U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

25–056 PDF 2017

S. HRG. 112–972 

REVIEW OF RECENT ENVIRONMENTAL PROTECTION AGENCY’S AIR STANDARDS FOR HYDRAULICALLY FRACTURED NATURAL GAS WELLS 

AND OIL AND NATURAL GAS STORAGE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CLEAN AIR 

AND NUCLEAR SAFETY 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 19, 2012 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.fdsys.gov 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

JAMES M. INHOFE, Oklahoma 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

MIKE CRAPO, Idaho 

LAMAR ALEXANDER, Tennessee 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

BETTINA POIRIER, Majority Staff Director 

RUTH VAN MARK, Minority Staff Director 

SUBCOMMITTEE ON CLEAN AIR AND NUCLEAR SAFETY

THOMAS R. CARPER, Delaware, Chairman 

MAX BAUCUS, Montana 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

JEFF MERKLEY, Oregon 

BARBARA BOXER, California (ex officio) 

JOHN BARRASSO, Wyoming 

DAVID VITTER, Louisiana 

JEFF SESSIONS, Alabama 

LAMAR ALEXANDER, Tennessee 

MIKE JOHANNS, Nebraska 

JAMES M. INHOFE, Oklahoma (ex officio) 

(III) 

C O N T E N T S 

Page 

JUNE 19, 2012 

OPENING STATEMENTS 

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware ................... 1 

Barrasso, Hon. John, U.S. Senator from the State of Wyoming .......................... 3 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 4 

Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland ................ 7 

Gillibrand, Hon. Kirsten, U.S. Senator from the State of New York .................. 9 

Udall, Hon. Tom, U.S. Senator from the State of New Mexico ............................ 9 

WITNESSES 

McCarthy, Hon. Gina, Assistant Administrator, Office of Air and Radiation, 

U.S. Environmental Protection Agency .............................................................. 10 

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

Responses to additional questions from Senator Inhofe ............................... 22 

Krupp, Fred, President, Environmental Defense Fund ........................................ 48 

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

Responses to additional questions from Senator Inhofe ............................... 65 

Corra, John V., Director, Wyoming Department of Environmental Quality ...... 68 

Prepared statement .......................................................................................... 70 

Responses to additional questions from Senator Inhofe ............................... 75 

Schuller, Tisha Conoly, President and CEO, Colorado Oil and Gas Association ........................................................................................................................ 78

Prepared statement .......................................................................................... 80 

Responses to additional questions from Senator Inhofe ............................... 88 

Smith, Darren, Environmental Manager, Devon Energy Corporation ................ 90 

Prepared statement .......................................................................................... 92 

Responses to additional questions from Senator Inhofe ............................... 96 

Allison, William C., V, Director, Air Pollution Control Division, Colorado 

Department of Public Health and Environment ............................................... 101 

Prepared statement .......................................................................................... 103 

Responses to additional questions from Senator Inhofe ............................... 107 

(1) 

REVIEW OF RECENT ENVIRONMENTAL PROTECTION AGENCY’S AIR STANDARDS FOR 

HYDRAULICALLY FRACTURED NATURAL 

GAS WELLS AND OIL AND NATURAL GAS 

STORAGE 

TUESDAY, JUNE 19, 2012 

U.S. SENATE, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, SUBCOMMITTEE ON CLEAN AIR AND NUCLEAR SAFETY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10 a.m. in room 

406, Dirksen Senate Office Building, Hon. Thomas R. Carper 

(Chairman of the Subcommittee) presiding. 

Present: Senators Carper, Inhofe, Cardin, Merkley, Barrasso, 

Sessions, and Johanns. 

Also present: Senators Udall and Gillibrand. 

OPENING STATEMENT OF HON. THOMAS R. CARPER, 

U.S. SENATOR FROM THE STATE OF DELAWARE 

Senator CARPER. The hearing will come to order. 

We welcome you, one and all. Appreciate the efforts of our witnesses to join us today. 

As you know, today’s hearing is an oversight hearing. It’s focused 

on air rules for the oil and natural gas industry which the EPA finalized, I believe, in April. Senators will have 5 minutes for their 

opening statements, and I’ll then recognize the Assistant Administrator for the Office of Air and Radiation at EPA to offer her statement to the Committee. 

Following the Assistant Administrator’s statement, we will have 

one round of questions. Then our second panel of witnesses will 

come forward, and their testimony will be followed by another 

round of questions. 

Today we hear a lot about the incredible boom in natural gas 

production in this country. Some call it a blessing, and I think 

there is something to that. We hear how this boom has allowed us 

to see extremely low natural gas prices. Low prices not only bring 

our energy costs down, but also help to make our manufacturers 

even more competitive throughout the world. 

The surge of production is mainly due to a technique called hydraulic fracturing, or fracking. And as the low hanging fruit of easily accessible reservoirs dry up, natural gas producers have increasing turned toward fracking to access more unconventional shale 

gas formations. 

2 

Recently the use of fracking has skyrocketed to an estimated 

11,400 new fractured wells each year. These numbers are expected 

to grow. As the use of fracking increases, we have a responsibility 

to ensure that developments happen responsibly and our shared 

environment remains protected, especially the air we breathe. 

Without control technology, fracking can result in the release of 

natural gas and methane into the atmosphere. Beyond wasting a 

limited energy resource, these emissions can damage our air and 

our health. 

The natural gas emissions contain harmful pollutants that form 

ozone and can also cause cancer. The methane released by fracking 

is a greenhouse gas that is more than 20 times—20 times—as potent as carbon dioxide. 

Before April of this year, only States like Colorado and Wyoming 

required the capture of these emissions. There were no Federal regulations regarding fracking emissions. I was encouraged when the 

Environmental Protection Agency stepped up to address the lack of 

regulation for this growing industry and growing source of emissions this April with the release of new air standards for oil and 

gas production. These new standards focused on fractured natural 

gas wells, asking industry to clean up their air pollution emissions 

by 2015. 

Mirrored after State regulations in Wyoming and Colorado, these 

new rules are a common sense, win-win solution for both industry 

and the environment. The rules will significantly reduce the 

amount of smog producing, cancerous air pollutants released by 

fractured wells, primarily through a process known as reduced 

emissions completions, or green completions. 

Green completions use special equipment to capture the natural 

gas that normally escapes into the atmosphere during the fracking 

process. This green completion approach represents a victory both 

for clean air and for industry, because once the emissions are captured using the green completion method, the gas companies can 

turn around and sell that natural gas instead of letting it escape 

unused into the atmosphere. The additional profits earned by selling this captured gas are expected to offset the cost of the new 

equipment and training that are necessary to implement this rule. 

Not only will these standards significantly reduce harmful air 

pollution, the industry may well come out ahead in the end, too, 

a win-win for industry and the environment. That is why Colorado 

and Wyoming and a number of municipalities already require 

green completions, and many operators are using the technique voluntarily. 

After reviewing over 150,000 comments, EPA has also provided 

a reasonable schedule for producers to capture their excess natural 

gas through green completions. Producers will have until 2015 to 

fully comply with these new rules. The result will be significantly 

improved air quality for everyone. 

This regulation shows that the choice between clean air and a 

strong economy is a false choice. We can have both clean air and 

a strong energy sector in this economy. And we need both. 

Our shale gas formations have enormous potential and will certainly play a key role in America’s energy future. But this potential 

must be utilized responsibly. The new EPA air standards strike the 

3 

proper balance between a healthy environment and our energy 

needs. 

On that note, I look forward to having open and thoughtful dialogue with our witnesses and colleagues today. I am pleased to recognize one of our two Senators from that State of Wyoming, Senator Barrasso. 

OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM THE STATE OF WYOMING 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

I want to also thank and welcome the witnesses here today. Especially I want to welcome John Corra, the Director of the Wyoming Department of Environmental Quality. John was appointed 

as the Director of the Department by then-Democrat Governor 

Dave Friedenthal and confirmed by the State senate in March 

2003, when I was a member of the Wyoming State Senate. So 

John, thanks so much for coming back from Wyoming for a visit. 

Mr. Chairman, the White House has touted its strong support for 

natural gas as a viable alternative, they say, to cheap, affordable 

American coal. President Obama stated during his 2012 State of 

the Union speech that ‘‘We have a supply of natural gas that can 

last America nearly 100 years.’’ He said, ‘‘My Administration will 

take every possible action to safely develop this energy.’’ 

The rhetoric of this White House does not match the actions of 

this Administration and its allies in the environmental community. 

On May 9th, 2012, a Bloomberg news story highlights an important 

point made by Jack Gerard, President of the American Petroleum 

Institute, and Dave McCurdy, President of the American Natural 

Gas Association. The Bloomberg article states that both Gerard 

and McCurdy have been emphasizing one point. While Obama had 

called for more gas production, as many as a dozen Federal agencies—as many as a dozen Federal agencies—were considering various rules or policies that could deal drilling a setback. 

Among these rules, Mr. Chairman, are proposed EPA rules governing hydraulic fracturing. This week we will debate whether the 

Senate will endorse President Obama’s war on coal, when we vote 

on Ranking Member Inhofe’s amendment to block the EPA’s Utility 

MACT rule. This rule makes it nearly impossible for energy companies to build new coal fired power plants. The war on coal by this 

Administration has been devastating to communities across the 

West, the Midwest, and Appalachia. 

What we are going to discuss here today is this Administration’s 

upcoming war now on natural gas. The war on natural gas should 

be no surprise to those who have followed the words of then-Candidate Senator Barack Obama, who campaigned against natural 

gas as part of his cap and trade climate change agenda. In a 2008 

interview with the San Francisco Chronicle, then-Candidate 

Obama stated that ‘‘Because I’m capping greenhouse gases, coal 

fired power plants, you know, natural gas, you name it, whatever 

the plants were, whatever the industry was, they would have to 

retrofit their operations.’’ That is Candidate Barack Obama, 2008, 

against natural gas. 

It is important to note that the Sierra Club has once again endorsed President Obama for President. On May 3d, the Sierra Club 

4 

announced their ‘‘Beyond Natural Gas’’ campaign. In a May 7th of 

this year Energy Environment Daily article, the Executive Director 

of the Sierra Club spelled out his intentions toward new natural 

gas plants when he stated, ‘‘We’re going to be preventing new gas 

plants from being built wherever we can.’’ 

I suspect that many in this Administration agree with this goal, 

while they still tell folks across America that natural gas will be 

there to supply their needs after they are done with their war on 

coal. What I want my colleagues to understand is that we cannot 

simply allow the same tactics that are hurting the many working 

men and women across this country who work in the coal industry 

to have those same tactics used to drive natural gas out of business. 

Organizations like the Sierra Club have praised these tactics and 

have celebrated the closing or blocking of hundreds of coal plants. 

These same organizations now fully expect this EPA to begin using 

the same tactics to attack natural gas. They are advocating this 

just as the first shovels are hitting the ground to build the natural 

gas well pads and new natural gas plants to replace coal mines and 

power plants that are being forced to close. If we do not change 

course, the end result will be an expensive, rationed, and foreign 

supplied energy future for our country. 

Mr. Chairman, I believe we must make American energy as clean 

as we can as fast as we can, and do it in ways that don’t raise energy prices for American families or cost thousands of jobs. I believe this Administration has been on the wrong track to accomplish this goal. 

Thank you, Mr. Chairman. I look forward to the testimony. 

Senator CARPER. You are welcome. 

I was sitting here wondering, did we read the same rule? We will 

find out. 

Senator Inhofe. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. Thank you, Mr. Chairman. 

I also want to welcome on the second panel Darren Smith, who 

will have a great story to tell. It is incredible, some of the good 

things that are happening out there. 

But today’s hearing is to review the EPA’s air rules and highlights on ongoing war waged by the Obama administration against 

fossil fuels in the development of America’s abundant domestic energy resources. Ironically, this hearing comes at a time when President Obama’s top environmental team is in Rio. That is called the 

Rio Conference Plus 20, the first one was in 1992. They are down 

there working on policies that would significantly weaken this 

country and which have failed time and time again, not only in the 

U.S. Congress, but in the arena of public opinion as well. 

It is also important to mention that this hearing comes while 

Congress is in the middle of a debate about the Obama EPA’s economically devastating Utility MACT that was mentioned by Senator Barrasso. This was my CRA to try to stop this rule that would 

essentially do away with coal in America. 

5 

The oil and gas production in America is increasing despite the 

Obama administration’s best efforts to shut down domestic energy 

production in favor of their radical green agenda. They are working 

to stop hydraulic fracturing through 13 Federal agencies and have 

attempted to implement their agenda to ‘‘crucify’’ American energy 

producers. 

We got a glimpse of this crucify philosophy in a rare moment of 

honesty by the Sixth District Regional Administrator of the EPA. 

Because of the EPA’s unprecedented actions in Parker County, 

Texas, I launched an investigation to begin with a letter to the 

agency on April 25th. I am extremely disappointed that despite my 

attempt to conduct oversight as a ranking member of the authorizing committee with jurisdiction over the agency, EPA has met my 

request with a disappointing lack of responsiveness and transparency. While I certainly don’t blame the witness on the first 

panel, I would like to have your help in trying to get a response 

from this letter. 

Almost 2 months after sending the letter, I have received no response from the EPA, let alone the comprehensive and substantive 

answers required to ensure legitimate congressional oversight of an 

agency that is becoming increasingly rogue and defiant. Due to the 

importance of this investigation and the EPA’s lack of cooperation, 

I am pleased to announce today that I, along with Senators Vitter, 

Boozman, Coburn, Cornyn, and Hutchison, that is every Republican member that is in the Region 6, we have a letter sent formally to request that the EPA Inspector General launch an official 

investigation into the EPA’s actions in Parker County, Texas. 

Hydraulic fracturing has been used more than a million times, 

and it started in my State of Oklahoma, back in 1949, was the first 

time that they used hydraulic fracturing. Since that time, it has 

been very successful. It has been regulated in a fine way by the 

States. While I often disagree with one of the persons, a witness 

that is on the second panel, Fred Krupp, in this case I did agree 

with him when he said that ‘‘Given the dysfunction in DC, a State 

by State approach will be more effective.’’ I agree with that statement. 

The EPA Administrator admitted in April, ‘‘In no cases have we 

made a definitive determination that the fracking process has 

caused chemicals to enter groundwater.’’ So there we have a statement that is made by two individuals, the last one by Lisa Jackson. 

I have a great deal of respect for her honesty in response to the 

question that I had asked. And she said there is not a case that 

is out there where they can identify groundwater contamination. 

So these rules that we are talking about are somewhat—are 

rules that we have looked at, and we have a concern that we are 

not just killing it as the vote tomorrow at 12:30 on the CRA on 

Utility MACT, not just on coal, but on all fossil fuels. It is kind of 

interesting to me that people who are opposed to fossil fuels—and 

they have the war on fossil fuels—are starting with coal. But the 

war goes on after that. 

My concern is this. We have a country called America, and we 

have to provide energy to run this machine called America. And 

you can’t do it without fossil fuels. 

6 

So I look forward to this hearing, and particularly those witness 

who are familiar with the process of hydraulic fracturing. I think 

it should be a very revealing hearing, and I appreciate your coming. 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE STATE OF OKLAHOMA

Today’s hearing to review EPA’s air rules highlights the ongoing war being waged 

by the Obama administration against fossil fuels and the development of America’s 

abundant domestic energy resources. Ironically, this hearing comes at a time when 

President Obama’s top environmental team is in Rio working on policies that would 

significantly weaken this country and which have failed time and time again—not 

only in the U.S. Congress but in the arena of public opinion as well. It is also important to mention that this hearing comes while Congress is in the middle of a debate 

about the Obama EPA’s economically devastating Utility MACT rule designed to kill 

coal in America, effectively waging open war against an industry which supplies our 

economy with thousands of jobs and affords us cheap and reliable domestic energy. 

Oil and gas production in America is increasing despite the Obama administration’s best efforts to shut down domestic energy production in favor of their radical 

green agenda. They are working to stop hydraulic fracturing through 13 Federal 

agencies and have attempted to implement their agenda to ‘‘crucify’’ American energy producers. We got a glimpse of this ‘‘crucify’’ philosophy in a rare moment of 

honesty from a former Obama EPA Regional Administrator, and unfortunately, we 

have seen this approach played out across the country. 

Because of EPA’s unprecedented actions in Parker County, Texas, I launched an 

investigation which began with a letter to the Agency on April 25. I am extremely 

disappointed that despite my attempt to conduct oversight as the ranking member 

of the authorizing committee with jurisdiction over the Agency, EPA has met my 

request with a disappointing lack of responsiveness and transparency. Almost 2 

months after sending the letter, I have received no response from EPA whatsoever, 

let alone the comprehensive and substantive answers required to ensure legitimate 

congressional oversight of an agency that is becoming increasingly rogue and defiant. 

Due to the importance of this investigation and EPA’s lack of cooperation, I am 

pleased to announce today that I, along with Senators Vitter, Boozman, Coburn, 

Cornyn, and Hutchison—that is, every Republican from EPA Region 6—have sent 

a letter formally requesting that the EPA Inspector General launch an official investigation into EPA’s actions in Parker County, Texas. 

Hydraulic fracturing has been used on more than 1 million wells since it was first 

performed over 60 years ago just outside of Duncan, Oklahoma. The practice has 

always been safely regulated by the States, and as a matter of fact, in February 

one of our witnesses was quoted in a New York Times article discussing who should 

be responsible for regulating hydraulic fracturing. Fred Krupp said, ‘‘Given the dysfunction in DC, a State by State approach will be more effective.’’ This is a statement I very much agree with. Despite ongoing efforts by EPA to manufacture a link 

between hydraulic fracturing and groundwater contamination—including an ongoing 

water study which many have raised serious concerns over—EPA Administrator 

Lisa Jackson admitted in April, ‘‘In no cases have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.’’ 

The rules we are discussing today are little more than a thinly veiled attempt to 

regulate greenhouse gases from hydraulic fracturing and are an obvious attempt to 

wrest power from States’ control and instead place it in the hands of the Federal 

Government. They are critically flawed and are predicated on faulty and inaccurate 

data and analysis that over-exaggerate emissions—in some estimates more than 

1,400 percent. Additionally, these rules mandate the use of technologies that are not 

readily available and further exaggerate emissions through an inadequate accounting of production and gathering facilities. 

The combination of hydraulic fracturing with horizontal drilling has led to an 

American energy revitalization that has created thousands of American jobs, 

brought in revenues to State, local, and Federal governments, and helped enhance 

our nation’s energy security. It has occurred in States that effectively and efficiently 

regulate hydraulic fracturing absent unnecessary Federal impediments. Current efforts by the Obama administration are designed to eliminate hydraulic fracturing 

by putting more and more authority over the process into the hands of the Federal 

Government. States have successfully regulated this practice for over 60 years and 

7 

are in the best position to protect their citizens and understand their unique challenges and geologies. For these reasons, we should keep the States in charge of hydraulic fracturing and continue the benefits to consumers, jobs, economic growth 

and expansion, and our nation’s energy security that have resulted from the safe 

and responsible development of America’s vast resources. 

I would like to thank our witnesses for coming today, particularly Darren Smith 

from Devon Energy, and I look forward to hearing the testimony. 

Senator CARPER. All right. 

Senator Cardin. 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM THE STATE OF MARYLAND 

Senator CARDIN. Thank you, Mr. Chairman. Thank you very 

much for calling this hearing. 

First, let me just take issue with the comments of Senator Inhofe 

and Senator Barrasso as it relates to the record of the Obama administration on energy security. Domestic oil production has increased—increased—every year President Obama has been in office. In 2011 U.S. crude oil production reached its highest level 

since 2003, increasing by an estimated 120,000 barrels per day 

over the 2010 level to 5.6 million barrels per day. 

Since 2009 the United States has been the world’s leading producer of natural gas. In 2011 U.S. natural gas production easily 

eclipsed previous all-time production records set in 1973. Overall, 

oil imports have been falling since 2005, and net imports as a 

share of the total consumption declined from 57 percent in 2008 to 

45 percent in 2011, the lowest since 1995. 

Mr. Chairman, I put that on the record because I think the 

Obama administration has tried to be balanced as we relate to energy security. We desperately need an energy policy for this country. An energy policy that makes us energy secure, that builds jobs 

that can’t be exported. And we know green energy is where we will 

create more jobs. And one that is friendly toward our environment. 

The good news is that the answer for all three lies in a similar solution. 

So I just really want to put on the record that the Obama administration has been very sensitive to energy security issues, as well 

as dealing with our future for jobs and for our environment. 

We have—Marylanders have a direct interest in this hearing. 

The Marcellus Shale deposits run through the western part of 

Maryland, so I am very much interested. And Senator Inhofe 

knows the Subcommittee on Water and Wildlife held a similar 

hearing as it relates to water quality issues. And Senator Inhofe 

has pointed out rather accurately that Oklahoma has been doing 

fracking for a long time, and its record is very positive. 

We now know that there are 11,000 new fracking wells that have 

been placed into service in the last year. So there is a lot going on. 

The challenge is that not every geological area is the same as Oklahoma. 

Another problem we have is that the pollution issues—whether 

they be water or whether they be air—know no State boundaries. 

So if a State is not doing what it needs to do, and pollutants enter 

our air flow, if it happens in West Virginia, it is going to come into 

Maryland. 

8 

So Maryland can have the tightest rules that there are, and we 

have seen that in regard to the utility issues that we will be talking about later today on Senator Inhofe’s resolution. Maryland has 

taken steps as it relates to our utilities. The problem is the rest 

of the nation has not. And this is a national problem. We need national solutions. 

As a result, we passed the Clean Air Act. We also passed the 

Clean Water Act. And the Environmental Protection Agency is 

charged with carrying out the responsibilities under the Clean Air 

Act, and that is exactly what they are doing. In fact, the court is 

directing them to come in with regulations because we have an 

issue. 

The good news is that every time we do these regulations, we 

look at cost-benefits. What is the cost versus the benefits? In every 

case, the ratios are well in favor of the benefits to our society by 

having clean air. I am sorry Senator Lautenberg is not here because he tells, I think, a very clear story, a personal story about 

asthma in his family and the impact that dirty air has on children 

and on parents that have to stay home and miss work. 

So clean air is an important responsibility. I think we all want 

to make sure that we have clean air. But here is the good news. 

The good news is if we get this done right we can expand our natural gas collections in this country in a way that will be more cost 

effective and also reduce pollutants. And that is, I think, what the 

Department is trying to do. One of their proposals, as I understand, 

captures some of the gas that is being emitted for sale, providing 

another revenue flow and more energy for this country and helping 

our environment. 

And that is, I think, what we are trying to find, ways that we 

can get energy from a variety of sources, including natural gas, do 

it in a way that creates more jobs, and is friendlier to our environment. And I would hope, in compliance with very important laws 

such as the Clean Air Act, which has helped the safety of people 

in this nation. 

So I look forward to this hearing, and I hope that we can stay 

straight as to the issues that are really before us. Thank you. 

Senator INHOFE. Mr. Chairman. 

Senator CARPER. Senator Inhofe. 

Senator INHOFE. As my good friend Senator Cardin knows, when 

another member’s name is mentioned, he can respond. So I want 

to do that. If you will just briefly. 

Senator CARPER. Please. 

Senator INHOFE. It is true that production has expanded since 

2008 during this Administration. However, it has all been done in 

the private sector. With all the advances that are out there right 

now, and we are booming, it is the answer to our energy problem, 

it is the answer to unemployment, and all of that, it is all happening in the private sector. It is unbelievable to me that in the 

public sector, that which the Obama administration has control 

over, it has actually reduced by 17 percent. 

So it is booming, and it is booming in spite of his effort toward 

percentage deletion, Section 199, manufacturers’ exemption and all 

of the tax things that he has had that would be punitive to development of gas and oil. 

9 

Senator CARPER. All right. Let’s just hold it there. 

Senator CARDIN. I do know Senator Inhofe wanted to nationalize 

our energy industry. 

Senator CARPER. Let’s just hold it there. 

Senator Gillibrand, you are next; thank you. 

OPENING STATEMENT OF HON. KIRSTEN GILLIBRAND, 

U.S. SENATOR FROM THE STATE OF NEW YORK 

Senator GILLIBRAND. Thank you, Mr. Chairman, and thank you 

for letting me participate in this hearing, since I am not on the 

Subcommittee. I appreciate your generosity. 

Thank you for being here. I just want to inquire on two areas. 

Now, obviously natural gas drilling in New York State is a huge 

economic opportunity that many of our farmers and rural landowners are very interested in pursuing. But many of our communities are also concerned about what would happen to quality of 

drinking water, what risks are being taken, are there any health 

effects. 

And the two major questions that I am hoping you can respond 

to are this: many members of our community are interested in 

knowing what the formulas are, what the concentrations are, and 

what chemicals are being used in the hydro-fracking process. They 

believe that it is a fundamental right to know what chemicals are 

being placed into the ground and whether those chemicals have 

had tests concerning health effects. Have there been studies? Have 

there been tests? Do we know whether they have any negative 

health effects? Are there any carcinogens preset? 

The second question is, obviously when you engage in hydrofracking, when you push the water deep into the earth, you will 

bring up water that has then been tainted with natural elements 

that are found within the earth. Oftentimes that may include radium. So the question is, is there a way to clean this water from 

any heavy metals or any other contaminants safely enough to have 

it then reintroduced into the water supply in some way? 

So those are the two areas of concern that New Yorkers have 

come to me most often with. Can we get full disclosure? Is there 

a way to mandate that disclosure so we know that no chemicals 

being used have negative health effects and know in advance that 

studies have already been done? And two, can we require treatment of water that comes up to make sure we are not contaminating groundwater? And I know that this is just opening statements, but I won’t be here for later. So when it is appropriate, I 

would be grateful if you either would respond to those questions or 

submit for the record. Those are my two areas of interest for New 

York State. 

Senator CARPER. Thanks for joining us today. 

Senator Udall. 

OPENING STATEMENT OF HON. TOM UDALL, 

U.S. SENATOR FROM THE STATE OF NEW MEXICO 

Senator UDALL. Thank you very much, Senator Carper. I also appreciate your allowing me to participate. 

I just wanted to note, Senator Inhofe, in the Permian Basin, we 

are booming in terms of oil. This is mostly BLM land, and we are 

10 

at a 12- to 14-year high in terms of oil production on Federal lands. 

Gas isn’t nearly as high, as you know, because of the economics 

and the low gas price. But we see different things around the country, but I thought that should be noted for New Mexico and the 

Permian Basin flows over into Texas and then southeastern New 

Mexico. 

I believe that natural gas has great potential as an energy source 

in the U.S. It is a significantly cleaner burning fuel for power 

plants and vehicles and coal or oil. And America has a very large 

supply due to shale gas reserves. Like any growing resource, extraction sector, the natural gas industry will need to minimize its 

impact on the environment to maximize its potential. EPA put a 

lot of work collaborating with industry, developing the standard to 

reduce fugitive emissions from hydraulic fracturing of oil and gas 

wells. 

I am encouraged by reports that many oil and gas producers already meet the proposed standard, since it is in their interest to 

minimize methane emissions. 

I would like to thank our witnesses today. In particular, Assistant Administrator Gina McCarthy, Fred Krupp from EDF, and Mr. 

Darren Smith of Devon Energy. Devon has a significant presence 

in New Mexico and contributes a good deal to efforts like BLM’s 

Restore New Mexico program to mitigate their impacts. 

So with that, Senator Carper, I would yield back. 

Senator CARPER. All right, thanks for joining us. 

Let me welcome our first witness, no stranger to this Committee, 

Gina McCarthy. As we know, Ms. McCarthy is the EPA Assistant 

Administrator for the Office of Air and Radiation. I think she is 

doing an exemplary job since joining the EPA. We welcome you 

back here today. 

You will have roughly 5 minutes to present your opening statement, and the full content of your statement will be included in the 

record. Again, welcome, thanks for joining us. Please proceed. 

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

Ms. MCCARTHY. Thank you, Chairman Carper, Ranking Member 

Barrasso, members of the Subcommittee. 

Mr. Chairman, I appreciate the opportunity to appear before you 

today regarding EPA’s recently issued emissions standards for the 

oil and gas industry. These standards will significantly reduce 

emissions of harmful air pollutants. They are achievable through 

current technologies already available and being used by leading 

companies as well as States. They will not slow natural gas production, and the result will be substantial cost savings. 

A year ago, the President set a bold but achievable goal of reducing oil imports by a third in a little over a decade. In the last year 

alone, we have already cut net imports of oil by 10 percent, or a 

million barrels a day, putting the United States on a pace to meet 

our goal by the end of the decade. 

Domestic oil and natural gas production has increased every year 

President Obama has been in office. In 2011 American oil production reached the highest level in nearly a decade, and natural gas 

11 

production reached an all-time high. The Obama administration is 

committed to ensuring the development of these vital domestic resources occurs both safely and responsibly. 

The rules we are here to discuss today include the first Federal 

air pollution standards for hydraulically fractured natural gas 

wells, along with requirements for several other oil and gas emission sources, such as storage tanks and natural gas processing facilities that currently are not regulated at the Federal level. These 

standards will reduce ozone forming air pollution and cancer causing air toxics, providing health benefits for Americans across the 

country. 

Combined, these rules are expected to reduce between 190,000 

and 290,000 tons of volatile organic compounds and emissions reductions of 12,000 to 20,000 tons of air toxics each year. Exposure 

to ozone is linked to increased asthma attacks, hospital admissions, 

and emergency room visits as well as premature deaths. EPA’s 

rules also protect against potential cancer risks from emissions of 

several toxic air pollutants, including benzene. 

As a co-benefit, the technologies also reduce methane emissions. 

Methane is an ozone precursor, and is a greenhouse gas that is 

more than 20 times as potent as carbon dioxide. These standards 

are expected to reduce methane emissions by the equivalent of 19 

million to 33 million metric tons of carbon dioxide annually. 

EPA worked with the regulated industry, and we worked with affected States to develop these new standards. After considering extensive public comment, we made changes in the final rules to help 

ensure that pollution reductions are achieved without slowing natural gas production. Most importantly, the rules include a transition period during which industry can control volatile organic compound emissions from hydraulic fracturing using one of two approaches. Until January 2015 VOC emissions can be controlled either through flaring or through the use of so-called green completions, or reduced emission completions, which capture natural gas 

that otherwise would escape to the air. 

After January 1, 2015, green completions will be required for 

most wells covered by the standards. This will provide the time 

necessary to order and manufacture enough equipment to ensure 

that these green completions can be done cost effectively. 

Gas captured through green completions can be treated and sold, 

and the revenues from the sales are expected to more than offset 

the cost of compliance. EPA’s analysis shows a cost savings of $11 

million to $19 million annually when the rules are fully implemented in 2015. 

These standards are achievable. Information provided to EPA indicates that green completions already are being used at about half 

of the fractured natural gas wells in the United States because of 

the leadership of those in the natural gas industry. Green completions already are required by leading States like Wyoming and Colorado and by some cities, including Fort Worth and South Lake, 

Texas. 

In crafting these rules, we made a special effort to ensure the 

program aligns with the existing programs in these States. We 

learn from them; we align with them. We do not duplicate their efVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
12 

fort, but we ensure that there is a level playing field across the 

United States. 

EPA standards support responsible growth in oil and natural gas 

development while protecting public health and the environment. 

They do level the playing field, requiring wells across the country 

to implement what is cost effective in proving technologies that are 

already used by the leading companies. 

Finally, EPA standards will save millions of dollars annually by 

encouraging recovery of natural gas that currently is wasted. To 

sum up, these are win-win standards that represent an important 

addition to the more than 40-year success story of the Clean Air 

Act. 

Thank you very much, and I look forward to responding to your 

questions. 

[The prepared statement of Ms. McCarthy follows:] 

13 


25056.001
14 


25056.002
15 


25056.003
16 


25056.004
17 


25056.005
18 


25056.006
19 


25056.007
20 


25056.008
21 


25056.009
22 


25056.010
23 


25056.011
24 


25056.012
25 


25056.013
26 


25056.014
27 


25056.015
28 


25056.016
29 


25056.017
30 


25056.018
31 


25056.019
32 


25056.020
33 


25056.021
34 


25056.022
35 

Senator CARPER. Thank you. 

We have been joined by Senator Johanns, recovering from his 

birthday yesterday, looking none the worse for wear. Nice to see 

you. 

I was born in West Virginia. They mine a lot of coal there in my 

native State. While we are not using as much coal today for generating electricity as we were a decade ago or even 5 years ago, we 

are going to be using coal for a long time in this country. Fortunately, we will be able to use a lot of natural gas in this country. 

We are already the Saudi Arabia of coal. We have become the 

Saudi Arabia of natural gas. 

And I understand that we are well on our way to becoming a net 

exporter of oil. That is not a bad success story. And we shouldn’t 

stop there. There is more that we can do. 

I think what EPA is trying to do is to say, as we make progress 

on those fronts, let’s just make sure that we are being smart with 

respect to the emissions that come from the fracturing or the 

fracking process. 

Senator Johanns and I are recovering Governors, and served together for a while in the National Governors Association. I used to 

say when I was Chairman there that the States are laboratories of 

democracy. And rather than us at the Federal level reinventing the 

wheel every time, why don’t we look to the other 50 States and see 

if we can learn some lessons from them. 

Why have we picked Wyoming and Colorado for those lessons, 

and what are those lessons that we can implement today? 

Ms. MCCARTHY. Colorado and Wyoming really have gone out in 

front on these issues, recognizing that there are opportunities for 

their States to actually accrue revenues and to preserve the natural resources of this country by using this process called green 

completions. What we attempted to do in looking at applying those 

to the national level was to coordinate with them as much as possible as well as with the industry to ensure that we understood the 

technologies that are available that we did what the law required, 

which is to make sure that those technologies would be out in commerce and be effective in producing these cost effective reductions. 

For that reason, we made quite a bit of adjustment between the 

proposal and the final rule, on the basis of all the comments we 

received from those States and from the industry itself as well as 

the environmental community and other stakeholders. 

Senator CARPER. OK, thanks. 

It is my understanding that EPA has made some changes from 

the proposal, the original proposal to the final new source performance standards for the fractured natural gas wells. Could you take 

a minute or two and just discuss or describe some of those changes 

that you have made? 

Ms. MCCARTHY. Yes. Senator, we made a number of changes that 

increased compliance flexibility for well owners that streamlined 

notification, reporting, that eliminates unnecessary expenditures at 

the State level and ensures coordination with States like Wyoming 

and Colorado. Primarily, we did this phase-in process for green 

completions to allow until January 2015 to move toward green completions. In the meantime, you can either do green completions or 

36 

flaring. That was in direct response for the industry concern that 

the equipment may not be readily available. 

Now, the second big thing we did was we recognized that there 

are formations in the U.S. where hydro-fracking is actually happening where there is a low pressure issue which precludes that 

from being cost effectively captured. And we created a subcategory 

that recognized that and understood that in areas, that in certain 

area formations, we wouldn’t be needing to look at green completions where they weren’t cost effective, and able to technology-wise 

be achieved. 

We also identified lots of ways in which we could streamline the 

reporting, including recognizing that if you are already pre-notifying to States, you don’t have to do the same thing to the Federal 

Government. We also took a look at removing some requirements 

for some of the more downstream transmission areas where the 

VOC content wasn’t as high in response to comments. So we made 

a number of changes here that directly respond to industry concerns and that ensure that we can provide these reductions cost effectively. 

Senator CARPER. OK, thanks. 

I think in our second panel today some of the witnesses may 

claim that EPA has overestimated emissions from hydraulically 

fractured natural gas wells. What do you have to say in response 

to those assertions? 

Ms. MCCARTHY. EPA is confident that our emissions estimates 

for gas well completions are reasonable, that they don’t overestimate the total emissions, and they are based on the best data currently available. We will continue, however, to work with stakeholders to ensure that we understand their concerns and that the 

misconceptions that we are hearing do not continue. 

I think the interesting thing about this, Senator, is we are not 

really arguing about the standards or the availability of the technology. What we are really talking about is how good is this rule. 

Is it good, or really good? Now, that is an argument that I can embrace. 

You will hear things like EPA only had four data points. We had 

four studies, a thousand wells engaged. You will hear issues about 

whether we overestimated our emissions factor. Does it take a really long time to do a completion? Does it take a short time? Well, 

no matter how much time, we have one emission factor. We don’t 

talk about enhancing that for longer periods of time. It is one average that is based on formations across the country and a wealth 

of data. 

So we can work through those issues. You will hear some confusion, however, but we will work through those, because we have 

leaders in the industry here testifying that we want to make sure 

is appreciative of this rule. 

Senator CARPER. All right, thank you. 

One last question, and I will yield to Senator Barrasso. Some 

critics claim that EPA’s cost benefit analysis numbers are off base. 

Could you just briefly explain how you came to those numbers, and 

could you address those criticisms? 

Ms. MCCARTHY. Yes, there was, this is one area where again we 

made significant changes between the proposal and final on the 

37 

basis of comments that we received. EPA takes a look at what activities are happening out in the field, what the equipment level is 

that people are using, and we do an estimate of what the emission 

inventory is, if you will, across the country. 

But then we reduce that by what is being voluntarily reduced. 

Because there are some great leaders in this industry. And we 

know that half the well completions where there is hydraulic fracturing are using green completions now. And we take a look at 

areas where green completions aren’t effective, and we make those 

adjustments, and we understand where States are already regulating, and we don’t want to double count that. 

Then we come out with information on what the costs are on the 

basis of what those emissions are and what the costs are in order 

for capital and for the installation of that equipment. I think we 

did a good job. We understood that there is a balance here. We 

looked at the cost, but we also looked at the money that you make 

when you actually collect the methane. And in the end, we are 

talking about a rule that saves millions of dollars. 

Senator CARPER. All right, thanks. 

Senator Barrasso, you are recognized for 7 minutes. 

Senator BARRASSO. Thank you very much, Mr. Chairman. I appreciate it. 

I would assume that you would agree with President Obama that 

we need an all out, all of the above energy strategy? 

Ms. MCCARTHY. I would. 

Senator BARRASSO. So I talked about in my opening statement, 

earlier this year the Director of the Sierra Club said about new 

natural gas plants. He said as we push to retire coke plants, he 

said we are going to work to make sure we are not simultaneously 

switching to natural gas infrastructure, and we are going to be preventing new gas plants from being built wherever we can. 

What does the EPA plan to do to fight back against that approach, to make sure that all these plants and everything are able 

to continue to be developed? 

Ms. MCCARTHY. Senator, the rules that EPA has been finalizing 

as well as those that are being proposed are not about a specific 

fuel supply. They are about needed reductions in pollution and the 

public benefits that accrue. 

Senator BARRASSO. So when an organization, an extreme environmental group, they are bragging that they have closed coal fired 

power plants, using the courts, manipulating environmental laws, 

now they want to move on to natural gas using the exact same tactics. If you are for natural gas development, do you think that we 

have to change something in the law then, to prevent these groups 

from blocking construction and development of natural gas? 

Ms. MCCARTHY. I think the Administrator and the Administration has been very clear that natural gas is part of the mix moving 

forward, that it offers a clean energy supply. And we are doing everything we can, like we did in this rule, to ensure that it recognizes that, it does not slow the development of oil and natural gas, 

and that we find a way to achieve reductions cost effectively. 

Senator BARRASSO. Well, the Utility MACT vote is set to occur 

this week. I want to ask you about the EPA’s policy in regard to 

this. The EPA Region 1 Administrator, Curtis Spalding, was talkVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
38 

ing to a group of students about Utility MACT, about EPA regulations. 

And he went on about the regulations, saying that gas plants are 

the preferred standard, which means if you want to build a coal 

plant, he said, you have a big problem. He said it was a huge decision, one made by Lisa Jackson. He said, you can’t imagine how 

tough the decision was, referring to Utility MACT, because you 

have to remember if you go to West Virginia, Pennsylvania, and all 

those places, you have coal communities who depend on coal. 

We are talking about communities with families, men and 

women working in the industry. There are additional businesses in 

those communities, schools, people who teach the kids. So he goes 

and he says, to say that we just think those communities should 

just go away, we can’t do that. But she, meaning Lisa Jackson, had 

to do what the law and policy suggested. He said it is painful, it 

is painful every step of the way. 

So my question to you is, what is going to happen to these communities in the West and the Midwest and Appalachia? Where do 

they go when they ‘‘go away’’? What is going to happen to them? 

What is going to happen to the jobs, what is going to happen to 

the communities? What is going to happen those people and their 

families? 

Ms. MCCARTHY. Senator, I did watch the video of Regional Administrator Spalding. I think, in my opinion it is fear that he was 

speaking about the challenges associated with coal today. And it is 

lack of competitiveness against natural gas, with low gas prices 

and with steady and low demand, that there are challenges associated with coal being competitive. Not necessarily just with the 

rules that are being initiated, although they are one factor. It really is a market issue. And I think he was trying to speak to the 

challenge associated with working with communities when you 

have job shifting that happens as a result of these market shifts. 

Senator BARRASSO. And the regulations that are coming out of 

your organization and the Administration relating to those jobs and 

those communities which will have higher unemployment. And we 

talk about the cause of benefit analysis, I think that you underestimate the cost, you overestimate the benefits and that the cost to 

these communities of people being out of work is very high in terms 

of there is not really any future saved health care cost, any great 

degree, compared to the amount of additional cost by people in 

chronic unemployment with increased illness, increased hospitalization, premature death, a whole host of components that affect the community. 

You started your testimony, you said that the domestic oil and 

natural gas production has increased every year since the President has been in office. Most of that development, as Senator 

Inhofe has said, has been on private land, not public land. And the 

Administration is responsible for public land, not the private land. 

If those oil and gas operations had been on public land, would 

they be operational today, do you believe? 

Ms. MCCARTHY. Senator, I don’t want to make predictions about 

anything. I do know that there has been a concerted effort to work 

with DOI and other agencies and pull them together on the adminVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
39 

istrative level to ensure that we are fully taking advantage of the 

natural gas resources. 

Senator BARRASSO. EPA has indicated that it expects all future 

fossil fueled power plants to use natural gas rather than coal. Now, 

the EPA has issued a proposal to tighten the particulate matter 

standards, create non-attainment areas in the various States where 

the natural gas is being produced, will be produced. How will we 

be able to tap the gas, fuel our electricity, create jobs if the EPA 

proceeds with its proposal to create more non-attainment areas? It 

seems like you are just playing right along with the Sierra Club 

and their efforts to go to what they describe as beyond gas, and 

eliminate gas as the next target in the efforts of this Administration. 

Ms. MCCARTHY. Senator, the rules that we have put out in the 

analysis indicates that coal now is a large portion of the energy 

supply in this country and that it will remain almost at the same 

level. So we are looking at a future where coal remains very much 

a part of the energy supply for this country. That is with the rules; 

that is without the rules. And we are using a wealth of data to 

show that. 

It also shows that those rules increased jobs, not decreased them. 

Although we recognize that there are shifts in jobs, and we have 

to work with communities all along the way. So I am not seeing 

that any of our rules are actually working against the way in 

which the market is already driving this industry. 

The most recent particulate matter announcement was a proposal. When you looked at that, the levels that we were talking 

about, that we need to scientifically decide what levels of protection 

are necessary in terms of the level of pollution that people breathe 

across this country, those levels will be readily achievable for all 

but six counties on the basis of already enacted Federal rules. 

Senator BARRASSO. Mr. Chairman, my time is expired. I would 

like to submit additional questions in writing. 

Senator CARPER. That will be quite all right. 

Senator BARRASSO. Thank you. 

Senator CARPER. You bet. 

Senator Inhofe. 

Senator INHOFE. Thank you, Mr. Chairman. 

Let me just say it one more time, because I think it has been repeated by Senator Barrasso, but I think it is important, because it 

is a point that kind of floats by, and nobody seems to understand 

it. 

And that is, with all of the good things that are happening right 

now, the Marcellus chain, and all these things that are happening, 

not just in the West, but in Pennsylvania and New York, and all 

the opportunities that are out there, and this massive explosion 

that we are in the middle of right now in terms of the production, 

that the increase that we keep talking about, or that the Obama 

administration keeps talking about, is all in the private sector. And 

if you look at his budgets, since he has now had four budgets, and 

in his last budget, No. 1, he had percentage depletion, he had Section 199 manufacturers exemption that he was going to single out 

the oil and gas industry to do away with, the IDCs, that is an inVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
40 

tangible drilling cost, all these things are punitive to the oil and 

gas industry. 

The fact is that in spite of all these wonderful things that are 

going on, it is all happening in the private sector. And in spite of 

that, the public sector, the public lands, and I wonder if my friend 

from New Mexico has stepped out, but just stop and think about 

the number of jobs, if we were able to do the same thing on the 

public lands. Instead of that, we have had a 16 percent reduction. 

In spite of all this boom that is going on in the public sector. It 

bears repeating over and over again. 

I would say for Administrator McCarthy, President Obama frequently touts about the job creation potential in the natural gas industry and has said many times we have the supply of natural gas 

that can last America nearly 100 years. That is true, I have been 

using 90 years gas and 60 years oil. That is if we would get the 

politicians out of the way so that we could explore our own resources here. And I might add, we are the only country in the 

world that doesn’t exploit its own resources. 

In your testimony, you mentioned that gas plays a key role in the 

nation’s clean energy future. My question is simply, does this Administration believe that natural gas is a long-term part or just a 

bridge in terms of its filling this function? 

Ms. MCCARTHY. Senator, I can only speak to what I know to be 

the case, which is that right now there is a change in the energy 

supply where natural gas is becoming more and more the fuel of 

choice that is driven by the market. I expect that that will continue. It doesn’t mean that coal is being driven out of the system 

in any appreciable way. That will continue as well. 

And how long that continues, I don’t know. But there is an overall impetus to move to cleaner and cleaner supplies, and then to 

also bring renewable energy into the mix. But natural gas is likely 

to be here for quite some time. 

Senator INHOFE. Well, I am sure it is, with the opportunities that 

are out there right now. It is just that we need to do that on public 

land as well as private land. 

I would only say this, this is a quote that I don’t think has been 

made yet by President Obama. He said, ‘‘So if somebody wants to 

build a coal powered plant, they can. It is just that it will bankrupt 

them.’’ To me, that doesn’t sound he is very supportive of continuing to use that. But I want to have time to get my second question in. 

This year, documents came to light revealing a dispute during 

the interagency review of the Utility MACT rule between the EPA 

and FERC. These documents revealed a startling pre-determination by EPA that natural gas cannot be relied upon for a viable fuel 

switch alternative due to the agency’s concern over the ‘‘environmental impacts of hydraulic fracturing.’’ Recently, the EPA Administrator in District 6—and this has already been referred to, but I 

want to get the exact quotes down here, then ask you the question. 

He resigned after publicly stating that EPA’s ‘‘general philosophy 

was to crucify and make examples of the oil and gas companies.’’ 

The EPA Region 1 Administrator, Curt Spalding, which was 

quoted by Senator Barrasso, was quoted as saying, this is an exact 

quote, ‘‘Lisa Jackson has put forth a very powerful message to the 

41 

country that if you want to build a coal plant, you’ve got a big problem.’’ He went on to explain that the decision was painful, which 

we have already talked about. West Virginia, Pennsylvania, and all 

those places you have coal communities who depend on coal and to 

say that we just think those communities will just go away, we 

can’t do that. 

Well, all these statements which have been made by some of the 

most influential people within the EPA, were made at the same 

time the President has been touting the all of the above energy approach. My question to you is this. After these statements were 

made, we had some disclaimers coming from the EPA, saying those 

are perhaps just some rogue statements that were made out there 

some place and are not really the philosophy of the EPA. 

So the question would be, is it possible that your colleagues at 

the EPA are actually telling the truth about your radical agenda, 

or is it that all of these bureaucrats are simply mis-speaking this 

frequently? Which of the two? 

Ms. MCCARTHY. So let me take your questions in order. The first, 

you were talking about the FERC and EPA and potential differences of opinion relative to MATS. I just want to confirm that 

EPA, FERC, and DOE are working closely on the Mercury and Air 

Toxics Standard in terms of its implementation. We have been 

working together to look at what technologies are available, any potential impact on reliability. So I do not see any difference in terms 

of that. 

Senator INHOFE. No, that wasn’t the question. The question was, 

these statements that were made, the statements that I just now 

made, quoting the Region 6, Region 1, and some of the others who 

have made about the oil and gas industry, is that just them or is 

that—would you in your position refute that as a policy of the 

EPA? 

Ms. MCCARTHY. Yes, let me hit that issue head-on. I just thought 

it was a little bit different. I know that Al Armendariz, the Region 

6 Administrator, used unfortunate words that were inflammatory. 

He says that, the Administrator indicated that. They do not give 

a clear picture of EPA and its enforcement policies. I think Al resigned, and that is a clear indication that he recognized that his 

words were unfortunate and that they didn’t properly represent the 

agency, and they do not. 

I think I explained Curt Spalding and the fact that he was perhaps, the quotes that were pulled out, if you looked in larger context you might see that Curt is a dedicated individual who is actually concerned about coal shifts and recognizes the current challenges that coal faces. But EPA is not in a position, nor would we 

ever speak to fuel diversity issues beyond ensuring that our rule 

are achievable and cost effective. And the MATS rule in and of 

itself is already achieved by dozens of units of coal right now. And 

I assure you that those decisions that are being made by industry, 

we will work with them to ensure that they can achieve these 

standards within the time that is allocated under the Mercury and 

Air Toxics Standard, if they choose to invest in those older, smaller 

generation units. 

Senator INHOFE. OK, my time has expired. I do have some questions for the record relative to your last statements there. Because 

42 

when you say you are for all of the above, and of course, not you, 

the President, the Administration, and part of that is the natural 

gas, and yet you do what you can to kill the process of hydraulic 

fracturing, I have said several times, you can’t get one cubic foot 

of natural gas out of a tight formation without using this process 

that has been safe since 1949. 

Thank you, Mr. Chairman. 

Senator CARPER. You are welcome. 

All right, Senator Cardin. 

Senator CARDIN. Thank you, Mr. Chairman. 

As I indicated in my opening statement, Maryland is very much 

interested in natural gas. We have the Marcellus Shale deposits. 

I think it is very interesting, as I listen to my colleagues complain 

about Federal action and so many cases here, it has been States 

that have been acting, certainly as it relates to water quality, 

where the Federal Government has a limited jurisdiction that the 

States have been the primary player. 

I know that the gas and oil industries have been concerned about 

the inconsistent regulatory climate in the 50 States. I think it is 

in the interest of an energy policy that we have national predictability on fracking and on getting natural gas, that as I pointed 

out, the pollutants that go into the air or go into our water; the 

risk factors are not bound by any State border. These are national 

issues, and we need national policies to deal with it. On air, we 

have a little bit clearer direction from the point of view of the 

Clean Air Act than we do with the Clean Water Act. 

I want to, though, first respond to Senator Inhofe’s point on a debate we will have a little later this afternoon with the mercury 

standards. I need to point out that this is a serious issue of public 

health for our community. Maryland thought it was so serious that 

we acted. We passed mercury standards that will comply with the 

standards that have been proposed by EPA. We have done that in 

a way that actually created more jobs in our State. 

Our utilities worked with us, helped pass the Healthy Start law 

in our State; improvements have been made in our coal burning 

power plants. And we are meeting those mercury standards, as I 

think the Chairman of the Committee is well aware. We have done 

that in a way that has created jobs, and we are proud of that 

record. 

The problem is that Maryland, like Delaware, Mr. Chairman, is 

downwind. So we can do everything we can to stop the pollutants 

from entering the air as a result of energy generation in our own 

State. But because of surrounding States, our citizens are still suffering from the effects of the pollutants going into the air. We have 

our days where it is not safe for children to literally go out because 

of aggravated breathing problems. 

The numbers that we have on the MAT standards would save 

thousands of premature deaths, thousands of cases of chronic bronchitis, the lost days from work for people who miss work as a result 

of poor air quality, estimated to be 850,000 days. The list goes on 

and on and on. The reason is that air pollution leads to cancer, 

leads to neurological development problems and reproductive problems. 

43 

So I guess my question to our witness is, has EPA evaluated the 

cost-benefit of these regulations from the point of view of the benefit to our community versus the additional burdens that will be 

placed on compliance with the proposed regulations? 

Ms. MCCARTHY. We have, Senator, and you are quite right, that 

power plants emit hundreds of thousands of tons of toxic air pollutants, and they are related to serious health consequences, particularly for children. If you look at the bottom line for the mercury 

and air toxics standard, we are talking about public health benefits 

between $37 billion to $90 billion each year. And that is a return 

of $3 to $9 for every dollar that we would invest to achieve those 

reductions through currently existing, cost effective technologies. 

Senator CARDIN. It is my understanding that those cost-benefit 

requirements were as a result of congressional action that you need 

to do those types of analyses. I think particularly those on the Republican side insist upon it. And we thought it was a good idea to 

be able to do that. And the numbers you are using I think are conservative numbers. There is a big range, but the minimum is three 

to one, which I think any economist would tell us is well worth it. 

There is also a human cost here. If it is your child that is suffering from asthma, and can’t go to camp because of the warnings 

that are being given, and then you have to stay home from work, 

so your child is missing camp, and you are missing a day’s pay as 

a result of poor air quality, it really hits home. 

Ms. MCCARTHY. These are very conservative numbers on the 

benefit side, because we have a lot of difficulty calculating with the 

certainty we need the benefits associated with toxics reductions. So 

these are conservative, but they are real, and we are talking about 

real lives. 

Senator CARDIN. I just want to point out, Mr. Chairman, to 

achieve the numbers that the EPA is proposing, just take a look 

at the work that was done in Maryland. Take a look at the investments that were made. The technology is there. This is not technology that we don’t have. We have the technology to achieve these 

results. It was done in a manner that was not at all disruptive to 

the utilities and the costs in our own State. 

I think what we are trying to do is use best practices to reach 

achievable levels in an orderly way, consistent with the Clean Air 

Act, consistent with laws that have been passed historically on a 

bipartisan basis by the Congress in order to protect the public 

health and to do it in a way that that will cause little disruption 

to our production of energy or to the economic consequences, in 

fact, will help our nation grow. 

Thank you, Mr. Chairman. 

Senator CARPER. You are welcome, and we thank you. 

Senator Johanns, and Senator Merkley, you are on deck. 

Senator JOHANNS. Mr. Chairman, thank you. 

Administrator, thank you for being here. Let me if I might just 

offer a thought to start out with. I come from a State, as you know, 

in the center of the country, the State of Nebraska. As our State 

was developing, we chose an avenue of public power. We are the 

only State in the United States that would be 100 percent public 

power. One might look at that and say, my goodness, that is quite 

44 

unusual for a State that is conservative, substantially Republican. 

But it is a model that worked well for us. 

Over time, as we developed the resources that would generate 

that power, we invested in hydro. Not a lot, but some, with Kingsley Dam. We invested in nuclear power, we have a couple of power 

plants out there that are nuclear power, generate electricity from 

that. And we invested in coal. Not because of any profit motive or 

anything like that. Again, I ask you to keep in mind that we are 

a public power State. 

Coal was a pretty good decision for our State. Why? Wyoming is 

right next door. We have railroads that run through our State that 

can easily transfer coal from Wyoming into the State of Nebraska, 

and it has worked very, very well. 

Our public power utilities have always wanted to maintain a 

high standard. They complied with the laws that were there 

through the years. Those laws have changed; we understand that. 

We understand that they will change in the future. 

But let me show you why, or point out something that makes us 

believe that EPA could not be more unreasonable. As you know, as 

the standards were being developed, currently the regulations, Nebraska was not a part of the original mix. Then all of a sudden, 

literally at the end, Nebraska was thrown into the mix. But what 

made it even more difficult for our State was that we were told 

that we had to start complying with those regulations within about 

6, 8 months. 

Now, if you think about that, you can’t escape the conclusion that 

that is outrageously unreasonable. Darn near arbitrary and capricious, if it is not. Where is that public utility going to raise the 

funds necessary to do the rebuilding of that plant that it would 

need to do? How quickly can they go into the financial markets to 

accomplish that? How quickly can they do the design for the plant? 

How quickly can they hire the contractors? 

And it just goes on and on and on. What we are ending up with 

is that we have a situation where it is not humanly possible to 

comply. So let me predict the future. I think unless we can get 

some relief here we just simply close down. We just simply can’t 

operate those plants. Notwithstanding our good faith and trying to 

comply with what EPA wants, we have a situation where literally 

it won’t be possible to comply. So then we have to go into the marketplace and buy the energy that people need, going to be a tight 

market, prices are going to go up. And it looks to me, in our State, 

that we will fulfill the President’s promise that electricity rates will 

necessarily skyrocket under his plan. 

So Administrator, explain to me why this would be a reasonable 

approach by EPA, and how could you let that happen to a State? 

Does it make any sense to you whatsoever? 

Ms. MCCARTHY. Senator, let me explain my understanding of 

what you are referring to. And it is the Cross-State Air Pollution 

Rule, which was really replacing the Clean Air Interstate Rule that 

was adopted in the prior Administration and found not to be legally 

solid. The courts remanded it back to us, and we had to re-do that 

rule and do it in a more legally and scientifically robust way, which 

we did. 

45 

The reason why we felt that it was appropriate and in fact advisable legally and for public health reasons to aggressively look for 

continued reductions was because this program didn’t start when 

the Cross-State Air Pollution Rule was put into place. It started 

when the Clean Air Interstate Rule was put into place. That 

prompted installation of equipment that we were able to take advantage of. 

The actual reductions we were looking for in that short period of 

time were not based on need for technology installation. They were 

based on what we believed to be documented, readily achievable reductions that you could get by dispatching the units differently, 

looking at some fuel switching. There are a variety of things that 

you do quickly and efficiently and effectively, as well as the purchase of allowance. This is not a unit by unit compliance. It is a 

trading program where allowances could be generated in other 

areas and purchased, again cost effectively, to achieve the reductions that downwind States are looking for to protect their public 

health. 

So I am more than happy to work with your State more directly 

if they feel like we haven’t done that. But there is also an opportunity in this rule for States to take over the allocation of their 

budgets and do it in a way that they feel is more appropriate to 

them. 

So we are doing everything we can to work with States and make 

sure that this isn’t unreasonable, but it also provides the downwind 

States the relief that they Clean Air Act really entitled them to and 

has not yet been delivered. 

Senator JOHANNS. I appreciate your offer, and there is not 

enough time, in fact I have run out of time already, to challenge 

some of your assertions. But having said that, your offer is a good 

one. I would be more than willing to coordinate a meeting with our 

public power participants to sit down with you personally. Because 

I think you will find out that the difficulty that this has created 

for a State like ours is nearly insurmountable. And it is not as easy 

as you have described. 

Now, I don’t know what your staff is advising you, but we think 

we have a serious problem. So I will just wrap up by saying thanks 

for your offer; you will hear from us. 

Ms. MCCARTHY. It is a date. 

Senator CARPER. We sound like matchmakers here. That is very 

good. 

I would just say, when you and I were serving as Governors together, we found ourselves in my State in a position where we 

could literally have shut down the State, shut down the State in 

order to try to comply with Clean Air requirements and still not 

have been in compliance. And it was because of all the pollution 

that blew in from the upwind States. We felt that wasn’t fair, and 

ultimately the court said that as well. 

All right, Senator Merkley. 

Senator MERKLEY. Thank you, Mr. Chair, and thank you for your 

testimony, Administrator McCarthy. 

Just to kind of track the topic of today’s discussion, that is setting standards primarily for the recovery of methane that comes 

from flowback, or the fluids that are pumped out of fracked wells, 

46 

as I understand it, you are really presenting a win-win. That is, 

that the fluids, when they are drawn back out of the well, release 

a lot of methane and other substances, but primarily methane. 

That capturing these gases has huge benefit for the air, but also 

is source of revenue to companies. Some companies have chosen to 

voluntarily implement, if you will, this recapture or green completion strategy. 

I thought I would just ask you to speak to why have some companies jumped in and voluntarily done this. Is it the economics of recovery, that they are making money in doing this? 

Ms. MCCARTHY. Our estimate at this point is that about half the 

completions now that are done are green completions. I think that 

a lot of the industries recognize that there is significant cost savings. And like any industry, there are leaders here. Devon is one 

of them, where they have gone above and beyond. We have a program called Natural Gas Star that actually has been working with 

the leaders to ensure that they learn from one another’s experience 

and that we encourage to the extent we can this kind of really corporate responsibility. 

But we believe that there needs to be an opportunity for that to 

be nationally shared, that it is appropriate to level the playing 

field, and it is appropriate to reduce emissions whenever it is cost 

effective, never mind beneficial to do so. 

Senator MERKLEY. So in terms of the experience of the companies 

that have already gone down this track, would they come to this 

now from the viewpoint of, we did this for corporate responsibility, 

or would they also say that it has turned out that the value of the 

gas that is captured actually pays for the expenses? 

Ms. MCCARTHY. There has been tremendous documentation by 

the companies themselves about how cost beneficial it is for those 

companies. 

Senator MERKLEY. Well, then, let me turn to the fact that a couple of States have already adopted green completion strategies. I 

believe Wyoming and Colorado are two of them. Are they the only 

two that have done so? 

Ms. MCCARTHY. They have. There have been a couple of other 

local communities in Texas, in particular, that have already adopted green completions as a requirement. 

Senator MERKLEY. Cities or counties within Texas? 

Ms. MCCARTHY. They are, let’s see, Fort Worth, which is not 

small, and South Lake, Texas. 

Senator MERKLEY. And there is actual gas production within the 

city boundaries that is affected by those? 

Ms. MCCARTHY. I believe it is the county, but I could be wrong. 

Senator MERKLEY. So what has their experience been? Have citizens been appreciative of the results or has the initial, if you view 

these kind of as pilot projects for others to observe, what lessons 

have been learned from that? 

Ms. MCCARTHY. I think in those areas there is significant ozone 

challenges. I think it lowers the volatile organic compounds, which 

is one of the contributors to the formation of ozone. So from an air 

quality perspective, it has been beneficial. I think I would encourage you to ask the next panel, the State representatives, about the 

47 

resources that it provides to the State when you recover these 

types of natural resources. 

Senator MERKLEY. So in the cases of Colorado and Wyoming, was 

that State statute that implemented the green recovery, or was it 

a kind of Department of Environmental Quality mandate? 

Ms. MCCARTHY. I would ask you to ask that question of those. 

I don’t want to presume if they were State regulations. 

Senator MERKLEY. Have they been in place long enough for the 

States to provide feedback, though? 

Ms. MCCARTHY. Oh, they have, and we worked very closely with 

those States to understand where it was beneficial. We also recognize that not all formations across the U.S. are the same. So in our 

rule we recognize that there are low pressure like coal bed methane deposits and formations where the pressure is not as high and 

where green completions are not going to be available. 

So we did our best to understand why they are beneficial, how 

much they are beneficial, and then areas where their benefit may 

not be available and where technologically we wouldn’t want to go 

to the extent of requiring green completions, because they are not 

technically available. 

Senator MERKLEY. And you also have two phases here, the first 

phase allows flaring, which is a convenient, cheap issue. I think it 

is 2 and a half years before you would require green completion, 

so a 2 and a half year phase-in. What defined that time period; 

why not a longer time period or a shorter time period? What was 

magic about this? 

Ms. MCCARTHY. It actually was data that the industry themselves submitted to us where we could understand how much 

equipment was available and how long it would take for equipment 

to be manufactured and made available so that we could move toward green completions in January 2015. I think we tried to use 

the data, we assessed it, we were very comfortable with it. We realized that the end goal is to recover the VOCs and to stop those 

from being emitted in the best way possible. Flaring helps. It destroys the VOCs, but it also can emit a small amount of NOx, which is also an ozone precursor. 

So to the extent that we can move from flaring to green completions, we are as technologically available and where it is cost effective. That is really how our rules drive our rulemaking. I think we 

were very faithful to that and to the data we had available to us 

to make these smart decisions. 

Senator MERKLEY. Switching gears a little bit, in 2003 there was 

a voluntary agreement with a few companies related to the use of 

diesel, I believe, in the fracking fluids. Why was diesel used in the 

fracking fluids, and why was it important to get it out? 

Ms. MCCARTHY. Senator, I am more than happy to go back and 

provide you some written follow up on that. I do not have the familiarity with that subject matter to be able to give you a direct 

response. 

Senator MERKLEY. Great. Thank you very much. 

Thank you, Mr. Chair. 

Senator CARPER. Ms. McCarthy, I think that wraps it up with 

you. You are a good warm-up act for these other guys. 

Ms. MCCARTHY. They will hold their own. Thank you, Senator. 

48 

Senator CARPER. I am sure they will. Thanks a whole lot. Thanks 

for being with us today. Some of our colleagues will have some follow up questions. We would just appreciate your responding 

promptly to those. Thank you very much, and thanks for your continued service. 

Good morning, one and all. We are happy you are here. We look 

forward to hearing from you. Thanks for taking time to join us 

today and to testify and respond to our questions. 

On the panel here today—we will start from my left, moving to 

the right. Fred Krupp, President, Environmental Defense Fund. 

Mr. Krupp, very nice to see you; welcome. 

Next we have John Corra, and John Corra is the Director of the 

Wyoming Department of Environmental Quality. We have a Wyoming in Delaware. A lot of times I say to my friends here, I was 

in Wyoming just this weekend. We also have an Atlanta, a Lebanon and all kinds of places. For a little State, we are pretty diverse. 

Next, Tisha Conoly Schuller, President and CEO of Colorado Oil 

and Gas Association. It is very nice to see you. 

Darren Smith, and Darren Smith is the Environmental Manager 

of Devon Energy Corporation. How are you today? 

And finally, last but not least, William Allison, the Director of 

the Air Pollution Control Division of the Colorado Department of 

Public Health and the Environment. 

Welcome, one and all. You have 5 minutes to make your statement. If you go much beyond that, we will have to rein you in. 

We are glad you are here, and we look forward to hearing what 

you have to say. Thank you for joining us. 

Mr. Krupp. 

STATEMENT OF FRED KRUPP, PRESIDENT, 

ENVIRONMENTAL DEFENSE FUND 

Mr. KRUPP. Chairman Carper, Ranking Member Barrasso, and 

members of the Subcommittee, thank you for this opportunity to 

testify. My name is Fred Krupp, and I serve as President of the 

Environmental Defense Fund. 

In 2011 the Secretary of Energy asked that I serve on the Secretary of Energy’s Advisory Board Natural Gas Subcommittee. The 

subcommittee was tasked with recommending measures to address 

the safety and environmental performance of natural gas, hydraulic 

fracturing from shale operations. During this service, I was fortunate to meet with policymakers, gas providers, environmental organizations, and hundreds of concerned citizens through a process of 

intensive fact gathering. 

The work was animated by two central considerations: the brisk 

expansion of shale gas and the imperative to address the public 

health and environmental impacts. The subcommittee encouraged 

adoption of rigorous standards for new and existing sources of 

methane, air toxics, ozone precursors, and other air pollutants from 

shale gas operations. 

Oil and natural gas operations emit volatile organic compounds 

and nitrogen oxides that contribute to smog; benzene, which is a 

known human carcinogen; and methane, which is a potent climate 

pollutant. We can measure these emissions in tons, but in a discusVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
49 

sion that often focuses on numbers, we must not overlook their personal impacts. 

Last summer, along with the subcommittee, I spent time in 

Washington County, Pennsylvania. There a mother told us that she 

had left her farm because of the severe air pollution from shale 

gas. The problems had become so bad that her children were living 

with relatives, and she was living out of her car at the time. 

Our nation’s clean air policies must reduce pollution, protect people, the environment, and communities. EPA’s national emissions 

standards will cut air toxics, ozone precursors, and methane. The 

centerpiece of these protections is the requirement to require reduced emissions completions or green completions at hydraulically 

fractured wells. In a reduced emission completion, operators use 

separators to trap and capture natural gas that would otherwise be 

lost. This allows them to direct the gas to sales lines and ultimately to consumers that help offset their compliance costs. 

A number of companies are using this proven, cost effective technology now, and the States of Colorado and Wyoming have similar 

requirements. These States with historic natural gas and oil development have recognized the ill effects that uncontrolled emissions 

can have. Indeed, many of EPA’s standards build on time tested requirements of Wyoming and Colorado. 

The natural gas industry in both States has continued to experience brisk growth while rigorous clean air standards similar to 

EPA’s have been in place. When EPA finalized its standards, the 

National Journal headline read, ‘‘EPA finds rare sweet spot on 

fracking rules,’’ noting that the rule ‘‘drew praise from both sides 

of the issue.’’ 

Indeed, EPA’s new source performance standards were commended by diverse interests, such as the American Lung Association, the American Thoracic Society, the American Petroleum Institute, and Southwestern Energy. Southwestern emphasized the 

common sense nature, stating, ‘‘What we do today with reduced 

emissions completions in our wells doesn’t cost us any more than 

just venting the gas into the atmosphere.’’ 

EPA’s common sense standard to reduce pollution can conserve 

a valuable domestic energy resource and in some cases save producers money. The standards limit ozone precursors and air toxics 

and as a co-benefit, methane emissions, a potent climate pollutant. 

Our nation must work together to build on these clean air measures. Solutions must include the adoption of rigorous emissions 

standards for existing sources and must address the methane leaks 

and discharges across the oil and gas system. 

Policy makers must provide leadership. The companies engaged 

in extraction activities must carry out solutions to protect our environment and our communities. Our nation’s leading scientists must 

devote their expertise to providing answers to critical questions, 

and the voices of concerned citizens across our nation must be 

heard in forging lasting solutions. 

This is critical if our nation is to fulfill the President’s promise 

in his State of the Union to develop natural gas without putting 

the health and safety of our citizens at risk. 

[The prepared statement of Mr. Krupp follows:] 

50 


25056.023
51 


25056.024
52 


25056.025
53 


25056.026
54 


25056.027
55 


25056.028
56 


25056.029
57 


25056.030
58 


25056.031
59 


25056.032
60 


25056.033
61 


25056.034
62 


25056.035
63 


25056.036
64 


25056.037
65 


25056.038
66 


25056.039
67 


25056.040
68 

Senator CARPER. All right, thanks so much. 

Mr. Corra. 

STATEMENT OF JOHN V. CORRA, DIRECTOR, 

WYOMING DEPARTMENT OF ENVIRONMENTAL QUALITY 

Mr. CORRA. Good morning, Mr. Chairman and Ranking Member 

Senator Barrasso. Thank you very much. 

My name is John Corra, and I am pleased to be here to talk to 

your Committee this morning. I want to thank you for the opportunity. 

Natural resources in Wyoming are both the how and the why we 

live there. We manage those resources consistent with the philosophy that mineral extraction and strong environmental protection 

go together. There are almost 36,000 oil and gas wells in the State, 

many of which have environmental controls mandated by our Department. These wells were once referred to in the Federal Clean 

Air Act as minor sources, and until recently, not subject to Federal 

regulation. Wyoming, however, had the foresight some 15 years ago 

to understand the importance of managing these oil and gas resources, and the recognition for strong air quality protection has 

evolved since then in our State. 

The industry has also shown leadership through innovation and 

experimentation which has led to our ability to raise the bar on 

emissions control technologies. The best example is the use of 

green completion technologies in areas of concentrated development. Over time, we learned that each producing oil and gas formation has a number of variables that bear on the level, extent, 

and need for emission control. Because of this, we have tailored our 

regulatory requirements. The technology as well, to recover oil and 

gas has continued to evolve, which has also resulted in the need 

for us to have flexibility in our State standards, which are based 

on location and density variables and geological conditions. 

We have in Wyoming created a three-tiered regulatory approach 

that recognizes the different intensities of development. The 

tightest regulation occurs in the Jonah and Pinedale area, where 

we have seen ozone exceedances due to intense natural gas development. Here, all new and modified wall pad equipment must be 

controlled upon startup to a 98 percent removal of hazardous air 

pollutants. In areas of less concentrated development, we have 

emission thresholds for single wells that allow a short time after 

startup to get the controls in place in order to establish the operating characteristics of the well. 

Outside of these areas, we have State-wide requirements that 

have slightly different control thresholds. Green completions are 

also required where appropriate. Our State regulatory schemes can 

take these factors into account more readily than national rules. 

Our aggressive approach faltered, however, in the Upper Green 

River Basin in Sublette County, Wyoming. In 2008 we first saw 

exceedances of the ambient air quality ozone standard. What was 

unique about these occurrences was the time of the year: winter. 

Until then, ozone problems had only been associated with summertime conditions. We acted quickly to implement additional regulatory requirements. 

69 

Even though we did observe ozone exceedances again in the winter of 2011, and have recently been classified as marginal non-attainment, the situation could have been worse. We developed tighter regulations, such as new permitting policies to require offsets of 

1.1 tons of nitrogen oxides for every ton of emissions coming from 

the proposed action and also 1 and a half tons for every ton of volatile organics that might be coming from the proposed action. We 

have also been studying ways to foster voluntary reductions of 

those sources in existence prior to these new policies. 

Last, during the environmental impact statement development 

stage of that project, we also took advantage of our unique State 

relationship with the Bureau of Land Management, which resulted 

in a permitting system for drilling rigs. 

Although we have not solved our ozone challenges, I do believe 

we are closer to a solution. While the number of wells has increased substantially in that area since 2008, and gas production 

has gone up by 8.3 percent, we have been able to reduce emissions 

of VOCs by 21 percent and nitrogen oxides by 17 percent. These 

notable results are a consequence of Wyoming being able to react 

quickly and to build upon an already established regulatory philosophy that was understood and accepted by the industry. 

Having the flexibility, authority, and autonomy to readily make 

changes to our regulatory scheme, partner with industry on voluntary measures, and develop policies for offset trading and banking are essential to our goal of solving that problem. 

The EPA regs are fairly close to ours, and we appreciate them 

patterning them. But we will see how they all work when we get 

into the implementation stage. 

This is a story about the speed and effectiveness of strong environmental regulations with the legislative support that we have 

had in our State, close working relationships with the regulated 

community, and recognition of local conditions and geology. 

In closing, I just would like to mention the flood of new regulations emanating from EPA. Since 2000 there have been hundreds 

of new rules that carry with them some level of State impact. In 

the air programs alone, there have been many rules just in the last 

several years. But funding and support for these efforts has not 

necessarily kept up. It has either remained flat or perhaps in some 

cases gone in the wrong direction. 

Mr. Chairman, that concludes my remarks. Thank you. 

[The prepared statement of Mr. Corra follows:] 

70 


25056.041
71 


25056.042
72 


25056.043
73 


25056.044
74 


25056.045
75 


25056.046
76 


25056.047
77 


25056.048
78 

Senator CARPER. Thank you. Great of you to come, thanks, Mr. 

Corra. 

Ms. Schuller, welcome. Please proceed. 

STATEMENT OF TISHA CONOLY SCHULLER, 

PRESIDENT AND CEO, COLORADO OIL AND GAS ASSOCIATION 

Ms. SCHULLER. Mr. Chairman, members of the Subcommittee, I 

am Tisha Schuller. I am President and CEO of the Colorado Oil 

and Gas Association. Thank you for the opportunity to testify. 

Colorado is uniquely positioned to provide some input on this 

rule. We have a 100-year history of oil and gas development across 

the State, over 45,000 active wells, a strong commitment to environmental protection, and a unique collaborative style that brings 

together environmental groups, regulators, and industry. 

Colorado has some of the more protective air emissions regulations and controls in the country. There are two of particular relevance to this rule. The first is Colorado’s Regulation Number 7 to 

reduce ozone precursors. This regulation is overseen by our State 

health department, the CDPHE. And it was adopted to reduce 

ozone precursors in the State’s non-attainment area. It also includes some State-wide requirements. 

The Wattenberg field is located in Weld County. In this one 

county in Colorado, there are over 18,000 active wells. This field 

is in non-attainment for ozone. As part of Regulation 7 implementation, industry has invested over $40 million to install over 3,000 

control devices. Even with increased drilling activity in this area, 

we know that there is a significant decrease in emissions. 

The second relevant regulation, in 2008, our State oil and gas 

commission, the COGCC, added a rule that reduced emissions completions, or green completions, to be used when technically and economically feasible. Where not feasible, best management practices 

to reduce emissions are required. The purpose of this rule was to 

encourage the capture of natural gas and reduce potential odors associated with well completion. 

We understand the EPA-based aspects of their rules on these two 

Colorado rules. As we have found in Colorado, there are positive 

aspects of the rules which promote conservation through the capture of natural gas and the resulting emissions reductions. In particular, Colorado air quality has benefited from the addition of low 

bleed pneumatic devices and the implementation of green completions. 

The remainder of my testimony will focus on what we have 

learned in Colorado’s rules and how the regulations might be improved for effective implementation. We have three main concerns. 

The first is the emissions estimates. Academics, governments, and 

regulatory authorities around the world rely on EPA’s natural gas 

emissions data to make policy and regulatory decisions. Two separate studies have concluded that the emissions estimates used in 

developing the rule were overestimated. 

This both results in an overstatement of the emissions reduction 

benefits of the rules and fuels controversies around the world about 

natural gas as a clean burning energy source. We hope that EPA 

will revise its emissions estimates with an analysis of the studies 

referenced in my written testimony. 

79 

The second is compliance requirements. The monitoring, testing, 

and recordkeeping requirements associated with these rules threaten to undermine the economic benefits associated with increased 

natural gas recovery. 

One clear example is the requirement that flares be monitored 

by a person onsite for 3 hours every month. Several others are outlined in my written testimony. Overall, we recommend that EPA 

gather input from State agencies such as Colorado’s and Wyoming’s 

on how to streamline these requirements for practical implementation for both operators and State regulators. This component is 

critical to ensuring that the burdens of compliance don’t negate the 

benefits of emissions reductions. 

And last, economics. The EPA has estimated there will be significant cost savings for the industry associated with these rules. We 

recommend that more effort is invested into validating the required 

costs and anticipated benefits in order to ensure that some requirements, such as green completions and low pressuring wells, or 

some of the compliance requirements, actually balance air emissions reductions with compliance costs. 

Our industry will work diligently with State regulators to continue to fully understand and address the requirements of this new 

rule. We hope that the published rule will allow for flexibility to 

encourage practical and pragmatic implementation. 

Thank you. 

[The prepared statement of Ms. Schuller follows:] 

80 


25056.049
81 


25056.050
82 


25056.051
83 


25056.052
84 


25056.053
85 


25056.054
86 


25056.055
87 


25056.056
88 


25056.057
89 


25056.058
90 

Senator CARPER. Thank you so much. 

Mr. Smith, please proceed. 

STATEMENT OF DARREN SMITH, ENVIRONMENTAL MANAGER, 

DEVON ENERGY CORPORATION 

Mr. SMITH. Mr. Chairman, members of the Subcommittee, thank 

you for the opportunity to be here today. 

My name is Darren Smith. I am the Environmental Manager for 

Devon Energy Corporation. Devon is a leading independent oil and 

gas producer. Our operations are onshore U.S. and Canada. Our 

company’s portfolio of oil and gas properties delivers stable and 

economically responsible production for the nation. 

We work hard at Devon Energy every day to ensure that our operations are conducted in an environmentally responsible way. We 

aim to protect the air, water, land, and the communities that we 

operate in. 

It is important to note that Devon does support responsible regulations for our industry. However, we stand opposed to regulations 

that are unreasonable and regulations that are grounded in unsound science. 

My testimony today will focus on the misperception that EPA 

has on initial gas production from our industry. And I will describe 

how this misperception has resulted in a drastic overestimate of 

methane emissions from hydraulically fractured wells. We know 

that this overestimate has already been used to justify the regulations, more stringent regulations for our industry. But probably 

more troubling is this overestimate is finding itself into policy research that time and time again is resulting in the wrong conclusions about natural gas and its value for this nation. 

It was when research from Cornell University published their 

Natural Gas Is Dirtier Than Coal study that Devon first became 

aware of the fact that EPA had revised their mission estimate from 

hydraulically fractured wells. EPA now asserts, and I will add that 

it has also reported to the United Nations Intergovernmental Panel 

on Climate Change, that emissions from unconventional wells are 

in the neighborhood of 9 million standard cubic feet per well and 

interestingly that those emissions have been taking place since 

1990. 

When we looked into the basis of this emission estimate change, 

we learned that EPA staff had relied on data reported to them 

from the Natural Gas Star program to create this new emission estimate, and this Natural Gas Star data really only came from three 

companies. That finding in itself probably describes the biggest 

flaw in EPA’s method. Because very simply, the Natural Gas Star 

program is for operators to report gas captured, not gas emitted. 

And in fact the Natural Gas Star program was never designed 

to report emissions from our industry. It was to report the gas that 

was captured from our industry. That is an important point. 

Devon has worked hard over the last year or so to inform the 

EPA of this mistake and to provide them with the data that they 

could use to make the change necessary to this emission estimate. 

We have met with them face to face with our own data. We have 

provided them data from a large group of independent operators, 

such as Devon. We provided this data to them as part of the NSPS 

91 

rulemaking docket. We have had e-mails, we have had telephone 

messages, we have worked relentlessly to help the EPA reverse 

their course and use actual data, proper data, and proper science 

in this rulemaking. 

We have also provided them reports from independent researchers that confirm our findings, and you will be interested to note 

that the Chamber of Commerce in the U.S., that represents over 

3 million businesses here in the U.S., also has been involved and 

has asked for a request for change for this data based on the Data 

Quality Act. 

Despite all this, EPA fails to acknowledge the mistake and more 

importantly, fails to make the change necessary. 

I’d like to turn to the graphic that I provided to you in my testimony. I am going to have to do it very quickly, I just noticed my 

time. But essentially, this graphic is to describe kind of the air in 

an illustrated form. 

Essentially, when a well is hydraulically fractured it needs to 

flow back so that the gas can be produced from the well. Flowback 

here on the left hand side starts off with very low gas volume, as 

water is removed from the well, gas increases until it levels off 

here. 

EPA’s perception of flowback is in the magnitude of 10 days, because that is what is reported to them under the Gas Star program. A 10-day flowback results in 9 million standard cubic feet of 

gas released from a well. 

Now, if you contrast that with the situation where gas capture 

is not possible using green completion, we have provided data to 

EPA from operators that suggests that flowback when gas capture 

is not possible is only in the magnitude of 3 and a half days. So 

if you can compare the gas volume assumed from the Natural Gas 

Star program versus the gas that is released when green completions aren’t possible, you will see that there is a stunning discrepancy here. 

It is Devon’s position that this factor needs to be changed and 

needs to be changed now. We have already seen that rules have 

been promulgated based on this bad science, and our concern again 

is that continued policy research is going in the wrong direction. 

We just recently have seen a study from our friends at EDF, Environmental Defense Fund, that suggests that gasoline vehicles are 

actually cleaner than compressed natural gas vehicles. And the 

foundation of these research findings is rooted in these bad estimates and this bad science. 

With that, I will conclude my testimony. Thank you. 

[The prepared statement of Mr. Smith follows:] 

92 


25056.059
93 


25056.060
94 


25056.061
95 


25056.062
96 


25056.063
97 


25056.064
98 


25056.065
99 


25056.066
100 


25056.067
101 

Senator CARPER. OK, thank you. 

Mr. Allison, please proceed. Welcome. 

STATEMENT OF WILLIAM C. ALLISON, V, DIRECTOR, AIR POLLUTION CONTROL DIVISION, COLORADO DEPARTMENT OF 

PUBLIC HEALTH AND ENVIRONMENT 

Mr. ALLISON. Thank you. 

Good morning, Mr. Chairman, members of the Committee. I am 

Will Allison, Director of the Colorado Air Pollution Control Division. I want to thank you for this opportunity to provide our perspective on responsible oil and gas development. 

I am here today to offer comments supportive of EPA’s recent 

rules and to discuss Colorado’s own experience with oil and gas 

regulation. Hydraulic fracturing has been utilized in Colorado since 

the 1970s. It is now standard practice for virtually all oil and gas 

wells in Colorado and across much of the country. 

Today, Colorado has well over 45,000 active oil and gas wells. 

And we anticipate continued growth in this industry sector. 

In addition to our abundant oil and gas resources, Colorado also 

has a thriving recreation and tourist economy. Our clear streams, 

clean air, and abundant wildlife are essential to our economy and 

to our identity. Oil and gas are an important source of domestic energy for our State and our nation. The industry provides good paying jobs and needed tax revenues, and that is good news. Our job 

is to help ensure that oil and gas development does not result in 

bad news for public health and the environment, and to help strike 

a responsible balance between environmental protection and energy 

development. 

Colorado has been at the forefront of regulating oil and gas emissions for many years. EPA’s new rules, as you heard, are largely 

based and built upon rules that have been successfully implemented in several oil and gas States, including Colorado. The oil 

and gas industry continues to thrive in Colorado under our comprehensive regulatory programs. 

EPA’s rules will reduce emissions of such harmful pollutants as 

volatile organic compounds, sulfur dioxide, and air toxics such as 

benzene. The rules also have the co-benefit of reducing greenhouse 

gases, such as methane. 

EPA’s rules promote proven technology and best practices that 

are already being used by many Colorado operators. Colorado supports EPA’s efforts to provide cost effective emission reductions for 

the nation’s oil and gas industry. We believe that the Federal rules 

will provide a level playing field and certainty to industry nationwide. States will retain the right to be more stringent than EPA 

rules if they desire. 

One of the central components that you have heard a lot today 

of EPA’s rules is green or reduced emission completions. Green 

completions can significantly reduce emissions of air pollutants. 

The EPA has concluded that green completions are cost effective, 

and we agree. Colorado already has rules requiring green completions where technically and economically feasible. And many operators routinely utilize green completions on all of their wells within 

our State. 

102 

Many Colorado operators also utilize other aspects and practices 

set forth in EPA’s rules. This includes the use of no bleed or low 

bleed valves, which emit less air pollution than so-called high bleed 

valves. Switching the valves out is as simple as changing a spark 

plug. And we have found that the controls in EPA’s rule are cost 

effective and that industry can recoup its costs as companies capture and then sell natural gas that would otherwise be vented to 

the atmosphere. 

EPA’s rules are an important tool to complement the success and 

growth of America’s oil and gas industry. Hundreds of thousands 

of oil and gas wells exist across the country, and EPA estimates 

that approximately 11,000 more wells will be hydraulically fractured each year. As thousands of additional wells are drilled, it is 

important to have cost effective emission controls in place to address the individual and cumulative impacts of these sources. 

For example, despite the tremendous growth of oil and gas emission sources in Colorado, with our regulations, over the past decade, we have seen decreases in the levels of many pollutants associated with oil and gas operations. 

As another example, many areas of this country, including the 

Denver metro area, are not currently meeting EPA’s health based 

ozone standard. Oil and gas operations are a significant source of 

emissions that contribute to ozone formation. Sound and effective 

practices are thus important to our efforts to maintain and improve 

air quality while supporting a growing industry sector. 

We are increasingly hearing concerns about the potential impacts 

of oil and gas development on public health and the environment, 

including questions about emissions and odors. Comprehensive 

rules such as these are an important tool for addressing community 

concerns regarding the potential impacts of oil and gas operations. 

EPA’s rules will place additional responsibilities upon State 

agencies already operating under tremendous resource constraints. 

We support continued and adequate funding to ensure that EPA 

and the States can effectively implement these regulations. 

In conclusion, Colorado supports these rules. The rules are an 

important step forward in our efforts to provide clean air while promoting economic growth. We will continue to look for opportunities 

and take appropriate action to ensure that our regulatory programs 

are protective, effective, and efficient. 

Thanks very much for the opportunity to speak with you today. 

[The prepared statement of Mr. Allison follows:] 

103 


25056.068
104 


25056.069
105 


25056.070
106 


25056.071
107 


25056.072
108 


25056.073
109 

Senator CARPER. Thanks so much, Mr. Allison. 

Senator Inhofe has asked to go first, and we are happy to say 

yes. 

Senator INHOFE. I appreciate that very much, Mr. Chairman. 

I am delighted to have Darren Smith here witnessing today. I am 

very familiar with Devon, with Larry Nichols, and your whole operation, how sensitive you have always been, historically, to environmental issues. 

Let me ask you just a couple of questions here. Devon’s projected 

emissions from the EPA air rules have been overestimated by as 

much as 1,400 percent. In addition, a study was put together by 

API and ANGA, and they came out with the overestimation also of 

primarily methane. 

Now, they didn’t come exactly to the same number conclusion. 

Can you tell me how both of you were right, or were both of you 

right on this estimate? 

Mr. SMITH. Sure, thank you. 

There does seem to be a disagreement in the numbers. But I 

think it can be described this way. The API study looked at two 

categories of emissions, separate from the work that we have done. 

They recognized that when you combine overestimates in these two 

categories, it actually lowers the EPA emissions by a half. 

Our work was specifically around completion emissions. And 

what we have demonstrated is that EPA’s emission factor for completions was several factors too high. So you can think of these two 

studies as complementary. But they basically describe different categories of emissions from the industry. 

Senator INHOFE. OK, that makes sense. 

Now, in your testimony you estimate that Devon has lost more 

than $40 million to the atmosphere under the EPA’s analysis. Can 

you explain how you arrive at that number and how Devon and 

other companies can justify losing that much of their product? 

Mr. SMITH. Sure. The calculation is real simple. We look at the 

number of wells that we drill and hydraulically fracture. Then we 

couple that with the volume of gas that EPA claims we are losing 

per well, and then we factor that with the gas price to come up 

with $40 million. So that is a large number, and clearly, companies 

successful as Devon certainly can tolerate that level of waste. 

Senator INHOFE. I see. And I wanted to ask you also about Wise 

County, Texas. That is the Dallas-Fort Worth area. That is in Region 6. It became a little bit famous with all the crucify comments 

and all that, with Armendariz. They recently have found that they 

are out of attainment. What I would like to ask you, could their 

being out of attainment be based on faulty science? And can you 

explain how the EPA arrived at its decision and the potential impact the decision could have in other areas? 

Mr. SMITH. Sure. We do believe that EPA’s decision to include 

Wise County as ozone non-attainment is not based on good science, 

and I can describe that. First of all, there is no ozone monitor in 

Wise County, so EPA’s decision to include it as a non-attainment 

county comes from the concept of its contribution to non-attainment. 

Senator INHOFE. You say there is no monitor in Wise County? 

110 

Mr. SMITH. There is no ozone monitor in Wise County. That is 

correct. So again, EPA’s decision to include it as an ozone non-attainment county comes from its belief that it is a contributor to 

non-attainment downwind. Interestingly enough, the winds in this 

part of Texas don’t blow in such a way that emissions in Wise 

County could contribute downwind to ozone problems in other 

counties. The wind only blows in that direction that would be needed to transport pollutants into non-attainment areas only 2 percent 

of the time. 

So what we have seen with EPA is that they have taken a what 

we kind of regard as a sub-microscopic approach to try and find 

some evidence to link the emissions in Wise County to non-attainment elsewhere. They have employed a back-trajectory model that 

really has only demonstrated that winds come from Wise County 

to a non-attainment area only twice in 3 years, and in fact, on one 

of those occasions the winds never did originate in Wise County. 

They originated in a non-attainment county, circled through Wise 

County, and then landed back in a non-attainment county. 

And the other thing I need to emphasize is that model that they 

employed, that was not employed by any other EPA region in the 

nation. In fact, other EPA regions have discredited it because it is 

not reliable. The model that they used in no way makes a connection between emissions in one area and ozone formation in another. 

You may know that ozone formation is a complicated photochemical process, and simply just by looking at some sort of wind 

direction is by no means some evidence that Wise County is contributing to ozone problems. 

Senator INHOFE. That is of particular interest to me, since my 

State of Oklahoma is downwind from Wise County. So I appreciate 

that very much, and thank you for your testimony. 

Senator CARPER. Senator Barrasso. 

Senator BARRASSO. Thank you, Mr. Chairman. 

Mr. Corra, you talk in your written testimony about philosophy, 

manage resources consistent with the philosophy that mineral extraction and environmental protection can exist together in harmony. Is that the philosophy you see coming out of this Administration? How do you see their approach? 

Mr. CORRA. Mr. Chairman and Senator Barrasso, in the case of 

the oil and gas regulations, we were quite pleased to see that the 

Administration spent time in the State to learn how we did that 

and to look at that. 

As we see in our State, we regulate coal mining, for example, to 

a very, very high standard. We also follow the Administration’s 

rules with regard to best available control technology on all the 

new sources of air pollution. 

A lot of rules have come through in the last year or so that we 

are still trying to process and see how they fit in to our regulatory 

scheme. We do like to say that we are regulatory partners with the 

EPA. We do appreciate the fact that they consulted with us on the 

natural gas standards. 

Senator BARRASSO. You also talk about the flexibility of local 

versus national rules. And I wonder what the impacts to State like 

Wyoming, if the Federal Government steps in to regulate, where 

111 

States like Wyoming are already doing the job of regulating at 

home. 

Mr. CORRA. Mr. Chairman, in the case of oil and gas in Wyoming, and I will talk about our non-attainment area in Sublette 

County, is a good example. The ability that we have to implement 

policies and have agreement on those policies with rules to follow 

later has been essential for us to act swiftly. We have already 

started on a planning process and implementing and making decisions well before we needed to develop any State implementation 

plan, for example, with the Federal Government. 

The local conditions cannot be overstated, quite frankly, in our 

area, both from a standpoint of geology as well as from the standpoint of surface topography. These problems are very unique to all 

those circumstances. And we are generally in a pretty good position 

to determine what the appropriate regulation should be. 

Senator BARRASSO. Thank you. 

Mr. Smith, you stated in your written testimony that the error 

in the way the EPA calculates emissions from natural gas emissions isn’t corrected, I think you quoted, it will continue to fuel bad 

public policy and research that overshadows the benefits of natural 

gas. If you would elaborate a little bit on that point. Will the EPA’s 

flawed data lead to less natural gas production? 

Mr. SMITH. Certainly. What we are seeing is that when different 

fuels are compared on a life cycle analysis basis that this over-estimate of emissions from the completion stage of natural gas wells 

tends to tip the balance such that there have been arguments that 

things like coal, for instance, on a life cycle basis, are in fact cleaner than natural gas. To us, those conclusions are absurd. 

But what that essentially could mean is that the advocacy for 

natural gas and the recognition of natural gas to improve air quality and to be a bridge fuel is being damaged. We are also seeing 

some studies that suggest that even compressed natural gas vehicles are maybe no cleaner than gasoline. 

And then also we have seen that this data is spread to our partners in the European area. So that is damaging the reputation of 

natural gas in those areas as well. 

Senator BARRASSO. What is your response, then, to the Sierra 

Club’s Beyond Natural Gas campaign? 

Mr. SMITH. I would say that, I don’t know exactly what is beyond 

natural gas, I am not sure anybody here knows what is beyond natural gas. But if there is something beyond natural gas, then I 

guess we really don’t know what that is. We firmly believe that 

natural gas needs to be part of the solution, particularly as we see 

more and more pressure put on coal, coal plants shutting down. 

Really, what is the other option? What is the other fuel source? It 

is a real mystery to us. 

Senator BARRASSO. OK, thank you. 

Thank you, Mr. Chairman. 

Senator CARPER. Senator Sessions. 

Senator SESSIONS. Thank you, Mr. Chairman, for your courtesy. 

Senator CARPER. You are welcome. 

Senator SESSIONS. Mr. Allison says that you can fix this problem, 

Mr. Smith, we will go to you, with a small cost and can recoup that 

cost from the energy captured. And I believe the fact sheet from 

112 

EPA says that their regulations are highly cost effective. And how 

would you respond to that? Is it going to be a net cost? What do 

you think it would be? 

Mr. SMITH. Sir, you will recognize that statements around cost 

effectiveness rely on the volume of gas captured. Of course, if the 

volume of gas captured is overestimated, then you can understand 

that the economics that are claimed for the benefit of this are also 

overestimated. 

Senator SESSIONS. Is the technology such that you wouldn’t flare 

the gas that is being now lost, presumably? You would actually 

capture it and put it in your pipeline? 

Mr. SMITH. I would say that—— 

Senator SESSIONS. Is that what they are talking about doing, 

technologically? 

Mr. SMITH. That technology is common, as has been said numerous times. It has happened voluntarily. But I would like you to 

think about it more as a process that helps operators improve the 

quality of their wells, rather than to avoid emissions, because operators do know that the emissions from cases where we cannot 

green complete are small and overstated by the EPA. So companies 

like Devon, we employ green technology or green completion technology, again, not so much as an emission avoidance opportunity. 

But what this temporary equipment really allows us to do is 

clean up our wells, clean them up longer, and capture the gas as 

it is happening. So we can clean up our wells without any wasted 

gas. 

It also allows us some operational flexibility. Because as I described quickly in my exhibit, that flowback brings a high fluid volume back initially in the well. You have one or two choices. You 

can construct permanent facilities—— 

Senator SESSIONS. So you can do this, you agree with him that 

it is being done, you are doing it in some cases. But what is it, 

what situation is it explicitly you can just simply tell us that you 

don’t think it is smart to do that uses this process? What kind of 

situations do not work? 

Mr. SMITH. Instances where this situation doesn’t work is where 

there is no infrastructure available to capture the gas. And I will 

say that the new NSPS rule that EPA is finalizing has language 

in there that is problematic for operators that are developing in 

new areas. For instance, for Devon, we have leases in Ohio, and 

we are developing those. There is some suggestion in this rule that 

subsequent wells after exploration wells, we will not be able to operate without green completion. 

I am just telling you that our operations are such that when we 

drill exploration wells, they are sometimes counties apart. So there 

are a lot of other ornaments in this rule, on the tree of this rule, 

if you will, that are problematic, one of which is our ability to develop new shale resources. 

Senator SESSIONS. I think that developing undeveloped fields 

might be a basis for a legitimate concern there for you. Mr. Allison, 

you were saying that it would capture—this energy would pay for 

itself. Do you have documentation to show that? Are you using 

EPA estimated numbers to conclude that it would pay for itself? 

113 

Mr. ALLISON. Thank you, Senator. We have several years of rules 

on the books in Colorado where green completions are required, 

where economically and technologically feasible. While we don’t 

have hard data, we estimate that approximately 85 percent of our 

operators use green completions on a regular basis and on those 

wells. So it is clearly cost effective for them. 

Senator SESSIONS. They are doing it voluntarily or because you 

require it? 

Mr. ALLISON. We have regulations on the books that were adopted after—— 

Senator SESSIONS. But do you have any scientific proof that it 

pays for itself? 

Mr. ALLISON. Again, our industry worked with us on these rules 

that were adopted with widespread support. We are fortunate to 

have leaders in our State, in the industry, who tell us that we do 

this on a regular basis, it makes sense for our company, we recoup 

our costs. We capture not only the emissions but the sand, the liquids, the other things that come up during the flowback process. 

And they are able to re-use a lot of that material. 

Senator SESSIONS. My time is up. Would you think that—does 

your regulation allow for an exploratory well in an area that does 

not yet have infrastructure? Do you have any exceptions for hardship type cases? 

Mr. ALLISON. Thank you, Senator. There are exceptions, for example, where there is not adequate pressure or wildcat or delineation well, yes. 

Senator SESSIONS. Thank you, Mr. Chairman. My time has 

passed. 

Senator CARPER. Let me ask you a couple questions, and then we 

will wrap it up. 

One, Mr. Smith has mentioned, I think, and some others in the 

industry have asserted that EPA has overestimated the emissions. 

I just would ask, Mr. Krupp, do you have any thoughts you would 

like to say with respect to the concerns Mr. Smith has raised? 

Mr. KRUPP. I think the EPA used the best available data to calculate their estimates. At the same time, the EPA is well aware 

that right now, emissions are causing pollution and hurting people. 

It is urgent that we get rules in place to reduce emissions. 

I would agree that all the estimates referred to are no substitute 

for empirical data. That is why the Environmental Defense Fund, 

in cooperation with the University of Texas and other industry 

partners, are out in the field collecting empirical data. But having 

said that, I am very confident that EPA’s data is the best available 

estimates and that they have good reason to want to urgently get 

things done now that reduce the emissions. 

Senator CARPER. Any other witnesses want to react to the concerns raised by Mr. Smith? Anybody else? 

OK. 

Ms. Schuller and Mr. Allison, given your experiences, do you 

think that EPA has given enough flexibility and time to producers 

to meet the new clean air standards, and what would you have 

maybe done differently had you been where EPA had? 

Ms. SCHULLER. Senator, first I would like to acknowledge that in 

the final rule, EPA did make some significant changes that acVerDate Aug 31 2005 07:00 Jul 10, 2017 Jkt 000000 PO 00000 Frm 00117 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25056.TXT SONYA
114 

knowledged industry concerns. There are still quite a few considerations that still need to be taken into account. The tank emissions 

requirements industry estimates will require 3 years. Based on the 

estimates we think there will be over 28,000 tanks. The emissions 

control devices aren’t currently being manufactured. So that is an 

example of one area that will require more time. 

In terms of what we would do differently next time, in Colorado 

we spend a lot of time partnering with our regulators to understand the technical considerations and the logistical requirements 

of implementation. I think the emissions estimates and the estimated costs are examples of things in this rule that could be significantly improved. And they are important because they dictate 

where the thresholds are for implementation and how stringent 

and onerous compliance requirements should be. So those are 

things we would do differently. 

Senator CARPER. OK. At the end of the day, though, do you believe that industry can meet the standards that are laid out for 

them by EPA? 

Ms. SCHULLER. Industry can meet the majority of them. But 

there will be some constraints around manufacturing and implementation that are going to be quite challenging. 

Senator CARPER. OK, thank you. 

If I could, do you want to say anything on that, Mr. Allison? 

Mr. ALLISON. Thank you, Senator Carper. I guess I would just 

add that I would agree there is uncertainty in any emission estimates. We welcome actual data, empirical data over estimates 

whenever possible. Ms. Schuller alluded to some studies that suggesting that emissions are overestimated. There are other studies 

out there suggesting that emissions are underestimated. 

Regardless of what the right number is, we think that these controls have demonstrated effective reductions in air pollution. We 

welcome ongoing studies such as alluded to by Mr. Krupp that 

would provide more empirical data on actual emissions at the well 

site. 

Senator CARPER. OK, thanks. 

Mr. Corra, Senator Barrasso mentioned to me earlier in the hearing that you were appointed by a Democrat in your State. Who appointed you? 

Mr. CORRA. Mr. Chairman, Governor Dave Friedenthal in 2003. 

Senator CARPER. All right, good. A question if I could for you, sir. 

You come from a State that has implemented similar clean air 

standards, similar to what the EPA has proposed. It sounds from 

your testimony today that since implementing your State standards 

that you have seen some positive impacts on air quality. Is that 

true? 

Mr. CORRA. Mr. Chairman, it is true. Where we are keeping detailed records in this Upper Green River Basin, where we have the 

non-attainment for ozone, we have seen reductions. And in fact, 

there have been, since 2008, when we began an aggressive program 

to add regulations to that industry there, the number of oil and gas 

wells has grown substantially. Gas production has grown, and we 

have seen a corresponding decrease in the precursor emissions that 

form ozone, namely nitrogen oxides and volatile organic compounds. 

115 

So our inventories continue to get better every year, and we continue to find other targets. We like the other States regulate a lot 

of the different component operations of these fields, pneumatic 

controllers, for example, tanks. But we are not sure we are there 

yet because of the unique weather conditions. But we have made 

good progress. 

Senator CARPER. OK, good. I want to wrap it up here in the next 

couple of minutes. Sometimes we have a diverse panel and we have 

issues such as clean air issues where there is a lot of disagreement. 

There is less so here. And that is a good thing, I think EPA Has 

done a nice job reaching out to the States, trying to learn from the 

States. It is reflected in the work and the testimony that we have 

heard. 

That isn’t to say what they have done is perfect. One of my admonitions from a child growing was, if it isn’t perfect, make it better. I still try, everything I do, I can do better. I think the same 

is true of all of us and of agencies like the EPA. 

But if it isn’t perfect, make it better, do each of you want to give 

like maybe one quick idea, quick idea as to something that is not 

perfect that EPA and we might want to make better going forward? 

Mr. Krupp. 

Mr. KRUPP. This rule only applies to new wells that are being 

constructed. There is a vast preponderance of gas that is being 

pumped from existing wells through infrastructure that is existing. 

Making it better would mean having standards applying to existing 

wells and existing infrastructure. 

Senator CARPER. OK, thank you. 

Mr. Corra. 

Mr. CORRA. Mr. Chairman, I think to make things better is to 

just, you cannot overemphasize the importance of allowing States 

to have the flexibility to implement these according to the conditions in their own States. So I would hope that going forward there 

aren’t a lot of other changes that are made. I think the implementation of the rule, how this thing evolves, other sorts of things that 

just seem to occur naturally, that follow new regulations, I would 

hope that EPA stays the course. They have said that they want to 

defer to the States, and that would make things a lot better, if they 

held to that promise. 

Senator CARPER. OK, good, thanks. 

Ms. Schuller. 

Ms. SCHULLER. Mr. Chairman, the rules have compliance requirements similar to those for major sources. Most oil and gas operations are remote and quite dispersed. In order for the rules to 

live up to their promise of being effective, I think the compliance 

requirements need to be modified to ensure that operators can 

adapt to them effectively. 

Senator CARPER. OK, thanks. 

Mr. Smith. 

Mr. SMITH. Mr. Chairman, I would suggest that there should be 

a critical review of the value add for new rules and to ensure that 

credible science is used to develop them. Many of these rules are 

promulgated, but we have just talked about one element of the rule 

here today, and we focused on green completions and those sorts 

of things. 

116 

But there are many other facets of this rule. I will suggest that 

the no value add, high cost component of this rule is the administrative piece, the recordkeeping and the reporting, those are the 

sorts of no value add, real cost impacts to operators like Devon. 

Those come out of our bottom line, those result in fewer wells 

drilled. 

Senator CARPER. OK, thanks. 

Mr. Allison. 

Mr. ALLISON. Thank you, Mr. Chairman. I think these rule are 

an important step forward. I would note that they apply only to gas 

wells. And there are areas of the country where a lot of oil is being 

produced right now. In the process of that, a lot of gas is being 

burned off. That seems counterintuitive, as you heard today, when 

gas is such an important part of our domestic energy. So I would 

suggest that EPA wants to take a look at that and work hard with 

industry and States and other stakeholders to see what might be 

appropriate steps to take with respect to that. 

I guess I would also say in closing that it is important, with this 

rule or any other EPA rules, for States to have adequate flexibility 

and for us to be able to take into account the unique atmospheric 

and aquatic and geologic resources within each State as we implement these rules. 

Senator CARPER. All right. Those are helpful comments and we 

appreciate those. And in the spirit of if it isn’t perfect, make it better, there are obviously some ways to make this better. 

One of the things that my dad used to try to impress on my sister and me when we were children growing up, I was reminded of 

this on Father’s Day, kind of reflecting, one of the things that he 

always reminded us of, just to use some common sense. My sister 

and I were kid and we must not have had very much, because he 

said every other day, just use some common sense. He didn’t say 

it that nicely. He was an old chief petty officer in the Navy, tough 

as nails. 

So believe it or not, after all those years of having it pounded it 

into my brain, I try to use common sense. And I encourage Federal 

agencies to do the same. And I am encouraged in this case that 

EPA has used a fair measure of that. We have these emissions that 

have value and that can be harnessed rather than just flared. I 

think EPA and the industry are trying to find a way to use the 

value of those gases, rather than just flare them and pollute the 

air, why don’t we capture them and use them commercially, economically. It makes a lot of sense. My dad would say, they are 

using some common sense down there. And we are certainly trying 

to. 

I thank you all. I thank our colleagues for coming today and preparing today and responding to our questions. Some of us will have 

some further questions to ask for the record. Our colleagues have 

2 weeks to provide those questions. We would just ask that you respond to them as promptly as you can. 

With that having been said, Senator Barrasso, I think it is a 

wrap. Thank you all. We are dismissed. 

[Whereupon, at 12:18 p.m., the Committee was adjourned.] 

Æ