate of GOP growth instead of GOP per capita would presume that the changes in the size of each 

country's economy are explained by the independent variables, not the actual size of the economy 

itself-which could be considered more likely. 

Selecting the Correct Fonn 

Another important issue related to model specification is whether the nature of the relationship 

between the dependent variable and the independent variables is properly specified: in other 

words, is the relationship linear or nonlinear? A linear relationship in expressed on a graph with a 

straight line and assumes that the rate of change in the dependent variable does not vary-hence 

the straight line on a graph. A non-linear relationship can also be expressed on a graph but does 

not have a straight line, and it assumes that the rate of change in the dependent variable can 

change. These concepts are discussed more below in the context ofthe top-down approach. 

Notably, however, identifying the form of the relationship between dependent and independent 

variables is important-"the consequences of an incorrect functional form for interpretation and 

forecasting can be severe." 102 

Crain and Crain ran a linear regression, which is based upon the assumption that the relationship 

is of direct proportionality and is expressed on a graph with a straight line. 103 Whether this is the 

type of relationship between regulation and size of a country's economy, or its economic growth 

generally, is an important question. Crain and Crain did not appear to provide a theoretical basis 

for assuming the relationship is linear, and some scholars have suggested that the relationship 

between regulation and economic growth is nonlinear. A 2012 working paper from the George 

Washington University Regulatory Studies Center suggested that "perhaps ... up to a point, 

increasing the size of government may tend to increase GOP, but that the relationship reverses 

after a certain threshold." 104 That paper examined whether a measure of the on-budget costs of 

federal regulation in the United States had an effect on GOP growth, which is a different 

objective than a top-down model ofthe cost of regulation, but it illustrates the important point 

that some effects on GOP can be nonlinear. If such model misspecification did occur in the Crain 

and Crain model, the results of their model could be held in question. 

In sum, these three issues related to model specification-selection of independent variables, 

selection of dependent variables, and selection of the correct functional form for the model-are 

highly important to the reliability and validity of conclusions made based upon a top-down 

estimate of the cost of regulation. 

102 A. H. Studenmund, Using Econometrics: A Practical Guide, 6th ed. (New York: Addison-Wesley, 20!!), p. 207. 

103 There may be additional econometric issues with the linear regression that are beyond the scope ofthis report. For 

example, linear regression models rely on several other assumptions that are not discussed here; for a more detailed 

discussion of these assumptions, see Jeffrey M. Wooldridge, Introductory Econometrics: A Modern Approach, 51

h ed. 

(South-Western- Cengage Learning, 2012). 

104 Tara M. Sinclair and Kathryn Vesey, Regulations, Jobs. and Economic Growth: An Empirical Analysis, George 

Washington University Regulatory Studies Center, Working Paper, Washington, DC, March 2012, p. 27, 

http:/ /regulatorystudies. columbian .gwu.edu/files/downloads/032212 _sinclair_ vesey _regjobs _growth. pdf. That paper 

examined whether there was a relationship between changes in the on-budget costs of federal regulation in the United 

States and macroeconomic outcomes, and it concluded that "we found basically no evidence that the regulators' budget 

has anything other than a zero effect on GDP and employment." 

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Other Potential Methodological Issues 

There are several additional methodological issues that may be of concern in the top-down 

approach, including unclear directions of causality and insufficient sample size in the model. 

Questions of Causality 

The first issue, which is linked to the question of identification of a dependent variable, relates to 

questions of causality in a top-down approach that uses a measure of regulation to explain the 

health of a country's economy: does the amount of regulation affect the economy, or could the 

economy also have an effect on the amount of regulation? This uncertainty about the direction of 

the causality between different components of a model is referred to by economists as 

"endogeneity." The presence of endogeneity can cause bias in the parameter estimates resulting 

from the model. As mentioned earlier in this report, it is crucial that researchers using a top-down 

approach explain the theory behind all of the components of their models. Having a solid 

theoretical foundation related to the causality question can reduce or eliminate the likelihood that 

a model will suffer from endogeneity. 

In the case of top-down studies of regulation like Crain and Crain, the parameter estimates are 

used to calculate the potential difference in GDP, which is the estimate that Crain and Crain 

provide for the cost of economic regulation. As explained in the section above summarizing their 

methodology, Crain and Crain assert that the GDP per capita is a direction function of the amount 

of regulation in a country. They do not explore the possibility that the causality could also go in 

the other direction. The presence of such endogeneity can cause the results of the model to be 

incorrect. 

The issue of correctly identifying the causal relationship is a challenge for scholars examining the 

relationship between regulation and other macroeconomic factors. For example, a recent study of 

the "regulatory volume" in states across the United States "looked at the relationship between 

regulatory output and a series of indicators described above meant to represent the economic 

health of the state." The study concluded that "citizens in more prosperous states may very well 

demand more regulation than citizens in less prosperous states." 105A similar concern could 

potentially be raised about the direction of causality between the volume of regulation and the 

economy. 

Sample Size 

The second is an issue of sample size, particularly for a top-down study that uses a cross-country 

comparison of industrialized economies. A small sample size can have detrimental effects on the 

precision of the model's results: a smaller sample size makes the estimate less precise and 

therefore less reliable. Researchers who examine cross-country comparisons of regulation face 

some potential problems, including the small number of fully industrialized countries and the 

fairly short length of time over which regulatory measures have been constructed. 

The Crain and Crain study uses 34 countries and a time period of eight years: 2006 to 2013. This 

is a relatively small sample size, especially given that the measures of regulation and other 

variables in the model are unlikely to change very much from one year to the next in just an 

eight-year period. 106 In addition, this specific eight-year period is not necessarily a typical one, as 

105 Stuart Shapiro and Debra Borie-Holtz, The Politics of Regulatory Reform (New York: Taylor & Francis, 2013), pp. 

65-66. 

106 The R-squared in the table for "within" the countries in their sample is .OJ, meaning that their model is not a very 

(continued ... ) 

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it is the period leading up to and immediately following the Great Recession. 107 Therefore, 

conclusions made based upon this narrow time period may not be generalizable to other years or 

other periods. 108 

Potential for Double-Counting Costs 

In the top-down approach, another potential problem is whether costs may be double-counted. 

Crain and Crain separate their total estimate of the cost of regulations into four categories, as 

described above, although it appears that this approach may be double-counting the cost of some 

regulations for at least two reasons. 

The first reason is an econometric one: as mentioned above, the potential for omitted variable bias 

exists in any econometric model. If Crain and Crain omitted a variable that is highly correlated 

with their measure of "economic" regulations-such as a measure of environmental or other 

types of regulations, which are almost undoubtedly correlated with their measure of economic 

regulation-then the explanatory power of the omitted variable becomes attributed to the 

coefficient on the economic regulation measure. In other words, the explanatory strength of that 

measure is inflated by the omission of other variables that are not included. By adding other 

measures of regulation, including environmental regulations, to the total cost they estimate for 

economic regulation, Crain and Crain may therefore be double-counting the effects of these other 

types of regulations. 

Second, the potential for double-counting exists because of the nature of the questions asked to 

business leaders that comprise the regulatory quality measure. The questions themselves do not 

necessarily measure only economic regulation, although Crain and Crain imply that to be the 

case. Rather, as discussed above, they measure potentially very broad effects of all types of 

regulation by measuring the overall regulatory environment. Because Crain and Crain is a hybrid 

study that also employs a bottom-up methodology to measure certain types of regulation, they 

add an estimate of the cost of other types of regulation to their estimate ofthe cost of economic 

regulation. As a result, their overall number of roughly $2 trillion could include some double 

counting. 109 

No Discussion of Benefits of Regulations 

To date, it appears that the top-down approach has not been used to estimate benefits of 

regulation--only costs. It is not clear whether the method could be used to measure benefits, 

because the approach measures cost in terms of potential economic growth that has not occurred 

due to the amount of regulation. A parallel approach does not seem to be applicable to benefits, 

which, as discussed above, are often not easily measured in dollar amounts or economic effects, 

and therefore may not be able to be estimated in this same way. 

( ... continued) 

good tit to explain the changes within countries over that period. 

10' Crain and Crain included dummy variables for two years, 2008 and 2009, but did not explain why. 108 The Crain and Crain data appear to have other issues related to sample size as well. For example, their sample 

appears to be missing some observations-34 countries times eight years should yield 272 observations, but they report 

their number of observations in Table 3 to be 219. They do not provide an explanation for why these observations are 

missing. 

109 Furthermore, it is worth noting that the portion of their model that covers the non-economic regulation-$580 

billion-may contain some of the same potential problems as those identified above for other bottom-up estimates. 

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Although the top-down method does not appear to be intended to measure costs and benefits, 

having an estimate of costs without an estimate of benefits does not provide the complete context 

for evaluating whether a country's amount of regulation is appropriate. Such a comparison of 

costs against benefits has been institutionalized in the regulatory process in the United States 

since the early 1980s. Specifically, one of the underlying components of the current regulatory 

system, which was formally put into place by President Ronald Reagan in 1981 when he issued 

Executive Order 12291, is that agencies should consider the costs of individual regulations and 

compare them against the benefits, and that "regulatory action shall not be undertaken unless the 

potential benefits to society for the regulation outweigh the potential costs to society." 110 This 

general approach of comparing costs against benefits has been upheld since the Reagan 

Administration formalized it in 1981, and the shift to become more reliant on estimates of costs 

and benefits in informing regulatory decisions over the past several decades has been well 

documented. 111 

In sum, the notion that costs and benefits must be compared to one another has remained a crucial 

component of the regulatory process in the United States over the past several decades. Under 

current rulemaking requirements, agencies are responsible for measuring costs against benefits in 

individual regulations, and because of the nature of the bottom-up method and its reliance on 

those estimates, it can be used to make overall comparisons between total costs and benefits. 

Such a comparison does not seem possible, however, at the macroeconomic leveL 

Summary: Advantages and Disadvantages of Two 

Approaches 

Each of the two main approaches taken to estimate the total costs and benefits of regulations have 

pros and cons, which tend to mirror one another. This final section briefly compares the two 

approaches and provides some perspective on why this issue is of potential interest to Congress. 

The bottom-up approach to estimating the total costs and benefits of regulations, such as the 

approach taken by OMB in its annual report to Congress, has several advantages. The bottom-up 

approach involves adding up actual cost estimates calculated by agencies pursuant to rulemaking 

requirements. These estimates are conducted on an individual basis for certain regulations, and, 

although they often contain some uncertainty, are based upon specialized information the agency 

has regarding expected costs and benefits. 

110 Executive Order 12291, "Federal Regulation," 46Federal Register 13193, February 17,1981, § 2(b). 

President William Clinton maintained this general principle of weighing costs against benefits when he issued his 

executive order on rulemaking, which replaced Executive Order 12291. Executive Order 12866 § l(b)(6). In his 

executive order, President Clinton arguably took a slightly more lenient approach by changing the wording to require 

that the benefits to society justifY the costs of the regulation, rather than outweigh. 

President Barack Obama continued to uphold the practice of comparing costs against benefits when he issued 

Executive Order 13563 in 20 II, emphasizing, among other things, that agencies must "propose or adopt a regulation 

only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are 

difficult to quantify)," Executive Order 13563 § !(b). 

111 See CRS Report R4!974, Cost-Benefit and Other Analysis Requirements in the Rulemaking Process, coordinated by 

Maeve P. Carey, and CRS Report RL32240, The Federal Rulemaking Process: An Overview, coordinated by Maeve P. 

Carey, and Eric A. Posner, "Controlling Agencies with Cost-Benefit Analysis: A Positive Political Theory 

Perspective,'' University of Chicago Law Review, voL 68, no. 4 (Fall2001), pp. 1137-1199, describing the 

"entrenchment of cost-benefit analysis in American government" in recent decades ( pp. 1139-1140). 
214 


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Methods of Estimating the Total Cost of Federal Regulations 

Notably, current requirements for agencies to estimate costs and benefits of their rules are 

intended to assist with agency decisionmaking in individual regulations by more fully informing 

decisionmakers of the likely outcomes and providing a means of evaluating and comparing 

regulatory alternatives. The potential utility of that information when taken out of the context of 

individual rules and aggregated, however, is greatly reduced. 

An individual cost-benefit analysis conducted by an agency and included in the bottom-up 

aggregated estimate could also suffer from econometric problems similar to those described 

above in the context of the top-down approach. However, the individual estimates used in the 

bottom-up approach can be validated by comparing the ex ante estimates of costs and benefits to 

ex post estimates. Some such studies exist and are discussed above. In addition, agencies maythough they are not explicitly required to--revisit the original cost-benefit estimate when 

conducting a retrospective review of their regulations. 112 This provides a potential means of 

validating the results of the bottom-up method, whereas the top-down method does not have a 

similar opportunity for ex post validation. 

The biggest potential problem with the bottom-up approach, however, is that the aggregated 

estimate is unlikely to represent the costs and benefits of all rules. Not all rules are included in the 

aggregate, because cost-benefit estimates are not currently conducted or required for all 

regulations. Furthennore, even for rules in which a cost-benefit analysis is required, monetizing 

certain types of costs and benefits can be challenging, and any effects of regulations that are not 

monetized are not able to be included in a bottom-up aggregate. 

Because of these limitations about what may be missing from the bottom-up estimate, a top-down 

approach may be more likely to capture fully the overall cost of regulations, as the top-down 

approach could conceivably provide a way to include in its estimate of indirect costs and effects 

of regulations that are not included in the bottom-up approach. However, the top-down approach 

has several potential problems when it comes to implementation, most of which arc conceptual 

and methodological. Any estimates ofthe cost of regulation resulting from a top-down approach 

are entirely reliant on the validity of the model, identification of its components and structure, and 

the theory behind it. The validity of an estimate is especially reliant upon the validity of the proxy 

measure of regulation. In practice, overcoming these conceptual and methodological hurdles is 

difficult, if not impossible, meaning that the results of a top-down approach should be treated 

with a great deal of caution. 

Finally, the top-down approach does not make a comparison of costs to benefits. Such a 

comparison appears to be outside the purpose of the top-down approach, but having both 

estimates of costs and benefits can provide a more complete representation of the costeffectiveness of a country's regulation. 

Issues for Congress 

Because of the role Congress plays in delegating legislative authority to federal agencies to issue 

regulations, Congress has shown an interest in conducting oversight of those regulations, both for 

112 A government-wide retrospective review is currently required under the Obama Administration, and similar reviews 

have been required by previous administrations. It is unclear, however, the extent to which agencies re-examine or 

recalculate their ex ante cost-benefit estimates. For more infonnation on the current retrospective review initiative 

under the Obama Administration, see Joseph E. Aldy, Learning from Experience: An Assessment of the Retrospective 

Reviews of Agency Rules and the Evidence/or Improving the Design and Implementation of Regulatory Policy, report 

prepared for the oonsideration of the Administrative Conference of the United States, November 17, 2014, at 

http://www.hks.harvard.edu/fs/jaldy/imglaldy_retrospective.pdf. 

Congressional Research Service 27 
215 


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Methods of Estimating the Total Cost of Federal Regulations 

individual regulations and the regulatory system generally. One way for Congress to conduct 

oversight of the regulatory system as a whole is to monitor the total cost and benefits of federal 

regulation. 

Inaccuracies in cost-benefit estimates conducted by agencies could have the effect of 

undermining public confidence in the regulatory process.u3 So, too, could a misunderstanding or 

over-reliance on estimates of the total cost of regulation that are not intended to be considered 

precise findings. For the reasons discussed throughout this report, both approaches to estimating 

the total cost of regulation have inherent-and potentially insurmountable--flaws. The true cost 

of regulation is incredibly difficult to estimate for the many reasons discussed in this report, and 

perhaps others as well. The discrepancy between the two approaches and their associated 

estimates raises the question of the utility of using such figures in the regulatory reform debate. 

Author Contact Information 

Maeve P. Carey 

Analyst in Government Organization and 

Management 

mcarey@crs.loc.gov, 7-7775 

113 Winston Harrington, Richard D. Morganstern, and Peter Nelson, "On the Accuracy ofRegulatory Cost Estimates," 

Journal of Policy Analysis and Management, vol. 19, no. 2 (Spring 2000), p. 298. 
216 


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ARTICLES 

EPA's New 

Source Review 

Program: Time 

for Reform? 

by Art Fraas, John D. Graham, 

and Jeff Holmstead 

An Fraas is a Visiting Fellow at Resources for the 

future; John D. Graham is Dean of the Indiana 

University School of Public and Environmental Affairs; 

and JcffHolrnstcad is a Partner in Bracewell LLP. 

----Summary-------

This Article examines the complex CAA program 

known as new source review (NSR), which affects virtually every major manufacturing facility and power 

plant in the United States. The NSR program provides important health and environmental benefits but 

has become a significant impediment to the growth 

and modernization of the U.S. manufacturing sector. 

Because of a new, more stringent air quality standard 

for ozone, the resulting changes in the NSR program 

n1ay effectively prevent industrial development in some 

parts of the country. The authors propose administrative reforms that EPA could take to address some of 

the major concerns about NSR while still maintaining 

the environmental benefits of the program: (1) replace 

cu rrenr deterministic, upper-bound modeling requirements with a probabilistic approach to air quality 

modeling; (2) expand the pool of emission reduction 

credits rhat may be used to offset emissions from new 

or expanded facilities; and (3) take actions to facilirate 

NSR permitting when there are changes to national 

ambient air quality standards. The authors also offer 

two potential statutory reforms. 

-----·---------

The administrations of both George W. Bush and 

Barack Obama recogniz,ed that manufacturing is 

one of the most heavily regulated sectors in the U.S. 

economy. Since 1981, manufacturers have become subject 

to more than 2,200 unique regulations, almost one-half 

attributable to one federal agency, the U.S. Environmental Protection Agency (EPA). 1 Both administrations also 

sought to streamline existing federal regulations that apply 

to the manufacturing sector in order to reduce economic 

burdens that threaten the competitiveness of U.S. manufacturing. However, a recent report by the Regulatory 

Studies Center at George Washington University found 

that the retrospective reviews of manufacturing regulations under both presidential administrations have had 

limited impact. Indeed, some of the retrospective reviews 

appear to have led to greater rather than diminished regulatory burdens. 2 

EPA's new source review (NSR) program is of special 

interest because it affects virtually every major manufacturing facility and power plant in the United States-and 

any company that might want ro build such a facility in the 

fmure. 3 In this Article, we discuss the major concerns about 

the NSR program that have been raised by industry and the 

policy community, and also highlight the expanding burdens of the program resulting from increasingly stringent 

national ambient air quality srandards (NAAQS). However, since the NSR program is also recognized as a source 

of significanl environmental benefits, the simple option of 

deregulation does not seem to be particularly promising. 

We argue that creative regulatory reforms can accomplish 

most or all of the anticipated environmental benefits ar 

considerably reduced cost to the regulated industry and 

the U.S. economy. 

Authors' Note: lhis Article was originally prepared as a working 

paper by Art Fraas and john Graham for discussion among academics 

and industry professionals at a workshop at Indiana Uniwrsity on 

October 29, 2015, in Indianapolis, Indiana. Financial support was 

the ttvo working paper authors by Indiana University 

raised fi'om individual philanthropists interested in 

manufocturirtg. Wf are gratefiJ! for the comments 

pr011ided on earlier drafts by Lynn Hutchinson and Nathan 

Richardson and the research assistance (Hunter) Odom. 

lhe 

2. 

NATIONAL RFSP-~~<C!-! Cot :-.~cn., Nccw SouRcJ' REV!£"'' rOR Srii.TlONAF.Y 

.)O\J\l.C~os OJ· AJR Potu:noN 68 76 (2006). 

~7 ELR I 0026 eNVIRONMENTAL LAW REPORTER 1-2017 
217 


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Copyright© 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120. 

We starr with a brief summary of certain key features of 

the Clean Air Act (CAA) and a brief discussion of how the 

NSR program fits within the structure of the Act. We then 

identify aspects of the current NSR regulatory approach 

that are likely to impose increasing costs on manufacturers in the near future. We propose options for regubrory 

reform that are designed to streamline and modernize 

regulatory requirements and reduce regulatory costs, while 

still allowing the regulatory program w achieve significant 

environmental results. We recognize that reforms that can 

be adopted through executive action are more likely to 

occur than those chat require new legislation by the U.S. 

Congress, but we also outline two variants of a potentially 

promising legislarive reform that could replace the existing case-by-case NSR review process with a system of economic incentives. 

I. Background 

A NAAQS 

1he CAA requires that EPA establish NAAQS for certain 

pollutants known as "criteria pollutants": pollutants that 

come from a variety of sources, are widespread in many 

geographic areas, and "reasonably may be expected to 

endanger public health or welfare."4 EPA has identified and 

set NAAQS for six such pollutants, including ozone and 

paniculare marter (PM). 'TI1e statutory language requires 

primary health-based NAAQS to be set or levels "which in 

the judgment of the Administrator, based on such criteria 

and allowing an adequare margin of safety, are requisite to 

protect the public health."5 YJhis requirement has yielded an 

underlying health science based on an increasingly sophisticarcd set of studies focused on sensitive subpopulations 

and more subde health endpoints. 

ynle CA.A also requires EPA review of NAAQS every 

five years.6 Although EPA has not been able to meet the 

five-year deadline in recent years, environmental groups 

have used litigation effectively to force EPA into what 

amounts w almost continuous review of NAAQS, especially NAAQS for ozone and PM. '!he resulr has heen a 

series of more suingent standards over the past decade. 

And given the focus on sensitive subpopulations and more 

subtle health effects, it appears likely rhat there will be continuing pressure to rarchet down NAAQS even further in 

Future years. 

4 

5. 

6. M. 

Since 2009, EPA has set more stringent NAAQS for four 

of the six criteria pollutants: nitrogen dioxide (N01

), sulfur 

dioxide (SO,), PM, and ozone. 'lhese NAAQS impose substantial costS on the U.S. economy and, in particular, on 

the manufacturing sector. For the recently revised ozone 

NAAQS, for example, EPA estimated annual cosrs of $1.4 

billion (not including the cosr in California, which faces 

a particularly difficult challenge in reducing ozone levels), 

but some experts believe rhat the cosr will be much higher. 

Some major metropolitan areas such as Los Angeles, 

Houston, and the East Coast megalopolis have had a continuous classification as "nonattainment" (NA) for the 

ozone and fine PM NAAQS. 7 1hese areas face continuing 

pressure to reduce emissions from the transportation and 

manufacturing sectors and severe restrictions on the siting 

of major new sources. Other large cities find that, with the 

lowering of NAAQS, they are in NA again (after spending years to meet an earlier standard) and must adopt even 

more stringent emissions controls for their manufacturing, 

commercial, and transportation sources.8 In addirion, as 

discussed below, the continuing ratcheting downward of 

NAAQS is making it 'tncreasingly difficult ro site major 

new manufacturing sources. 

Studies of rhe historical effect of the CAA on economic 

activity report significant economic costs in NA areas.9 Por 

example, Michael Greenstone estimated that, as compared 

to attainmenr counties in the United States, NA counties 

lost $37 billion in capital, $75 billion of economic producrion (in 1987 dollars), and 590,000 jobs during the period 

from 1972 to l987.w In a more recent study, Greenstone et 

aL estimated a significant decline in total facror productivity for pollutant-intensive plants in NA areas.n They report 

that this decline in productivity translates inro a loss of 

8. 

9. 

10. 

11. TuE EFFECTS oF ENYlROt--;ME:-;TAL 

REGULATION o" THE. CoMI'fTITlVI:.NILSS oF U.S, l\1ANUFACTUII.I;-;G 

Wnrking 

2012), 

1-2017 NEWS & ANALYSiS 47 tLR 10027 
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47 f:LR I 0028 ENV:RONMENTAL LAW RE:POR!E:R 1-2017 

$450 billion for manufacturing plants in NA arl'as during 

the 1972 to 1993 period of study." 

While these studies suggest a substantial shift of pollution-intensive industry away from NA areas in the 

United States, these studies may simply reHect a shift of 

activity within the United States from NA areas to attainment areas. In other words, although the CAA has clearly 

imposed significant economic costs on NA areas, it may 

have created commensurate economic gains in manufacturing activity and employment in attainment areas. 

Unfortunately, relarively few studies in the economic literature evaluate the effect of environmental regulation on 

the competitiveness of the U.S. manufacturing sector as a 

whole. A variery of other factors likely play an importanteven dominant-role in decisions on whether to locate in 

the United States versus another country. These factors 

include, for example, access to (and cosr of) important 

factors of production, transportation costs, existing investment in facilities and infrastructure, tax considerations, 

and exchange rate effects. 

Any empirical evaluation of the effect of environmental 

regulations is difficult to do because it must account for 

these other factors in teasing our any regulatory effect. 

Only a few srudics have attempted to do it. rlhis limired 

empirical literature suggests that environmental regulation has been a relatively minor factor in decisions as 

to whether manufacturing plants will be located in the 

United Stares or another countrv.U On the basis of this 

limited set of studies, Joseph AldYand William Pizer have 

suggested that the adverse effect of CAA requiremenrs in 

shifting economic activity and jobs away from NA areas 

ro "clean" areas within the Unired Stares has been more 

important than the effects in terms of forcing this economic activity ofFshore to countries wirh less stringent 

environmental requirements. 14 

However, these economic studies have looked at the past 

history of the CAA in the decades before 2000. With the 

suhstantial tightening of NAAQS in more recenr years, 

the difficulty of siting or expanding major manufacturing 

facilities in the Unired Stares may have created a more sig~ 

nificant incentive w shift industrial activity to other countries with less burdensome regularory requirements. 

B. New Source Review 

The CAA requires that, before a company can construct a 

new industrial facility or expand an exisring facility in the 

United States, it must first go £hrough the NSR permitting process and ohtain a permit that, among other things, 

ensures that the new or expanded facility will employ upto-date pollution control technology. The NSR program 

creates somewhat differenr requirements depending on 

whether the facility is located in an attainment area (an 

area that meets NAAQS or is unclassifiable due to the 

lack of data) or an NA area (an area that does not meet 

theNAAQS). 

In NA areas, new plants and major modifications to 

existing plants are required to meet the lowest achievable emission rate (LAER), meaning that the plants must 

install state-ofthe-art pollution controls in order to match 

or exceed the emission rate achieved hy the lowest-emitting similar facility in the country. In addition, they must 

obtain pollution "offsets" from other facilities in the same 

area. These requirements reportedly make ir difficult or 

even impossihle to site new plants in certain NA areas. 15 

In particular, discussions with industry sources suggest that the cost oF emissions offsets effectively prohibits the siting of major new industrial plants in certain NA 

areas. 'lbe idea hchind offsets is that, in order to build a 

new industrial facility in anNA area, a company must pay 

someone else to reduce emissions in that same area hy an 

amount that exceeds the emissions that will come from the 

new facility. Depending on the area, it must obtain offsets 

that are between 10% and 50% greater than the projected 

emissions from the new faciliry. 

Not surprisingly, offsets cannot be created on the hasis 

of actions already required by EPA or state regulations. 

To he counted as an offset, an emissions reduction must 

go beyond what is required by law. But for more than 40 

years, EPA and states have been looking for every conceivable way to reduce emissions related to ozone. In many 

areas, all the cosr-effecrive emissions reductions have been 

mandated by regulation. Where any reductions can be 

made, they are very expensive. 

For example, the Houston area, especially near the 

Houston Ship Channel, has numerous industrial facilities, but they are generally well-controlled. Because there 

is so much industry, it is possible to purchase offsets, but 

they arc very expensive. Houston-area offset prices vary 

from $150,000 to $200,000 per ton for volatile organic 

compounds (VOCs) and $80,000 to $100,000 per ton 

for nirrogen oxide (N0). 16 Even a relatively small faciliry 

with state-of-the-art controls will emit more than 100 tons 

per year of rhese pollutanrs. The so-called "ofF<;et ratio" in 

the Houston area is 1.4 to 1, meaning that the new facility would need to ofFset 140% of irs projected emissions. 

Thus, even if rhc new facility will emit only 100 rons per 

year of NO, and VOCs, the company trying ro build it 

!5. thc~c areas may &.bu find i1 JifflcLJlt to make 

16. 
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1-2017 NEWS & ANALYSIS ~7 ELR I 0029 

would need w purchase 140 tons ofNOx offsets and 140 

tons ofVOC offsets. At current ofTset prices, this means an 

up front cost of $32 million to $52 million just to purchase 

emissions off~ets. 

In the South Coast NA area in California, average offSet 

prices in 2014 were $23,500 per ton for VOCs and $63,000 

per ton for N0/7 Tahle 1 provides reported prices and 

quantities for major areas in California. In addition, the 

quantities involved in these emissions off~et transactions 

for any pollutant; and (2) even if projected emissions will 

not violate NAAQS, they will not result in an increase in 

ambient concentrations of any pollutant that exceeds the 

allowable PSD "increments" set hy the CAA. 19 

The requirement to show that emissions from a new 

facility will not "cause or contribute" to a violation of any 

NAAQS will he more challenging now that the ozone 

standard has been lowered from 75 to 70 parts per billion 

(ppb), because many areas of the country that have always 

been in attainment do Table 1. 2014 California Offset Prices for Emission Reduction Credits ($/ton) not meet the new standard. Until these areas 

arc designated as NA 

areas> a permit applicant 

would need to show 

that the proposed plant 

will not "contribute ton 

a violation of the new 

standard, which would 

appear to be impossih!e 

in or near areas that are 

already in violarion of 

Source: CALIFORNIA AIR RESOURCES BoARD (CARB}, EMISSION REDUCTION OFFSET TRANSACTION CosTS: 

SuMMARY REPORT FOR 20!4 (20!5), available at http://www.arb.ca.gov/nsr/erco/erc!4.pdf. 

Brackets denote average (mean) prke. 

arc relatively small compared with the emissions from a 

new major source coming into anNA area. 18 If the applicant does not have a facility in the NA area that it can readily control (or tear down) to provide offsets, then emissions 

offsets for five or more years in the future are reportedly 

hard or even impossible to find. 

More stringent NAAQS standards will also have an 

important effect on the siting of new sources in attainment 

areas. Under the "prevention of significant deterioration" 

(PSD) provisions of the CAA, new plants and major modiflcations in attainment areas must also go through a preconstruction permitting process. ~I his process requires that 

these plants: 

Adopt the best available conrrol technology (BACT) 

to control all pollutants (not just criteria pollutants) 

that arc regulated unJcr the CAA. BACT is somerimes no different from LAER bu£ may be less stringent, and less costly, for certain types of facilities. 

Provide an analysis of the effect of anticipated plant 

emissions on amhient air quality, including borh preconstruction monitoring of air quality in the area 

and air quality modeling of the effecr of the plant 

emissions on ambient air quality. 

To obtain a permit, rhe permit applicant must show, to 

the satisfaction of the permitting authority (generally the 

state environmental agency), that (I) projected emissions 

from the new plant will not result in changes in ambient 

air quality that would cause the area to exceed NAAQS 

17. CALll'OR:"llA AIR Rt.~O!JRG.S BOARD, EMl~S!O~ 

TRAN<;,\CTIOK CosTS: SuMM·\RY REPORT r<lR 

18 

the standard. EPA has 

said that it inrcnds to create at least two options that would 

address this concern: (1) by setting certain de minimis 

emissions thresholds bdow which a new facility would be 

deemed not to ''contribute" to a violation of the NAAQS; 

or (2) by allowing the permit applicant to purchase offsets. 

Given the history of CAA regulation, it is likdy that 

these options, when finalized by EPA, will be challenged in 

court. Even if they pass muster in the courts, it remains to 

be seen whether either of these options will be practically 

viable-especially for large industrial facilities. 20 If not, it 

will not be possible to build or expand a new industrial 

facility in certain areas, even if the facility would use stateof-the-art technology to control its emissions and even if 

the local community desperately wants it to be built. 

II. Analyses of the NSR Program 

A Costs of the NSR Process and Permitting Delays 

In a 2001 report on NSR> EPA observed that the permit 

application process can involve up ro five different stages: 

preparation of a permit application; agency determination 

of application "completeness" (a process that may include 

extensive discussion hetween the applicant and permitting officials and the preparation and submission of additional information); public notice and comment on a draft 

19. 

20. 
220 


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47 Ell\ I 0030 ENVIRONf'A,f:NlAL LAW Rf:PORTER 1-2017 

permit; issuance of a final permit along with response to 

comments; and administrative and judicial appeals. 21 ~D1is 

same report notes that "most developers describe [NSR] 

permitting as an extremely complex and time-consuming 

proccss." 22 A recent comment filed by an industry coalition srated: "Sources generally invest years in engineering, 

design and assessment studies before submitting a permit 

application for a major source. Even under optimistic conditions, it can take at least two years from the beginning 

of the fronrend engineering work unrH public notice of the 

draft permit is published." 23 

'The NSR process imposes direct costs in terms of the 

time and resources required tO prepare the permit application and to provide responses to questions and issues 

that arise in the permitting process. 1he uncertainty and 

delay that attend the permitting process may impose additional costs, including financial costs and penalties.J~ "Ihe 

opportunity costs associated with delays or cancellation of 

projects include the additional production forgone and, in 

some cases, forgone emissions reductions from retrofitted 

facilities. In addition, the pote-ntial for long delays and the 

uncertainty that attends the NSR process could lead to 

suboptimal decisions in upgrading existing capacity and 

installing new capacity.:'-5 

Some economists and industry representatives have 

argued that the focus ofNSR on preconstruction review of 

new or modified plants, and the attendant significant costs 

associated with the NSR program, have penalized the construction of new plants and the retrofit of existing plantsresulting in a "new source bias." 26 11ws, it has arguably 

been more economic in some cases to continue to operate 

relatively old, inefficient, and high-polluting plants than to 

21. ;-.;SR 90"D,w RtoV!!c\0/ BACKGROl:)'W PAl'l<R 5 {2001). 

22. 11 

23. 

25. 

26. 

install new facilities or upgrade existing facilities with better pollutant control technology. 27 To the extent this has 

occurred, :KSR review has had the perverse effect of delaying reductions in pollutants such as 502 and N0/8 

B. The Time Needed to Obtain an NSR Permit 

Under the CAA, EPA and other permitting agencies are 

required to either grant or deny an NSR permit within one 

year of receiving a permit application, but there is no practical way to enforce this deadline, and the permitting process often takes longer~sometimes much longer~-than a 

year. A 2015 Resources for the future discussion paper provides a snapshot of the NSR process from the date EPA or 

state authorities notify applicants that the NSR application 

is complete to the issuance of the final permit/1 During 

the period from 2002 to 2014, the nationwide average time 

to obtain an NSR permit for coal- and natural gas-fired 

electric generating units (EGUs) and refineries was roughly 

14 months.30 TI1is reprcsems a substantial increase in average processing time for NSR permits compared with the 

reponed permitting times for the 1997-2001 period. 111e 

distributions arc skewed---median values are less than the 

mean-with some projects requiring substantially longer 

to obtain NSR approval. 31 In addition, there was a significant variation across EPA regions in the processing time 

required for approval of new narural gas-fired EGUsfrom seven months for Region 7 (Iowa, Kansas, Mississippi, and Nebraska) to 19 months for Region 9 (Arizona, 

California, and Nevada). 

The data also show substantial year-to-year variarion in 

processing times, with markedly longer processing times 

during rbe 2003-2005 and 2009-2011 periods (Table 2). 

'l11e increase in permitting time during the 2003-2005 

period may reflect the uncertainty in the NSR program 

27. 

28. 

29. 

30. 

31. 
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1-2017 NEWS &ANALYSIS 17 ELR 10031 

due to the U.S. Court of 

Appeals for the District 

of Columbia (D.C.) Circuit review of EPA's 2002 

and 2003 revisions to the 

program:32 The longer processing times during the 

2009-2011 period may 

reflect a transition as the 

Obama Administration 

put its climate policy in 

place (meaning that sources 

for the first time had to usc 

BACT to control their carbon dioxide emissions) and 

as sources faced new air 

quality modeling requirements with EPA's revision of the NO), 502, and 

fine PM NAAQS. During the 2010-2014 period, 

for example, one-third of 

the combined cycle plants 

received NSR permits after 

Table 2. Average Permitting Time for Natural Gas 

EGUs (Including PSD and NAAreas) 

All natural gas 

Year- Mean Number 

2002 321 73 

2003 379 64 

2004 612 46 

2005 463 27 

2006 290 23 

2007 343 24 

2008 377 21 

2009 409 33 

2010 468 24 

2011 436 ! 21 

2012 268 31 f---

2013 225 26 

12014 235 3 

I Average 384 416 

processing delays by the state or EPA permitting authorities ranging from more than one year~-the statutory deadline for action-to three years. 33 

Ill. Historical Concerns About the NSR 

Program 

A. Delays Caused by Regulatory Overlap 

Por NSR, several different layers of government arc likely 

to be involved. Where EPA has approved the state implementation plan (SIP) provisions for NSR, the state is rhe 

primary permitting authority. However, under EPA regulations, EPA retains authority over air quality modeling, 

and the states may be required to consult with the EPA 

region (and EPA headquarters in some cases) on modeling issues:H 

In states that have not obtained EPA SIP approval fOr 

their NSR process, EPA is the permitting authority. In 

most of these states, EPA has delegated the NSR process 

JZ 

.13. 

34. riO C.ER. §Sl app. \'(/ (2005). 

I 

~ 

New permits Additions Modifications 

Mean Number Mean Number Mean Number 

324 47 299 25 769 I 

362 36 406 27 267 I 

521 27 829 13 551 6 

665 IS 124 3 241 9 

355 6 286 II 231 6 

371 16 393 3 223 5 

384 3 715 4 278 14 

439 25 364 5 233 3 

554 14 372 5 321 5 

587 8 415 5 297 8 

245 14 223 II 403 6 

2.70 II 228 7 161 8 

- 0 -- 0 235 3 

411 222 391 119 293 75 

to the states (meaning that state officials take the administrative steps to process permit applications) but retains 

ultimate permitting authority and must be consulted on 

all substantive issues, including modeling, the selection 

of BACT, emissions limits, and monitoring and recordkeeping requirements. In a relatively few cases, a state has 

refused to do NSR for one or more pollutants, and in these 

cases, EPA issues rhe NSR pcrmit. 35 

B. Changes in NAAQS: Problems in Transition and 

Lack of Timely EPA Guidance 

The recent changes in the N(\, 502

, fine PM, and ozone 

NAAQS have furtht~r complicated the NSR process, resulting in permitting delays and, in some cases, the decision 

by industry to defer or cancel projects. '16 New or revised 

NAAQS must be addressed immediatdy in rhe NSR permit process, even before EPA makes formal designations as 

ro which areas of rhe country arc in attainment or NA with 

the new standard. 11 

As a result, the new NAAQS can have an immediate 

impacr on pending permit applications. 38 Even if a permit 

3&. 

pcrmitapplical:iomthat 

w 

be 
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47 ELR I 0032 ENVIRONMENTAL LAW REPORTER 1-2017 

application has been pending Cor months or years and the 

permit applicant has shown that the new facility will not 

cause or contribute to the violation of any NAAQS, EPA 

has often required the permit applicant to redo its modeling analysis using the new standard. 

In some cases, rhis has proven difficult, costly, and rife 

with delays because EPA's practice has been to adopt a 

revised, more stringent NAAQS and begin work on implementation and modeling guidance only after adopting the 

newly revised NAAQS. Although EPA staff have claimed 

that state environmental agencies know how to proceed 

when a NAAQS is changed, the stare agencies have disagreed in comments to the Agency, and have sometimes 

delayed action on permit applications until EPA issues the 

necessary guidance. :!9 

In the case of EPA's 2010 revision of the NO, NAAQS, 

for example, EPA adopred stringent one-ho~r primary 

standards~the 98th percentile one-hour daily maximum 

averaged over three years~to supplement the existing 

annual standard. Shortly after the one-hour N02 NAAQS 

was issued, EPA put out a memorandum stating that anyone with a pending permit application-even with applications that had been pending for several years-would need 

ro redo a modeling analysis ro demonstrate that projected 

planr emissions would not cause or contrihute to a violation of the new one-hour NO, NAAQS. 40 

However, rhe adoprion of t-he short-term N02 standard 

grearly complicated the air quality modeling that new 

sources were required to provide in obtaining an NSR permit. The standard air quality models in place incorporate 

overly conservative assumptions for modeling single source 

efFects on ambient N01 levels. 1his over-conservatism was 

not a problem with the annual NO, NAAQS but, with 

the new, stringent one-hour N02 NAAQS, it effectively 

prevented showing that these new plants would not cause 

or contribute to NA.41 

39 

40 

41. 

It appears that EPA did not fully anticipate these issues, 

bur Agency officials have been working through the modeling issues raised by the shon-term one-hour N02 NAAQS 

ever since it was adopted. A year after setting the revised 

N02 NAAQS, EPA provided initial guidance on some 

of the modeling issues (e.g., the treatment of intermittent, auxiliary sources) and additional Acxibiliry in terms 

of modeling the cumulative effect of other sources within 

the region. But EPA stilt has not provided the modeling 

tools that, according to many stare environmemal officials, 

should have been in place before the new standard was 

adopted. EPA finally issued a notice of proposed rulemaking in July 2015 to address these remaining issues-five 

years after promulgating the one-hour N0 1 NAAQSand a final rule is expected in the next few m;;nths.42 

The Avenal Power Center, one of the combined cycle 

projects affected by the 2010 NO, NAAQS revision, provides a stark lesson in the obstacl~ course associated with 

the NSR permitting process. Avenal was a proposed stateof-the~art combined cycle electric generating project to 

be located in California, and an EPA regional office was 

the permitting authority. EPA's Region 9 notified Avenal 

that its NSR permit application was complete on March 

19. 2008. 

On february 9, 2010, EPA revised the N02 NAAQS by 

adopting a new stringent one-hour NO~ standard to supplement rhe existing annual N01 NAAQS, and EPA took 

the position that the Avenal deve-lopers were now required 

to show that it would not cause or contribute to a violation 

of the one-hour NO, NAAQS. rlhe developers submitted a 

new modeling analySis to demonstrate compliance with the 

new standard, but EPA said it could not determine whether 

it was acceptable because the Agency had not yet adopted a 

new modeling protocol for use with the one-hour standard. 

On March 9, 2010, rwo years after Region 9 found 

that its NSR application was complete, Avenal filed suit 

in federal district court charging that EPA had failed to 

act within one year as required by §165(c) of the CAA.43 

'Ihe developers wok the position that, because EPA had 

been legally required to take final acTion on the permit 

application well before the new one-hour standard was 

even proposed, it should not be required ro redo its permit 

applicarion to demonstrare compliance with the new standard. In January 2011, after briefing and oral argument on 

these issues but befOre the courr reached a decision, EPA 

informed the court that it had decided to grandfather cerraln PSD applications, including the Avenal application, 

from the NSR requirement that projects meet the one-hour 
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1-2017 NEWS &ANALYSIS 47 ELR 10033 

NO, NAAQS, and explained that ir would request comments on its grandfathering proposal. 

On May 2(>, 2011, the court issued an order requiring 

EPA w take final action on the NSR permit within 60 days 

(i.e., by August 27, 2011). The EPA regional office issued 

the NSR permit to Avenal one day later, on May 27, but 

this did not constitute final action because of the possibility for opponents of the project to appeal the permit to 

EPA's Environmental Appeals Board (EAR). Project opponents did appeal to the EAB in early June, submitting four 

petitions seeking a review of the permit. 

On August 18, 2011, the EAB issued its decision, 

declining to review the permit given the time constraints 

imposed hy the district court order requiring the Agency 

to make a final permit decision by August 27, 'lhe environmental opponents of Avenal also filed suit with the U.S. 

Court of Appeals for the Nimh Circuit. 'The Nimh Circuit 

agreed with the environmental groups that Avenal must 

show that it would not cause or comribure to a violation 

of rhe one-hour N02 NAAQS4 ' It appears that, after the 

Ninth Circuit decision, Avenal decided not to go forward 

with the project. 

IV. Heightened NSR Concerns Under the 

New Ozone Standard 

'1he new ozone standard illustrates som..- of the difficulties 

that arise when EPA adopts a new standard before deciding how it should be implemented. TI1ere are several areas 

of concern with siting new sources under NSR given the 

interaction with the revised ozone NAAQS, including the 

effect of modeling requirements, the difficulty of securing 

needed emissions offsets, and the issues associated with 

the adoption of a standard at or near background levels 

of ozone. 

A. Modeling Requirements 

In the pasr, EPA's approach has been to ''assess the ozone 

impacts of an individual source ... on a case-by-case basis 

in consu!tarion with the appropriate EPA Regional Office 

and/or permit reviewing authority."45 There has nm been a 

"preferred Of recommended analytical technique Of modeling system," and analyses of single-source effects for 

NSR have usually involved only a qualitative assessment 

(although in a few cases, applicants have been required to 

usc sophisticated chemical transport modeling). 

In its July 2015 proposal to revise its Guideline on Air 

Quality 1v1odding, EPA asserts that advances in photochemical modeling have reached the point where it is 

reasonable to identify specific air quality models appropriarc for usc in assessing the ozone efFects of individual 

44 

45. 

sources seeking an NSR permit. As a result, EPA states 

that it plans to require more rigorous single-source modeling for ozone under the PSD permitting program.46 'Ihus, 

a qualitative evaluation will no longer be sufficient, and 

new sources must provide air quality modeling to show 

that the plant will not cause or contribute to a violation of 

the new ozone NAAQS. 

If rhe final air quality modeling rule-expected in 

the next few months-retains a requirement for singlesource modeling for the ozone NAAQS, nothing will be 

in place in terms of clear direction on the specific modding required. New sources and the permitting authorities will face continuing uncertainty about the modeling 

required to demonstrate that plant emissions will not cause 

or contribute to a violation of the ozone NAAQS. Coupled 

with the more stringent ozone standard, the new modeling requirements for ozone will likely create a significant 

new challenge for many companies seeking to huild new 

manufacturing plants or industrial facilities in the United 

States. 1he hottom line is that new sources will be in a kind 

of limbo. 

EPA has suggested that it will address this concern in 

part by creating a new de minimis exemption for proposed 

sources whose emissions arc too low to have a meaningful 

impact on ozone formation. However, EPA does not yet 

have anything in place to help identify de minimis sources 

that would be exempt from modeling requirements. 

Instead, in its recent air quality modeling proposal, EPA 

explains that it will undertake a new rulemaking that will 

provide a technical basis to identify emissions levels and 

amhiem impacts that would not be expected to contribute 

significantly to ambient ozone levelsY EPA has set a schedule for this rulemaking that will take at least another two 

years-substantially lagging behind last October's change 

to the ozone NAAQS. 

B. Finding Emissions Offsets in PSD Areos 

As noted above, EPA policy allows new sources in PSD 

areas to use emissions offsets to address cases where the 

plant emissions would cause or contribute to a violation 

of NAAQS. In theory, this would provide an oprion for 

sources located in areas that meet the prior ozone standard of 75 ppb but have monitored levels that exceed the 

new 70 ppb standard. Until these areas are designated as 

NA {a process that takes several years), sources locared in 

these areas will be subject to the PSD provisions for NSR, 

including the requirement that sources show that they will 

not cause or contribute to a violation of the new ozone 

NAAQS. Since monitored levels in these areas exceed the 

new standard, the only recourse these sources may have is 

to obtain emissions offsers. 
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1he problem, however, is that these areas will not have 

the arrangements in place to generate offsets for several 

years. History has shown that it takes several years for 

an area to develop the institutional arrangements necessary lor the generation of acceptable offsets. EPA does, at 

least in theory, allow offsets from other areas under certain 

circumstances, but the opportunity to use these "trades" 

across areas has historically heen constrained by EPA. In 

particular, the applicant must demonstrate a "net air quality benefit" across the region-a showing that must be 

made through detailed computer modeling to EPA's satisfaction. Some commenters on the ozone NAAQS proposal highlighted the difficulty of obtaining EPA approval 

of such trades.48 Finally, it should be noted that rural areas 

with ozone levels exceeding 70 ppb that do not have any 

other controllable sources may never be able to generate 

the needed emissions offsets. As a result, the recent ozone 

NAAQS may effectively ban the construction of new 

sources in these rural areas. 

C. Dealing With Background Ozone 

In the case of the recent ozone NAAQS, the new 70 ppb 

standard likely approaches background levels in some 

areas of rhe United States, leaving little "headroom" for 

new manufacturing facilities in terms of showing that 

their residual emissions, even after installing the best 

available pollution control technology, will not violate the 

ozone NAAQS. Recent research has found that stratospheric intrusions and long-range transport-particularly 

in western stares-have resulted in daily maximum eighthour ozone levels of 70 ppb or more, '~ With the ozone 

NAAQS at or below background, sources will find it 

impossible to show that they will nor "contribute to" a 

violation of the standard. 

EPA has argued that stratospheric intrusions can be 

dealt v.rith through its exceptional events policy, which 

allows EPA to distegard exceedances of a NAAQS caused 

by certain types of exceptional events. However, states that 

48 For txampk rhe Sourh Carolina .1gmcy in charge of implementing 1he 

new 

thehave tried to use the policy in the past claim that it has 

been extremely difficult, costly, and time-consuming to 

get EPA recognition of any exceptional events-perhaps in 

part because EPA has established a high hurdle for accepting state claims of exceptional events. In any event, the 

existing rule sets restrictive requirements for such claims, 

in part hy requiring the affected states to show a "clear 

causal relationship" between the measured level and the 

event rhar has affected air quality in rhe area. 

'lhis requirement necessitates extensive moniroring and 

modeling to establish a clear causal relationship in a context where there continue to be significant questions about 

the accuracy of ozone air quality modeling. Further, the 

state must show that the exceedance is in excess of normal 

historical fluctuations. It is not clear that states will be able 

to meet these restrictive conditions because little historical data exist on such intrusions. In the final ozone rule, 

EPA signaled that it intended to complete revisions to the 

Exceptional Events Rule and guidance document before 

October 2016.50 

In October 2016, EPA issued revisions to its existing 

Exceptional Events Rule as promised. The rule addresses 

some of the issues raised hy stakeholders since promulgation of the current rule in 2007, with the objective of 

providing clarity on the criteria needed to prove an exceptional event and increasing rhe administrative efficiency of 

the process. Unlike existing EPA policy, however, the rule 

restricts rhe scope of the Exceptional Evenrs Rule to specific 

regulatory actions, such as the designation of areas subject 

to a NAAQS as attainment or NA and determinations of 

attainment of a NAAQS by NA ateas. EPA explains in 

the preamble that it is preparing a guidance document to 

address the exclusion of data for other applications, such as 

NSR.~ 1 EPA has not announced a schedule for issuing such 

a guidance document and, if history is a guide, there may 

be uncertainty for many years about ways in which exceptional events will affect the NSR program. 

V. Potential Administrative Reforms 

Past efforts to refOrm the NSR program have largely 

focused on changes thar would ease the burden on existing 

sources by reducing the numher of projects and activities 

that would be treated as major modifications of an existing source that require an NSR permit. For example, the 

most recent changes-issued in 2002-allow the use of 

projected fururc actual emissions, rather than potential 

emissions, in measuring emissions increases; a longer lookback period in selecting rhc baseline against which future 

projected actual emissions are compared; and a new program referred ro as the plantwide applicabiliry limitations 

(PAL) program, which creates an incentive for sources to 

65437. 
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1-2017 NEWS & ANALYSIS 47 ELR 10035 

reduce their emissions as a strategy for avoiding NSR in 

the future.52 

rihere certainly is merit in exploring additional NSR 

reforms for existing sources, but this Article is primarily 

focused on the ways in which the current NSR program 

may impede construction of new facilities, even with stateof-the-an emission controls. Below, we discuss a set of 

reforms designed to address rhese issues and ro make rhe 

NSR program more sensible when it comes to new sources, 

A A More Realistic Approach for Air Quality 

Modeling 

EPA's current modeling guidance requires deterministic air 

quality models using the maximum allowable emissions 

rate and the maximum allowable operating conditions for 

each averaging time. 5

3 It also requires the use of modeling 

assumptions that yield the maximum impact on air qual~ 

iry in calculaiing background, including rhe effect of other 

sources in the area. However, sources typically operate 

well below their maximum allowable emission rates, and it 

would be highly unusual for all the sources in an area to be 

emitting at their highest allowable rares at the same timeand during a period when weather conditions would maximize the ambient impacts of their emissions. As a result, 

EPA's current modeling guidance substantially overstates 

the ambient air quality dfecrs of a porenrial new source. 

One solution to the over-conservatism of rhe current 

approach would be to adopt a probabilistic modeling 

approach. Adoption of probabilistic methods would allow 

the use of distributions to reflect the variability in aclual 

emissions, meteorology, and background. One common 

approach is to use Monte Carlo analysis to combine the 

information from rhe various probability distributions 10 

provide an estimate (in the form of a distribution) of rhe 

effect on air quality. 'Thus, probabilistic analysis provides 

information on the variability and uncertainty in the estimated air quality effects and on the extent r~ which currem deterministic modeling requirements overestimate the 

actual air quality impacts of a new source. 

Adoption of probabilistic air quality modeling 

approaches would be particularly appropriate with the statistical fOrm adopted for the short-term NAAQS.'>4 Where 

a short-term NAAQS has been established to protect a sensitive subpopu lation, it might also be possible to usc probabilistic modeling to predict the likelihood that a member 

of such a subpopulation might be present and potentially 

exposed to peak concentrations caused by unusual circumstances related to weather or emission events. 

Obviously, in order for probabilistic modeling to be 

helpful, EPA must indicate a receptivity to such modeling. But the Agency should also provide guidance on what 

probabilistic cutpoint must be met when making a determination that a new source will not contribute to adverse 

air quality impacts. EPA is already using probabilistic 

modeling to various degrees in other programs, so it should 

be feasible to develop guidance for appropriate use of such 

modeling in the NSR program. 

B. Reforms to the Offset Program 

'Ihe statutory offset requirements for the NSR program 

were established in 1977 and were based on the assumption that, if an area was in NA, the problem was largely 

caused by local industrial sources that needed to install 

pollution controls. riherefore, if a company wanted to 

locate a new facility in that area, ir could pay for potlution 

controls at another facility and rhus obtain the emissions 

reduction credits it would need to offset emissions from 

the new facility. 

Although this may be the case in some areas of the 

country, it is not rhe case in many or hers-especially when 

it comes to ozone. With the lowering of rhe ozone standard to 70 ppb, it appears that a number of rural areas will 

become NA areas, including areas that currently have no 

industria! facilities at alL In such areas, violations of the 

ozone srandard are typically caused by a combination of 

natural background, motor vehicles that travel through the 

area, and pollution transported from long distances. Here, 

no offsets are available and, depending on how the offset 

program is implemented, rhe offset requirement may well 

serve as an effective prohibition on the construction of any 

industrial facilities. 

'I1le orher scenario in which the offset requirement may 

effectively ban new industrial facilities arises from the fact 

that some areas of the country have been very aggressive 

over many years in their regulatory efforrs to reduce ozone 

levels. It may be true, as some critics suggest, that some of 

these areas did nor take aggressive regulatory action until 

passage of rhe 1990 CAA Amendments, but states with 

persistent ozone problems have spent rhe past 25 years looking for every conceivable way to reduce emissions related to 

ozone. In these areas, all the cost-effective emissions reduc~ 

rions (and some very costly ones as well) have already been 

mandated by regulation, and EPA does nor allow such 

emissions reductions to he used as oflScts. Where. there are 

any offsets to be had in these areas, they are very expensive and often make it economically infeasible to lm:ate any 

ppb fottheaveragefourth 
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47 ELR I 0036 ENVIRONMENTAL LAW REPORI ER 1-2017 

new industrial facility in the area, even a relatively small 

fad lit y with state-of-the-art pollution controls. 

Fortunately, potential administrative reforms would 

help address both concerns-rural areas where no ofFsets 

are available and heavily regulated areas where offsets, if 

they are available at all, are very costly. First, the CAA 

allows the developer of a proposed new facility to obtain 

offsets from another area (i.e., an area outside the NA area 

where the new EKility will be located) as long as (1) the 

other area is also in NA and has "an equal or higher nonattainment classification" and (2) emissions from the other 

area contribute to NA in the area in which the new source 

will be located. Historically, it has heen very difficult ro 

obtain permission to use out-of~area otTsets because EPA 

and states have required extensive modeling studies to show 

that emissions from the offset-producing area contribute to 

pollution levels that exceed NAAQS in the area in which 

the new facility is to be located. Industry representatives 

also report that, even where such modeling has heen done, 

EPA has been reluctant to approve it. 

However, advances in our understanding of air pollution have shown that ozone and fine PM (often referred to 

as PI\1 2 5

) are more a regional issue than a local issue, and 

that elevated levels of these pollutants in a particular area 

are caused in parr hy emissions from many other areas, 

including some that are very distant. ~Ihis finding-based 

on EPA modeling studies showing that there is long-range 

transport of emissions that contribute to ozone and fine 

PM NA-is the basis for EPA's recent Cross-State Air 

Pollution Rule. The Rule required substantial emissions 

reductions from power plants in 28 states because EPA has 

found that they contribute to ozone and fine PM NA in 

other states, 

'Thus, instead of requiring case-by-case modeling studies to justify the usc of out-of-area offsets, EPA and stares 

could in many cases rely on the long-range transport studies that EPA has already done to show that emissions from 

28 states contribute to ozone and fine PM NA in many 

other states. Even where EPA has not already done such 

modeling, companies seeking to rely on out-of-area offsets should be able to employ similar studies to justify the 

use of such offSets. This reform would nor address all the 

concerns about currem ofFset requirements, but it would 

significantly expand the pool of potential offsets in many 

parts of the country (especially in rural areas) while still 

achieving the program's environmental goals. 

Unfortunately, the use of our-of-area offsets may not be 

an option for some heavily regulated areas such as the South 

Coast Air Quality Management District (SCAQMD) and 

the San Joaquin Valley in California because of the requirement that such offsets must come from an area that has "an 

equal or bigher nonattainment classification." For the purposes of ozone, there arc five different NA classlficationsmarginal, moderate, serious, severe, and extreme "and a 

developer who might want to build or expand a facility 

in an extreme area like SCAQMD would he ahlc to use 

our-of-area offsets only from another extreme area, where 

offsets will also be very costly and may not be available. 

Even in these areas, however, other reforms to the offset program may expand the pool of offsets and allow 

the development of some new manufacturing facilities. 

For example, EPA has historically insisted that emissions 

reductions required by regulation may not be used as offsets. 'Ihis may be true when it comes ro regulations pro~ 

mulgated by EPA, hut states are also required to adopt their 

own sets of regularions, SIPs, to show how they will come 

into attainment. If an area wanted to preserve the option of 

attracting new manufacturing facilities, it could be allowed 

to set aside some of its SIP emissions reductions to be used 

as offsets, as long as the SIP shows that 01her reductions 

would allow the area to continue making reasonable further progress toward attainment. 

As discussed ahove, a number of studies have shown 

that NA areas have lower levels of economic growth than 

attainment areas. 1his is likely caused, to a large extent, 

by current offset requirements, which have been developed 

over many years in a series of restrictive EPA policies and 

guidance documents, It may he time, especially in light of 

the new ozone standard, to revisit these requirements to 

ensure that they strike the right balance between improving air quality and allowing continued economic growth 

in NA areas, 

C. Adoption of a Consistent Treatment for Pending 

Permit Applications 

EPA has been inconsistent in its treatment of NSR permit 

applications that are pending when a new NAAQS comes 

into effect. Before 2010, it appears that such decisions were 

generally made on an ad hoc hasis by individual state agencies. Some would require permit applicants to redo their air 

quality modeling to show compliance with a new standard, 

but others believed that this approach was not required. In 

their view, if an applicant had done the necessary modeling 

to show compliance wirh the standards in place when the 

permit application was submitted, no additional air quality 

modeling was required. 

EPA did not address this issue when it adopted irs onehour N02 standard in 2010, but it became a point of 

contention between several permit applicants and environmental groups that were opposing their proposed projects. In response, EPA said that it did have authority to 

grandfather pending permit applications whenever a new 

or revised NAAQS was adopted, so applicants would not 

need to redo their air quality studies based on the standard. 

However, the Agency said, because it did not explicitly 

include a grandfathering provision as part of the new N02 

NAAQS, all applicanrs with pending permit applications 

were required to do anmher air quality study ro show that 

emissions from their proposed projects would not cause or 

contribute to a violation of the new standard. 
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Perhaps, because of the problems that this created 

for many permits that were pending back in 2010, the 

Agency did include an explicit grandEuhering provision 

as pan of the 2015 ozone standard. rD1e Agency could 

easily adopt this approach in connection with any future 

NAAQS revisions and grandfather rhose NSR applications that are reasonably complete before the new 

NAAQS comes inro effect as a part of its final rule. In its 

ozone NAAQS proposal, EPA is already moving in this 

direction. It could also extend this approach to protect 

applicants for projects char are proposed for attainment 

areas, as long as their applications are complete before the 

area is designated NA, 

Without this type of protection, project opponents will 

have an incentive to delay the permitting process as long 

as possible in rhe hope that the area will be designated 

NA befOre a final permit can be issued, A more consistent 

grandfarhering approach would ensure that companies do 

not spend years trying to obtain a PSD permit, only to 

reach the end of the process and find they now need co get 

anNA NSR permit (with offsets that may not be available) 

rather than a PSD pcrmiL 

D. Timely Issuance of Implementation Rules and 

Modeling Guidance 

As mentioned earlier, one of the most important reforms 

EPA could make is simply to make sure that the necessary 

implementation rules, guidance, and air quality models are 

already in place when a revised NAAQS comes into effect. 

~lhis would require a commitment of EPA resources that 

the Agency has so far not been willing to make, but it certainly could be done. 

Part of the problem may be that the nuts and bolts 

of implementing a new standard are not terribly ''sexy." 

'Ihe most senim EPA officials, those who are politically 

appointed, understand that they will he in place for only 

a few years, and they generally want to spend their time 

and arrention on higher-profile issues. When it comes to 

NAAQS, they receive praise from the environmental communiry for lowering the standards, but not for the difficult task of actually figuring out how a lower standard can 

be Implemented. It is rare to have political leaders at EPA, 

either Repuhlican or Democratic, who want to make their 

mark on the world by dealing with air quality modeling 

and the arcane world of oiT"sc!s. 

On the ocher hand, it would be relatively simple to 

address this issue with a bask structural reform a[ EPA. 1he 

Agency aiready has a well-established process for reviewing NAAQS-a process that normally takes several years. 

Ar present, this process does not involve key stakeholders 

involved in implementing the NSR permitting program. 

1he NAAQS review process should be structured so that 

by the end of the process, the necessary implemcnrarion 

rules and modeling guidance have also been finalized. TI1is 

simple step would addre:ss many of rhe concerns rhat have 

arisen over the past few years, 

VI. Potential Statutory Reforms 

A. A Narrow Fix: Emissions Fees in Lieu of Offset 

Requirements 

Current modeling and oiTsct requirements may be the most 

significant regulatory impediment to thr development of 

new and expanded manufacturing plants in the United 

States. rn attainment areas, more stringent NAAQS coupled with conservative models and modeling assumptions 

make it difficult {and sometimes impossible) for a permit 

applicant to show that a new facility will not "cause or contribute to" a violation of any NAAQS. Even where it may 

be possible to make such a showing, the process is uncertain, lengthy, and burdensome. 

When a new or expanded source in an attainment area 

cannot make such a showing, it must obtain emissions offsets in order to obtain a permit. Irr this sense, it is treated 

just like a facility in anNA area. In either case, a new facility may not be built unless the permit applicant can obtain 

sufficient pollution offsets, However, as outlined above, 

offsets are not available in many areas, and in areas where 

they are available, they can be prohibitively costly. 

We propose a narrow statutory reform that could 

address these issues wbile still obtaining mosr or perhaps 

even more of the environmental benefits of the current 

program: allow permit applicants to pay emissions fees in 

lieu of meeting the current offset requirements, and require 

the state or local environ mental agency to usc these fees to 

pay for or subsidize emissions reductions rhat the agency 

believes will do the most good in terms of reducing environmental risks. 55 

Depending on the size of the fee, states may or may not 

be able to obtain the emission offsets required by the currem NSR program, but they may be able ro obtain even 

more because they could seek emissions reductions from 

a much broader range of sources than allowed under the 

current program. Current EPA practice favors offsets that 

come from other industrial sources-·not from "mohile 

sources" (including cars, trucks, and construction equipment) and not from "area sources" (such as dry cleaners, 

auto body shops, and other paint and coating operations). 

Our proposal would have emissions fees paid into a fund 

that would be under the control of the state or local environmental a?,ency, which could use the proceeds to finance 

emissions reductions and other air quality programs. fn 

some cases, rhis might include subsidizing diesel retrofits 

or other emissions reductions from mobile or area sources 

5'5. 
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47 ELR I 0038 ENVIRONMENTAL LAW REPORTER 1-2017 

that can be more important in terms of improving ambient 

air quality than traditional off:o;;ets. 

In some cases, states could use their existing regulatory authority to obtain emissions reductions that could 

be used as offsets. Under current law, existing sources do 

not necessarily have an incentive to make even cost-effective emissions reductions because (1) rhey do nm have to 

pay for their emissions and (2) rhey may want to "hoard" 

potential reductions to offset future emission increases.56 

As a result, existing plants have an incentive to retain any 

potential reductions to support their own plans for plant 

expansion, insread of generating emission offsets for a new 

plant.~; States could use their existing regulatory authority 

to obtain such reductions and create offsets that could be 

used by anyone seeking to build a new source (or expand 

an existing one). 

Under rhe approach rhar we are proposing, a new or 

expanded facility would still need to obtain a permit to 

ensure rhat it will be built with modern pollution control 

technology~ BACT in attainment areas and LAER technology in NA areas-but instead of obtaining offsets, it 

would make a payment to rhe state or local environmental 

agency based on its projected emissions. We anticipate thar 

such per-ton emissions fees would be different for different 

pollurams based on tbe "n:asonable cost" of a technologybased level of control. Some examples ofidentifying a "reasonable" comrol cost include the fo!Iowing: 

Section 185 of the CAA (adopted in 1990), which 

established an emissions fee of $5,000 per ron 

adjusred annually by the Consumer Price Index. In 

2013, the fee was $9,400 per ton for NO, and VOC 

emissions for severe and extreme NA areas. 

EPA's regulatory impact analysis for the recently 

adoptcJ ozone standard, which used a control cost of 

$15,000 per ton as a reasonable estimate of the highest per-ran cost that would be necessary for the cost 

of ''unknown" conrrols required to meet the current 

ozone N AAQS. 

We anticipate that rbese numbers ($9.400-$15,000 

per ton) would be at the upper end of the range of potential emissions fees, since rhey reAecr the projected cost of 

obtaining emissions reductions in the ar~as with the most 

serious air quality problems. 

B. Broader Structural Refarm: Emissions Fees in 

Lieu ofNSR 

A more sweeping statutory reform could replace the entire 

NSR permitting program with a system of industrial em is~ 

sions fees. The fees could be based on the projected perton cost of comroHing different pollutants, or they could 

5G. 

'57. 

instead be damage-based. Damage-based fees could vary 

based on geographic location, insofar as reasonable estimates of damages arc available. Different fees would be 

applied to different pollutants, based on rhe best available knowledge of their relative toxicity to human health 

and the environment. Emissions near population centers 

would likely be assessed a higher fee than emissions in 

rural areas. sa 

A virtue of emissions fees compared with the NSR process is that companies can build the fees into their cosr 

strucrures, creating a clear economic incentive to control 

or modify their production processes to reduce emissions. 

Because the fcc is automatic, it circumvents all the costlv 

preparations and delays associated with NSR and reduc;s 

the power of EPA and state officials over specific companies 

involved in new construction or in the upgrade or repair of 

ex is ring facilities. Wirh emissions fees, rhe company does 

not fJ.ce any uncertainty about how rhe regulator will react 

to a facility that is new or undergoing repair and maimenano:. With NSR, there is considerable uncertainty as to 

bow state or EPA officials will define rhe NSR obligation 

for a specific facility. And it is this regulatory unccrrainry 

thar may discourage a company from making investments 

in new facilities. Note that an emissions fee could also 

be extended to apply to existing sources, removing new 

source bias. 

However, there are important barriers and hurdles ro 

implementing an emissions fee approach. First, a growing body of scientific evidence calls imo question a key 

assumption of rhe CAA: that rhere is a "safe" amount of 

po!lution that can be established by environmental science. 

While a threshold dose for adverse effects seems likdy for 

each individual, there is a wide range of susceptibility to 

adverse effects, considering rhe differences among healrhy 

adults, senior citizens, asthmatics, children, and people 

with cardiopulmonary problems, If the safe population 

dose threshold is defined as the safe dose for the most susceptible individual, then the population threshold may be 

very close ro zero or background levels. 

As a result, the environmental community may oppose 

the aJoption of an emissions fee approach in place ofNSR 

modeling requirements to ensure protection of air quality, 

out of their concern for the adequacy of protec[ion of public health. On the other hand, some environmental groups 

are simply looking for the mosr effective way to reduce 

emissions, and they may sec emissions fees as more effective than an NSR program that is politicized, fragmented} 

and under constant lirigation. 

58. 
229 


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Copyright© 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120. 

1-2017 NEWS & ANALYSIS 47 ELR I 0039 

To the extent that fees would be based on estimated 

damages, an emissions fee approach would require a rigorous benefit analysis. While EPA has developed beneflt 

estimates for the ozone and fine PM NAAQS pollutants, 

debate is ongoing (and controversial) over the uncertainry 

in EPA's estimates of the health effects of ozone and PM 

exposure.59 In particular, considerable uncertainty exists 

in the estimated health effects associated with exposures 

at the low ambient levels of ozone and fine PM that characterize U.S. air quality. Even EPA acknowledges significant uncertainty associated with mortality estimates for 

exposures at the low ambient levels of ozone and fine PM 

that are present in the United States.60 Nonetheless, EPA 

knows how to use tools of uncertainty analysis and those 

tools could be applied to help develop appropriate emissions fees. 

Second, current NSR requirements are designed w protect against short- and long-term violations of the several 

NAAQS. However, there is substantial seasonal, day-today (and even hourly) variability in rhe effect of emissions 

from a major plant on ambient air quality. 'This variability 

arises from variations in such factors as background emissions and meteorological conditions. As a result, a fixed 

emissions fee may approximate the effect of emissions in 

terms of long-term average ambient air concentrations of 

pollutants such as ozone and fine PM, but such fees would 

have to vary substantially on a day-to-day (and even hourly) 

basis across diffr.:rem locations within an urban area ro 

track the daily effect of plant emissions on air quality and 

the associated air pollution damages. 

lhus, a stable annual emissions fee would only rarely 

be "righr" on a day-to-day (or hourly) basis in protecting 

against short-term violations of NAAQS and in reflecting tbc damages of plant emissions. A short-term, variable 

emissions fel" responding to variations in meteorological 

and atmospheric conditions would more closely approximate (although srill imperfectly) rhe damage efl'ects of 

emissions from a major facility, bur implementation of such 

a variable fee would be challenging. 1he variability in the 

fee would also give up some of the "certainty" advamagcs 

that would accompany a stable long-term emissions fee. 

Nonetheles~, with modern compucer technology and 

"big clara" systems, a variable emissions fee may be feasible and could prove to be less administratively onerous 

fOr industry and EPA than rbe current NSR program. 

59. 

60 Knlrilla et aL mprd note 59. 

Clearly, however, it would have to be structured in a way 

that provides ct:rtainty and predictability for source owners, perhaps hy limiting the range in which the fee can 

fluctuate and setting the fee far enough in advance that 

they can plan their operations based on the amount of 

the fee. 

1he air chemistry associated with NC\ emissions is particularly complicated. 1he resulting non-convexity in rhe 

relationship between reductions in NO~ emissions and 

ambient ozone and fine PM levels yields negative benefits 

in some major metropolitan areas. In other words, reducing 

NOx emissions can actually make air quality worse in some 

areas. As a result, it is not dear how best to implement an 

emissions fee program for NOx emissions in these major 

urban areas.(.1 However, such modeling difficulties are also 

a conundrum in the command-and-control approach to 

NSR that EPA is now implementing. 

'I11ird, an emissions~ICe approach will require that 

covered facilities estimate or monitor their emissions of 

multiple pollutants on a continuing basis. Much of this 

information is already reported by companies to state 

environmental agencies, EPA, or both. Since companies 

would know that under this new approach, fees would 

be charged for emissions, they would have an additional 

incentive to understate their emissions to EPA. A rigorous 

EPA enforcement system-with substantial penalties for 

false reponing-will be required to ensure the integrity of 

reported emissions. 

Although intensive monitoring and enforcemcm programs are feasible for major manufacturing planrs (the 

kinds of sources subject to the NSR program), these intensive programs would not be feasible for the large number 

of smaller stationary/area sources and the transportation 

programs required to achieve and maintain air quality rhar 

meets NAAQS. Thus, fOr rhese smaller sources, something 

like the current CAA processes to implement NAAQS 

(e.g., SIPs) will continue ro be necessary. 

VII. Conclusion 

The NSR program has become a significant impediment to 

rhe construction and expansion of manufacturing facilities 

in the United States. With increasingly stringent NAAQS, 

and especially under the new ozone standard, it may effectively prevent industrial development in some parts of the 

country. We have identified several administrative actions 

that EPA could rake ro address tbese issues while sti!l mainraining the environmental benefits of the program. 

We srart wirh two refOrms rhar would be beneficial 

even if none of the NAAQS is revised again. First, EPA 

could adopt a probahilistic approach to air quality modeling to replace its current deterministic, upper-bound 

modeling requirements. Such an approach would mort 
230 


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Copyright© 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120. 

1-201/ NEWS &ANALYSIS 47 ELR I 0039 

To the extent that fees would be based on estimated 

damages, an emissions fee approach would require a rigorOltS bendit analysis. While EPA has developed benefit 

estimates for the ozone and fine PM NAAQS pollutants, 

debate is ongoing (and controversial) over the uncertainty 

in EPA's estimates of the health effects of ozone and PM 

exposure?' In particular, considerable uncertainty exists 

in the estimated health effects associated with exposures 

at the low ambient levels of ozone and fine PM that characterize U.S. air quality. Even EPA acknowledges significant uncertajnty associated with mortality estimates for 

exposures at the low amhient levels of ozone and fine PM 

that are present in the United States.60 Nonetheless, EPA 

knows how to use tools of uncertainty analysis and those 

tools could be applied to help develop appropriate emissions fees. 

Second, current NSR requirements are designed to protect against short- and long-term violations of the several 

NAAQS. However, there is substanrial seasonal, day~today (and even hourly) variability in the effect of emissions 

from a major plant on ambient air quality. This variability 

arises from variations in such factors as background emissions and meteorological condirions. As a result, a fixed 

emissions fee may approximate the effect of emissions in 

terms of long-rerm average ambient air concentrations of 

polluranrs such as ozone and fine PM, bur such fi:cs would 

have to vary substantially on a day-to-day (and even hourly) 

basis across different locations within an urban area ro 

track the daily effect of plant emissions on air quality and 

the associated air pollution damages. 

lhus, a stable annual emissions fee would only rarely 

be "right" on a day-ro-day (or hourly) basis in protecting 

against short-term violations of NAAQS and in reflecting the damages of plant emissions, A short-term, variahle 

emissions fee responding ro variations in meteorological 

and atmospheric conditions would more closely approximate (although still imperfectly) the damage efFects of 

emissions from a major facility, but implementation of such 

a variable fee would he challenging. The variahility in the 

fee would also give up some of the "cenaimy" advantages 

that would accompany a stable long-term emissions fee. 

Nonetheless, with modem computer technology and 

"big data" systems, a variable emissions fee may be feasible and could prove to be less administratively onerous 

for industry and EPA than the current NSR program, 

59 NATJo:-;r,o,LRliSEARCH COUNCIL, EHIMATJNG THE PUBLIC H<:Ar.Tll BENEfiTS 

OF PROPOSED A1R Pou.uTro" Rr.GtJlATJO-.:s (National Academic> Prc~s 

2002); Anhur lhe Treatmmt 

60. 

Clearly, however, it would have to be structured in a way 

that provides certainty and predictability ror source owners, perhaps by limiting the range in which the fee can 

fluctua(e and seuing the fee fJ.r enough in advance that 

they can plan their operations based on the amou n.t of 

the fee. 

The air chemistry associated with NOx emissions is particularly complicated. 111e resulting non-convexity in the 

relationship between reductions in NOx emissions and 

ambient ozone and fine PM levels yields negative benefits 

in some major metropolitan areas. In other words, reducing 

NO~ emissions can actually make air quality worse in some 

areas. As a result, it is not clear how best to implement an 

emissions fee program for NOx emissions in these major 

urban areas.61 However, such modeling difficulties are also 

a conundrum in the command-and-control approach to 

NSR thar EPA is now implementing. 

Third, an emissions-fee approach will require that 

covered facilities esrimate or monitor their emissions of 

multiple pollutants on a continuing basis. Much of this 

information is already reported by companies to stare 

environmental agencies, EPA, or both. Since companies 

would know that under this new approach, rees would 

be charged for emissions, they would have an additional 

incentive ro understate their emissions to EPA. A rigorous 

EPA enforcement system~with substantial penalties for 

false reporring~will be required ro ensure the integrity of 

reported emissions. 

Although intensive monitoring and enforcement programs are feasible ror major manufacturing plants (the 

kinds of sources subject to the NSR program), these intensive programs would nor he feasible for rhe large numher 

of smaller stationary/area sources and rhc transportation 

programs required ro achieve and maintain air quality that 

meets NAAQS. 1hus, for these smaller sources, something 

like the current CAA processes to implement NAAQS 

(e.g., SIPs) will continue to be necessary. 

VII. Conclusion 

1he NSR program has become a significant impediment ro 

the construction and expansion of manufacturing facilities 

in the United Stares. With increasingly stringent NAAQS, 

and especially under the new ozone standard, it may effectively prevenr industrial development in some parts of the 

country. \Y./e have idcnrified several administrative actions 

that EPA could take to address these issues while still maintaining the environmenra! benefits of the program. 

We starr with two reforms that would be beneficial 

even if none of the NAAQS is revised again, First, EPA 

could adopt a probahilistic approach to air quality modeling to replace its current deterministic, upper-bound 

modeling requirements. Such an approach would more 
231 


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Copyright© 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120. 

accurately predict the air quality impacts of a new or 

txpanded f2.ciliry and thus make it easier to obtain permits for new and expanded facilities in attainment areas. 

Second, EPA could adopt reforms that would expand the 

pool of offsets and allow more clean development in both 

attainment and NA areas while preserving the program's 

environmental benefits. 

We also recommend two simple reforms that would 

explicitly address the NSR issues that arise when a NAAQS 

is revised. First, EPA should revise its regulation to clarify 

that permit requirements and standards will be based on 

the date a complete permit application is submitted (which 

is within the control of the permit applicant) and not on 

the date the permit is actually issued (which may be years 

later and is solely within the control of the permitting 

authority). Second, rhe Agency should adopt internal staffing reforms to ensure that the necessary implementation 

rules, guidance, and air quality models are already in place 

when a revised NAAQS comes into effect. 

Additionally, we offer rwo potential statutory reforms. 

The first would be fairly narrow but would significantly 

improve the NSR program by allowing permit applicants 

to pay emissions fees in lieu of meeting the current offset 

requirements. 'Ihese fees would go into a fund that the 

state or local environmental agency would use to pay for 

or subsidize emissions reductions that the agency believes 

will do the most good in terms of reducing environmental risks. 

Finally, we note that a more fundamental reform would 

be to change the statute and replace the NSR program for 

major manuf:Kturing facilities with a system of emissions 

fees for each of the NSR pollutants. By monitoring emissions, each company would know its financial responsibility for pollution and could take steps to reduce or prevent 

emissions and thereby avoid fees, Such an approach would 

eliminate the uncertainty and unpredictability of the NSR 

process and encourage the expansion of existing manufacturing plants and the construction of new ones. 

Appendix: Chronology for PSD Application for Footprint Power Salem Harbor 

Development LP Gas-Fired Combined Cycle EGU (630 MW) 

Initial application 

Additional information submitted 

Draft PSD permit issued for public comment 

Public hearing 

Public comment extended 

Revised General Electric (G E) guarantee 

Response to EPA & other comments; tmissions update with additional GE guaranrce 

Additional letter on startup/shutdown 

Additional air quality monitoring for P1v1, & updated emissions rates for carbon monoxide & 

sulfuric acid 

Petition denied 

Final permit issued 

47 ELR 10040 ENVIRONMENTAL LAW REPO.RTER 

Dec. 21, 2012 

Apr. 12, 2013 

June 10, 2013 

June 18, 2013 

Aug. 6, 2013 

Aug. 20, 2013 

Sept. 4, 2013 

Sept. 9, 2013 

Sept. 9. 2013 

Oct. 10, 2013 

Nov. I, 2013 

Nov.!, 2013 

Dec. 11, 2013 

Jan. 10, 2014 

Jan. 16-21, 2014 

2014 

Mar. 3, 2014 

Sept. 2, 2014 

Sept. II, 2014 

1-2017 
232 


25128.179

GREG WALDEN, OREGON 

CHAIRMAN 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

~ongresg of tbe mnttell ~tate£) 

J!}ousc of l\cprcscntattbcs 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

Mr. Kevin Sunday 

Director of Government Affairs 

Mojority 12021225-2927 

M.iMritv ~2021 226-3541 

March 6, 2017 

Pennsylvania Chamber of Business and Industry 

417 Walnut Street 

Harrisburg, PA 171 01 

Dear Mr. Sunday, 

Thank you for appearing before the Subcommittee on Environment entitled "Modernizing 

Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and Promoting 

Development and Manufacturing." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains open 

for ten business days to permit Members to submit additional questions for the record, which are attached. 

The format of your responses to these questions should be as follows: (I) the name of the Member whose 

question you are addressing, (2) the complete text of the question you are addressing in bold, and (3) your 

answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Monday March 20, 2017. Your responses should be mailed to Giulia Giannangeli, Legislative 

Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, DC 

20515 and e-mailed in Word format to Giulia.Giannangeli@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

, .. ,3:: Ct.-

Chairman 

Subcommittee on Environment 

cc: Paul Tonka, Ranking Member, Subcommittee on Environment 

Attachment 
233 


25128.180

• PAChamber'M - of Business and Industry 

The Honorable John Shimkus 

C/0 United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Environment 

2125 Rayburn Office Building 

Washington, DC 20515-6115 

March 10,2017 

RE: "Modernizing Environmental Laws: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing" Hearing and Questions for the 

Record 

Dear Chairman Shimkus, 

I am writing in response to your letter sent following a hearing held by the committee on Feb. 16 

regarding modernizing our environmental laws, at which I had the opportunity to testifY. This letter 

contains a response to the following questions for the record that you have forwarded on behalf of 

Representative Marsha Blackburn. 

I. The authors of this whitepaper raise concerns that when EPA revises National Ambient Air 

Quality Standards, the agency does not typically provide implementation rules and 

modeling guidance at the same time, and this can lead to permitting delays. They 

recommend that when EPA revise a standard, it also makes available the necessary 

implementation rules and modeling guidance. 

a. Why are implementation rules and modeling guidance important? 

b. Would more timely implementation rules and guidance help avoid permitting 

delays? 

Implementation rules and modeling guidance are not just important but necessary to both applicants and 

air quality permitting agencies. These rules and guidance documents help agencies gather the necessary 

information to define non-attainment areas and to make permitting decisions that conform to the law. 

Applicants also need the rules and guidance to make informed business decisions, as the cost and 

operational restrictions to comply with applicable regulatory requirements in non-attainment areas can 

significantly alter the economic feasibility of a project. 

As EPA develops more stringent National Ambient Air Quality Standards that are applied in shorter and 

shorter periods of time (for example, a !-hour S02 standard and an 8-hour ozone standard versus daily, 

rolling three month or annual standards for other pollutants), monitoring data may not be robust enough 

or even available to define non-attainment areas, requiring agencies to instead rely on modeling. The 

modeling itself relies on a vast number of assumptions and inputs, and federal modeling guidance defines 

what EPA believes to be appropriate for these types of assumptions and inputs. The absence of guidance 

places any project permitted without it at significant litigation risk. 

Per the Clean Air Act Section II 0, states may not permit projects that would operate in a manner that 

places an area that is attaining a National Ambient Air Quality Standard out of attainment or inhibits its 

progress towards attainment if it is already out of attainment. As discussed in the testimony submitted to 
234 


25128.181

the committee for the hearing, projects constructed in non-attainment areas must accept more stringent 

emissions limits and secure emissions reduction credits. Non-attainment areas must first be defined before 

permitting decisions regarding projects within them can be made. Absent finalized implementation rules 

and modeling guidance, project applicants and agencies are left in an extremely difficult position: proceed 

with permitting (in the face of significant legal risk) or wait until guidance is finalized. Undoubtedly, 

more timely implementation rules and guidance would help avoid permitting delays and minimize 

litigation risk. 

The Pennsylvania Chamber of Business and Industry supports any legislative measure that would obligate 

the Environmental Protection Agency to publish final implementation rules and modeling guidance 

documents in conjunction with any final revision to the National Ambient Air Quality Standards . 

.. 

Kevin Sunday 

Director of Government Affairs 
235 


25128.182

GREG WALDEN, OREGON 

CHAIRMAN 

ONE HUNDRED FIFTEENTH CONGRESS 

fRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

QCongre9'9' of tbe mntteb iittates 

j!}ouse of l\epresentatibes 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN House OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

Mr. Thomas M. Sullivan 

Vice President of Small Business Policy 

U.S. Chamber of Commerce 

1615 H Street, N.W. 

Washington, DC 20062 

Dear Mr. Sullivan: 

Majority l201) 2.25-·<!927 

Minority l202l225-31')41 

March 6, 2017 

Thank you for appearing before the Subcommittee on Environment entitled "Modernizing 

Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and Promoting 

Development and Manufacturing." 

Pursuant to the Rules ofthe Committee on Energy and Commerce, the hearing record remains open 

for ten business days to permit Members to submit additional questions for the record, which are attached. 

The format of your responses to these questions should be as follows: ( l) the name of the Member whose 

question you are addressing, (2) the complete text of the question you are addressing in bold, and (3) your 

answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Monday March 20,2017. Your responses should be mailed to Giulia Giannangeli, Legislative 

Clerk, Committee on Energy and Commerce, 2125 Rayburn House Oflice Building, Washington, DC 

20515 and e-mailed in Word format to Giulia.Giannangeli@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

""~-1~ 

John Sa~ Chairman 

Subcommittee on Environment 

cc: Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
236 


25128.183

CHAMBER OF COMMERCE 

OF THE 

UNITED STATES OF AMERICA 

SMALL BUSINESS COUNCIL 

11-tOMAS M. SULUVAN, EXECUTIVE DIR.ECTOR. 

The Honorable John Shimkus 

Chairman 

Subcommittee on Environment 

March 29,2017 

United States House of Representatives 

Washington, DC 20515 

Re: Questions for the Record, Hearing Entitled, "Modernizing Environmental 

Laws: Challenges and Opportunities for Expanding Infrastructure and 

Promoting Development and Manufacturing." 

Chairman Shimkus: 

On behalf of the Small Business Council of the U.S. Chamber of Commerce, I am 

responding to your questions that arose from your hearing on February 16<h, 2017. 

Thank you for allowing the U.S. Chamber of Commerce to appear before your 

Subcommittee and I hope you find this information responsive. 

Responses to Representative Gregg Harper: 

Question on whether the U.S. Chamber of Commerce has assessed the cost of regulation 

on small business: 

Yes, the U.S. Chamber of Commerce Foundation recently issued a report entitled, 

"The Regulatory Impact on Small Business." The study shows how federal 

regulations cost the American economy as much as $1.9 trillion a year in direct 

costs, lost productivity and higher prices. The impact on small businesses is nearly 

20 percent higher than the average regulatory burden shouldered by the Business 

community as a whole. The Chamber Foundation's full report can be found online 

at: !mns://www.uschamberfoundation.org/smallbizreg~. 

Question on the impact of regulatory delays in the permitting of new energy or other 

major infrastructure projects: 

My colleague, William Kovacs, who is the Chamber's Senior Vice President for 

Environment, Technology, and Regulatory Affairs, presented testimony to your 

Subcommittee on July 14, 2011 at a hearing entitled," Regulating Chaos: Finding 

Legislative Solutions to Benefit Jobs and the Economy." Mr. Kovacs's testimony 

detailed an examination of the lost economic value of 351 projects that were 
237 


25128.184

2 

stopped, stalled or killed outright due to regulatory and permitting delays. The 

economic study is part of the "Project No Project" initiative that can be found online 

at: http: //www.projectnoproject.com. Researchers Steve Pociask of TeleNomic 

Research, LLC and Joseph P. Fuhr, Jr. of Widener University found that successful 

construction ofthe identified projects could produce a $1.1 trillion short-term boost 

to the economy and create 1.9 million jobs annually. According to The Associated 

General Contractors of America, only 1 percent of the construction industry has 

businesses larger than 100 employees, so the impact of regulatory delays in the 

construction business is felt almost entirely by small businesses. 

The U.S. Chamber of Commerce supported permit streamlining provisions that were 

enacted as part of the FAST Act because ofthe economic harm caused by delay.1 We 

would like to work with Congress to ensure those permit streamlining sections of 

the FAST Act are effective. 

Responses to Representative Richard Hudson: 

Question on whether the Federal government has been transparent about the costs 

and benefits it calculates for environmental rules: 

The Federal government has not been transparent about the costs and benefits it 

calculates for environmental rules. Susan Dudley, the former Administrator for the 

Office of Information and Regulatory Affairs (OIRA), explained the lack of 

transparency in how the Federal government currently assesses costs and benefits 

in a recent publication by Cato.z I share the views of Ms. Dudley and have testified 

numerous times before Congress on the need for the Federal government to better 

assess the impacts of regulation on small businesses in a transparent manner.3 

1. Fixing America's Surface Transportation (FAST) Act, Pub. L. No.114-94,129 Stat.1312 (2015) 

2 Susan E. Dudley, OMB's Reported Benefits of Regulation: Too Good to be True?, Regulation Magazine, 

Cato Institute (Summer 2013), available at: 

h ttps: II o bj ect.cato.orgl sites I cato.o rg I files I serials I files I regulation 12 013/6/ regulation -v3 6 n 2-

4.pdf. 

'See recommendations for indirect impact analysis in testimony by Thomas Sullivan: 

U.S. House of Representatives, Committee on Small Business, The RFA at 25: Needed 

Improvements for Small Business Regulatory Relief, Serial No. 109-5 (March 16, 2005}. 

U.S. House of Representatives, Committee on Small Business, Improving the Regulatory 

Flexibility Act- H.R. 2345, Serial No. 108-62 (May 5, 2005). 

U.S. House of Representatives, Committee on Small Business, Legislation to Improve the 

Regulatory Flexibility Act, Serial No. 110-62 (December 6, 2007). 

U.S. House of Representatives, Committee on the Judiciary, Subcommittee on Courts, 

Commercial and Administrative Law, Regulatory Flexibility Improvements Act of2011; 

Unleashing Small Businesses to Create jobs, Serial No.112-16 (February 10, 2011). 
238 


25128.185

3 

Question on whether environmental regulations should take costs into account in more 

than a perfunctory way: 

There is an imbalance in how the Federal government assesses costs and benefits 

with regard to small businesses and how they are impacted by federal regulations. 

While the U.S. Environmental Protection Agency (EPA) emphasizes its view that its 

regulations benefit human health (an assessment of the secondary impact of how 

pollution reductions benefit human health), the EPA does not adequately assess the 

secondary (or indirect) costs for the same regulations. For instance, when EPA 

issues mandates on fuel content, it does not adequately assess how the rise in gas 

prices impact the transportation sector, an industry dominated by small firms. The 

Regulatory Flexibility Act should be amended to ensure that regulatory impacts on 

small businesses are disclosed by EPA in a balanced and transparent manner.4 

Responses to Representative Bill Johnson: 

Question on whether EPA's existing guidance on outreach to small businesses should 

be updated: 

The 92-page guidance issued by the EPA in November of 2006 is certainly 

comprehensive.5 Unfortunately, the guidance seems to be missing a key ingredient 

for EPA to engage constructively with small businesses and that is a cooperative 

relationship with the Office of Advocacy at the U.S. Small Business Administration 

(SBA). SEA's Office of Advocacy is charged with implementing the Regulatory 

Flexibility Act and its positive relationship with the small business community 

should be relied upon as a resource for Federal agencies, including EPA, to 

constructively engage with the small business community.6 EPA's guidance should 

be updated by instructing its staff to coordinate with SEA's Office of Advocacy as 

early as possible when EPA is formulating how a regulation may impact small 

businesses. 

Chapter 4 of EPA's November 2006 guidance covers small business outreach. In this 

section, EPA does encourage cooperation with SEA's Office of Advocacy. However, 

the guidance should be updated to instruct EPA staff that such cooperation take 

place as early as possible in the regulatory development process. 

4 ld. 

5 Alexander Cristofaro, Final Guidance for EPA rulewriters: Regulatory Flexibility Aetas amended by 

the Small Business Regulatory Flexibility Act, Office of Policy Economics, and Innovations, U.S. 

Environmental Protection Agency (EPA) (November 30, 2006), available at: 

https://www.epa.govfsites/production/files/2015-06/documents/guidance-regflexact.pdf. 

6 Regulatory Flexibility Act, Public Law No. 96-354, 5 U.S.C. 601 (September 19, 1980), amended by 

the Small Business Regulatory Enforcement Fairness Act, Public Law. No. 104-121 (March 29, 1996), 

amended by Public Law No. 110-28 (May 25, 2007), available at: 

https:jjyvww.sba.g yjadvgqKy}~J:rtall-busines_s-rcgulat:_ory-e.l'lforcejTl_ent-@.imess:a~t-sbrg@.. 
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4 

EPA should be complimented for including references to the value oftrade and 

membership associations that represent small businesses in the technical aspects of 

rulemaking. EPA benefits from engagement with trade and membership 

organizations that represent small businesses and are relied-upon for technical 

advice. When EPA updates its guidance, the constructive and cooperative 

relationship between EPA and trade and membership organizations should be 

highlighted as a key element in small business outreach. 

Questions about when EPA "got-it-right" when listening to and addressing small 

business concerns when issuing new regulations under the Clean Air Act and when EPA 

didn't "hit-the-mark:" 

EPA Got it Right: When EPA truly listens to small businesses and changes its 

approach to regulation, the agency can reduce pollution and minimize economic 

harm to small businesses. In the summer of 2002, EPA notified SBA's Office of 

Advocacy that it would seek to reduce emissions from diesel powered non-road 

engines. With help from SBA's Office of Advocacy, EPA met with several small 

business stakeholders who raised concerns about the technical and cost feasibility 

of EPA's contemplated rule. EPA made changes that allowed for a phase-in of new 

technology and an exemption for engines with less than 25 horsepower. EPA's 

flexibility helped small engine manufacturers afford technology upgrades and still 

resulted in considerable pollution reductions. 

EPA Missed the Mark: My colleague, Keith Holman, who is a Senior Policy Counsel 

for Environment, Technology, and Regulatory Affairs at the U.S. Chamber of 

Commerce, presented testimony before the Congress a few years ago and provided 

several examples of where EPA missed the mark.? The most egregious examples of 

EPA ignoring small business concerns is when the agency refuses to convene a panel 

of small businesses because EPA "certifies" that its rule will not have a significant 

economic impact on a substantial number of small entities.8 In 2008 and 2009, 

numerous small business stakeholders and SBA's Office of Advocacy petitioned EPA 

to formally consult with small businesses on its proposed greenhouse gas 

endangerment finding, but EPA refused. 

EPA also misses the mark when it ignores the recommendations from the Small 

Business Advocacy Review Panel convened under the Small Business Regulatory 

Enforcement Fairness Act (SBREFA). 9 As outlined by Keith Holman before the 

House Small Business Committee, the regulatory alternatives proposed by small 

7 Keith W. Holman, Regulatory Flexibility Act: Is EPA Failing Small Businesses?, U.S. House of 

Representatives, Committee on Small Business (June 27, 2012). 

8 See explanation ofSBREFA "certification" at: https://www.epa.gov/laws·regulations/summaryregulatory-flexibility-act-amended-small-business-regulatory-enforcement. 

9 See explanation of Small Business Advocacy Review Panels under SBREFA at: 

https:f/www.ep;!,KQ\'LITg-flexfsmall-business-advocacy·review·sbar-panels. 
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business stakeholders in the Boiler MACT rulemaking would have minimized costs 

without compromising EPA's environmental objective.10 However, EPA refused to 

include the recommended small business flexibilities.1 1 

Thank you again for the opportunity to present the views of the Chamber's Small 

Business Council. Please do not hesitate to contact me for any additional 

information about the views expressed in this letter. 

Sincerely, 

Thomas M. Sullivan 

Executive Director 

Small Business Council 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Environment 

10 See, Holman Oune 27, 2012). 

5 

11 Winslow Sargeant, Ph.D., Letter to EPA Administrator, Lisa P. jackson, Comments on 

EPA's Proposed Rules, "National Emission Standards for Hazardous Air Pollutants for 

Major and Area Sources: Industrial, Commercial, and Institutional Boilers (August 23, 

2010). 
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GREG WALDEN, OREGON 

CHAIRMAN 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

ONE HUNDRED FIFTEENTH CONGRESS 

(!Congress of tbt mnlttb ~tatts 

~oul3e of l\epresentnttbel3 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFtcE BuiLDING 

WASHINGTON, DC20515--6115 MiijOrity (202) :12!}--2927 

Minority (202) 225-.3641 

March 6, 20 I 7 

Mr. Ross E. Eisenberg 

Vice President of Energy and Resources Policy 

National Association of Manufacturers 

733 lOth Street, N.W.; Suite 700 

Washington, DC 20001 

Dear Mr. Eisenberg, 

Thank you for appearing before the Subcommittee on Environment entitled "Modernizing 

Environmental Laws: Challenges and Opportunities for Expanding Infrastructure and Promoting 

Development and Manufacturing." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains open 

fo1· ten business days to permit Members to submit additional questions for the record, which are attached. 

The format of your responses to these questions should be as follows: (I) the name of the Member whose 

question you are addressing, (2) the complete text of the question you are addressing in bold, and (3) your 

answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of 

business on Monday March 20,2017. Your responses should be mailed to Giulia Giannangeli, Legislative 

Clerk, Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, DC 

20515 and e-mailed in Word format to Giulia.Giannangeli@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely,L_ ~ 

John Shi~\l,~' Chairman 

Subcommittee on Environment 

cc: Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
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Ross E. Eisenberg 

Vice President 

Energy & Resources Policy 

Manufacturers 

March 20, 2017 

The Honorable John Shimkus 

Chairman 

Subcommittee on Environment 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Paul Tonko 

Ranking Member 

Subcommittee on Environment 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Shimkus and Ranking Member Tonko: 

Thank you for your follow-up questions for the record from the Subcommittee's recent 

hearing, "Modernizing Environmental Laws: Challenges and Opportunities for Expanding 

Infrastructure and Promoting Development and Manufacturing." Enclosed are my responses. 

The National Association of Manufacturers looks forward to working with the Subcommittee on 

these and other issues affecting manufacturers. 

Ross Eisenberg 

Vice President 

Energy and Resources Policy 

Leading Innovation. Creating Opportunity. Pursuing Progress. 

-----------·-·-----
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RESPONSES TO QUESTIONS FOR THE RECORD 

ROSS EISENBERG, NATIONAL ASSOCIATION OF MANUFACTURERS 

HOUSE COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON ENVIRONMENT 

HEARING ON "MODERNIZING ENVIRONMENTAL LAWS: CHALLENGES AND OPPORTUNITIES FOR 

EXPANDING INFRASTRUCTURE AND PROMOTING DEVELOPMENT AND MANUFACTURING" 

MARCH 20,2017 

question from the Honorable John Shimkus !R-Ill 

1. Mr. Eisenberg, you testify that "the state of our national economy, the 

manufacturing sector and the environment are considerably different than they 

were 20, 30 or 40 years ago. However, we are still operating with policies designed 

to address the environmental challenges of a previous era." 

a. Could you elaborate how some policies may not work for today's regulated 

sectors? 

Every five years, EPA must decide whether the National Ambient Air Quality Standards 

(NAAQS) are sufficiently protective of public health. As NAAQS (for particulate matter, ozone, 

sulfur dioxide, carbon monoxide, lead and nitrogen oxides) have dropped closer to background 

levels, it is becoming increasingly difficult to pass the test and get an approved permit. 

Regulated industries are approaching a permitting gridlock. EPA should establish a new 

permitting process and adjust its modeling criteria to be more reflective of actual impacts. The 

challenges with the ever-tighter NAAQS are exacerbated by a lack of (or inappropriate) 

emission measurement methods, poor estimates of emissions, use of unrealistic air dispersion 

models, and several rigid permitting policies. 

In the water space, the EPA continues to struggle with how to apply the Clean Water 

Act's provisions to nonpoint source pollution. The relationships between and relative impacts of 

point and nonpoint sources differ regionally, and sometimes locally, making it difficult to 

establish a uniform program. What is needed is a balanced approach to point and nonpoint 

problems that focuses on the water quality of the watershed in question. More extensive 

treatment should not be required of any dischargers if such treatment will have no appreciable 

impact on the quality of the receiving waters. The NAM recommends improving capabilities for 

assessing the nation's water quality that aid in determining the relative impact of point and 

non point sources on water quality and the ability of waters to meet their designated uses. 

Conclusions derived from the data can then be used to better allocate the nation's resources in 

achieving our water quality goals. Effective management of nonpoint sources of water pollution 

should be achieved through state and regionally developed programs. The EPA should provide 

technical assistance, but should not attempt to assume the role of developing a uniform federal 

non point program or of directly regulating non point sources. 

Finally, the current regulatory requirements under CERCLA do not allow contaminated 

properties to be resolved in an efficient manner. Despite completing remediation activities, the 

property owners are often unable to get clearance from the regulatory agencies in a timely 

manner to sell or develop their properties. EPA should interpret regulatory requirements under 

1 
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the Supertund program in a manner that would speed the remediation of these sites while 

reducing costs, while still ensuring the necessary environmental protections. 

Question from the Honorable Marsha Blackburn (R-TN) 

1. In a recent white paper entitled "EPA's New Source Program: Time for Reform," 

the authors state that EPA's new ozone standards 'may effectively prevent 

development in some parts of the country."' 

a. Do you agree that EPA's new ozone standards threaten to prevent 

development in certain parts of the country? 

I agree that the EPA's most recent ozone standards threaten to prevent development in 

certain parts of the country. In fact, in some areas the standards are already causing problems. 

In Colorado, the state environmental agency proposed, for the first time ever, to set specific 

permit limits for 49 individual manufacturing facilities, since there are no other possible 

reductions to be had. This move would more or less lock into place those permit limits and make 

it extremely difficult to expand. What is worse: Colorado believed it needed to take these actions 

just to meet the 2008 ozone standard of 75 parts per billion. Manufacturers are very nervous 

about what measures might be required to meet the 2015 standard in the Denver metro area. 

Colorado's struggles are not unusual: half of the states in the continental U.S. have at 

least one area in non attainment with the 2015 ozone standard. The Georgia Department of 

Natural Resources noted in its comments on the 2015 ozone standard that there were no 

effective control measures left available to the state, beyond those already identified and being 

implemented, to reduce ozone levels in the Atlanta nonattainment area. 

Recall also the testimony of the San Joaquin Valley Air Pollution Control District, which 

testified before the Energy and Commerce Committee just last year. This area has already 

taken such extreme stems as banning residents from using their fireplaces in most winter 

months and limiting the amount of time lids can be off paint cans. Yet officials have concluded 

that they will not meet the 2015 ozone standards even if they eliminate emissions from all 

stationary and area sources, off-road equipment, farm equipment, passenger vehicles and 

heavy-duty trucks. 

Questions from the Honorable Buddy Carter (R-GA) 

1. In your written testimony, you recommend that Congress "[s]pecify that forest 

biomass energy is considered carbon neutral as long as forest carbon stocks are 

stable or rising on a broad geographical scale, and recognize the forest products 

industry's use of forest products manufacturing residuals for energy as carbon 

neutral regardless of forest carbon stocks." Could you elaborate? 

The carbon neutrality of biomass harvested from sustainably-managed forests has been 

recognized repeatedly by an abundance of studies, agencies, institutions, legislation and rules 

around the world, including the guidance of the Intergovernmental Panel on Climate Change 

and the reporting protocols of the United Nations Framework Convention on Climate Change. 

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When measuring carbon neutrality, it is important to focus on broad regions rather than 

specific plots of land. It is true that if the focus is on a single plot of forest, emissions from 

burning biomass for energy can take years to recapture. But that is not how biomass 

sustainability should be assessed, because in the same year that particular plots of land may be 

harvested, many other plots are growing, thus offsetting the loss of carbon from the harvested 

plot. As a result, carbon stocks across the region are continuing to increase even if several 

individual plots may have been harvested that year. 

Moreover, one of the most significant impacts to forest carbon stocks is the shifting of 

forest lands to development or agriculture. Robust demand for wood products, including using 

biomass to generate energy, provides economic incentives to keep forest land forested. 

In keeping with these principles, a report by the World Business Council for Sustainable 

Development (WBCSD) recommends that wood coming from a forest that has stable or rising 

carbon stocks should be deemed carbon neutral. In particular, the report defines carbon 

neutrality as "a property of wood or other biomass harvested from forests where new growth 

completely offsets losses of carbon caused by harvesting. Under these conditions, as carbon is 

released from harvested wood back into the atmosphere, usually as biogenic C02, growing 

trees are removing C02 from the atmosphere at a rate that completely offsets these emissions 

of biogenic C02, resulting in net biogenic C02 emissions of zero or less."1 

Forest product manufacturing residuals such as bark, sawdust, wood shavings, and 

black liquor associated with the Kraft pulping process would need to be disposed of if they are 

not com busted to produce useful energy. Disposing of these residuals by incineration without 

energy recovery would constitute a blatant waste of energy resources, and disposal by 

landfilling would generate methane, which is also a greenhouse gas. 

A study by the National Council for Air and Stream Improvement (NCASI) found that, 

considering fossil fuel displacement, the forest products industry's use of manufacturing 

residuals avoids approximately 181 million metric tons a year of C02e emissions. That is the 

equivalent of removing about 35 million cars from the road.2 

The forest products industry has created a highly efficient, market-based system of 

managed forest use with significant carbon benefits. Those benefits include: (1) providing 

biomass power by utilizing forest and mill residuals; (2) efficiently using biomass residuals 

through combined heat and power systems to assure forest biomass resources minimize total 

forest system GHG emissions; (3) diversifying manufacturers' energy portfolios and reducing 

GHG emissions while simultaneously meeting society's needs for forest products; (4) avoiding 

GHG emissions that otherwise would result from residual disposal; (5) balancing forest supply 

and demand through market-based systems for biomass due to forest planting and re-growth, 

as evidenced by ne>t increases in forest carbon stocks over most of the last 50 years; and (5) 

recycling paper to reuse valuable biomass resources. 

1 World Business Council for Sustainable Development, "Recommendations on Iliomass Carbon Neutrality," at 3 

(Oct. 2015), available at http://www.wbcsd.org/Projccts/Forest-Solutions-Group/Resources/Recommendations-onBiomass-Carbon-Neutrality. 

2 National Council for Air and Stream Improvement, "Greenhouse Gas and Fossil Fuel Reduction Benefits of Using 

Biomass Manufacturing Residuals for Energy Production in Forest Products Facilities," Technical Bulletin No. 

l 016, available at http://www .ncasi.org/Downloads/Download.ashx?id=9603. 

3 
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2. Does use of forest and agricultural biomass currently play an important role in 

addressing energy needs in the United States, including for the manufacturing 

sector? 

According to the Energy Information Administration (EIA), biomass accounted for 49 

percent of total U.S. renewable energy consumption in 2015 {biofuels, 22 percent; wood 21 

percent; and biowaste 21 percent).3 Data from the Energy Information Administration's 2010 

Manufacturing Energy Consumption Survey {MECS) suggest that more than sixty percent of the 

energy used by the forest products industry is accounted for by biomass. Pulp, paper, 

packaging and wood products facilities account for 62 percent of the renewable biomass energy 

consumed by all manufacturing sector facilities. 

With respect to agricultural biomass, the United States Department of Agriculture 

(USDA) found that the bioeconomy contributes $393 billion in economic activity, provides 4.2 

million American jobs, and is the leading source of domestic renewable energy.• Crops grown 

by farmers store C02 from the atmosphere; when agricultural feedstocks are used for food, fuel 

and fiber, the stored C02 returns to the atmosphere in a natural biogenic cycle. 

3. Is it important to manufacturers that Federal policy relating to forest and 

agricultural biomass for energy be consistent across Federal departments and 

agencies? And would more consistent Federal policy relating to biomass energy 

serve to promote domestic manufacturing in the United States? 

Manufacturers need regulations that are consistent and predictable; the federal 

government's stance on biomass energy has been anything but. Disparate policies across 

government agencies, such as the confusing patchwork of positions regarding biomass energy, 

create regulatory uncertainty and impede capital planning and investment. The government's 

current approach also undermines the sustain ability of the industries that use biomass and 

discourages beneficial biomass use. A coherent, consistent policy regarding forest and 

agricultural biomass would help U.S. manufacturing industries use more biomass in a more 

certain and cost-effective manner and thus help the environment and manufacturing 

competitiveness. 

'www.eia.gov/energyexplained/?page=renewable home. 

<USDA, "An Economic Impact Analysis ofthe U.S. Biobascd Products Industry" (Oct. 2016), available at 

https:llwww. usda.gov /medialpress-releases/20 16/1 0/03/usda-report -shows-growing-bio based-products-industrycontributes. 

4