U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

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

79–849 PDF 2013

EPA ENFORCEMENT PRIORITIES AND PRACTICES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 6, 2012 

Serial No. 112–147 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

JOHN SULLIVAN, Oklahoma 

Vice Chairman 

JOHN SHIMKUS, Illinois 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

BRIAN P. BILBRAY, California 

STEVE SCALISE, Louisiana 

CATHY MCMORRIS RODGERS, Washington 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

CHARLES A. GONZALEZ, Texas 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

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

Hon. John Sullivan, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 5 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 5 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 6 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 7 

Prepared statement .......................................................................................... 9 

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

opening statement ................................................................................................ 11 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 11 

WITNESSES

Barry T. Smitherman, Chairman, Texas Railroad Commission .......................... 13 

Prepared statement .......................................................................................... 16 

Bryan T. Shaw, Chairman, Texas Commission on Environmental Quality ....... 26 

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

Robert J. Sullivan, Jr., Chairman, Oklahoma Independent Petroleum Association, and Owner, Sullivan and Company, LLC ................................................. 69 

Prepared statement .......................................................................................... 71 

Joel A. Mintz, Professor of Law, Nova Southeastern University ........................ 80 

Prepared statement .......................................................................................... 82 

Stephen B. Etsitty, Executive Director, Navajo Nation Environmental Protection Agency ........................................................................................................... 85 

Prepared statement .......................................................................................... 87 

Allen Short, General Manager, Modesto Irrigation District ................................ 93 

Prepared statement .......................................................................................... 95 

SUBMITTED MATERIAL

Statement, dated May 2012, of Union of Concerned Scientists, ‘‘Health Professionals’ Open Letter to Policy Makers in Support of the Clean Air Act 

and the Environmental Protection Agency,’’ submitted by Mr. Rush .............. 152 

Article, dated May 31, 2012, ‘‘Fact Check: Oil stats belie tough enforcement 

talk,’’ Associated Press, submitted by Mr. Rush ............................................... 163 

(1) 

EPA ENFORCEMENT PRIORITIES AND 

PRACTICES 

WEDNESDAY, JUNE 6, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:05 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Ed Whitfield 

(chairman of the subcommittee) presiding. 

Members present: Representatives Whitfield, Sullivan, Shimkus, 

Burgess, Bilbray, Scalise, Olson, McKinley, Gardner, Pompeo, Griffith, Barton, Upton (ex officio), Rush, Green, Gonzalez, and Waxman (ex officio). 

Staff present: Gary Andres, Staff Director; Charlotte Baker, 

Press Secretary; Michael Beckerman, Deputy Staff Director; Anita 

Bradley, Senior Policy Advisor to Chairman Emeritus; Maryam 

Brown, Chief Counsel, Energy and Power; Allison Busbee, Legislative Clerk; Patrick Currier, Counsel, Energy and Power; Cory 

Hicks, Policy Coordinator, Energy and Power; Heidi King, Chief 

Economist; Ben Lieberman, Counsel, Energy and Power; Mary 

Neumayr, Senior Energy Counsel; Andrew Powaleny, Deputy Press 

Secretary; Krista Rosenthall, Counsel to Chairman Emeritus; Chris 

Sarley, Policy Coordinator, Environment and Economy; Michael 

Aylward, Democratic Professional Staff Member; Jeff Baran, Democratic Senior Counsel; Phil Barnett, Democratic Staff Director; Alison Cassady, Democratic Senior Professional Staff Member; Greg 

Dotson, Democratic Energy and Environment Staff Director; and 

Caitlin Haberman, Democratic Policy Analyst. 

Mr. WHITFIELD. The hearing will now come to order. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Today’s hearing is on EPA enforcement priorities and practices. 

I would note that we had expected Dr. Al Armendariz to testify 

here today. He is the former Region 6 Administrator, and we were 

disappointed that he chose to cancel yesterday afternoon. We do intend to explore the reasons for his failure to appear. 

As I said, the title of today’s hearing is ‘‘EPA Enforcement Priorities and Practices,’’ and I hope that at least one result of this hearing will be when it is over that Administrator Jackson and some 

others at EPA will think more about working in a cooperative attiVerDate Aug 31 2005 15:50 Mar 22, 2013 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\111425~1\112-14~1 WAYNE
2 

tude and spirit with the entities and the States that they deal with 

rather than an adversarial attitude and spirit. 

Now, why do I say that? Well, I am going to give you some examples. Number one, Mr. Armendariz himself. We all know the statement that he made before a city council meeting in Texas in which 

he said, ‘‘When the Romans went into a community, they would 

find five citizens and they would crucify them, and after that they 

wouldn’t have any trouble,’’ and he said ‘‘That is what we need to 

do in the oil and gas industry.’’ That is not the type of attitude we 

need from public employees. 

In the Range Resources case, which is another example of the approach to enforcement that concerns us, in that case EPA issued 

an emergency compliance order against a drilling company based 

on false accusations, even though Texas regulators warned EPA it 

was premature and the facts were not known. In the end, EPA did 

withdraw the order, but not until after the company was forced to 

spend millions of dollars to defend itself against EPA’s false claims. 

EPA’s efforts relating to the Texas Flexible Air Permits provide 

another example of aggressive and unprecedented regulatory actions. This permitting program had been in effect since President 

Clinton’s administration and was working very well to improve the 

State’s air quality. EPA took upon itself to federalize this program 

and compel more than 100 major facilities to go through a process 

EPA called deflexing. 

It isn’t just Congressional Republicans who think that EPA is 

overreaching. An increasing number of Federal judges do also. In 

the recent Sackett decision, the Supreme Court unanimously rejected EPA’s efforts to deny due process to landowners. One of the 

judges wrote that ‘‘The position taken in this case by the Federal 

Government would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency employees.’’ He further said that ‘‘In a Nation that values due process, 

not to mention private property, such treatment is unthinkable.’’ In 

another case, the Luminant case in the Fifth Circuit Court of Appeals, that court rejected EPA’s attempts and said that EPA’s disapproval was based on ‘‘purported nonconformity with three extrastatutory standards that the EPA had created itself out of whole 

cloth.’’ 

In the recent Spruce Mine case decision, another Federal judge 

invalidated an attempt by EPA to rescind a coal mining permit. 

The court called EPA’s rationale ‘‘magical thinking’’ and ‘‘a stunning power for an agency to arrogate to itself.’’ 

And in the Avenal case last year, a court rejected EPA’s claim 

it was not bound by the Clean Air Act’s statutory requirement to 

make a permitting decision within 1 year. The court said, ‘‘The 

EPA’s self-serving misinterpretation of Congress’s mandate is too 

clever by half and it is an obvious effort to protect its regulatory 

process at the expense of Congress’s clear intention.’’ And then the 

court went on to say, ‘‘Put simply, that dog won’t hunt.’’ 

So we believe, many of us believe, EPA is out of control. They 

are more interested in being an adversary than working in a cooperative spirit. And so that is what we hope to explore in today’s 

hearing. 

[The prepared statement of Mr. Whitfield follows:] 

3 


79849.001

Opening Statement of the Honorable Ed Whitfield 

Subcommittee on Energy and Power 

Hearing on "EPA Enforcement Priorities and Practices" 

June 6, 2012 

(As Prepared/or Deliver)) 

I would note that we had expected Dr. Armendariz to testify here today and we are 

disappointed he chose to cancel yesterday afternoon. We do plan to get to the 

bottom of the reasons for his failure to appear. 

I've been concerned about the Obama EPA for more than three years now and here 

arc a few examples of why. 

The Range Resources case is one very concrete example of the approach to 

enforcement that concerns us. In the Rangc Resources case, EPA issued an 

emergency compliance order against a drilling company based on false 

accusations, even though Texas regulators warned EPA it was premature and the 

facts weren't known. In the end, EPA withdrew the order, but not until after the 

company was forced to spend millions of dollars to defend against EPA's false 

claims. 

EPA's etTorts relating to the Texas Flexible Air Permits provide another example 

of aggressive and unprecedented regulatory actions. This permitting program had 

been in effect since thc Clinton Administration and was working very well to 

improve the state's air quality. EPA took upon itself to 'federalize" this program 

and compel more than 100 major facilities to go through a proeess EPA called "deflexing." 

Those EPA aetions do not appear to have the effect of furthcring the environmental 

and public health goals of the Clean Air Act, and the agency's actions strongly do 

conflict with the state-federal partnership that is at the core of this statute. EPA's 

unprecedented takeover of greenhouse gas permitting in Texas to promote its 

climate change agency agenda is another such example as well. 
4 


79849.002

It isn't just Congressional Republicans who think that EPA is overreaching. An 

increasing number of federal judges do to. 

In the recent Sackett decision, the Supreme Court unanimously rejected EPA's 

efforts to deny due process to landowners. Justice Alito concluded: 

"The position taken in this case by the Federal Government ... would have 

put the properly rights of ordinary Americans entirely at the mercy of the 

Environmental Protection Agency (EPA) employees." He further said that 

"In a nation that values due process, not to mention private property, such 

treatment is unthinkable." 

In the recent Luminant case relating to EPA's efforts to disapprove Texas's 

standardized pollution control permit, the Fifth Circuit Court of Appeals rejected 

EPA's attempts and said that EPA's disapproval was based on "purported 

nonconformity with thrce extra-statutory standards that the EPA had created out of 

whole cloth." 

In the recent Spruce Mine Case decision, a federal judge appointed by President 

Obama rejected EPA's unprecedented attempt to invalidate a West Virginia coal 

mining permit. The court called EPA's rationale "magical thinking" and "a 

stunning power for an agency to arrogate to itself." 

In the Avenal casc last year, a court rejected EPA's claim it was not bound by the 

Clean Air Act's statutory requirement to make a permitting decision within one 

year. The court said" 'The EPA's self-serving misinterpretation of Congress's 

mandate is too clever by hal I' and an obvious effector to protect its regulatory 

process at the expense of Congress' clear intention. Put simply, that dog won't 

hunt." 

Overall, EPA is an agency that seems to have gotten badly off track from its proper 

role as a measured, balanced and objective regulator, and I hope that today's 

hearing will be first step towards a much-needed change in direction. 
5 

Mr. WHITFIELD. At this time I would like to yield 2 minutes to 

the gentleman from Oklahoma, Mr. Sullivan. 

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

Mr. SULLIVAN. Thank you, Chairman Whitfield. Thank you for 

holding this important hearing today to discuss the enforcement 

practices and priorities of the U.S. Environmental Protection Agency. Today we will be taking a critical look at some of these enforcement practices in EPA Region 6, which includes my State of Oklahoma. 

I am pleased to welcome my good friend Bob Sullivan, who is 

chairman of the Oklahoma Independent Petroleum Association. He 

is with us to discuss the importance of fossil fuels to our Nation 

and to share his real-life business experiences with EPA Region 6’s 

enforcement practices on oil and gas producers. Thank you for your 

advocacy on oil and gas issues at both the State and Federal level. 

I am extremely disappointed that former EPA Region 6 director 

Dr. Al Armendariz decided to cancel his appearance at today’s 

hearing at the last minute, and I think I know why. The American 

people deserve an honest explanation for his comment saying that 

the EPA should crucify and make examples out of oil and gas companies, which employ over 9 million Americans. This type of regulatory bullying and abuse underscores the problems we face with 

EPA’s enforcement culture. 

Like many Americans, I am pleased that Mr. Armendariz resigned after publicly expressing such hostility and political prejudice toward oil and gas companies, an industry that employs over 

300,00 Oklahomans in my State. This blatant political bias is completely unacceptable behavior from a now former government official charged with regulating this critical industry. 

The Obama administration’s refusal to fire Mr. Armendariz is 

proof that they are out of touch with the American people when it 

comes to developing a national energy policy. While I supported 

Mr. Armendariz’s decision to resign, I also challenge the EPA to go 

even further to root out this troubling trend of hostility towards oil 

and gas production in order to achieve our goal of powering our Nation with affordable and stable sources of American-made energy. 

Mr. Chairman, I yield back the balance of my time. 

Mr. WHITFIELD. At this time I recognize the ranking member, 

Mr. Rush, for his opening statement. 

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

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. Chairman, I am really somewhat—not somewhat, I am very 

disturbed at this hearing. Since the beginning of the 112th Congress, by my count, we’ve had over 30 Energy and Power Subcommittee and joint committee hearings—over 30—and we have 

held over a dozen subcommittee and full committee markups, and 

we have had nine bills that originated from this subcommittee that 

have been voted on by the full House. Yet from all that time and 

all that effort and all the taxpayers’ dollars that are going into all 

6 

this, this subcommittee has produced exactly one bill—let me repeat: one bill, the Pipeline Safety Reauthorization Act—that has 

actually become law. 

Now, here we go again. Mr. Chairman, when will the other side 

understand that the EPA stands for the Environmental Protection 

Agency and not Every Problem in America Agency. EPA is the Environmental Protection Agency, not the Every Problem in America 

Agency. While attacks on the EPA and the Clean Air Act may appease some of the more extreme constituency that the majority side 

represents, most American people, particularly those who are facing economic crises in their lives and their families and their 

homes and in their neighborhoods, they want to see us working in 

a bipartisan manner to address critical issues such as access to 

jobs, clean air, clean water, less dependency on foreign oil and enhanced energy efficiency measures, and an increased reliance on 

cleaner and renewable energy sources for the future. Those are the 

issues they want us to be working on, not some comment that some 

unemployed or some ex-member of the EPA, who is no longer in 

government, not someone who is no longer a part of the Federal 

Government. They don’t want us to focus on some stupid statement 

that he made some time ago. They want us to focus on the issues 

that are before them right now and the issues that they are concerned about. 

But here we are, cameras all over the place, showing off, showing 

how angry we are about the statement that was taken out of context of an ex-government employee, a former EPA staffer who is 

going on with his life and won’t be here—I am pretty sure he won’t 

be here ever again. But why are we wasting time? You know, you 

want an opportunity to profile and parade before the cameras, you 

want an opportunity to try to embarrass the Obama administration? Well, I think we are the ones who should be embarrassed. 

But we know that not one constructive thing is going to happen 

today, not one thing. Not one scintilla of solution for the American 

people is going to come out of the time that we are wasting here 

today. 

Mr. Chairman, with all due respect to the witnesses who are 

here, I believe our time would be better served by working in a bipartisan manner to enact policy that some day may actually move 

this Nation and its energy agenda forward. 

Mr. Chairman, I thank you and I want to yield the balance of 

my time to my friend from Texas. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, and I want to thank our 

ranking member for yielding me time and holding this hearing. 

I want to first welcome two Texans to our committee, our Chair 

of our Texas Railroad Commission that actually regulates oil and 

gas in Texas, Barry Smitherman. I have known Barry’s family for 

decades, a good family, a Houston family, although hill country 

now. And also the Chair of our Texas Commission on Environmental Quality, Bryan Shaw. 

I regret the reason we are holding this hearing today, and I had 

planned to praise Dr. Armendariz for agreeing to testify since he 

7 

resigned, but canceling at the last minute is disrespectful to our 

committee, and some of us who actually remember a subcommittee 

hearing we had in Houston that our Regional Administrator 

couldn’t appear but he was literally two blocks from our hearing 

there at South Texas College of Law. I am disappointed he chose 

not to do it but I want to thank our other panelists for being here, 

especially our Texas witnesses. 

The oil and gas industry has been and will continue to be a vital 

economic engine for our country, and EPA officials should not use 

negative language against the oil and gas industry without cause. 

While Dr. Armendariz’s comments may have been meant as an 

analogy, if you take them in context of actions taken by EPA Region 6, they reveal a troubling trend of hostility toward oil and gas 

production literally in Texas, Oklahoma and Louisiana and New 

Mexico that produces a significant amount of the product our country needs. 

I am sure many of you saw the Associated Press article last by 

Dana Cappiello. Dana ran an extensive analysis of enforcement 

data over the past decade and found that EPA went after producers 

more often under the Bush than under this administration. I think 

that is fine and good, but I also think it speaks volumes about the 

great care our companies are putting into ensuring their exploration and production activities do no harm to the environment, 

given the number of wells had actually increased in recent years. 

However, the AP numbers didn’t reflect violation notices and emergency orders which have been a true problem within this current 

administration. Take, for example, what famously happened in 

Parker County. The EPA preempted the Railroad Commission, 

issued an emergency administrative order alleging hydraulic 

fracking had made the water unsafe when the data did not support 

the EPA’s claim. Ms. Cappiello’s numbers also don’t reflect Dr. 

Armendariz’s choosing to attend that conference literally two blocks 

away from our Energy and Commerce Energy Subcommittee hearing when we were discussing EPA’s decision to disapprove the 

Texas Flexible Air Permit program. The hearing and the forum 

were just blocks away, and these instances tell a very different 

story and I regret that Dr. Armendariz is not here to explain his 

rationale. 

Mr. Chairman, I hope this hearing is constructive and we can 

move forward, not only in Region 6 but our effort in our committee 

to produce the energy that our country needs, and I yield back my 

time. 

Mr. WHITFIELD. Thank you. 

At this I recognize the chairman of the committee, Mr. Upton of 

Michigan, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. 

Let us be honest: Under this administration’s EPA, the extreme 

has become routine, and that is why, when video surfaced of Dr. 

Armendariz talking about his ‘‘crucify’’ enforcement strategy, it 

really rang a bell with those of us in Congress who oversee the 

agency, not to mention those who have to deal with the economic 

8 

consequences back home. His words provided a window into a pervasive mindset driving a long list of problematic enforcement and 

regulatory actions by the agency. 

To understand that mindset, we sought to hear from him directly. In fact, earlier this week he confirmed that his testimony 

would arrive on time on Sunday. He volunteered to come. After all, 

it was his comments that so clearly embodied the hostile enforcement policy that we have seen in action for the last couple of years. 

And unfortunately, late yesterday afternoon, very late yesterday 

afternoon, an attorney representing him contacted the committee 

staff to notify us that despite his earlier agreement to come, he was 

no longer willing to testify. Well, we would like to know why, and 

why, several weeks after he had agreed to testify, did he retain 

counsel and then withdraw? The EPA, did they interfere with this 

witness? We don’t know. But I have in my hand a couple copies of 

letters that we intend to send today to the EPA and to Dr. 

Armendariz to ask those questions. Congress and the American 

people deserve answers about the administration’s policies and 

practices, and we intend to get them. But even without his appearance today, we are going to scrutinize the agency’s actions by hearing directly from those on the receiving end of their enforcement. 

Over and over, we have seen EPA treating job-creating energy 

companies as if they were the enemy. We have seen new regulations that defy any credible reading of the authority delegated to 

the agency. EPA’s attitude toward the private sector is troublesome 

enough, but its treatment of non-Federal levels of government is 

hardly any better, and I would remind everyone that the very first 

section of the Clean Air Act states that ‘‘air pollution control at its 

source is the primary responsibility of states and local governments.’’ 

So today we are going to hear from those State, local and tribal 

officials whose longstanding working relationship with the Federal 

EPA has deteriorated considerably under this administration. 

The Clean Air Act has effectively balanced economic growth and 

environmental improvement for decades, and I am concerned that 

EPA has gotten far away from that balance. 

I yield my time now to Mr. Barton. 

[The prepared statement of Mr. Upton follows:] 

9 


79849.003

Statement of Chairman Fred Upton 

Subcommittee on Energy and Power 

Hearing on EPA Enforcement Priorities and Practices 

June 6, 2012 

(As Preparedfor Delivery) 

Let's be bonest under the Obama EPA, tbe extreme has become routine. That's why, whcn 

video surfaced of Dr. AI Armendariz talking about his "crucify" enforcement strategy, it really 

rang a bell with thosc of us in Congress who oversee the agency, not to mention those who have 

to deal with the economic consequences back home. His words provided a window into a 

pervasive mindset driving a long list of problematic enforcement and regulatory actions by the 

agency. 

To understand that mindset, we sought testimony from Dr. Armendariz. After all, it was his 

comments that so clearly embodied the hostile enforcement policy we have seen in action for the 

past three years. 

Unfortunately, late yesterday afternoon, an attorney representing Dr. Armendariz contacted the 

committee staff to notify us that - despite his earlier agreement to appear Dr. Armcndariz was 

no longer willing to testify. Well, I'd like to know why not. Why, several weeks after he had 

agreed to testify, did he retain counsel and withdraw? The EPA did not make a witncss available 

to appear alongside Dr. Annendariz today. Did the Obama administration urge him not to 

appcar0 

[ have in my hand copies of letters we intend to scnd today to the EPA and to Dr. Anllcndariz to 

ask thosc questions. Congress and the American pcople descrve answers about this 

administration's policies and practices, and we intcnd to get them. But even without Dr. 

Anm:ndariz here today, we arc going to scrutinize tbe agency's actions by hearing directly from 

those on the receiving end of their enforcement. 

Over and over, wc have seen EPA treating job-creating energy companics as if they were the 

enemy. We have secnncIV regulations that defy any credible rcading of the authority delegated 

to the agency. 
10 


79849.004

EPA's attitude toward the private sector is troublesome enough, but its treatment of non-federal 

levels of government is hardly any better. I would remind everyone that the very first section of 

the Clean Air Act states that "air pollution control at its source is the primary responsibility of 

states and local governments." But today, we will hear from state, local, and tribal officials 

whose longstanding working relationship with the federal EPA has deteriorated considerably 

under Obama. 

The Clean Air Act has effectively balanced economic growth and environmental improvement 

for decades. I am concel11cd that EPA has gotten far away from that balance. It is time to get 

back to what works. Thank you. 
11 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Chairman Whitfield and Ranking Member Rush for holding this hearing. 

I, like Chairman Upton, am disappointed but not surprised that 

former Regional Administrator Armendariz has chosen not to testify before this subcommittee. As my friend Mr. Green just pointed 

out, at a field hearing down in Houston, the former Regional Administrator was blocks away, was formally invited to testify and 

participate at that hearing and again chose not to do so. 

The Congress sets the rules, and the administration enforces 

them. We have a good set of environmental laws on the books. We 

expect President Obama and his appointees to enforce those rules 

in an even and fair-handed fashion. In the case of Region 6 Administrator Armendariz, he was not a fair umpire. He had a preconceived mindset, viewed himself more as an executioner than as 

a fair umpire, as some of his comments have shown. As soon as he 

became the Region 6 administrator, EPA withdrew a longstanding 

support of the Texas Flexible Air Permit program that was initiated under President Clinton. The Obama administration through 

Regional Administrator Armendariz removed that. In the cases of 

Range Resources, which dealt with the issue of hydraulic fracturing, again, former Regional Administrator Armendariz came 

into office saying that he wanted to eliminate hydraulic fracturing. 

He thought he had a case in Range Resources and moved to an enforcement action even when the then-chairman of the Railroad 

Commission of Texas sent him an email saying that that was premature and that the facts did not justify that. In Idaho just recently, the Obama administration went against a family called the 

Sacketts on a wetlands issue. Again, Mr. Chairman, Congress sets 

the rules and the administration enforces them. This Obama administration in the case of the EPA doesn’t want to play by the 

rules. They want to set their own rules, and in some cases literally 

try to put industry and businesses out of business. 

With that, I yield to my good friend from Denton County, Dr. 

Burgess. 

Mr. WHITFIELD. The gentleman is out of time. 

At this time I recognize the gentleman from California, Mr. Waxman, for 5 minutes. 

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

Mr. WAXMAN. Thank you, Mr. Chairman. 

In May 2010, then-EPA Regional Administrator Al Armendariz 

was in DISH, Texas, talking to citizens concerned about oil and gas 

pollution. When he started describing his philosophy of enforcement, he used a poor analogy involving Romans and crucifixion. 

Everyone agrees that it was an inappropriate comment. 

But those who oppose strong enforcement of the Nation’s environmental laws have exaggerated what was said in order to make 

absurd attacks on EPA and the Obama administration. They claim 

that Dr. Armendariz intended to take enforcement actions against 

12 

innocent companies and that his comments are representative of 

EPA’s overall enforcement philosophy. 

This smear attack ignores most of what Dr. Armendariz said that 

day, and it ignores the facts. Dr. Armendariz has apologized for his 

controversial comments, and he has resigned. He has made it very 

clear that those comments were an inaccurate way to describe 

EPA’s enforcement efforts. And it is important to realize that no 

enforcement action has been taken in DISH, Texas. 

EPA Administrator Lisa Jackson and the White House have reiterated that the comments do not reflect any EPA policies or the 

agency’s actions. Despite these clear statements, EPA’s critics 

claim that the controversial Armendariz comments must represent 

EPA’s true enforcement policy. This is just more of the same factfree, anti-EPA rhetoric from the Republicans. 

Here are the facts. The Clean Air Act, Clean Water Act, Safe 

Drinking Water Act and other cornerstone environmental laws 

allow States to implement and administer the statutes’ requirements. It is EPA’s job to ensure that the States implement nationally consistent programs that meet Federal standards. 

The States do not always meet these expectations. In fact, the 

EPA IG recently found that ‘‘State enforcement programs frequently do not meet national goals and states do not always take 

necessary enforcement actions. State enforcement programs are 

underperforming. ... noncompliance is high and the level of enforcement is low.’’ And in these situations, EPA has the authority to 

step in to take the action needed to enforce the law. 

For decades, these enforcement decisions have been made by career EPA enforcement professionals, not political appointees. That 

has not changed under this administration. 

Since the agency was formed during the Nixon administration, 

EPA has employed a philosophy of deterrence. EPA punishes violations of the law fairly and openly in order to deter others from 

breaking the law. And EPA focuses its limited enforcement resources on the highest priorities that represent the most serious 

pollution problems. There is nothing unique about this approach. 

In fact, I would be surprised if we could find a well-run law enforcement agency or civil enforcement program in the country that 

worked differently. 

The data tells the story. I have charts. The first chart shows the 

number of EPA enforcement actions nationwide over the last 11 

years. As you can see, the number of enforcement actions during 

the first 3 years of the Obama administration has actually dropped 

off slightly compared with the Bush administration years. I see no 

evidence of an overzealous enforcement policy here. 

Let us look at just EPA Region 6. That is the region that Dr. 

Armendariz led. If his controversial remarks reflected a radical enforcement policy, then surely we would find evidence of that in Region 6. But as you can see from the chart, that is simply not the 

case. Again, the number of civil enforcement actions is actually 

lower during the past 3 years than during the Bush years. 

The third chart shows that total civil penalties collected under 

the Obama administration are not much different than under the 

previous administration. You can see that the totals go up and 

down each year depending on when bigger cases are resolved. In 

13 

fact, the average amount of civil penalties collected during the 

Bush administration is actually slightly higher than so far under 

the Obama administration. 

Those are the facts. One comment from 2 years ago cannot 

change the facts. Environmental laws that protect our air and 

water are important to the health and wellbeing of Americans. The 

only way to ensure those protections are real is to enforce them. 

Career employees at EPA have been doing that enforcement work 

for 40 years, and they should keep doing so to protect American 

families from toxic chemicals and other pollutants. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. Thank you. 

That concludes the opening statements today, so I want to welcome once again the first panel, the only panel, and on our panel 

today we have with us Dr. Bryan Shaw, who is Chairman of the 

Texas Commission on Environmental Quality. We have Barry 

Smitherman, who is Chairman of the Texas Railroad Commission. 

We have Mr. Robert Sullivan, who is Chairman of the Oklahoma 

Independent Petroleum Association. We have Dr. Joel Mintz, who 

is a Professor of Law at Nova Scotia University. We have Mr. Stephen Etsitty, who is the Executive Director of the Navajo Nation 

Environmental Protection Agency. And we have Mr. Allen Short, 

who is the General Manager of the Modesto Irrigation District in 

California. 

So welcome. We look forward to all of your testimony because 

you all are the ones that work on a daily basis with the Federal 

EPA, and we look forward to your insights and comments. 

Chairman Smitherman, we will call on you first for a 5-minute 

opening statement. 

STATEMENTS OF BARRY T. SMITHERMAN, CHAIRMAN, TEXAS 

RAILROAD COMMISSION; BRYAN W. SHAW, CHAIRMAN, 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY; ROBERT J. SULLIVAN, JR., CHAIRMAN, OKLAHOMA INDEPENDENT PETROLEUM ASSOCIATION, AND OWNER, SULLIVAN AND COMPANY, LLC; JOEL A. MINTZ, PROFESSOR OF 

LAW, NOVA SOUTHEASTERN UNIVERSITY; STEPHEN B. 

ETSITTY, EXECUTIVE DIRECTOR, NAVAJO NATION ENVIRONMENTAL PROTECTION AGENCY; AND ALLEN SHORT, GENERAL MANAGER, MODESTO IRRIGATION DISTRICT 

STATEMENT OF BARRY T. SMITHERMAN 

Mr. SMITHERMAN. Thank you, Mr. Chairman, Mr. Vice Chairman, members of the committee, especially my friends from Texas. 

I am Barry Smitherman. I am the Chairman of the Texas Railroad 

Commission. Thank you for the opportunity to provide my perspective on the enforcement priorities and practices of the Environmental Protection Agency. 

As the Chairman of the Railroad Commission, I and my Railroad 

Commission colleagues are responsible for overseeing the exploration and production of oil, natural gas and lignite coal in Texas. 

Texas is the Nation’s largest producer of oil and natural gas, producing 413 million barrels of oil and 7.4 trillion cubic feet of natural gas in 2011. That translates into 1.1 million barrels of oil a 

14 

day and about 20 bcf of natural gas a day. These numbers continue 

to increase in 2012. In March, we were producing 1.35 million barrels of crude oil a day. That is more than the United States presently imports from Venezuela. We are also the home of 49 percent 

of all the land-based rigs in America. 

This energy production supports 2 million jobs in Texas and is 

responsible for a quarter of the State’s economy. The average oil 

and gas job in Texas pays about twice what the average non-oil 

and gas job pays, and these jobs, of course, are vital to the State’s 

economic wellbeing as we continue to be a leader in energy production. 

The Railroad Commission, Mr. Chairman, has effectively regulated the energy industry in Texas since 1919. The State has maintained a predictable regulatory environment allowing for prolific 

yet responsible development, and this successful track record is 

partially due to the scientists, engineers and policymakers that are 

closest to the variables being regulated and they are most familiar 

with all of the elements at play. 

State regulation of these industries is critical because in my estimation, it is impossible for blanket Federal regulations to account 

for the unique circumstances of each State. As has been highlighted several times earlier this morning, recently the EPA has 

been insinuating itself into areas that have historically been the 

purview of the States. Let me talk more about the Range Resources 

case, which was mentioned. 

On December 7, 2010, the EPA issued an emergency order 

against Range Resources for allegedly contaminating a residential 

water well near Fort Worth. This order was issued despite the fact 

that the Railroad Commission staff had already advised the EPA 

that the Commission’s investigation was ongoing and that no final 

conclusions had been reached. Furthermore, we now know that the 

EPA issued the order even though the EPA did not evaluate the 

underground geology in the area, did no research to determine possible pathways for the migration of the methane, and was in disagreement with many scientists. The Commission had already secured the voluntary cooperation from the operator, and we were 

moving quickly to investigate the situation. 

The Commission concluded in March of 2011 that Range Resources’ fracking activities were not responsible for the contamination of well water. However, the EPA continued with its investigation for another 12 months. Range Resources was forced to spend 

over $4 million defending itself against unfounded and unprecedented attacks, and then in March of 2012, in a one-paragraph letter, the EPA dropped its emergency endangerment order against 

the company. 

Unfortunately, Mr. Chairman, this is not an isolated incident. 

We have seen cases in Pavilion, Wyoming, and in Dimock, Pennsylvania, where the EPA has also accused oil and gas operators of 

groundwater contamination from fracking without sufficient evidence to justify those accusations. I hope, Mr. Chairman, that the 

result of this hearing today is that EPA will begin to listen and 

work with local regulators going forward, regulators that know best 

the circumstances, the underground geology and the facts present 

in those States. 

15 

Thank you very much. 

[The prepared statement of Mr. Smitherman follows:] 

16 


79849.005

Written Summary 

2! 

Testimony by Barry T. Smitherman 

Chairman. Railroad Commission of Texas 

before the 

Committee on Energy and Commerce. Subcommittee on Energy and Power 

United States House of Representatives 

Hearing: EPA Enforcement Priorities and Practices 

June 6. 2012 

Mr. Chairman, and Members of the Committee: 

Thank you for the opportunity to provide my perspective on the enforcement priorities and 

practices of the Environmental Protection Agency ("EPA"). 

My testimony largely focuses on how EPA's enforcement priorities and practices have affected 

energy production in the State of Texas. As Chairman of the Railroad Commission of Texas I am 

responsible for overseeing the nation's leading oil and gas producing state, which produced 413 million 

barrels of oil and 7.4 trillion cubic feet of natural gas In 2011. Texas has a proven regulatory track record 

allowing for prolific, yet responsible energy development. It is critical that state reguiatory agencies like 

the Railroad Commission continue to regulate its energy production. Recently, we have seen the many 

problems that arise when federal agencies like the EPA attempt to usurp regulatory authority from the 

states. 

My testimony focuses on specific problems states have recently encountered with attempted 

federal regulation by EPA. For instance, EPA has been active in expanding Its role regarding hydraulic 

fracturing. This expansion has led to impractical policies and unsound science. My testimony highlights 

missteps by EPA in the Range Resources case that took place In Texas, as well as similar troublesome 

events that occurred in Pavillion, Wyoming and Dimock, Pennsylvania. 

My testimony also expresses my concern with EPA's overly broad study of potential impacts of 

hydraulic fracturing on drinking water. 

Furthermore, although the Railroad Commission does not have Jurisdiction over air pollution, I 

discuss grave concerns I have with respect to air pollution regulation by EPA of upstream oil and gas 

production and downstream power generation. 

Sincerely, 

Barry T. Smitherman 

Chairman 

Railroad Commission of Texas 
17 


79849.006

Testimony of Barry T. Smitherman 

Chairman. Railroad Commission of Texas 

before the 

Committee on Energy and Commerce. Subcommittee on Energy and Power 

United States House of Representatives 

Hearing: EPA Enforcement Priorities and Practices 

June 6. 2012 

Mr. Chairman, and Members of the Committee: 

Thank you for this opportunity to provIde my perspective on the enforcement priorities and practices of 

the Environmental Protection Agency ("EPA"). 

As Chairman of the Railroad Commission of Texas (the "Commission"), I am responsible for overseeing 

the exploration and production of 011, natural gas, and lignite coal in Texas. Texas is the nation's largest producer 

of 011 and natural gas with over 161,000 active oil wells and 102,000 active gas wells, which produced 413 million 

barrels of 011 and 7.4 trillion cubic feet of natural gas In 2011. This energy production supports two million jobs in 

Texas and a quarter of the State's economy. It Is vital to the State's economic well-being that Texas continues to 

be a leader in energy production. 

Effective State Regulation of 011 and Natural Gas Production and Surface Waste Management 

The Commission has effectively regulated the energy industry in the State of Texas since 1919. The 

State has maintained a predictable regulatory environment allowing for prolific, yet responsible energy 

development. This successful track record is partially due to its scientists, engineers, and pollcymakers being 

closest to the variables regulated and most familiar with the elements at play. State regulation of energy 

resources Is cr~lcal because ~ is impossible for blanket federal regulations to account for the unique 

circumstances of each state. Such blanket regulations often lead to impractical policies based on unsound 

science. Recently, EPA has begun insinuating itself Into areas that have historically been the purview of the 

states by attempting to unleash a barrage of regulations besed on politically-motivated fiction, rather than fact. 

am extremely troubled by this trend In EPA's enforcement priorities and practices. 

Page 1019 
18 


79849.007

In the past, EPA has often stated that it believes Congress intended for It to regulate under the Safe 

Drinking Water Acrs (SDWA) Underground Injection Control (UIC) Program only those wells whose principle 

function is the subsurface emplacement of fluids, and not wells whose principle functIOn is the production of oil or 

natural gas. However, EPA has been actively expanding its role regarding hydraulic fracturing operations, as well 

as other activtties associated with oil and gas production that have historically been under state regulation. 

The states have successfully regulated oil and natural gas production and surface waste management 

activities, including hydrauliC fracturing, for decades and have the experience and personnel to effectively 

regulate such activities. Despite the tremendous oil and gas activity in Texas and a aO-year history of hydraulic 

fracturing, there is not a single proven case connecting hydraulic fracturing to groundwater pollution. EPA 

Administrator Lisa Jackson recently confirmed this track record when testifying before the U.S. House Oversight 

and Govemment Reform Committee by stating, "I am not aware of any proven case where the fracking process 

has affected water, although there are investigations ongoing: 

A majority of the states also effectively administer UIC Programs under the SDWA. The states maintain 

their regulations adequately address potential risks to underground sources of drinking water posed by the actual 

hydrauliC fracturing operations. EPA has not indicated how it believes current state regulations fail to protect 

underground sources of drinking water. 

Texas has enforcement primacy for the federal UIC Program. UIC Program duties and funding are split 

between the Commission and the Texas Commission on Environmental Quality ("TCEQ"). Federal funds 

allocated to the Commission average approximately $500,000 per year. The Commission has authority over 

Class II (oil and gas) and Class'" (partial-brine mining). The Commission has not yet applied for authority over 

EPA's recently created Class VI (geologic sequestration of anthropogenic carbon dioxide) UIC Program. 

After a 2004 EPA study of hydraulic fracturing of coal bed methane wells indicated some concem with the 

use of diesel fuel in hydraulic fracturing, Congress amended the SDWA Section 322 of the Energy Policy Act of 

2005 amended the UIC portion of the SDWA (42 USC 300h(d)) to define "underground injection' to exclude 

"". the underground injection of fluids or propping agents (other than diesel fU9ls) pursuant to hydraulic fracturing 

operations related to oil, gas, or geothermal production activities" (emphasis added). The language is unclear 

Page2of9 
19 


79849.008

and open to interpretation. EPA Itself did not clarify what it believed the language to mean until the summer of 

2010, when it revised certain wording on Its webpage regarding the activity. At that time, EPA undertook no 

rulemaking in changing its Interpretation, nor did It issue any notice of the change to regulators or the regulated 

community. 

In April of 2012, EPA published for comment a draft guidance document for permitting of wells in which 

diesel fuel is to be used in hydraulic fracturing treatments. EPA has classified wells on which hydraulic fracturing 

treatments are performed as Class II Injection wells, and has recommended all of the requirements for existing 

Class II wells in addition to numerous other requirements to address what EPA perceives as the additional risks 

posed by hydraulic fracturing. This will effectively be the first time the federal govemment has regulated the 

drilling, completion, and production of oil and natural gas wells on non-federal lands. Because EPA is proposing 

to define the term 'diesel fuel" very broadly, and because EPA failed to Include a de minimis threshold for 

whatever tt ultimately defines as "diesel fuel: numerous oil and natural gas wells potentially could be classified as 

Class II UIC wells requiring a UIC permit. 

Although the stated purpose of this guidance document is to assist EPA permit writers in areas and states 

where EPA is the permitting authority, such guidance can become the standard. The Commission contends that 

the Class II UIC program requirements, which are designed for long-term continuous injection activities, are not 

appropriate for hydraulic fracturing. 

EPA Attempts to Issue Guidance Documents Rather Than Rulemaklng 

Furthermore, EPA Is proposing these requirements in a guidance document rather than as rules. 

Recently, several courts have cautioned EPA that it cannot circumvent the rulemaking process and violate the 

Administrative Procedures Act by Issuing guidance in lieu of formal regulations developed through a notice and 

comment rulemaking process to change environmental rules. Adoption of requirements by guidelines rather than 

through rulemaking can result in capricious enforcement, particularly because guidelines can be revised at any 

time. 

For example, in National Mining Association v. Jackson, the D.C. Cirouit Court of Appeals rejected EPA's 

reliance on guidance documents in lieu of rulemaking. 

Page 3 of9 
20 


79849.009

In July of 2011, in Natural Resources Defense Council v. EPA, the D.C. Circuit Court of Appeals held that 

EPA violated the Clean Air Acfs plain language and violated the Administrative Procedure Act by relying on 

Interpretive guidance - rather than a regulation - to allow states to propose altematlves to statutorily required fees 

for ozone non-attainment areas under the Clean Air Act. 

Two Supreme Court decisions, Solid Waste Agency of Northern Cook County v. United States Army 

Corps of Engineers (2001) and Rapanos v. United States (2006), focused on the federal governmenfs jurisdiction 

over various wetlands. We understand that EPA Is continuing to expand its power despite restrictions imposed by 

the U.S. Supreme Court by moving forward with its controversial "waters of the U.S." guidance under the Clean 

Water Act, which would significantly expand EPA's regulatory reach. EPA Is expected to eliminate the term 

"navigable" from the definition of "waters of the U.S.," which would expand Clean Water Act Jurisdiction to even 

small depressions and ditches that carry only rainwater. By relying on Informal guidance, rather than proper 

rule making procedures, to expand federal jurisdiction over state waters and private property, EPA and the Corps 

are effectively aVOiding legal obligations that would otherwise apply to agency action under the Administrative 

Procedures Act 

Problematic Practice of EPA Inappropriately Issuing Enforcement Orders 

Soon after EPA Region VI Administrator Dr. AI Armendariz spoke of crucifying oil companies like the 

Romans used to crucify villagers, EPA targeted operators In Texas, Wyoming, and Pennsylvania. EPA 

deliberately created a public media frenzy in these three cases by asserting that hydraulic fracturing had caused 

water pollution, only to quietly withdraw or temper those false accusations at a later date once proven wrong. 

On December 7, 2010, EPA Issued an emergency endangerment order against Range Resources, a 

Texas natural gas company, for allegedly contaminating a residential water well near Fort Worth, Texas. The 

order stated that "EPA has determined that appropriate Stata and local authorities have not taken sufficient action 

to address the endangerment described herein and do not Intend to take such action at this time .... " EPA 

ignored the fact that Commission staff had already advised EPA that the CommiSSion's Investigation was ongoing 

and that no final conclUSions had been reached. According to documents released as a result of Range 

Resources' lawsuit against EPA regarding the emergency endangerment order, we now know that EPA did not 

Page4of9 
21 


79849.010

evaluate the geology in the area, did not research to determine possible pathways for migration of methane to 

groundwater, and was not in agreement with all of its scientists on EPA's conclusions. 

EPA acted prematurely. Before EPA Issued its order, Commission staff advised EPA that a specific 

source of contamination was still unknown and that the investigation was ongoing. EPA was also informed that 

the Commission had secured voluntary cooperation from the operator, including measures to assure safety in the 

affected household. All parties agreed that natural gas was present in the water wells; however, the Commission 

advised EPA that evidence indicated the gas was present In area water well aquifer prior to the commencement 

of Range Resources' activities. 

EPA acted without reviewing all available information. We are not convinced that the presence of the gas 

in the water wells posed an 'Imminent and substantial danger" to human health. One· water well owner had 

disconnected his water well from the residence and air monitoring of the residence never Indicated a threat of 

explosion. The other water well owner never filed a complaint with the Commission. Reportedly, the well owner 

was aware of natural gas and was managing it with an open holding tank that vented any gas before the water 

was used. Moreover, state and local authorities had been actively investigating the matter since August of 2010, 

had not determined whether there was a connection between Range Resources' activities and the gas in the 

water wells, and had secured commitments from the company to expand the investigation. The Commission 

advised EPA of those commitments before EPA issued the emergency order. 

EPA relied on faulty science. Based on the evidence presented at a Commission hearing, the 

Commission Hearing Examiners concluded, and the Commissioners agreed, that gas in the water weils in 

question was from the Strawn Formation, which is In direct communication with the Cretaceous aquifer in which 

the water wells are completed. There was no evidence to Indicate that the natural gas production wells were the 

source of the gas in the water wells. The entire investigative and adjudicative process was conducted with 

administrative efficiency at the Commission in only seven months, compared to the 20 months spent by EPA. 

The appropriate geochemical parameters for fingerprinting to distingUish Strawn gas of Pennsylvania age 

from Barnett Shale gas of Misslssipian age, are nitrogen and carbon dioxide, not carbon (as used by EPA). Gas 

from Pennsylvanian age rock, including Strawn, has higher nitrogen concentration and lower carbon dioxide 

Page 5 019 
22 


79849.011

concentration than Barnett Shale gas. Gas found in the water wells does not match the nitrogen isotopic 

fingerprint of Barnett Shale gas. Bradenhead gas samples from both production wells do not match Barnett Shale 

gas, confirming that gas was not migrating up the wellbores and that the Barnett Shale producing Interval in the 

wells was properly isolated. Three-dimensional seismic data indicated no evidence of fauWng In the area of the 

water wells and microseismic data available for more than 320 fracture stimulations in Parker County indicated a 

maximum fracture height of approximately 400 feet, meaning that almost one mile of rock exists between the 

highest fracture and the shallow groundwater aquifer. 

Range Resources was forced to spend over four million dollars defending itself against EPA's 

persecution, not including income lost from ha~ed production. In March 2012, after more than a year in a federal 

court battle with Range Resources, EPA dropped its emergency endangerment order against the company. 

Equally troubling was well owner Steve Lipsky's attempt to extort $6.5 million from Range Resources 

during this process. On January 27, 2012, District Court Judge Trey Loftin threw out Mr. Lipsky'S lawsuit against 

the company, ruling that Lipsky lacked legal jurisdiction because the Commission had already detennined that 

Range Resources' gas wells were not responsible for contaminating the water well. On February 16, 2012, Judge 

Loftin subsequently issued another Order against Mr. Lipsky, expressing concern that Lipsky, under the advice or 

direction of Alisa Rich, an environmental consultant, attached a hose to the water well's gas vent, not to a water 

line, and then lit the gas from the hose's nozzle. Judge Loftin stated "[the] demonstration was not done for 

scientific study but to provide local and national news media a deceptive video, calculated to alann the public into 

believing the water was burning." Judge Loftin also cited evidence that Ms. Rich had sought to mislead the EPA. 

The Range Resources case is not an isolated incident. EPA has acted with similar haste in Pavillion, 

Wyoming and Dimock, Pennsylvania, where EPA accused oil and gas operators of groundwater contamination 

from their hydraulic fracturing operations without sufficient evidence to justify those accusations. In both these 

cases, like with Range Resources, EPA ignored the facts and the science, whipped the public into hysteria, and 

then quietly backed away from its initial allegations. 

EPA's actions relating to emergency orders was brought to the attention of the United States Supreme 

Court in Sackett v. EPA. On March 26, 2012, the Supreme Court in a unanimous decision found in favor of an 

Page 6 of9 
23 


79849.012

Idaho couple, asserting that, when it comes to wetlands, "arbitrary and capricious" EPA compliance orders can 

indeed be challenged in court without having to wait for EPA to take enforcement action. 

I hope that EPA takes heed of past experiences and begins listening to and working with knowledgeable 

parties at the state level to ensure the use of fact-based, reliable science and avoid further embarrassments. Due 

to EPA's recent missteps and Dr. Armendariz' overt political activism we must - at minimum - have a full 

investigation of Dr. Armendariz' actions during his tenure as administrator so that we may determine how often, 

and to what extent, he crossed the line and harmed our economy and our energy future by pursuing his extreme 

political agenda instead of science and fact. 

EPA's Study on Hydraulic Fracturing 

In a Fiscal Year 2010 appropriations bill, Congress urged EPA to "carry out a study of the relationship 

between hydraulic fracturing and drinking water, using a credible approach that relies on the best available 

science, as well as independent sources of information." EPA's original scoping document for this study 

proposed a study of the 'Full Life Cycle" of an all and gas well. In other words, the scope Included all areas of oil 

and natural gas exploration and production activity, such as site selection and development, as well as 

production, storage, and transportation, which are unrelated to hydraulic fracturing and clearly under the purview 

of the states. After review, the EPA's Science Advisory Board recommended that EPA direct Hs Initial, short-term 

research to study sources and pathways of potential impacts of hydraulic fracturing on water resources, especially 

potential drinking water sources. In spite of the fact that EPA narrowed the scope of the study in its Draft Plan to 

Study the Potentiallmpaets of Hydraulic Fracturing on Drinking Water Resources released on February 7, 2011, it 

still proposes to include in the study areas beyond the speCific practice of hydraulic fracturing, delving into areas 

beyond the reach of federal law, such as water availability and water withdrawal. 

Atthough the Commission does not have jurisdiction over air pollution, I have been carefully watching and 

reviewing, in concert with TCEQ, the EPA's recent actions with respect to air pollution regulation of upstream oil 

and gas production and downstream power generation. 

EPA's Expanding RegulatIon of Air Pollution 

New Source Performance Standards and National Emissions Standards for Hazardous Air Pollutants 

Page 7 019 
24 


79849.013

Under the Clean Air Act ("CAN), EPA Is required to review New Source Perfonnance Standards 

("NSPS"), National Emissions Standards for Hazardous Air Pollutants ("NESHAP"), and residual risk standards 

every eight years. The final NSPS and NESHAP regulations for oil and gas, which were signed on April 17,2012, 

are the first federal air standards for wells that are hydraulically fractured and for other sources of air pollution in 

the oil and gas industry not currently regulated at the federal level. These regulations greatly expand EPA's 

federal authority into oil and gas production activities, which have generally been under state regulation. In 

addition, EPA appeared reasonable and conciliatory only because it initially proposed unreasonable regulations 

and then eliminated a few of the most egregious in the final version after discussions wtth industry. 

Cross-State Air Pollution Rule 

Last September I testified before the United States House' Committee on SCience, Space, and 

Technology regarding the lack of science behind the EPA's controversial Cross-State Air Pollution Rule 

("CSAPR"). I testified that CSAPR was an arbitrary, job-killing rule grounded in unreliable and incomplete 

SCientific data. CSAPR would require significant reductions of S02 and NOx from fossil fuel-fired power plants In 

27 states in an effort to regulate emissions from power plants In "upwind" states that allegedly contribute to air 

quality degradation in "downwind" states. The rules have a disproportionate impact on Texas and an 

unreasonable timellne for compliance that could result in premature retirement of power plants and could threaten 

the stability of Texas' power grid. 

On July 6, 2011, EPA finalized CSAPR, which requires a significant reduction in S02 and NOx, both of 

which are products of the direct process of creating electricity from lignne and natural gas. Despite the fact that 

Texas' sulfur dioxide emiSSions make up only 11 percent of those emissions for states covered by the new rule, 

EPA mandates that 25 percent of the required reductions come from Texas alone. In addition, the final draft is 

substantially different from the initial draft, leaving no opportunity for public discussion. Moreover, the timeline for 

compliance is not just unreasonable, but also technically Impossible. The rules would require that Texas 

generating companies comply with this 1,30o-page rule by an infeasible date of January 1, 2012. Fortunately, 

last December, the United States Court of Appeals for the D.C. Circuit issued Its ruling to stay CSAPR pending 

judicial review. The D. C, Circuit was right to stay this highly flawed rule, which is based on inaccurate and 

incomplete infonnation. 

Page 8 019 
25 


79849.014

Mercury and Air Toxics Standards for Utilities 

On February 16, 2012, EPA finalized the Mercury and Air Toxles Standards for power plant emissions, 

EPA states that these first national standards will reduce emissions of mercury and toxic air pollution like arsenic, 

acid gas, nickel, selenium, and cyanide, EPA's own analysis estimates that the rule will cost $10 billion annually 

- 40 percent more than the total cost of all the Clean Air Act regulations EPA has ever imposed on power plants, 

Furthermore, the U,S, Chamber of Commerce estimates that 99,99 percent of the benefits EPA derives from the 

rule actually occur from reductions, not in mercury but particulate matter, a pollutant already extensiVely regulated 

by other EPA rules, To make matters worse, the rule already has resulted in the announced shutdown of 

numerous coal-fired power plants, placing utility grids and jobs at risk, 

New Source Performance Standards for Greenhouse Gas Emissions from Power Plants 

On April 13, 2012, EPA published NSPS for emissions of carbon dioxide for new affected fossil fuel-fired 

electric utility generating units ('EGUs"), The proposed requirements, which are strictly limited to new sources, 

would require new fossil fuel-fired EGUs greater than 25 megawatt electric to meet an output-based standard of 

1,000 pounds of carbon dioxide per megawatt-hour, based on the performance of widely used natural gas 

combined cycle ("NGCC") technology, 

The proposed NSPS are EPA's first proposed numeric greenhouse gas ('GHG') ,emission limits for any 

category of Industrial facility, and will have a significant impact on new power plants, EPA's approach to the final 

standards is also likely to establish precedents for EPA's regulation of GHG emissions from other types of 

facilities, 

Thank you for the opportunity to testify before the Committee and for your attention to this urgent matter, 

Sincerely, 

Barry T, Smitherman 

Chairman 

Railroad Commission of Texas 

Page 9 019 
26 

Mr. WHITFIELD. Thank you, Mr. Smitherman. 

At this time, Mr. Shaw, you are recognized for 5 minutes. 

STATEMENT OF BRYAN W. SHAW 

Mr. SHAW. Thank you. Good morning, Chairman Whitfield, 

Ranking Member Rush. I am Dr. Bryan Shaw, the Chairman of the 

Texas Commission on Environmental Quality, and I appreciate the 

opportunity to visit with you today about many issues ongoing with 

the relationship between EPA and specifically the State of Texas. 

I am not interested and I am not here specifically to pile on to 

Dr. Armendariz and his time as Region 6 Administrator. Instead, 

I think it is important that we recognize the pattern and the philosophy that his comments represented that seemed to be consistent with what we have seen through recent EPA actions, specifically the enforcement activity as well as regulation, and not just 

suggesting that the number of regulations or enforcement cases 

went up, but the failure to have a just and reasonable and fair regulatory process and enforcement policy, which is demonstrated not 

only in the examples that you have heard cited today but also what 

we have seen in other rulemakings such as the Flexible Permits 

program, which you discussed earlier, whereby EPA did not apply 

science and the law to overturn Texas’s program but instead wishes to impose what they desire short of the Clean Air Act and Federal regulations. And to that end, Dr. Armendariz, after Texas having gone through the process of trying to explain how the Flexible 

Permits program did indeed meet the requirements of the Clean 

Air Act and met those concerns that they published in the Federal 

Register, the response that he said—I believe Gina McCarthy was 

in the room at the time—was that EPA was not interested and did 

not want to have a Flexible Permit program, a very similar type 

of philosophy in that EPA was not interested in making sure that 

the State program met Federal requirements or even that we were 

achieving our environmental goals, but instead wanting to make 

sure that their politically driven policies were in place. 

And that is why I am here today, hoping that we can, as Chairman Smitherman talked, encourage EPA to work with us as partners to recognize that relationship that we should have between 

State and Federal government so that we can follow. Our goal at 

TCEQ, to have sensible regulations that address real environmental risk while encouraging economic growth. We do that with 

regulations that are based on science and compliance with State 

and Federal statutes, and in every case that we disagree with EPA 

and have a lawsuit on many of those, it is because of their actions 

not being consistent with that principle of sound science, reasonable approach where we follow the law, and common sense applied 

to that. 

I mentioned the Flexible Permits program as a prime example of 

their failure to follow that process. And in fact, Dr. Armendariz 

was one of the key leaders in unraveling that program, which was 

in place for 15 years, which was one that led to numerous environmental benefits. And when asked to produce a single instance 

where the Flexible Permits program demonstrated a failure to follow Federal law or even the requirement to reduce those emissions, 

that did not occur. EPA stood by their desire, not the demonstraVerDate Aug 31 2005 15:50 Mar 22, 2013 Jkt 037690 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 F:\111425~1\112-14~1 WAYNE
27 

tion of any concerns in the Federal Register or Clean Air Act that 

the program didn’t meet Federal requirements, but instead they 

didn’t ‘‘want’’ the Flexible Permit program. As a result, 65 Flexible 

Permits in Texas have been ‘‘deflexed,’’ the term that was used, 

and EPA basically uses that to refer to those that have SIP-approved permits. 

There are 36 permit applications that are pending in-house, and 

we have not seen additional flex permit holders that have made 

commitments to deflex, but their applications are still pending. The 

deflex process has been an incredible waste of money and resources 

for both the permit holders and the environmental agency with no 

environmental benefit; to be clear, no environmental benefit. To 

date, not one deflexing permit action has revealed a circumvention 

and emissions violation that EPA claimed were being hidden by 

those flexible permits. No additional emission limitations, additional controls required or additional conditions have been added to 

any of those permits as a result of EPA’s actions. 

I would like next to move to another example of this failure to 

follow the common practice in the rules and regulations in place. 

It is our UIC, Underground Injection Control program, as it relates 

to uranium mining. And EPA has deviated from what has been a 

30-year practice of complying largely with their requirement that 

is mandated in Federal statutes that they approve or deny within 

90 days of submission of requests for aquifer exemption to allow in 

situ uranium mining. We have two cases whereby EPA has created 

two new requirements, modeling requirements, that are not captured in the statutes nor are they captured in EPA’s guidance documents. We submitted letters to EPA recommending approval of 

those aquifers for exemption. They sent back letters requesting 

modeling, which is something that has never been required. They 

want modeling for 75 years’ life and to demonstrate that no drinking water will be impacted, and yet they can’t demonstrate where 

our approved program has ever led to failure in the drinking water 

process. So I am hopeful that we can find and move toward a more 

productive relationship with EPA. 

Thank you. 

[The prepared statement of Mr. Shaw follows:] 

28 


79849.015

U.S. House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Energy and Power- June 6, 2012 

"EPA Priorities and Practices" 

TestirrlOny of Dr. Bryan W. Shaw, Chairman of the TCEQ 

The Texas Commission on Environmental Quality (TCEQ) regularly weighs matters 

that affect the environment and economy. Our goal is sensible regulation that 

addresses real environmental risks, while being based on sound science and 

compliance with state and federal statutes. In every case where Texas disagrees with 

EPA's action, it is because EPA's actions are not consistent with these principles. 

Flexible IJermits 

Texas' Flexible Permits Program was established in 1994 in an effort to incentivize 

grandfathered operations to voluntarily enter into the State's air permitting and 

environmental regulation program. Facilities that were exempted from permitting 

because of their grand fathered status agreed to submit to state regulation because 

the program offered them operational flexibility. In exchange for emissions 

reductions, participants were authorized to allocate emissions on a plant wide basis, 

rather than by individual emission source. The end result was a program that gave 

owners and operators greater flexibility and control - but that reduced emissions 

and complied with all state health standards and all applicable federal Clean Air Act 

requirements. 

At the time that the TCEQ established the Flexible Permits Program, Texas had a 

large number of "grandfathered" facilities that pre-dated the State's permitting 

program, which did not begin until 1971. As the EPA acknowledges. neither the EPA 

nor the TCEQ had statutory authority to impose permitting controls on - or require 

permits for - these grandfathered facilities. 

Because of the Flexible Permits Program - and the enactment of Texas laws that 

later imposed mandatory permitting requirements - there are no longer any 

grandfathered facilities in the State of Texas. It is worth noting that some of these 

facilities are still grandfathered from federal permits. 

The TCEQ submitted its Flexible Permits Program rules to the EPA for approval in 

1994. Although the TCEQ issued flexible permits without interference from the 

federal government since the first term ofthe Clinton Administration. the EPA 

rejected the rules and disapproved the Texas program on July 15. 2010. This 

rejection came fifteen years after the rules were submitted to EPA as a Texas State 

Implementation Plan (SIP) revision. 

Under the Federal Clean Air Act, the EPA is required to act on Texas' rules within 18 

months. Yet the federal government waited more than a decade - three presidential 

administrations - to take action and ultimately reject the TCEQ's Flexible Permits 
29 


79849.016

Program rules. Despite the fact that more than a dozen years passed since the rules 

were first submitted, the TCEQ attempted to work with the Bush and Obama 

administrations and resolve the EPA administrators' objections. On June 16, 2010, 

the TCEQ proposed draft rules that amended the Flexible Permits Program in an 

effort to resolve the federal government's concerns. Despite TCEQ's efforts, the EPA 

summarily disapproved the Texas program just one month after the State's new 

proposed rules were published. 

Even after the TCEQ proposed revisions to the rules to address EPA's concerns, the 

EPA sent letters to every flexible permit holder requiring submittal of a plan to 

transition to what EPA refers to as a "SIP-approved" permit. 

As of May 2012, the TCEQ has "de-flexed" 65 flexible permits and 36 permit 

applications are pending in-house. EPA received commitments from the remaining 

19 flexible permit holders to dc-flex, but application submittals are still pending. 

The "de-flex" process has resulted in an incredible waste of time and monetaIY 

resources for both permit holders and the TCEQ for no environmental benefit. To 

date, not one of the "de-flexing" permitting actions has revealed the circumvention 

and emissions violations that EPA claimed were being hidden by flexible permits. In 

addition, there have not been any reductions in emission limitations, additional 

controls required, or additional conditions added to the permits as a result of the 

process. 

The TCEQ, through the State Attorney General's Office, challenged EPA's 

disapproval in the United States Comt of Appeals for the Fifth Circuit. Briefing has 

been completed and oral argument was held on October 4, 2011. A decision by the 

court is currently pending. 

Permitting of Non-Greenhouse Gas Criteria Pollutants 

In the fall of 2011, EPA Region 6 posted a note on their website regarding EPA's and 

TCEQ's roles in issuing Prevention of Significant Deterioration (PSD) permits for 

major sources of greenhouse gases (GHGs). The posting stated, "EPA Region 6 is the 

agency responsible for issuing PSD permits for major sources of GHGs under 

Federal Implementation Plans (FIPs) in the states of Arkansas and Texas. The States 

of Texas and Arkansas still retain approval of their plans and PSD programs for 

pollutants that were subject to regulation before .Janumy 2, 2011, i.e., regulated NSR 

pollutants other than GHGs. In some cases, EPA will be issuing a permit for just 

GHG emissions while the state's PSD programs will issue a permit for non-GHG 

emissions. For projects that trigger the need for a PSD permit solely because of 

GHGs, EPA will he responsihle for permitting the increases on non-GHG 

pollutants if they are "significant" as defined at 40 CFR 52.21(h)(23)." 

This statement was posted after EPA repeatedly stated they would work with state 

permitting authorities (even in federal preamble language). EPA held no discussions 

with the TCEQ about permitting non-GHG pollutants. 

Further, in the FIP, EPA only assumed authority for GHG permitting and did not 

assume authority for permitting of criteria air pollutants. 
30 


79849.017

The TCEQ has clear authority and responsibility to permit increases of non-GHG 

pollutants through our authorized SIP. 

The following is a quote from the September 2010 GHG PSD FIP proposal discussing 

its intent to limit the FIP: " ... our preferred approach - for reasons of consistency is 

that EPA will be responsible for acting on permit applications for only the GHG 

portion of the permit, that the state permitting authorities will be responsible for the 

non-GHG portion for the permit, and EPA will coordinate with the state permitting 

authority as needed in order to fully cover any non-GHG emissions [emphasis 

added] that, for example, are subject to BACT because they exceed the significance 

levels." (75 Fed Reg 53883, 53890). 

£1' A Delay in Approving SIP Submittals 

The EPA Region 6 has not made final determinations on rules, attainment 

demonstrations, and other SIP revisions in a timely manner. The federal Clean Air 

Act requires EPA to take final action within 18 months of a state's SIP revision 

submittal. Failure to do so subjects EPA to the possibility of a non-discretionary 

duty lawsuit to take final action. 

As of March 2012, all or parts of approximately 75 TCEQ SIP revisions remain 

pending EPA review. These 75 revisions date back to 1993. Of these 75, 

approximately 52 were submitted more than 18 months ago. Of these 52, 

approximately 15 are subject to a settlement of a non-discretionary lawsuit that 

requires EPA Region 6 to take final action on a staggered schedule ending on 

December 31, 2013. 

The lack of timely action by the EPA regarding new or different requirements creates 

uncertainty among the regulated community. This is also true for the general public 

and businesses in regions of the state affected by the SIP revisions that have not 

received final approval by the EPA. Further, the delay may result in enforcement by 

EPA against the regulated community for failure to comply with the approved SIP, 

but where industry is complying with the new TCEQ rules. 

The TCEQ may need or be required to engage in rulemaking or SIP revision project 

on an expedited schedule if the EPA conditionally or fully disapproves a SIP revision. 

Implementation of SIP-related programs is based on prior SIP submittals and may 

be disrupted due to EPA taking delayed negative action on the submittals. 

EPA Cross-State Air Pollution Rule (CSAPR) 

On July 6, 2011, the administrator of the U.S. Environmental Protection Agency 

(EPA) signed the Cross-State Air Pollution Rule (CSAPR), which FIPs on Texas and 

26 other states to address transport requirements under the federal Clean Air Act 

110(a)(2)(D)(i) for the 1997 eight-hour ozone NAAQS and the 1997 and 2006 fine 

particulate matter (PMos) NAAQS. 

The CSAPR was a replacement rule for the federal Clean Air Interstate Rule (CAIR) 

that was vacated in 2008 by the U. S. Court of Appeals. 
31 


79849.018

The CSAPR requires power plants within the affected states to comply with ozone 

season nitrogen oxides (NOx) emission budgets for states included under the rule for 

the 1997 eight-hour ozone NAAQS and with annual sulfur dioxide (S02) and NOx 

emission budgets for states included under the rule for the 1997 and 2006 PM2 .

5 

NAAQS. 

While Texas was only proposed to be included under the CSAPR for the 1997 eighthour ozone NAAQS with ozone season NOx emission budget requirements, the EPA 

finalized the rule with Texas also subject to the particulate matter programs. The 

EPA assigned Texas annual budgets for NOx and S02 without providing the TCEQ 

and affected power plants within the state the opportunity to comment on them. The 

final rule would have required a 47 percent reduction from Texas power plant 2010 

S02 emissions by 2012. 

The federal Clean Air Act does provide that a state cannot allow emissions from 

sources within their state to contribute significantly to non attainment or interference 

with maintenance with a NAAQS in another state. However, the states are supposed 

to take the primary role in meeting this transport requirement as part of the state 

implementation plan development process. With the CSAPR, not only did the EPA 

usurp the state's role in this process, the EPA did not even provide adequate notice 

or 0ppOltunity to the TCEQ in order to comment on the rule. 

At proposal the EPA did not find that Texas power plant emissions significantly 

affected any air quality monitors in other states for PM2.

s. However, a "significant" 

Texas linkage for PM25 to the Granite City, IL monitor (located approximately one 

half mile from a steel mill) was included at rule finalization. With no indication of 

any specific significant linkage at proposal, it was not possible for Texas to provide 

meaningful comment on the technical underpinnings of a linkage to any potential 

one monitor among dozens of "nonattainment" or "maintenance" receptors for Pl\1z.s covered by the rule. 

EPA's own modeling data, which fails to take into account local controls from the 

steel mill's MOU, shows that the Granite City monitor would be projected to have 

neither attainment nor maintenance problems for the annual PM25 standard by 2014 

even without the existence of CSAPR controls (i.e. 2014 base case emissions 

demonstrates attainment). 

Despite the EPA's claims that the CSAPR will not impact electric reliability, this rule 

puts at risk the economic future of power generation; those dependent on affordable 

electricity in Texas; and places vulnerable citizens at a significant health and safety 

risk. 

The EPA's analysis of electric reliahility for the CSAPR was not available at proposal 

and includes significant errors regarding generation capacity within ERCOT - the 

largest grid operator within Texas. The EPA overestimates ERCOT's generation 

capacity by nearly 20,000 megawatts. The EPA estimates a base generation capacity 

for ERCOT power plants of around 90,400 MW. This estimate includes 100% of 

Texas' installed wind generation. ERCOT only plans on 8.7% of installed wind 

generation due to its unpredictability and unreliability. EPA's estimate of ERCOT's 

capacity also includes units currently retired and mothballed. More recent 
32 


79849.019

information from the EPA associated with the Mercury Air Toxics Standard (MATS) 

mle indicates that the EPA is also underestimating future demand while 

overestimating future capacity. 

Litigation regarding the CSAPR is ongoing. The Attorney General for the State of 

Texas (OAG) filed a petition for review with the U.S. Court of Appeals for the District 

of Columbia Circuit on September 20, 2011. And the OAG also filed a motion for 

stay of the final mle on September 22, 2011. The rule is also being challenged by 

Texas electric generating utilities, including Luminant and San Miguel, and multiple 

other parties. Fourteen states, including Texas, filed administrative and legal 

challenges to the rule. The U.S. Comt of Appeals stay put the rule on hold until the 

courts could make their final decision on the merits of the case. The courts' 

willingness to put the rule on hold acknowledges two key elements: 1.) That the court 

agrees the rule would do harm if it were in place, and 2.) That Texas may prevail 

once all the evidence is considered by the court. Oral arguments were heard on 

April 13, 2012. 

In Situ Uranium Mining - Aquifer Exemptions 

EPA Region 6 is reversing over 30 years of precedent by mandating modeling that is 

not required in EPA or state rules or indicated in EPA guidance on the subject. This 

new, ad hoc requirement is being applied to the state's Underground Injection 

Control (UIC) program. As a result, Region 6 has sua sponte decided that new 

aquifer exemptions for two in situ uranium mining projects are incomplete without 

computer modeling to demonstrate that the aquifer or portion thereof proposed for 

exemption does not currently serve as a source of drinking water. 

EPA's specif1cation that modeling should simulate groundwater conditions 

throughout all uranium production and groundwater restoration phases of a 

uranium mining operation ignores the rule criterion's focus on current conditions 

rather than on future events. 

Such modeling is not required in EPA or state rules or indicated in EPA guidance on 

the subject. In fact, EPA ignores its own guidance. The TCEQ relied upon the EPA 

memorandum "Guidance for Review and Approval of State Underground Injection 

Control Programs and Revisions to Approved Slate Programs, GWDB Guidance #34" 

in preparing its program revisions to reflect the designation of the aquifer 

exemptions. Guidance 34 makes no reference of any modeling analysis required to 

demonstrate that a proposed exempted area does not currently serve as a source of 

drinking water. 

Accordingly, the EPA did not implement any changes to aquifer exemption 

regulations through a rulemaking process or follow its obligations under the TCEQEPA Memorandum of Agreement for proper communication to TCEQ of any 

proposed or pending modifications to federal statutes, rules, guidelines, policy 

decisions, ete. 

Such modeling has no precedent in any of the over 30 aquifer exemptions approved 

by EPA for in situ uranium mining in Texas during the 30-year history of the UIC 
33 


79849.020

program in Texas. Furthermore, such modeling is not consistent with applicable 

case law from Western Nebraska Resources Council v. United States Environmental 

Protection Agency, 943F.2d 867. 

In requiring such modeling, EPA Region 6 ignorcs the applicable UIe program in 

Texas. Thereby EPA is disregarding the state program's statutes and rules; detailed 

application technical review by licensed TCEQ staff; opportunity for public 

participation including public meetings; consideration and response to comment; 

and opportunity for contested case hearing and judicial review of commission 

decisions. For Class III injection wells for uranium mining, the TCEQ's 

rules are more specific and more protective of groundwater than EPA's 

regulations. 

TCEQ received a letter from EPA dated May 16, 2012, persisting in their request for 

computer modeling. The EPA Region 6 did not deny the application, but rather 

refused to approve it until computer modeling is provided. However, by refusing to 

grant the aquifer exemption until such a time that all of EPA's "requirements" are 

satisfied is an effective denial. 

In the TCEQ's response dated May 24,2012, the following points are made: 

As stated in previous communications, EPA regulations, EPA guidance, 

and EPA precedent do not require groundwater modeling to 

consider a non-substantial UIC program revision to identify an 

exempted aquifer. 

Although the groundwater outside of the designated exempted aquifer 

is not relevant to the aquifer exemption criteria, such groundwater is 

protected by compliance with TCEQ injection well permits, production 

area authorizations, and enforcement ofTCEQ's rules. 

There have been 43 Class III injection well permits issued for uranium 

mining in Texas. After completion of mining, restoration and 

reclamation activities, concurrence from the United States Nuclear 

RegulatolY Commission is required to approve the final 

decommissioning, including groundwater restoration, of an in situ 

uranium mine. There has not he en one instance of 

documented off-site pollution of a USDW from in situ 

uranium mining activities. 

EPA has never commented to TCEQ that a pending permitting action 

for an in situ uranium mining project would lead to the contamination 

of a USDW outside of an exempted aquifer. EPA has never informed 

TCEQ that the authorized mc program is out of compliance with the 

Safe Drinking Water Act because Class III injection well operators are 

failing to protect USDWs or groundwater outside of exempted aquifers. 

And never has EPA notified TCEQ that EPA intended to take an 

enforcement action against a Class III injection well operator for failing 

to protect USDWs as required by TCEQ permit or rule. 
34 


79849.021

Conclusion 

It appears that EPA may be swayed by the unsubstantiated allegations 

and fears of uranium mining opponents who have contacted them 

regarding TCEQ's program revision. 

The TCEQ remains committed to the approved UIC program and 

believes the permits and authorizations protect USDWs in the area as 

required in the Safe Drinking Water Act. 

We will continue to consider all of our options and remain hopeful that under EPA's 

new leadership at Region 6, we can reach a satisfactory resolution for everyone 

involved. 

I would also like to draw your attention to the TCEQ's Dr. Michael Honeycutt and 

Dr. Stephanie Shirley's Clean Air Act cost-benefit analysis study, which provides a 

detailed look into the critical issues with EPA's methodology. Namely, a 

methodology that leads to overestimated benefits of the Clean Air Act. This 

information is particularly disturbing given it is the flawed and inaccurate basis upon 

which EPA bases many of its policy judgments. Their study is attached, for ease of 

reference. 

I thank you for the opportunity to provide written and oral testimony for this 

hearing, and remain available for any questions or comments you may have. 
35 


79849.022

EPA's Benefit Cost Analysis 

Susana Hildebrand, P.E., Chief Engineer 

Michael Honeycutt, Ph.D. 

Stephanie Shirley, Ph.D. 
36 


79849.023

Commission on Environmental Quality 

Mission Statement: 

The Texas Commission on Environmental Quality strives to protect our 

state's human and natural resources consistent with sustainable 

economic development. Our goal is clean air, clean water, and the safe 

management of waste. 

The TCEQ regularly weighs matters that affect the environment and 

economy. Our goal is sensible regulation that addresses real 

environmental risks, while being based on sound science and 

compliance with state and federal statutes. In every case where Texas 

disagrees with EPA's action, it is because EPA's action is not consistent 

with these principles. 
37 


79849.024

n 

Ii Background 

.. March 2011 - EPA published "Benefits and Costs of the 

Clean Air Act from 1990 to 2020 (Second Prospective 

Study)" 

- Benefits ($2T) outweigh costs ($65B) by 30 to 1 

• TCEQ staff examined this analysis, focusing on: 

• The studies used 

• The assumptions made 

• The methods employed 
38 


79849.025

n II! Regulatory Impact Analyses 

• President requires RIAs (Regulatory Impact Analyses) from 

all agencies proposing significant regulations 

.. RIA should help determine if the benefits of an action are 

likely and justify the costs or discover which of various 

possible alternatives would be the most cost-effective 

- (OMB circular A4, 09/2003) 
39 


79849.026

Key legislation - Executive Orders 

~ E012291 - Reagan, 1981 

- "Regulatory action shall not be undertaken unless the 

potential benefits to society for the regulation outweigh the 

potential costs to society ... the alternative involving the least 

net cost to society shall be chosen" 

• E012866 - Clinton, 1993 

Key change: benefits must justify the costs 

III E013563 - Obama, 2011 

- Benefits must justify the costs 

- New: equity, human 

impacts are required to 

- "Our regulatory system must protect public health, welfare, 

safety, and our environment while 

growth, innovation, 
40 


79849.027

Use of PM2.

S in RIAs 

EPA uses estimates of 

benefits from reducing PM25 in its RIAs for 

rulemakings under the 

Clean Air Act 

This is called "co-benefits" 

because a PM, 5 reduction 

is expected from efforts to 

reduce other air pollutants 

• Trenq towards using PM2.5 as pnmary source of 

benefits in most RIAs 

since 1997 

Even when regulation is 

not intended to protect public health from 

exposures to ambient 

PM,.5 

2009 

Change in 

Methodology 

From 2012 
41 


79849.028

Key Changes in PM2•

5 Methodology 

---,--------,----------------------

iii The Benefits and Costs of the Clean Air Act from 

1990 to 2020 (March 2011) 

1 A no-threshold model for PM 2.5 that calculates 

incremental benefits down to the lowest modeled air 

quality levels 

2. Risks attributed to very low (background) levels of 

ambient PM25 

3. Assumption of causal relationship between PM2.

5 and 

mortality 

4. A Value of Statistical Life (VSl) 
42 


79849.029

Result of Key Changes in PM::z.s Methodology 

Change in deaths 

attributable to PM 2.5 

Increased estimates of 

benefits 

350,000 

300,000 

250,000 

200,000 

150,000 

100,000 

50,000 

Number of Deaths due to 

PM2.5 in 2005 

Pre-2009 

320,000 

13% of all deaths 

in U.S. 

Post-2009 

I Despite improvement in air quality since the cAM] 
43 


79849.030

1. No Threshold Model 

A no-threshold model 

for PM2.

5 that calculates 

incremental benefits 

down to the lowest 

modeled air quality 

levels 

Based on ~ 

death Ii 

certificates ~ 

collected 

the city 

in ~ 

Annual 

NMOS 

level 

Average Annua! PM25 Eftim et al. 2008 

Adapted from 

Smith 2011 
44 


79849.031

1. No Threshold Model 

A no-threshold model 

for PM2.

5 that calculates 

incremental benefits 

down to the lowest 

modeled air quality 

levels 

Annual 

NMOS 

level 

Statistically fitted 

concentration-response 

function 

1S 2D 

Average Annual PM25 EfUm et at 2008 

Adapted from 

Smith 2011 
45 


79849.032

1. No Threshold Model 

A no-threshold model 

for PM2.

5 that calculates 

incremental benefits 

down to the lowest 

modeled air quality 

levels 

Annual 

NMOS 

level 

Statistically fitted 

concentrat!on~response 

function 

lS 2D 

Average Annual PM2S Eftim et aL 2008 

l-r-"_J 

Extrapolation 

below lowest measured levels 

Adapted from 

Smith 2011 
46 


79849.033

1. No Threshold Model 

A no-threshold model 

for PM2.

5 that calculates 

incremental benefits 

down to the lowest 

modeled air quality 

levels 

1. Question: what is the shape 

of the curve in the low-dose 

range? 

2. Question: is there significant 

risk associated with ambient 

levels? 

Annual 

NMOS 

!evel 

Statistically fitted 

concentration~response 

function 

Average Annual PM25 Eftim at al, 2008 

~ 

below measured levels 

Adapted from 

Smith 2011 
47 


79849.034

Clinical Exposure Studies Conducted by EPA 

January 2010 - June 2011 

41 Volunteers 

Dose:35 - 750 ug/m3 

Results 

1 individual: elevated heart rate 

1 individual: irregular heart beat* 

39 individuals: no clinical effects 
48 


79849.035

2. Risk Attributed to Ambient PM2.S 

=99% of the estimated mortality is due to concentrations less 

than the level deemed health (NAAQS). 

Baseline anoual mean PM n level \j.\g/ml} 

Of the total PM-related deaths avoided: 
49 


79849.036

ZOl1obctU 2009 

Krewskl2009 

Zeger 2003 

Wood] urf 200S 

PMkcf :):008 

F,\)nklm 2008 

EttH1\ 2008 

Bdl2008 

Millcr 2007 

till 200~; 

3. Assumption of Causality 

;;----- No Effect 

3 -1 5 6 14 17 20 
50 


79849.037

3. Assumption of Causality 

The epidemiology studies 

cannot show causality 

The analysis "assumes a 

causal relationship between 

PM2.

5 exposure and 

premature mortality ... if the 

PM2.s/mortality relationship 

is not causal, it would lead 

to a significant 

overestimation of net 

benefits" 

-EPA, The Benefits and Costs of the Clean Air 

Act from 1990 to 2020, March 2011 

Washmgton DC 

Palm8each 

ifttrOlt 

Pittsburgh 

San Diego 

Fresno 

Philadelphia 

Sacramento 

Ind!anapoils 

Manhattan 

MmneapoJis 

Cleveland 

Boston 

Tampa 

COlumbus 

Memphis 

Chicago 

Phoenix 

Milwaukee 

P>2f(€ntlncr(,il:SeinMortllJjt'lIAI~aus{!! 

Estimates of the percent Increase in all-cause mortality with a 

10 ~g/m3 increase in previous day's concentration PM:25 
51 


79849.038

Extrapolation of Mortality Estimates 

Fignt'!? (,·2. Distt'ihutioll ofP:\I:.:, \Iortality Rhk in 2005 

Pc-r'>c('ntage of tt)t,\l deaths du(~ to PM1.S 

-.. 
52 


79849.039

4. Value of Statistical life 

Definition 

A Value of Statistical Ufe (VSL) = value of risk reduction 

A "statistical life" has traditionally referred to the aggregation of small 

risk reductions across many individuals until that aggregate reflects a 

total of one statistical life 

The VSL has been a shorthand way of referring to the monetary value 

or tradeoff between income and mortality risk reduction, i.e. the 

willingness to pay for small risk reductions across large numbers of 

people 

It has led to confusion because it has been interpreted as referring to 

the loss of identified lives 

If risk was reduced 

by 1 in 1.000,000 

for 1 year 

in a population of 200 million 

of 200 statistical lives = value of risk reduction 
53 


79849.040

Deriving Value of Statistical life 

to - Road Hazard Studies 

<II Example: 

Cars with seatbelts cost $300 

more than cars without seatbelts $300 

- Buying a car with that option 

reduces the probability of death 

by 1 in 100,000 

Probability of death by 1 in 100,000 

- If people are willing to pay for this option, we can 

infer that the person is placing a valuation on his/her 

life of at least $300 x 100,000 30,000,000 ($30 

million) 

r" "-"-""---"""--"-~" "I 

I $300 I 

I x 100,000 I 

I = $30 million J 
54 


79849.041

Deriving Value of Statistical Life 

vs. Risk - Studies 

• Example: 

- A job carries a higher risk of 

injury, but pays $ 500 more per year 

- The more dangerous job carries 

an increased risk of injury by 

1 in 10,000 Probability of injury by 1 in 10,000 

- If people are willing to pay for this option, we can 

infer that the individuals are placing a valuation on 

their lives of at least $500 x 10,000 = 5,000,000 ($5 

million) 

r-- ------$500-1 

i x 10,000 I 

I = $5 million I L__ _.J 
55 


79849.042

Interpreting VSl in the Media 

"When these new [EGU MACT] standards are finalized, they will assist in preventing 11,000 heart 

attacks, 17,000 premature deaths, 120,000 cases of childhood asthma symptoms and 

approximately 11,000 fewer cases of acute bronchitis among children each year, Hospital visits will 

be reduced and nearly 850,000 fewer days of work will be missed due to illness." 

- Lisa Jackson, EPA Administrator, 2011 

"EPA's proposed mercury and air toxics standards , .. are projected to save as many as 17,000 

American lives, 

- John D. Walke, Natural Resources Defense Council, 2011 

"These new standards mark a huge step forward in clean air protections and will be responsible for 

saving thousands of lives each year." 

- Albert A. Rizzo, MD, National Volunteer Chair of the American Lung Association 

"The new EPA mercury standards will save countless lives and improve the quality of life for 

millions," 

- New York Mayor Michael Bloomberg 
56 


79849.043

Appropriate Use of Value of Statistical Life 

L: 

• Lives Saved vs. Life-Years Added 

Deaths "prevented or avoided" 

- Gains in life expectancy 

Utility 

Time 

From Weeks 1995 

• The median age of people who gain extra 

months of life from cleaner air is close to 

80 years 

Adjustment of VSL for quality of life: 

EPA VSL of $8,900,000 appropriate 

for healthy young adult ("'25) 

- 6: 1 ratio for 25 vs. 80 year old 
57 


79849.044

Clean Air Act - Benefits and Costs 

reduced number of deaths in 2020* valueper statIst'IQ131 

. = 230,000 fewerdea~hs*$,a,900,OOO per 11!.t:':'>i'I\r.~ 

~~~21ttilfi!'J" BenefitlCo$t :::::$$\ij"li§~~1$(J.a65trilfiOh~il:·30 

life-years gained in 2020 * value per statistical life-year gained 

=1,900,000 life-years gained * $150,000Ilife-year gained 

::::: $0.3 trillion 

BenefitlCost::::: $0.3 triliion/$O.065 trillion* ::::: 5 
58 


79849.045

Mercury &. Air Toxics Standard 

Benefits fl10m BARs "flo-Benefits" frQm 

€tiilli(lns~ non-BARs Cbilll(lns~ 

Mercury $ 0.004-0.006 $ 1-2 

Acid Gasses $0 $ 32-87 

Non-Hg Metals $0 $ 1-2 

Total :$$ 0.006 $ 33-90 

• MATS is estimated to prevent 0.00209 IQ point loss per child (starting 

immediately) 

• Each child will gain 0.0956 school days over their lifetime 

• 0.00209 IQ points x 244,468 children = 511 IQ pOints per year 

• Assuming a net monetary loss per decrease in one IQ point of between 

~$8,000 and ~$12,000 (in terms of foregone future earnings) 

• Benefit == $4.2M to $6.2M 

Table adapted from testimony by Anne E Smith 2)2010 to Subcommittee on Energy and Power 
59 


79849.046

Oil & Gas NSPS and NESHAPS 

Benefits 

Costs 

Non-monetized 

benefits 

NA 

- $15 

11,000 tons of HAPS 

190,000 tons of voe 1.0 million tons of methane 

Health effects of HAP exposure 

Health effects of PM2.5 and ozone exposure 

Visibility impairment 

Vegetation effects 

Climate effects 

NA 

$3.5 

670 tons of HAP 

1,200 tons of voe 420 tons of methane 

Health effects of HAP exposure 

Health effects of PM2.5 and ozone exposure 

Visibility impairment 

Vegetation effects 

Climate effects 

. quantification of those benefits cannot be accomplished for this rule. This is not to 

this 

April 2012 F?/A 
60 


79849.047

PM Co-Benefits in RIAs 

Cost 6,400 10,600 9,329 17 4 26,350 

• Double counting benefits: same statistical lives 

counted in multiple rules 

II> Different costs: unique to each rule 
61 


79849.048
62 


79849.049

Contact Information 

Susana M. Hildebrand, P.E. 

Chief Engineer 

susana. hildebrand@tceq.texas.gov 

(512) 239-4696 

Michael Honeycutt, Ph.D. 

Division Director, Toxicology 

michael. honeycutt@tceq.texas.gov 

(512) 239-1793 
63 


79849.050

Health Effects of Poverty and Unemployment 

Poverty and unemployment have been recognized as risk factors for 

morbidity and mortality since the 1800's (Virchow, 1848) 

As of March 2012, there are 4,850 publications on this topic 

Unemployment and All-Cause 

Mortality 

Meta-analyses stratified by gender and age '" 

Gender Mean Age HR{95% el) 

Less than 40 173"(141,2.11) 

Women 40 to 49.9 134' (115,1.56) 

50 to 65 

less than 40 

Men 40 to 49.9 

50 to 65 1.17' (100, 1.36) 

Roell,,'et "1.50c Sci Med 2011; 72:840-54 

Relation of real GDP per capita to age-adjusted death 

rates, US 1900-2000 (natural logarithms). 8.0000 .,----------'----'------, 

7.8000 

6' 

~ ~ 7.6000 

~ i 7.4000 

i! 

'§.~ 7.2000 

!~ w! 7.0000 

6.8000 

.. , .. :t \;+ 

-# .... 

... t·+ ...... .. , 

6.6000 +-. __ ~_~ _________ ~_..-i 

8.0000 8.5000 9,5000 10,0000 10.5000 

real GOP per capita 

(logarithmic 1990 "international" Geary-Khamlsdollars per capita) 

Brenner M Hint. J. Epidemiol. 2005;34:1214-1221 
64 


79849.051

With CAAA VS. Without CAAA 

The Bntefirs am! CO$lS of rile Clean Air A.ct/roll 19.90 1020]0 

fjGURE 1"1 CLEAN AIR ACT SECTlON 312 ';CENAR!QS: CONCEPTUAL SCHEMATJC! 

B c 

Wrth-CAAA 

1910 1990 2000 2010 2020 

·F reezes pollution controls at 1990 

levels 

'Assumes no additional state or local 

regulation after 1990 

-Assumes no improvements in 

technology or efficiency 

-"There is no way to validate the 

counlerfacluai, wilhoul-CAAA 

scenario estimates" 
65 


79849.052

Oil & Gas NESHAPS 

Total BI!Dl:'fth bawd ou 100 Yl:'ar G-WP adjmtmentl 

(million, 10083) 

April 18, 2012 Press Conference 

"Today's rules would yield significant reductions in methane, a potent greenhouse gas. EPA's 

Regulatory Impact Analysis for the rule estimates the value of the climate co-benefits that 

would result from this reduction at $440 million annually by 2015." 

-Gina McCarthy 

monetized benefit: 

Note: benefits calculated at 3%, but costs at 7% 
66 


79849.053

• ($2006) 

Costs of the Clean Air Act and Amendments 

RIAs for Rilles NO{Targ.eting Ambie!1tPM 2.5 

--~ 

.. Cross State Air 

Pollution Rule 

EPA estimated 

cost:$800 million 

annually 

Independent 

analysis: $120 

billion by 2015 

.. Boiler MACT 

EPA estimated 

cost:$2.6 billion 

annually 

Independent 

analysis:$14.5 

billion 
67 


79849.054

Business Impact 
68 


79849.055

usted Benefits Estimate 

Tony Cox, 2011: 

($1.8 trillion initial estimate) 

x (1/6 reduction factor for VSL if age or VSLY is considered) 

x (0.5 probability that a true association exists) 

x (0.5 probability that a true association is causal, given that one exists) 

x (0.5 probability that ambient concentrations are above any thresholds or nadirs 

in the C-R function, given that a true causal C-R relation exists) 

x (0.5 expected reduction factor in C-R coefficient by 2020 due to improved 

medication and prevention of disease-related mortalities) 

= (1.8 trillion)*(lj6)*(O.5)*(O.5)*(O.5)*(O.5) = $19 billion 
69 

Mr. WHITFIELD. Thank you. 

Mr. Sullivan, you are recognized for 5 minutes. 

STATEMENT OF ROBERT J. SULLIVAN, JR. 

Mr. SULLIVAN. Thank you, Chairman Whitfield and Ranking 

Member Rush and other members of the subcommittee. I very 

much appreciate this opportunity. 

I would also like to thank my Congressman, Vice Chairman Sullivan, for his leadership on crude oil and natural gas issues, and 

for the record, although I share his last name, we are not related, 

a fact for which I am sure Congressman Sullivan is continually 

grateful. 

I am Chairman of the Oklahoma Independent Petroleum Association and the Owner of Sullivan and Company LLC, a 54-year-old 

family-owned independent producer of crude oil and natural gas. I 

have 25 employees, roughly half in the field and half in the office. 

Like my peer OIPA members, Sullivan and Company explores for 

new domestic oil and natural gas reserves using modern finding, 

drilling and production techniques. In addition to our work on private lands, Sullivan and Company operates extensively on Indian 

lands. 

I have submitted my written testimony for the record and will 

take only a few minutes to address a few key points. First, the personal agendas of EPA officials impact EPA priorities and practices 

and result in overzealous enforcement actions. Wrongful EPA actions in the Parker County, Texas, Pavilion, Wyoming, and 

Dimock, Pennsylvania, instances show the limits of Federal credibility when it comes to regulating oil and gas operations. We are 

troubled by the enforcement philosophy of EPA as expressed by Mr. 

Armendariz, but we are not surprised. Mr. Armendariz is a highly 

motivated environmental activist who pursued his anti-fossil fuel 

agenda through a powerful EPA post. He used the bogeyman of hydraulic fracturing, a safe and proven technology, to achieve his 

goals. 

With no scientific basis to fault hydraulic fracturing, activists 

and administration officials have become fear mongers. Their strategy is to create anxiety over oil and natural gas development, criticize State groundwater and drinking water protections as insufficient, federalize oil and gas regulations, and use that process to 

slow development by increasing the cost of regulatory compliance. 

Federalizing exploration and production rules will kill jobs, curb 

domestic energy production and harm America. The Federal Government has neither the expertise nor the objectivity to fulfill such 

a charge. The regulation of oil and gas activities must reside with 

the States. Every State is geologically distinct. There is no one-sizefits-all solution or protection program. 

Second, the victims of corrupted EPA practices and science are 

policymakers of both major parties. Consumers and small oil and 

natural gas businesses like mine, nationwide that is 18,000 companies, averaging about a dozen employees each and operating in 32 

States. We independent producers have no refining or gasoline station operations. We sell our commodities, which are crude oil and 

natural gas, at whatever price the global market says they are 

worth. We are not Big Oil. 

70 

But together, independent producers drill 95 percent of all the 

wells in the United States and account for 68 percent of the total 

U.S. production. That is made up of roughly 82 percent of U.S. natural gas production and more than 54 percent of domestic oil production. On shore in America, we independents are responsible for 

over 3 percent of the total U.S. workforce, more than 4 million 

American jobs, more than $579 billion in total economic activity, 

and 4 percent of the U.S. GDP. And we pay a lot of taxes, royalties, 

rents to Federal, State and local governments. 

In 2010, independent producers generated $131 billion for Federal and State coffers. For every $1 million upstream capital expenditures by independent producers, that results in $5.1 million 

in overall contribution to the U.S. GDP and six direct jobs and 33 

total upstream jobs, so there is 5:1 leverage there. 

For each of the past 4 years, the President has asked Congress 

to prevent small producers like me from deducting normal business 

expenses at tax time. He and his executive agencies have also rejected the Keystone XL pipeline, which independent producers need 

to move oil more efficiently to market from Montana and North Dakota. They have opted for expanded New Source Performance and 

Emissions Standards and mandatory greenhouse gas reporting 

rules that will cost our industry hundreds of millions of dollars. 

They have proposed a set of duplicative and unnecessary Federal 

rules for hydraulic fracturing on public and Indian lands that will 

delay permits and reduce royalty payments to tribes and Federal 

Government. They have pressed for landmark legislation to raise 

the price of all fossil fuels in order to help create a market for alternative energy sources that do not exist in commercial volumes 

or are not economically feasible today. 

Finally, recent abuses by the EPA clearly show that Congress 

must exercise more oversight of the agency. Regional EPA Administrators have too much power and at the very least should be subject to Senate confirmation. 

I think you for the privilege of testifying, Mr. Chairman. 

[The prepared statement of Mr. Sullivan follows:] 

71 


79849.056

Testimony of Robert.1. Sullivan, Jr. 

Chairman, Oklaboma Independent Petroleum Association 

U.S. House of Representatives 

Energy & Commerce Committee 

Subcommittee on Energy & Power 

Wednesday, June 6, 2012 

Chairman Whitfield, Ranking Member Rush, members of the Subcommittee, I appreciate 

the opportunity to testify today. 

I would like to thank my Congressman, Vice Chairman Sullivan, for his leadership to 

incrcase the domcstic production of crude oil and natural gas. As I hope my testimony reveals, 

these fossil fuels arc critical not just to Oklahoma, but also to the nation. For the record, although 

he and I share a last name and come from Tulsa we are not, to the best of our know ledge, related. 

I serve as Chairman of the Oklahoma Independent Petroleum Association and am the 

owner of Sullivan and Company, LLC, a 54-year-old independent producer of crude oil and 

natural gas. I havc 25 cmployees - 13 in our Tulsa office and 12 in the field. 

Like my peer OIPA members, Sullivan and Company explores for new, domestic oil and 

natural gas reserves using modern finding, drilling, and production techniques. In additioJl to our 

work on private lands, Sullivan and Company operates extensively on Indian lands. 

Today's hearing is critical to understanding how the personal agendas of senior EPA 

officials manifest themselves in overzealous enforccment actions as well as the limits of federal 

credibility when it comes to regulating exploration and production opcrations. 

There arc roughly 18,000 independent producers like me operating in 32 states. Although 

sOl11e arc larger and well known, the average independent producer employs 11 full-time and 

three part-time employees. He or she has been in business for 26 years on average. I 
72 


79849.057

Together, we drill 95 percent of all U.S. wells and account for 68 percent or total U.S. 

production roughly 82 percent of U.S. natural gas production and more than 54 percent of 

domestic oi I production; 

Onshore here in America, independents arc responsible for: 

over 3 percent of the totaILJ.S. workforce; 

more than 4 million American jobs; 

more than $579 billion in total economic activity; 

4 percent of U.S. GOP;' 

Tn 2010, independent producers' employees paid S30.7 billion in income, sales, and excise 

taxes. Our combined total federal, state. and local taxes, royalties and rents were $69.1 billion. 

Our ecosystem of direct, indirect and induced jobs generated $131 billion for federal and state 

coffers. ' 

Every $1 million of upstream capital expenditurc by independent producers results in $1 

million in total taxes, $5.1 million in overall contribution to U.S. GOP, six direetjobs, and 33 

total upstream jobs.· 

Like the subcommittee, OJPA and independent producers across the nation are troubled by 

the enforcement philosophy of EPA as cxpressed by former EPA Region 6 Administrator Al 

Armendariz in a recently revealed 20 I 0 video: 

"But ~lS 1 said, oil and gas is an enlllrcement priority, it's ()ne Dr sevcn. so we arc going to spend a 

I'lir anhlllni or time' looking at oil and ga, pmtiuelioll. And 1 gave. I \\as in a m,'eting once anti I 

gal'l' an anaiogy to my st:!lTabout my philosophy of cnttll'cement, ~lfld I think it was probably a 

littk el'lltic and maybe not appropriate Illr the meeting but I'll go ahead and tell you what J said. 

It IVas kind or lik, how the Romans used to conquer litlle villagl's in the ivJcdilerrallcan. They'd 

go into a littie' Tur~ish town somewhere:, they'd lind the Iirst Ii\l' gnys they saw and they would 

cruci I\' them. And then you know that town was really easy to manage for the next few years . 

. \nd so vou make examples out orpcopic whtl arc in this case nol compliant \\'ith the 1.1\\. Find 

2 
73 


79849.058

people who arc I)ot COlllpliant with the law, and you liit them as hard as you can and you make 

,,'(amples out 01 th"111, and thc're is a dCll'lTent c'lTect there, AmI, cOll1p'll1ics that arc sm'lrl see 

thaI, they don't want to play that game, and tih:y decide at that point that it's tillle to clean up, 

AmI, that won't happc'n unless you have somebody out there making e'(amples of people, So you 

go ouL you look at an industry, you tind people violating the law, you go aggressively alier 

thelll, And we do have S(lllle pretty elTective enforcement tools, Compliance can get very high, 

\'cry, \'ery quickly, That's what these companies respond to is both their public image but also 

tinaneial pressure, So you put some financial pressure on a company. you get other people in 

that industry to ckan up \ny quick lv, So, that's our general philosophy," EPA Region (, 

Administrator AI Armendariz, 2() I () 

\\'hik surprisc'd llwt \11'. Armcmbri,l \\'a, so i(ll'li1coming. OIPA is nol s.urprised by what 

he IT\'C:t!cd about his appn1:lch to m:ll1aging till' Region (, office, nor about EPA's culturc and 

philosophy, 

In June 2010, OIPA hosted Mr. Armendariz at its annual meeting in Dallas, Texas, He 

had recently assumed his position at Region 6, OIPA mcmbers wanted to learn more ahout the 

man who would have such authority over their companies' bottom lines. 

While Mr. Armendariz did not use the inflammatory rhetoric with us that ultimately 

resulted in his resignation, h'" sent a clear and direct signal to llS that he ,vas the new sheriff in 

town and that he intended to initiate an attack on oil and natural gas producers within Region 6, 

Our general impression of Mr. Armendariz was of a highly motivated and committed 

environmcntal activist who opposed fossil fucls, 

We could not have known at that timc thc arc ofML Armendariz's career, nor the role 

EPA's wrong/hI Parker County. Texas, enforcement action would play ill environmental 

extremists' public campaign to demonize safe and proven technologies that are helping break 

America's dependence on overseas oil. 

It is impossible to discuss these issues without addressing hydraulic fmeturing - the 

currcnt bogeyman used by environmental activists to scarc ordinary citizens, drive professional 

3 
74 


79849.059

fundraising appeals, and motivate environmental cxtremists and powerful voting blocs that 

simply oppose fossil fuels. 

Hydraulic fracturing is a technique used to provide a pathway for natural gas and oil 

trapped insidc a rock into a producing well so that they can be brought to the surface. The 

earliest hydraulic Ij'aeturing jobs occurred in the late 1940s in Oklahoma and Kansas. The 

technique has bcen continuously used and improved since that time. Gcnerally, a solution that is 

99.5 percellt water and sand is pumped under extreme pressure into the rock. The pressure 

creates tiny fractures in the rock. The fluid is then pulled out of the rock while the sand remains 

behind to prop open the ti-aelurcs and allow the oil and natural gas to flow into the wcllborc. 

More than 100,000 Oklahoma wells have been hydraulically Ij'aetured over the past 60 

years without a single documented instance of contamination to ground ,vater or drinking watcr. 5 

This is because state ground water regulations were developed long before hydraulic 

fracturing began and have proven more than sufficient in regulating the practice. Oklahoma's 

first commercial oil well was drillcd in 1897, I () years beforc statehood. The Oklahoma 

Corporation Commission was given responsibility for regulation of oil and gas production in 

Oklahoma in 1914. The Commission has exclusive state jurisdiction over all oil and gas industry 

activity ill Oklahoma, including oversight and enforcement of rules aimed at pollution prevention 

and abatement and protecting the state's water supplies." 

Such state regulations established well construction standards including protective steel 

casing and cementing requirements. Thcy were designed to protect ground watcr from 

contamination by oil and its produced water. Thcse regulations havc cffectively preveuted 

contamination of drinking watcr and ground water in more than a million instances where 

hydraulic fracturing has been uscd7 

4 
75 


79849.060

Thanks to hydraulic fi'ueturing and technological breakthroughs in horizontal drilling the 

United States now imports less than 49 percent of its oil, down from 60 percent a few short years 

ago. 

This docs not sit well with fossil fuel opponents. With no scicntilic basis to fault 

hydraulic fracturing, environmental extremists have become fear mongers. Their strategy is to 

create anxiety over oil and natural gas development, criticize state ground water and drinking 

water protections as insufficient, demand that the regulatory process be federalized, and then use 

that process to slow development by increasing the costs of regulatory compliance in tefms of 

both employee hours committed to the paperwork burden and actual dollars. 

for example, compliance software costs associated with the greenhouse gas reporting 

requirements under EPA's proposed New Source Performance Standards (NSPS) and National 

Emission Standards for Hazardous Air Pollutants (NESHAP) exceed S227,000 plus $54,000 in 

anllual maintenancc and updates. That's just sollware expenses for one company. The total cost 

of monitoring equipmcnt, capture devices, and reporting measures to meet EPA greenhouse gas 

reporting and reduction efforts will mn into the hundreds of millions of dollars annually. 

As another example of federal regulatory overreach, you mayor may not be familiar with 

the American Burying Beetle, which is listed as an endangered species. The Department of the 

Interior has determined the beetle to be active during certain parts of the year in Osage County, 

Okla., where I have operations to produce minerals owned by the Osage Tribe. To protect the 

bcctlc I must hire consultants, who must put out survey traps containing carrion, file additional 

paperwork with the U.S. fish and Wildlife Service (USFWS) and slow drilling operations during 

the beetles' active period. Slowing operations to protect the bectlc means slowing royalty 

payments to the Osage Tribe. This endangered species issue means my operations are regulated 

5 
76 


79849.061

by two separate competing entities within the Department of the Interior the Bureau of Indian 

Amlirs to protect the tribe and USFWS to protect the beetle plus OSHA, plus EPA. 

In the case of Parker County, Texas, EPA Region 6 decided that state and local officials 

had not taken sufilcient action to investigate claims of contaminated drinking water. Without 

scientific basis for doing so, the EPA decided to hlame reports of contamination on hydraulic 

fracturing, notified opponents of hydrnulic fi'acturing that it intended to make news, ordered 

independent producer Rangc Resources to provide clean drinking water to local residents, 

engaged in a media campaign to frightcn residents about the danger of a fire or explosion, 

imposed heavy financial penalties on Range Resources, and then promoted its ability to assess 

heavy penalties through news releases.' 

Mr. Armendariz, it secms, was intently following his own playbook. 

Earlier this year, however, a judge found that one of the local residcnts alleging 

contamination had worked with environmental activists to deceive public officials and the 

community about the threat. In March, EPA quietly withdrew its administrative ordcr that 

alleged Range Resources had polluted the water and dropped its lawsuit against Range 

Resources. 

[n hindsight, it should be noted that the Environmcntal Defense Fund had contracted with 

Mr. Armendariz in 2007 to produce a study on shale-related air emissions in Dallas-Fort Worth 

that challenged the prior research of state and fedeml regulators. 9 Published in January 2009, Mr. 

Armendariz's conclusions were subsequently challenged by the Barnett Shale Energy Education 

Council due to his "inaccurate and t1awed interpretation of the facts."'o Additionally, Mr. 

Armendariz served as a technical advisor to several anti-fossil fuel organizations and appeared in 

an activist's motion picture that attacked hydraulic fracturing. 

6 
77 


79849.062

The Parker County, Texas, incident taken in context with similar egregious EPA 

actions and subsequent EPA reversals related to hydraulic fracturing operations in Pavilion, Wy. 

(Region 8) and Dimock, Penn. (Region 3) _. leads me to believe that EPA's problems are 

national in scope. 

Bad science, or scicnce improperly skewed to deliver a preconceived result and promote 

an extremist agenda, is not science at all and docs a disservice to polieymakers of both major 

parties and the taxpayers. 

These episodes underscore that the federal government possesses neither the expertise, 

nor the objectivity to regulate specific drilling and production techniques. Each state is 

geologically distinct from its neighbors. There is no one-size-fits-all solution or protection 

progrml1. 

Furthermore, the Region 6 episode suggests that Congress must exercise greater oversight 

of EPA regional offices and that EPA Regional Administrators should be subjected to Senate 

confirmation. 

Finally, there is only one electcd orticc that is indistinguishable from the bureaucracy that 

servcs it, and that is the office of the President of the United States. Despite words and photo ops 

to thc contrary, the Prcsident's actions, and the actions of his executive agencics, clearly indicate 

thc Prcsident's anti-fossil fuel bias. 

In this regard, Mr. Armendariz simply seems to have operated in a manner consistent 

with that of the rest of President Obama's Administration. To cite his own imagery, I have no 

doubt that Mr. Armcndariz simply believed hc was "cnlcifying" oil and gas producers as a loyal 

Roman soldier serving the emperor. 

7 
78 


79849.063

Thank you very much l'or allowing me to appear today. I look f'orward to any questions 

you may have. 

1 Independent Petroleum Association of America, 2012. 

2 IHS Global Insight, "The Economic Contribution of the Onshore Independent Oil and Natural 

Gas Producers to the u.s. Economy," April 2011. 

J Ibid. 

4 Ibid. 

5 Testimony of Jeff Cloud, Oklahoma Corporation Commission, U.S. Senate Committee on 

Environment & Public Works, April 12, 2011. 

6 lbid. 

7 Testimony of the Independent Petroleum Association of America, U.S. House Committees on 

Agriculture and Natural Resources, July 8, 2011. 

8 EPA, "EPA Region 6 Enforcement and Compliance Results for 2011," December 8,2011. 

9 AI Armendariz, Ph.D., "Emissions from Natural Gas Production in the Barnett Shale Area and 

Opportunities for Cost-Effective Improvements," January 26, 2009. 

10 Ed Ireland, Ph.D., "Air Quality and the Barnett Shale," January 10, 2011. 

8 
79 


79849.064

SUMMARY 

Testimony of Robert ,J, Sullivan, Jr. 

Chairman, Oklahoma Independent Petroleum Association 

U.S. House of Representatives 

Energy & Commerce Committee 

Subcommittee on Energy & Power 

Wednesday, June 6, 2012 

The domc:stic crude oil and natural gas industry is a highly decentralized amalgam of 

small businesses that already arc effectively regulated at the state level. 

America's 18,000 independent producers operate in 32 states and drill 95 pc:rcent of U.S. 

cnIde oil and natural gas wells. They arc responsible lor more than 4 million U.S. jobs 

and 4 percent of U.S. GDP. Most independent producers arc small businesses with only 

about a dozen employees, but are nevertheless critical to U.S. energy security. 

The Subcommittee hearing is critical to understanding how the personal agendas of 

senior EPA officials manifest themselves in overzealous enforcement actions and the 

limits of federal credibility when it comes to regulating exploration and production 

operations. 

Mr. Armendariz spoke at the Oklahoma Independent Petroleum Association's annual 

meeting in June 20 I O. He sent a clcar and direct signal to those in attendance that as 

Region 6 Administrator he intended to initiate an attack on oil and natural gas producers 

within Region 6. 

Although the states arc effectively regulating cnIde oil and natural gas exploration and 

production, opponents of fossil fuels wish to create anxiety over oil and natural gas 

development and state protections in an attempt to federalize the regulatory process, thus 

slowing development by increasing compliance costs. 

Mr. Armendariz was a willing participant in this activist effort. However, his actions are 

consistent with others at EPA and merely reflect the anti-fossil fuel bias of the President 

of the United States. 

Congress mllst exercise more oversight of EP A. EPA Regional Administrators should be 

subject to Scnatc confirmation. 

### 
80 

Mr. WHITFIELD. Well, thank you. 

Dr. Mintz, when I introduced you, I made the mistake of saying 

Nova Scotia University, and it is Nova Southeastern University 

where you are a Professor of Law, so you are recognized for 5 minutes. 

STATEMENT OF JOEL A. MINTZ 

Mr. MINTZ. Thank you, sir. We are a distance from Nova Scotia, 

actually. It is not a problem. 

Mr. Chairman, Mr. Ranking Member and members of the subcommittee, my name is Joel A. Mintz. I am a Professor of Law at 

Nova Southeastern University in Fort Lauderdale, Florida. Since 

1983, a major focus of my academic research and writing has been 

enforcement work of EPA. I have written three books and a number of book chapters and law review articles that touch on EPA enforcement. My most recent book, Enforcement at the EPA: High 

Stakes and Hard Choices, revised edition, which I actually have a 

copy of here for purposes of shameless self-promotion, was published in April by the University of Texas Press. That work, based 

on 190 personal interviews with government officials, as well as extensive documentary research, recounts the history of EPA’s enforcement program from its beginnings in the early 1970s through 

January 2009. Since 2009, I have also conducted a number of informal telephone interviews with enforcement personnel at EPA and 

the Department of Justice to get a continuing sense of the major 

EPA enforcement developments and trends during the Obama administration. 

My testimony before you today is intended to put the enforcement work of EPA during the Obama administration to date into 

context and historical perspective rather than to discuss any individual cases or regulations. My main point is simple and straightforward. For the past 3 1⁄2 years, EPA’s approach to enforcement 

has employed the same overall philosophy and strategy that has 

characterized EPA enforcement since the early 1970s. Rather than 

being uniquely overzealous or draconian, EPA enforcement in the 

Obama years has followed longstanding patterns established at 

EPA well before 2009. 

From the agency’s beginnings in the Nixon administration to the 

present day, EPA enforcement, with only a few brief periods of exception, has been based on a theory of deterrence. Under this deterrence theory, which is scarcely unique to EPA, violations of the 

law are to be detected promptly, and fairly and appropriately punished, as a way of deterring the individual violator and others similarly situated from violating the law in the future. The theory assumes that individuals and firms are rational economic actors who 

will comply with the law when the probability of detection is great 

enough, and the penalties are high enough, that it becomes economically irrational for them to violate the law. Of course, the constitutional rights of all citizens must be strictly protected during 

this process, both because it is the right thing to do and because 

enforcement cases will not succeed in the courts where citizens’ 

rights are violated. 

Throughout EPA’s history, with only minor exceptions, decisions 

regarding which industries and companies should be the focus of 

81 

enforcement actions, and whether those actions should be administrative, civil judicial, or criminal in nature, have been made by career enforcement professionals and not by political appointees. 

From the George H.W. Bush administration through the Obama 

administration to date, for approximately a third of its enforcement 

work, EPA’s enforcement staff has relied on a national priority approach that targets particular industries and national or international firms for intensive, comprehensive enforcement actions. 

This targeting approach is a neutral, non-political procedure that 

employs statistical analysis of data to give enforcement priority to 

industries and firms which have the worst compliance records, and 

whose environmental releases do the most harm to the health of 

Americans. 

EPA’s own annual enforcement reports provide statistical evidence that EPA enforcement under Obama has not been uniquely 

harsh. They reveal, for example, that during the eight years of the 

George W. Bush administration, the civil penalties assessed 

against environmental law violators averaged $117 million per 

year. In contrast, during the first 3 years of the Obama administration, EPA enforcement resulted in the assessment of a slightly 

lower amount of civil penalties: $115 million a year. 

Similarly, EPA enforcement actions against the oil and gas industry declined during the Obama administration as compared 

with the preceding Presidency. EPA brought only 87 enforcement 

actions against the industry in 2011, while it initiated 224 such actions in 2002. Although there may well be good explanations for 

these declines, they do support the overall conclusions of my historical research: EPA’s enforcement work during the Obama period 

has been similar in nature to the work it did in nearly every administration since the agency was established, regardless of the 

party affiliation of the President. 

Thank you. 

[The prepared statement of Mr. Mintz follows:] 

82 


79849.065

Testimony of 

Professor Joel A. Mintz 

Before the 

House Committee on Energy and Commerce 

Subcommittee on Energy and Power 

June 6, 2012 
83 


79849.066

My name is Joel A. Mintz. I am a Professor of Law at Nova Southeastern 

University Law Center in Fort Lauderdale, Florida. Since 1983, a major 

focus of my academic research and writing has been the enforcement work 

of the EPA. I have written three books and a number of book chapters and 

law review articles that touch on EPA enforcement. My most recent book, 

Enforcement at the EPA: High Stakes and Hard Choices (revised edition) 

was published in April by the University of Texas Press. That work-based 

on 190 personal interviews with government enforcement officials as well 

as extensive documentary research-recounts the history of EPA's 

enforcement program from its beginnings in the early 1970s through 

January, 2009. Since 2009, I have also conducted a number of informal 

telephone interviews with enforcement personnel at EPA and the 

Department of Justice to get a continuing sense of the major developments 

and trends during the Obama administration. 

My testimony before you today is intended to put the enforcement work 

of EPA during the Obama administration to date into context and historical 

perspective. My main point is simple and straightforward: for the past three 

and a half years, EPA's approach to enforcement has employed the same 

overall philosophy and strategy that have characterized EPA enforcement 

since the early 1970s. Rather than being uniquely overzealous or 

draconian, EPA enforcement in the Obama years has followed longstanding 

patterns, established at EPA well before 2009. 

From the Agency's beginnings in the Nixon administration to the present 

day, EPA enforcement (with only a few, quite brief periods of exception) 

has been based on a theory of deterrence. Under this theory-which is 

scarcely unique to EPA-violations of the law are to be detected promptly, 

and fairly and appropriately punished, as a way of deterring the individual 

violator and others similarly situated from violating the law in the future. 

The theory assumes that individuals and firms are rational economic 

actors, who will comply with the law when the probability of detection is 

great enough, and the penalties are high enough, that it becomes 

economically irrational for them to violate the law. Of course, the 
84 


79849.067

constitutional rights of all citizens must be strictly protected during this 

process-both because it is the right thing to do and because enforcement 

cases will not succeed in the courts where citizens' rights are violated. 

Throughout EPA's history, with only minor exceptions, decisions regarding 

which industries and companies should be the focus of enforcement 

actions-and whether those actions should be administrative, civil judicial, 

or criminal in nature-have been made by career enforcement 

professionals, and not by political appointees. From the George H.W. Bush 

administration through the Obama administration to date, for 

approximately 1/3 of its enforcement work, EPA's enforcement staff has 

relied on a national priority approach that targets particular industries and 

national or international firms for intensive, comprehensive enforcement 

actions. This targeting approach is a neutral, non-political procedure that 

employs statistical analysis of data to give enforcement priority to 

industries and firms which have the worst compliance records, and whose 

environmental releases do the most harm to the health of Americans. 

EPA's own annual enforcement reports provide statistical evidence that 

EPA enforcement under Obama has not been uniquely harsh. They reveal, 

for example, that during the eight years of the George W. Bush 

administration, the civil penalties assessed against environmental law 

violators averaged $117 million per year. In contrast, during the first three 

years of the Obama administration, EPA enforcement resulted in the 

assessment of a lower amount of civil penalties: $115 million per year. 

Similarly, EPA enforcement actions against the oil and gas industry declined 

during the Obama presidency, as compared with the preceding 

administration. EPA brought only 87 enforcement actions against this 

industry in 2011, while it initiated 224 such actions in 2002. Although there 

may well be good explanations for these declines, they do support the 

overall conclusions of my historical research: EPA's enforcement work 

during the Obama period has been similar in nature to its work in nearly 

every administration since the Agency was established, regardless of the 

party affiliation of the president. 
85 

Mr. WHITFIELD. Thank you, Dr. Mintz. 

Mr. Etsitty, you are recognized for 5 minutes. 

STATEMENT OF STEPHEN B. ETSITTY 

Mr. ETSITTY. Good morning, Chairman Whitfield, Ranking Member Rush and members of the committee. On behalf of Navajo Nation President Ben Shelly, we extend our appreciation for the opportunity to present our views this morning. 

I will focus on EPA’s tribal consultation responsibilities and the 

Regional Haze Rule BART determination processes and our experiences working with Region 6 and EPA headquarters. 

The Navajo Nation is a coal-based resource tribe with two large 

coal-fired power plants and associated mines on our lands, and the 

1,800-megawatt San Juan Generating Station and San Juan Mine 

located just off the reservation in New Mexico. Both the San Juan 

plant and the San Juan mine are located outside the jurisdiction 

of the Navajo Nation but the plant and the mine have positive economic impact on the Nation and on the regional economy. Because 

of the Nation’s substantial coal reserves and jobs in the energy sector, the Regional Haze Rule and other EPA rules will have longreaching impacts on the Nation’s sovereignty including our ability 

to independently develop our natural resource economy and provide 

economic security for our tribal members. 

Recent rulemaking under the Regional Haze Rule by EPA imposed excessively stringent and expensive BART, or selective catalytic reduction control technology, on the San Juan plant and jeopardizes the continued viability of the power plant. In this regard, 

the EPA has a requirement to engage in meaningful consultation 

with the Navajo Nation in the development of regulations with 

tribal implications as recognized in Executive Order 13175 and 

EPA’s tribal consultation policy section 4. However, EPA has failed 

to do so. 

The standard for determining whether a regulation has tribal implications is whether a proposed regulation has ‘‘substantial direct 

effects on or more Indian tribes.’’ The Federal Implementation Plan 

for the San Juan plant will have substantial direct effects on the 

Navajo Nation, San Juan plant, the San Juan Mine, subcontractors 

and seasonal workers. As the Nation stated in its comments on the 

proposed FIP for San Juan, EPA provides a facile conclusion that 

it does not have direct tribal implications because the FIP does not 

impose federally enforceable emission limits on any source located 

on tribal lands and neither imposes substantial direct compliance 

costs on tribal government nor preempts a tribal law. 

However, the EPA failed to consider potential regional economic 

impacts and impacts on the local Indian tribes including the Navajo Nation and the inevitable impacts if San Juan Generating Station and its mine were forced to close as a result of the imposition 

of costly SCR technology. 

EPA failed to conduct an accurate analysis of the potential social 

costs to the Navajo people. Should this final FIP result in closure 

of the San Juan plant and mine, hundreds of jobs will be lost, not 

only in the coal and power industry on the Nation but in the service support industry and public sector as well. A conservative estimate is that 318 Navajo jobs would be lost. This includes highly 

86 

paid jobs that are about 2.7 times the average Navajo Nation 

household income of $20,000. This lost revenue would reduce 

spending by about $25 million per year and a loss of nearly $1 million annually in sales tax receipts. An increase in the number of 

unemployed on the Navajo Nation caused by the closure of the San 

Juan plant or the San Juan Mine would result in increased demands on social services provided by the Navajo Nation and other 

government agencies at a time when other EPA rulemakings are 

threatening to diminish the Nation’s coffers such as BART determinations at the Four Corners Power Plant and the Navajo Generating Station, which are located on the reservation. These increased demands for services would necessitate that the Navajo 

Nation divert an increased percentage of its already stressed budget to provide for the social needs of the unemployed. This would divert funding that could be spent on economic development and 

thereby stunt future economic growth on the Navajo Nation. 

The Nation supports the substantive goals of the Clean Air Act 

and the goal of the Regional Haze Rule to provide visibility or to 

improve visibility in class I areas. However, implementation by 

EPA of the Regional Haze Rule and the BART process must be 

done with due analysis and accommodation of the critical economic 

interests of the Navajo Nation and the Navajo people and the continued operation of power plants in and near Navajo Indian Country. EPA has an obligation, a requirement to meaningfully consult 

with the Nation for rulemakings directly affecting the Nation before proposing a draft rule and after promulgating a final rule. 

That was not done for the proposed FIP for San Juan or for the 

advanced notice of proposed rulemaking for the Four Corners 

Power Plant and the Navajo Generating Station, and EPA therefore violated its consultation obligations and responsibilities to the 

Nation. 

The Nation nonetheless remains hopeful that EPA will continue 

to improve its consultation practices in accordance with their own 

stated policies and to complete tribal consultation on the San Juan 

FIP and to work with EPA in a true government-to-government relationship. 

Thank you. 

[The prepared statement of Mr. Etsitty follows:] 

87 


79849.068

Statcment of Stephen B. Etsilty 

Executivc Director 

Navajo Nation EPA 

Committee on Energy and Commerce 

June 6,2012 

lleat'ing Titled: "EI' A Enforcement Priorities and Practices" 

The Navajo Nation appreciates the opportunity to present its views on the United States 

Environmental Protection Agcncy's Enforcemcnt Priorities and Practices. My Testimony this 

Illorning will foclis on Regional Haze, the Best Alternative Retrofit Technology ("BARr) 

determination processes, and our experiences working with Region VI. Region IX, and 

Environmental Protection Agency CEPA") Headquarters. 

The Navajo Nation ("Nation") is a primarily coal-based resource tribe that is the landlord 

for two large coal-fired plants and associated mines located directly on its tribal lands and close 

neighbor to one large coal tired power plant and associated mine located near the Nation. The 

Regional Haze Rule. 40 C.F.R. Part 51, 64 Fed. Reg. 35714 (July I, 1999), directly affects the 

Nation's existing natural resource economy and its government revenue sources. Moreover, 

because of the Nation's substantial coal reserves and potential jobs in the energy sector, the 

Regional Haze Rule and other EPA rules will have long reaching impacts on the Nation's 

sovereignty, including the Nation's ability to independently develop its natural resource 

economy and provide economic security for its tribal members. 

J. Introduction 

The San Juan Generating Station CSJGS"). a coal-tired electric power plant adjacent to 

the Navajo Nation. is of critical cconomic importance to the Navajo Nation and the Navajo 

people. The SJGS provides jobs to a significant number of Navajo people, both at the power 

plant and at the coal mine associated with the plant, as discllssed further below. A recent 

rulemaking under the Regional Haze Rule by the EPA imposes excessively stringent and 

expensive BART on the SJGS and jeopardizes the continued viability of the power plant. 

Accordingly, the Navajo Nation filed an Amiclls Curiac brief' in Wild Earth Guardians. el 

of .. 1'. United Sial".\' Enviral1lnen/af Protection Agency, Tenth Circuit Case Nos. 11-9552, 11-

9557, and 11-9567.in support of the Public Service Company of New Mexico ("PNM") and of 

New Mexico Governor Martincz and the Nell Mexico Environment Department (collectively 

"New Mexico"), in their petitions for review of tbe BART I'ulcmaking for the SJGS (entitled 

"Approval and Promulgation of Implementation Plans; New Mexico; Federal Implementation 

Plan for Interstate Transport of Pollution Affecting Visibility and Best Available Retrofit 

Technology Determination," 76 Fed. Reg. 52,388 (Aug. 22, 20 II) (,'FIP"). 

The Navajo Nation ("Nation") is the largest sovereign Indian Nation both in terms of 

population and land area in the United States. The Nation is the homeland of approximately 

300,000 Navajo people, covers more than 27,000 square miles, and shares territory with the 
88 


79849.069

slales of Arizona. :.icw Mexico. and Utah. Much of the :.iation is in close proximity 10 areas 

covered by the Regional Haze Rule (known as "Class I" areas under Clean Air Act. see 42 

U.S.c. ~ 7472(a». 

As economic census data continues to illustrate the Nation has remained extremely 

economically depressed 1'01' many generations. In economic terms, it is one of the two poorest 

at'eas in the United States, with an unemploymcnt rate that has incrcased from 42.16% in 200 I to 

50.52% in 2007. Since the current national recession hit in late 2008, the Nation has suffered 

even more unemployment, particularly for younger Navajo people, \\'ho are often forced to move 

elsewhere. The average annual Navajo family income is about $20,000. 

The SJGS is a rour-unit coal-fired electric generating t~lCility located in Waterflow, New 

Mexico, and has a generating capacity of 1800 mcgawatts. The SKiS is located approximately 

17 miles east of Shiprock. New Mexico. a town of approximately 10,000 residents and the 

largest popUlation center on the Navajo Nation. Coal t,)r the SJGS is mined at the San Juan 

Mine. located about 18 miles cast of Shiprock. 

While both the SJGS and the San Juan Mine are located outside the jurisdiction of the 

Navajo Nation, the plant and the mine have a significant positive economic impact on the Nation 

and on the regional economy. 

The SJGS is a major employer in the northeastern portion of the Navajo Nation. 

Approximately 88 of the 400 employees (22%) at the plant arc Native American. most heing 

Navajo. About 230 of the San Juan Mine 500-person workroree (approximately 46%) are Native 

American. with most also being Navajo. In addition, many of the temporary workers hired 

during times of scheduled maintenance at the SJGS and the major contractors to the SJGS are 

comprised of mostly Navajo employees. 

II. EPA's Obligation to Engage in Meanil1gful Tribal Consultation 

As recognized in fo.O. 13175, .. the United States has a unique legal relationship with 

Indian tribal governments as set forth in the Constitution of the United States, trcaties. statutes, 

Executive Orders. and court decisions" Accordingly. every federal agency "shall have an 

accountable process to ensure meaning/it! lind time(v input by tribal officials in the development 

of regulatory policies that have tribal implications." (emphasis added). As the EPA recognizes in 

its EPA Tribal Consultation Policy. Section IV, EPA shares the federal government's trust 

responsibility derived from the historical relationship between the federal government and Indian 

tribes. 

For purposes of the required tribal consultation, the standard for determining whether a 

regulation has tribal implications is not whether it "impose[s] substantial direct compliance costs 

on tribal governments:' but rather whether a proposed regulation has "substantial direct effects 

on one or more Indian tribes." As discllssed above, the FIP for SJGS will have substantial direct 

effects on the Navajo Nation. the SJGS, San Juan Mine, subcontractors. and seasonal workers. 

This represents about 318 households of the Navajo Nation and includes highly paid jobs that are 

about 2.75 times the average Navajo Nation Household Income of about $20.000. Regionally. 

2 
89 


79849.070

coalminc jobs pay an average annual income of more than $55.000. and loss of comparable 

paying jobs at the SJGS would be devastating. both directly and indirectly. to many Navajo 

people. 

Closure of the SJGS and San Juan Mine would also afl'ec! the Navajo Nation's tax basco 

Approximately 318 workers 11'om the SJGS. San Juan Mine. and related activities reside on the 

Navajo Nation. These individuals purchase goods and services produced. processed or extracted 

from the Navajo Nation. and 4% sales tax is assessed on all saks of goods und services within 

the Navajo Nation. In the event that the SKiS and San Juan Mine are closed and workers are 

laid of I these individuals will have less money to spend. This would reduce the sales tax 

revenue collected by the Navajo Nation and place additional social safety net obligations on the 

Navajo Nation. 

EPA has a trust responsibility to the Navajo Nation in this circumstance. Nonetheless. 

despite the unique impact that this FIP and other impending BART rulcmuking in Navajo Indian 

Country will have on the Navajo Nation. the EPA failed to conduct requisite "outreach" to the 

Nation and consultation prior to publishing the proposed FIP for SK,S. 

Because of this lack of outreach and consultation. Navajo Nation President Ben Shelly 

sent a letter on tvlay 3. 2011 to Dr. Armendariz. Regional Administrator. EPA Region VI. 

requesting formal government-to-government consultation with EPA on the FIP for SJGS. It 

113S especially disappointing to again have to remind EPA of its consultation obligations to the 

Nation at a time Ilhen other air-quality rulemakings for the Nation's power plants were pending: 

(BART for Navajo Generating Station (""NGS") and the Four Corners Power Plant ("FCPP"). 

and the MATS Rule. The Nation has had to request consultation on those aforementioned 

rulemakings event hough EPA had just finalized its Tribal Consultation Policy purportedly to 

better implement LO. 13175 and its 1984 Indian Policy. 

As a result of the President's request. EPA staff met with President Shelly and other 

Navajo Nation officials and counsel on May 20. 20 II, in Albuquerque. New Mexico. At that 

meeting. the parties discllssed the Nation's comments and concerns about the proposed FIP for 

S.lClS. The Nation appreciates the 0ppol1unity provided by EPA. However. the approximately 

tllo-hour consultation. only provided at the eleventh hour of the FIP rulemaking. was neither 

meaningful nor adequate tribal consultation. In hlct. contrary to its Tribal Consultation Policy. 

EP A never provided feedback to the Nation regarding its comments at the May 20. 20 II 

meeting. and the Nation is therefore unaware how its concerns were weighed or considered by 

the agency, if at all. The EPA can and must do better to engage with the Nation in meaningful 

government-to-government consultation in this and other rulemakings. which have the potential 

to so catastrophically impact the Nation through EPA regulation. Indeed. EPA made only one 

change in the tinal FIP for SJGS that was positive for the Nation compared with the proposed 

rule. 

The Natic)ll nonetheless remains hopeful that EPA will improve its consultation practices. 

in accordance with its stated policies. and looks forward to beginning to work with the EPA in a 

true government-to-government relationship as the Regional Haze Rule is implemented in the 

southwest and across the Navajo Nation and as other rule-makings are undertaken. 
90 


79849.071

III. EPA's FailUl'c to Analyzc Impacts to the Nation from the S.JGS FIP 

In its April 4. 20 II comments on the draft I'll' for SKiS. and in its Amicus Brief in Wild 

EarTh Gliardians, et aI., v. United States Environmental Protection Agency. the Nation pointed 

out EpA's failure to comply with its own regulations and fully analyze all five BART factors for 

all available retrofit control technologies that are technically feasible. and how EPA also failed to 

consider critical economic impacts to the Nation and Region as required as part of the BART 

analysis. and pursuant to its trust responsibility and government-to-government relationship with 

thc Nation. Specifically, EPA failed to consider potential regional economic impacts and impacts 

on local Indian tribes. including the Navajo Nation. and the inevitable impacts if SKiS and its 

mine were forced to close as a result of imposition of costly SCR technology. 

As the Nation stated in its comments on the proposed FIP for SJGS. EPA provides the 

facile conclusion that it does not have direct "tribal implications:' as defined in [,0. 13175. 

because the Flf' docs not impose federally enforceable emissions limitations on any source 

located on tribal lands, and neither imposes substantial direct compliance costs on tribal 

governments. nor preempts tribal law. 

This is not an accurate analysis of the potential social costs to the Navajo people. On the 

contrary. should the final I'll' for SJCiS result in closure of S.JGS. hundreds of jobs will be lost. 

not only in the coal and power industl'y on the Nation, but in the service support industry and 

public sector as \\cli. If the SJGS closes as a result of EpA's BART FIP. a conservative estimate 

is that 318 Navajojobs would be lost. representing an annllalloss of abo lit $17,7 million, This 

would reduce spending by about $25 million per ycar after adjusting for an income multiplier 

and a loss of nearly $1 million annually in sales tax receipts j()r the Navt\jo ;-":ution, which is a 

significant loss for the Navajo Nation's General Fund. An increase in the number of 

unemployed on the Navajo Nation caused by the closure of the S.JGS or Sun Juan Mine would 

result in increased demands for social services provided by the Navajo Nation. At a time when 

other EPA rulemakings are threatening to diminish the Nation's cotTers. such as BART 

determinations at the FCpp and the NGS. these increased demands for services would necessitate 

the Navajo Nation diverting an increased percentage of its already stressed budget to provide for 

the social needs of the unemployed. This would divert funding that could be spent on economic 

development and thereby stunt future economic growth on the Navajo Nation. 

IV. Othcr EPA Rulcmakings Affecting the Navajo Nation 

On February 25. 2011. EPA. Region IX. proposed an Alternative Emission Control 

Strategy ("AECS"l. a bctter-than-BART determination which supplemented its previous October 

19. 20 I 0 proposal for FCpf'. The AECS takes into account the FCPp proposal to shutdown 

Electrical Generating Units ("EGUs") !. 2 and 3 (of 5 total EGUs). The loss of this total net 

capacity of 560 MW by 20 I 4 would result in 100% control of NO,. S02. PM. Hg and other 

hazardous pollutants trom these EGUs. which would significantly reduce emissions from FCPP, 

Currently. EPA. Region IX. has delayed proposing BART for NGS pending crucial 

consultations with stakeholder tribes, After publication of the Advance Notice of Proposed 

.j 
91 


79849.072

Rulel11aking ("'ANPIC) for GART Ill!' NC,S and FCPP, the Navajo Nation recommended a 

phased approach to emissions controls for thosc plants, and suggested that the EPA consider the 

multiple intercsts at stake, including the significant economic intc('csts of the Navajo Nation. 

The Navajo Nation previously commcnted that EPA should have explicitly analyzed the impact 

of the MATS rule in conjunction with these other rulemakings and provide flexibility for 

compliance scheduling so that FCPP and NGS. upon which the Navajo Nation economy is 

almost entirely (·diant. can continue their operations. The Nation also commented that the EPA 

should also analyze the impact of future rulcl11akings. such as GHG regulation. which have the 

potential to insert yet another layer of compliance costs and compliance scheduling for coal-fired 

power plants to meet. and constitute severe challenges to the Navajo Nation economy. 

We acknowledge that EPA has begun to implement its Tribal Consultation Policy with 

affected Indian tribes and is working closely with other tCdcral agencies. including the 

Department of thc Interior. on these issues. While the Nation appreciates that EPA is apparently 

scnsitive to the plight of FCPP and NGS under its current rulcmakings. equally critical to the 

Nation's and the regional economy is the future of SJGS. EPA must use the flexibility it has 

under tile CAA to develop a rational scheme integrating its multiple rulcmakings and time/ines. 

especially givcn the goal under the Regional Haze Rule to gradually phase in visibility 

reductions in Class I Areas up until 2064. To the extent the EPA is unable to be flexible because 

of statutory requirements under tile CAA. the Nation urges Congress to consider amendments to 

the CAA that will allow for such flexibility. 

Specifically in making BAR'1' determination. EPA also must not be allowed to invert the 

intent of Congress that local governments. including tribes. have exclusive authority to make 

discretionary policy decisions consistent with the needs of their constituents and regional 

economies. so long as they meet the requirements of the CAA and further the national goal of 

pristine conditions at Class I areas under the Regional Haze Rule. 

V. Conclusion 

The Nation supports the substantive goals of the CAA, and the goal of the Regional Haze 

Rule to improve visibility at Class I areas. However. for the Nation as a tribal nation and a small 

government landlord of affected EGUs and associated mines. implementation by EPA of the 

Regional Haze Rule and BART must be done with due analysis and accol1lmodation of the 

critical economic interests of the Navajo Nation and the Navajo people in the continued 

operation of power plants in and ncar Navajo Indian Country. EPA has an obligation to 

meaningfully consult with the Nation fiJr rulemakings directly affecting the Nation befo('e 

promulgating a draft rule. That was not done for the proposed FIP for SJ(iS. or lar the ANPR 

for the FCPP and NGS. and EPA therefore violated its consultation obligations and trust 

responsibility to the Nation. 

EPA's "one size fits all" approach to rulemaking fails to acknowledge or address the 

specific concerns and impacts to the Navajo Nation. as well as regional impacts. Making matters 

worse. EPA'5 uncoordinated approach to rulemakings impacting the same industries creates 

regulatory uncertainty. increases compliance costs. and puts at substantial risk the national and 

regional economies. critical jobs of Navajo people. and the very viability of the Navajo 
92 


79849.073

government. Congress should therefore strongly consider amending the CAA to mandate an 

integrated scheme for EP;\ rulemaking, and to allow industry to implement the Regional Haze 

rule and other EPA rulcmakings in a rational fashion and within a reasonable time frame, while 

still protecting the health and wclt11re of the public and meeting the substantive goals of the 

CAA. 

Respectfu II y, 

THE NAVAJO NATION 

Stephen B. Etsitt) 

E,eclllin! Director 

No)'ajo Nation t:nvironmental Proteclion Agency 

6 
93 

Mr. WHITFIELD. Thank you very much. 

Mr. Short, you are recognized for 5 minutes. 

STATEMENT OF ALLEN SHORT 

Mr. SHORT. Thank you, Mr. Chairman and Ranking Member 

Rush and members of the Subcommittee on Energy and Power. 

Good morning. My name is Allen Short. I am the General Manager 

of the Modesto Irrigation District located in California’s Central 

Valley. Thank you for the opportunity to speak with you about 

EPA’s enforcement as what you just have heard, the Regional Haze 

Rule at the San Juan Generating Station. The coal-fired plant, as 

you now know, is located in New Mexico, specifically in EPA Region 6. I am here because the San Juan station is a significant 

source of electric power for hundreds of thousands of customers 

throughout California. 

Modesto Irrigation District is a local, publicly owned utility that 

is in partnership with the city of Santa Clara, the city of Redding, 

which form the M–S-R Joint Power Agency. We serve roughly 

210,000 customers in California, and the M–S-R owns a mix of generating resources including a share of the Generating Station Unit 

4, which provides 150 megawatts to M–S-R members. The station 

is also an important source of electricity for the Southern California Public Power Authority, SCPPA, whose members serve almost 5 million customers. SCPPA members own a part of San Juan 

as well. Collectively, California public utilities own 24–1/2 percent 

of the San Juan station. The principal owner and operator of the 

San Juan station is Public Service Company of NM, PNM, an investor-owned utility. 

My testimony is on behalf of MID, M–S-R and SCPPA. Under the 

Clean Air Act regional haze provision, each State and EPA are required to develop and implement plans to help restore natural visibility at 156 national parks and wilderness areas by the year 2064. 

To comply, the State of New Mexico proposed a plan for the generation facility that would meet the goals and objectives of the rule 

with an emissions technology which would cost approximately $77 

million. Unfortunately, EPA rejected the State plan for the San 

Juan Generating Station and has established a Federal plant that 

requires installation of emissions control technology costing somewhere between $750 and $805 million, and this is based upon installation bids from firms specializing in this technology. The bids 

are more than twice EPA’s cost estimate of $345 million. Although 

EPA’s approach would cost 10 times more than the State plan, it 

would remove only slightly more haze, an improvement that would 

be virtually imperceptible to the human eye. 

It is important to understand the Regional Haze Standards are 

not health-based standards. They are about visibility only. This is 

why cost-effectiveness and reasonableness are the main factors for 

selecting the regional haze emissions technology. By grossly underestimating the real cost of its plan, EPA also overstates the costeffectiveness. M–S-R and SCPPA share a cost for EPA plan to its 

customer will range from $272 to $2,250 per annual per year. This 

is also on top of the many stringent mandates that California has 

imposed upon electric utilities. 

94 

Environmental organizations want the Federal plan to be implemented on a timetable that would require shutting down all or 

parts of the station during installation and could affect the reliability of the regional transmission grid. Environmental groups 

have also asked the California Energy Commission to prevent M– 

S-R and SCPPA from paying for regional haze compliance at San 

Juan. San Juan owners must begin the Federal plan immediately. 

New Mexico Governor Suzanna Martinez has asked EPA to stay 

implementation of the plan so that the State and EPA and PNM 

can work towards an agreeable alternative to the State and Federal plans. We strongly support the Governor’s effort to sit down 

and talk with EPA. 

California public utilities are willing to do their share to reduce 

regional haze through cost-effective and reasonable improvements 

to the station but our customers should not have to pay for the extreme cost of technologies that produce only marginal benefits as 

compared to similarly effective alternatives. Again, this falls down 

to the customer who will actually pay for it. It will have an effect 

on the California economy, jobs and home foreclosures. 

Thank you. 

[The prepared statement of Mr. Short follows:] 

95 


79849.074

Short Summary 

Testimony of Allen Short 

General !\1,mager, Modesto Irrigation District (MID) on behalf of 

MID, M-S-R Public Power Agency, and the Southern California Public Power Authority 

June 6, 2012 

M-S-R Public Power Agency (fVl-S-R) and Southern California Public Power Authority (SCPPA) are 

minority owners in the San Juan Generating Station (SJGS), a four-unit 1,680 MW coal-tired power plant 

in Farmington, New Mexico, which is in EPA Region 6. M-S-R and SCPPA member agencies receive a 

significant amount of electric power from the SJGS 

M-S-R and SCPPA support New Mexico's State Implementation Plan (SIP) to implement the Clean Air 

Act's regional haze requirements at the SJGS. The Act's regional haze provisions are intended to 

gradually improve visibility in national parks and wilderness areas. The New Mexico SIP would reduce 

haze-causing NOx emissions trom the SJGS by 20% through the installation 01' Oest Availahle Retrofit 

Technology (OART) over a tive-year period at an estimated cost 01'$77 million. 

EPA has rejected the State's approach, issuing a Final Rule in Aug. 20 II, that set a regional haze standard 

for SKiS that is far more stringent than standards imposed dsewhere. EPA's federal implementation plan 

(FIP) requires the installation of emissions control technology that would cost $750-805 million, based on 

bids from experienced engineering firms competing to do the work. These real-world estimates are more 

than twice EPA '5 estimate of $345 million, 

Although EPA's plan would cost 10 times more than the state's plan. it would remove only slightly 1110re 

haze -- and the improvement would be vir/lIan)' iJ/1f'~rcef'tihie /0 the humall ey~. 

EPA's regional haze FIP for SKiS could affect grid reliability. Environmental groups have asked the 

court to require that the live-year FIP be put on a three-schedule. This would necessitate shutting down 

some or all of the generating units al SJGS for two years while emissions controls are installed. A study 

commissioned by M-S-R concluded that taking SJGS ofl~line would cause overloads and possible 

instability on portions of the transmission grid in the Southwest. 

SJGS o\\ners have challenged EPA's regional haze FIP in court and have asked EPA to stay enforcement 

its FIf' while the court considers the matter. Recently, New Mexico Gov. Susana Martinez (R) also asked 

EPA to stay its regional haze order to allow the State, EPA and Public Service of New Mexico (PNM), 

SJGS's operator. to work toward a compromise plan. We support Gov. Martinez's proposal. 

Separately, the Sierra Club and the Natural Resources Defense Council (NRDC) have petitioned the 

Califomia Energy Commission (CEC) to initiate a rulemaking that would bar SJGS's owners in California 

from paying their share of regional haze compliance costs for the plant. The environmental groups allege 

that such investments violate California's greenhouse gas (GHG) emissions law, S8 1368, which prohibits 

investments that would extend the life of existing coal-fired power plants. The California owners of SJGS 

disagree with this interpretation of the GHG law. 

The California public agencies that have ownership interests in SJGS are willing to do their share for 

clearcr air with cost-effective improvements to bring the plant into compliance with Clean Air Act 

standards. That is why we support the New Mexico SIP. Out our ratepayers should not be required to 

pay for extremely costly mandates that produce only marginal benclits as compared to far less expensive 

but similarly effective alternatives. 

### 
96 


79849.075

Testimony of 

Allen Short, General Manager, Modesto Irrigation District 

On behalf of 

The Modesto Irrigation District, 

M-S-R Public Power Agency 

And the Southern California Public Power Authority 

Before the 

Committee on Energy and Commerce, 

Subcommittee on Energy and Power 

United States House of Representatives 

EPA Enforcement Priorities and Practices 

Washington, D.C. 

June 6, 2012 
97 


79849.076

Chairman Whitfield, Ranking Member Rush and Members of the Subcommittee on Energy and Power: 

Good morning. My name is Allen Short and I am the General Manager of the Modesto Irrigation 

District (MID) in California's Central Valley. Thank you for the opportunity to speak with you today 

about the potential impacts of the Environmental Protection Agency's approach to enforcement of the 

Clean Air Act's Regional Haze rule at the San Juan Generating Station, a four-unit 1,680 MW coal-fired 

power plant near Farmington, New Mexico, which is in EPA Region 6. I am here because the San Juan 

Generating Station is a significant source of electric power for hundreds of thousands of homes and 

businesses in Northern, Central and Southern California, as well as in New Mexico and Utah. 

My purpose in speaking to you today is to bring to your attention our concerns about EPA's 

regional haze federal implementation plan (FIP) for the San Juan Generating Station, which was finalized 

last year. The EPA FIP costs 10 times more than a similarly effective stote implementation plan (SIP) 

proposed by the State of New Mexico. EPA rejected that portion of New Mexico's plan dealing with the 

San Juan Generating Station, and instead EPA has mandated emissions controls that will cost hundreds 

of millions of dollars but produce only marginal haze improvements as compared to the State plan. 

MID is a local publically owned utility that provides irrigation service to nearly 60,000 acres and 

electric service to approximately 113,000 accounts. Annual peak electric demand is more than 600 MW, 

which MID meets with a mix of hydroelectric, wind, solar and thermal generation. MID is in partnership 

with the City of Santa Clara and the City of Redding in the M-S-R Public Power Agency (M-S-R), which has 

made investments in renewable and thermal generation resources to provide electricity to 210,000 

residential and commercial customers in three counties of Central and Northern California. Among 

those resources is the San Juan Generation Station. M-S-R owns a 28.8-percent share of San Juan 

2 
98 


79849.077

Generating Station Unit 4, which provides 150 MW annually to M-S-R, representing nearly 25 percent of 

MID's total supply and 15 percent of Santa Clara's and 21 percent of Redding's municipal power supplies 

(based on calendar year 2010 retail sales). 

The San Juan Generating Station is also an important source of electric power for public utilities 

that are participants in the Southern California Public Power Authority (SCPPA), whose members are 11 

municipalities and one irrigation district that deliver electricity to approximately 4.8 million people over 

an area of 7,000 square miles. Five SCPPA members own a 41.8 percent of San Juan Unit 3, and the City 

of Anaheim, also a SCPPA member, owns a 10 percent share of San Juan Unit 4. 

The principal owner of the San Juan Generating Station is the Public Service Company of New 

Mexico (PNM), an investor-owned utility that also operates the plant. My testimony today is on behalf 

of the public utilities that are San Juan's minority owners in California: the Modesto Irrigation District, 

M-S-R Public Power Agency and the Southern California Public Power Authority. 

Summary 

The Clean Air Act has charged EPA and the states with improving the air quality in national parks 

and wilderness areas. In 1999, EPA issued the Regional Haze Rule that requires the states, in 

coordination with EPA and other federal agencies, to develop and implement air quality protection plans 

to address regional haze by improving visibility at 156 national parks and wilderness areas. Specifically, 

states are required to establish goals for improving visibility and develop long-term strategies over a 60-

year period to reduce emissions of air pollutants that cause visibility impairment. 

3 
99 


79849.078

In 2011 the State of New Mexico proposed a regional haze SIP that would reduce haze-causing 

nitrogen oxide (NOx) emissions from the San Juan Generating Station by 20 percent through the 

installation of Best Available Retrofit Technology (BART) over a five-year period at an estimated cost of 

$77 million. However, EPA issued a final rule in August, 2011, that set a regional haze standard for San 

Juan that is far more stringent than standards that have been imposed elsewhere. The rule established a 

regional haze FIP for the San Juan Generating Station that requires the installation of emissions control 

technology that would cost $750 million to $805 million, based on bids from two reputable engineering 

firms specializing in this technology. Although EPA's plan would cost 10 times more than the state's 

plan, it would remove only slightly more haze and the improvement would be virtually imperceptible 

to the human eye l 

Though it rejected provisions of the New Mexico SIP addressing regional haze controls at the 

San Juan Generating Station, EPA approved the rest of the State's plan on May 31, 2012. 

The San Juan Generating Station's owners have challenged EPA's regional haze FIP in federal 

court. In addition, the owners and the State of New Mexico have asked EPA for a stay of enforcement of 

the FIP while the matter is being considered by the courts. Without a stay, the owners have no choice 

but to begin carrying out the EPA order immediately, incurring tens of millions of dollars in engineering 

and construction costs for work that the courts may ultimately determine isn't necessary. 

4 
100 


79849.079

The Modesto Irrigation District and the other members of M-$-R and SCPPA support New 

Mexico's regional haze SIP because it provides a cost-effective means of significantly reducing the San 

Juan Generating Station's contribution to regional haze without imposing an undue burden on our 

customers. It also contributes to meeting New Mexico's first interim goals along a long-term path to 

improve visibility and restore Class I areas to natural conditions by 2064, as required by the Clean Air 

Act. In contrast, EPA does not appear to have given any consideration to how its regional haze FIP for 

the San Juan Generating Station would affect hundreds of thousands of ratepayers in California, New 

Mexico and Utah, nor has EPA weighed the plan's possible adverse effects to the reliability of the 

transmission system. 

EPA grossly underestimated the cost of its implementation plan. Bids received last month for 

installation of the FIP-mandated emissions control technology -- Selective Catalytic Reduction (SCR) at 

the San Juan Generating Station ranged from $750 million to $805 million, not induding engineering, 

project management and insurance costs estimated to be about $48 million. These real-world estimates 

are more than twice EPA's latest estimate of $345 million to retrofit SCR emissions controls at the San 

Juan Generating Station. The EPA contractor that prepared the estimate failed to consider or indude 

consideration for a number of significant cost drivers specific to the San Juan Generating Station, such as 

plant elevation, physical limitations within the plant footprint, and the scope of the equipment required. 

The minimal visibility gains offered by the EPA's FIP over the New Mexico state plan would not justify 

the added cost even if EPA's original estimate were correct, and they certainly do not justify a price tag 

more than 10 times the size of the New Mexico's SIP. 

EPA's regional haze FIP for the San Juan Generating Station could also affect the reliability of the 

electric grid in the Southwest. Although the five-year implementation schedule currently mandated by 

5 
101 


79849.080

the FIP is feasible, though challenging, Wildearth Guardians and other environmental organizations have 

petitioned the federal courts to require a three-year implementation schedule. Because completing the 

installation of SCR emissions controls on a three-year schedule is not feasible, each of the units of the 

San Juan Generating Station would have to be shut-down in the fourth and fifth years (2015-16) until 

their individual upgrades are complete. M-S-R commissioned a preliminary study of the reliability 

impacts of a shutting down all four units of the San Juan Station on either a short-term or permanent 

basis. This study found that while there is enough unutilized electric power in the Western United States 

to replace the San Juan plant's generation, moving that power to where it is needed would cause 

overloads and possible instability on portions of the transmission grid in New Mexico, Arizona and 

Colorado, violating North American Electric Reliability Corporation (NERC) Standards that are intended 

to ensure the reliability of the bulk power system in North America. 

Both the State and EPA plans pose a special quandary for the California owners of the San Juan 

Generating Station because fulfilling the Clean Air Act requirements at the San Juan plant is seen by 

some as a violation of one of California's greenhouse gas (GHG) laws. That law (SB 1368) prohibits 

publicly owned utilities from investing in power plants whose carbon dioxide (CO,) emissions exceed a 

state standard equivalent to CO, emissions levels from a natural gas plant. While the San Juan 

Generating Station exceeds that standard, California's law allows existing contractual and ownership 

obligations to remain in place and exempts routine maintenance work at these facilities. 

However, the Sierra Club and the Natural Resources Defense Council (NRDC) have recently 

asked the California Energy Commission to issue rules that would effectively prevent the M-S-R and 

SCPPA utilities from fulfilling their contractual obligations to help pay for regional haze improvements at 

the San Juan Generating Station that are necessary to meet the requirements of federal law. 

6 
102 


79849.081

The Sierra Club and NRDC have also questioned whether investments by California public power 

agencies in existing environmental upgrades at the San Juan Generating Station violated California's 

GHG law. Over the last decade the San Juan Generating Station owners have invested more than $430 

million to install additional emissions control equipment, including the nation's first full-scale mercury 

removal systems. In fact, the San Juan Generating Station is compliant with the EPA's MACT rule. The 

most recent environmental retrofit was completed in 2009 at a cost of about $320 million. These 

improvements have cut the plant's NOx emissions by 44 percent, reduced sulfur dioxide (SOx) and 

particulate matter by more than 70 percent and enabled a 99 percent mercury removal efficiency rate. 

But the Sierra Club and NRDC allege that these environmental improvements may be illegal investments 

by the M-S-R and SCPPA utilities --- even though the Sierra Club was signatory to the Consent Decree 

requiring San Juan's owners to perform the upgrades. 

The California utilities that are part of M-S-R and SCPPPA are non-profit agencies charged with 

the delivery of affordable, reliable energy to their customers. Fulfilling that mandate has become 

increasingly difficult as California's GHG law and renewable portfolio standards have made electricity 

more expensive. Compliance with just the GHG and renewable energy standard laws alone will cause an 

estimated 12.9 percent increase in the monthly electric bills of MID customers by 2020. Complying with 

the EPA Region 6 regional haze FIP for the San Juan Generating Station will add yet more to the 

ratepayers' burden at least $50 per year for the average Modesto customer. 

But we are hopeful that EPA will consider alternatives to its regional haze FIP for the San Juan 

Generating Station. On April 26, New Mexico Governor Susana Martinez asked EPA to stay its regional 

haze FIP so that the State, EPA and PNM can work toward an agreeable alternative to both the EPA and 

the New Mexico regional haze plans. We appreciate and support the Governor's effort. 

7 
103 


79849.082

We also appreciate the Committee's interest in EPA's approach to enforcement of regional haze 

requirements. This is a national issue. New Mexico's regional haze SIP is one of 37 state regional haze 

plans that EPA is committed to take action on before the end of this year under the terms of a consent 

decree settling litigation brought by environmental organizations. Our New Mexico case is an example 

of how EPA's enforcement of regional haze regulations is neither effective nor mindful of the financial 

impacts to electric customers. 

New Mexico and Federal Implementation Plans 

The Clean Air Act includes provisions intended to control emissions that contribute to regional 

haze that impairs views in national parks and wilderness areas. The Act gives states primary authority on 

the scope of regional haze remediation, within certain boundaries, requiring the states to take the lead 

in designing and implementing regional haze plans intended to make "reasonable progress" toward the 

Act's goal of restoring "natural visibility" in parks and wilderness areas by 2064. 

The Act also gives states primary responsibility to make BART determinations for the unique 

circumstances of each state and emission source. States are given broad discretion in BART 

determinations because the states are in the best position to understand local conditions and concerns. 

It is important to understand that the regional haze rule is not a health-based standard and that costeffectiveness is one of the five factors that must be considered in a BART analysis. 

The state of New Mexico drafted a regional haze SIP that would require selective non-catalytic 

reduction (SNCR) controls to be installed at the San Juan Generating Station. The New Mexico SIP meets 

the requirements of the Clean Air Act at a total cost of about $77 million for the San Juan Generating 

Station -- a significant, but manageable cost. 

8 
104 


79849.083

Nevertheless, EPA rejected the San Juan Generating Station portion of the New Mexico SIP, and 

on August 22, 2011, EPA issued a Final Rule on a FIP to address NOx and SOx emission limits at the San 

Juan Generating Station. (As previously mentioned, the balance of New Mexico's SIP was just approved 

by EPA on May 31 of this year.) EPA's regional haze FIP mandates NOx controlled emission rates (0.05 

Ibs/MMBTU) for the San Juan Station that are not only inconsistent with other recently adopted regional 

haze FIPs in EPA Region 6 and EPA Region 9 for coal-fired generation, the rates are five times lower than 

those mandated by either the EPA's Regional Haze Provision Authority (0.23Ib/MMBTU) or EPA's Good 

Neighbor Provision Authority (0.28 Ib/MMBTU). To accomplish the aggressively low rate of 0.05 

Ib/MMBTU, EPA's San Juan Generating Station FIP mandates the use of SCR technology that is far more 

costly than the similarly effective SNCR technology included in New Mexico's SIP. 

We are particularly concerned that even after spending almost a billion dollars to comply with 

EPA's regional haze FIP requirements, we may still not be in compliance. Firms bidding to install the SCR 

controls at the San Juan Generation Station informed PNM that they could not guarilntee that the NOx 

emission rate mandated by EPA's FIP could be achieved at San Juan and that sulfuric acid emissions 

could not be reliably measured at the level that the FIP requires. 

Making reasonable progress toward improving visibility over a 60-year period should not require 

huge investments for minimal or imperceptible benefits. EPA also must use the best available science 

when projecting visibility improvements for its preferred SCR technology. EPA's outdated visibility 

modeling exaggerates the visibility improvements of SCR and the corresponding cost effectiveness'. 

P~lltlon ofPub!IC ::;:erncc 

9 

anJ PromulgCltloll 

and Best Available 
105 


79849.084

Impact to California households and businesses 

M-S-R has analyzed the potential cost impacts of the installation of the EPA-mandated SCR 

technology at the San Juan Generating Station based on an $800 million-to-$80S million estimate 

confirmed by the recent construction bids. M-5-R's share of the costs for its 28.8-percent interest in San 

Juan Generating Station Unit No.4 are assumed to be covered by the issuance of $85 million in new taxexempt debt to be amortized over a 10-year period coterminous with existing debt stemming from M-SR's original ownership purchase of the San Juan Unit No.4 in 1983. The increase in annual debt service 

would represent a IS-percent increase in the delivered cost of San Juan Generating Station power to MS-R's members. On an individual member agency basis, the total cost increase for the next decade are 

$460 per customer for the City of Redding electric utility, $620 per customer for the MID and $920 per 

customer for the City of Santa Clara's utility. 

SCPPA member cities Azusa, Banning, Colton, Glendale, and the Imperial Irrigation District 

collectively own 42 percent of San Juan Generating Station Unit 3, and Anaheim owns 10 percent of San 

Juan Generating Station Unit 4. The cost their customers would incur to upgrade to the SCR technology 

in EPA's plan would collectively be as much as $143 million. The total cost impact to each SCPPA owner 

is different based on its individual resource mix, but the impact is significant. For example, each of 

Glendale Water and Power's 83,000 customers would pay an additional $272, whereas Azusa Light and 

Water's 15,000 customers would pay $2,250 each toward the total cost of the SCR retrofit. 

Approximately 140,000 customers of the Imperial Irrigation District, who reside in one of California's 

poorest counties with some of the highest unemployment, would each face $850 in added costs. 

10 
106 


79849.085

Congressional Concerns 

To highlight the impact EPA's plan would have on California electricity customers, a bipartisan 

group of 10 California Members of Congress (Reps. Joe Boca (D), Jerry Lewis (R), Bob Filner (D), Mary 

Bono Mack (R), Dennis Cardoza (Dj, Gary Miller (R), Jim Costa (D), Wally Herger ( R), Tom McClintock (R) 

and Jeff Denham (R)) wrote letters to EPA Administrator Lisa Jackson encouraging EPA to fully consider 

the information in the New Mexico SIP and take appropriate action. The California legislators expressed 

support for meeting federal regional haze requirements and asked EPA to carefully consider the 

significant rate impact that a SCR-based FIP would have on their constituents. They also emphasized that 

the regional haze requirements are a viSibility-based standard that are supposed to be meet with the 

"best available control technology," which is defined in part by cost-effectiveness. Moreover, the 

bipartisan group of Members noted the significant environmental investments that the San Juan 

Generating Station's California owners are making to meet stringent California energy requirements, 

including requirements that utilities achieve a 30-percent reduction in GHG emissions and meet a 33-

percent renewable energy standard by 2020. 

Reliability Impacts 

EPA's FIP for the San Juan Generating Station requires installation of the SCR controls over a 

five-year period; that clock started running last September. Environmental organizations that support 

EPA's efforts to mandate the more expensive SCR technology at the San Juan Generating Station, and at 

other coal plants in the nation, have asked the federal courts to impose a three-year installation 

schedule that cannot be achieved without shutting down multiple units of the San Juan Generating 

Station during the fourth and fifth year of the construction period until the retrofits are completed and 

tested. M-S-R asked Navigant Consulting, Inc. (Navigant) to undertake a preliminary assessment of the 

potential impacts on the transmission system if the San Juan Generating Station was taken out of service 

11 
107 


79849.086

during 2015 and 2016. The study (summary attached) focused on potential reliability impacts to the 

transmission grid for the region encompassing Arizona, New Mexico, the EI Paso area of Texas, 

southwestern Colorado and southeastern Utah. 

The preliminary assessment (which included power-flow analyses only) indicated that operating 

the regional transmission system with the San Juan generation off-line could: 

Result in new post-contingency transmission line overloads (of as high as 6%) on 

existing 230-kV and l1S-kV lines in northern Arizona, northern New Mexico and 

southwestern Colorado. 

Increase the number and/or severity of the post-contingency transmission line 

overloads noted on two l1S-kV lines in northeastern New Mexico, which are 

interconnected with the existing 230-kV line between the Walsenburg Substation in 

southern Colorado and the Gladstone substation in northeastern New Mexico. 

Result in post-contingency transmission voltage deviations of as high as 13% at the Ojo 

34S-kV bus in northern New Mexico. 

It is possible that such large voltage deviations could be an indication of potential system 

instability, but determining if this is the case would require additional studies. Transmission system 

overloads or voltage instability would likely violate NERC standards that are intended to ensure the 

reliability of the bulk power system. If a shut-down of the San Juan Generating Station were to cause 

transmission system overloads or voltage instability, NERC standards that could be violated include 

standard BAL-STD-002 (sufficient locational operating reserves), standard BAL-004-WECC-01 

(transmission line frequency maintenance), standard TOP-007-WECC-l (System Operating Limits), and 

standard TOP-STD-007-0 (Operating Transfer Capacity Limits). Remedial Action Schemes (RAS) for the 

12 
108 


79849.087

affected transmission lines would need to be reviewed, revised, and/or otherwise upgraded. With 

substantially less generation available, a Transmission Operator may have difficulty restoring its system 

within acceptable time limits dictated by standard PRC-SDT-003-1. 

California Energy Commission 

California's GHG emissions law (S8) 1368 -- (Perata, Chapter 598, Statutes of 2006) required 

the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) to 

establish a GHG emissions performance standard and to implement regulations for all long-term 

financial commitments in base load generation made by investor-owned and publicly owned utilities. 

The California Emissions Performance Standard adopted by the CEC is 1,100 pounds (0.5 metric 

tons) of carbon dioxide (CO,) per megawatt hour (MWh) of electricity, which is the rate of emission of 

GHG for combined-cycle natural gas base load generation. Coal-fired power plants do not meet this 

standard. However, as the CEe has stated, "S8 1368 is not intended to shut down currently operating 

power plants or lead to their deterioration ... " Rather, the purpose of the law is to reduce financial risks 

to electric consumers by ensuring that utilities do not make substantial investments to build new (coalfired) power plants or extend the lives of existing plants where those investments are likely to result in 

additional environmental compliance costs under future GHG limitations. The law prohibits California 

utilities from acquiring or increasing ownership interests in plants that do not meet the California 

Emissions Performance Standard and prohibits investments that have the potential to extend the life of 

existing generating units by five years or more, or to increase generating capacity. Investments for 

routine maintenance are exempted. M-S-R and SCPPA believe that upgrades to meet federal 

environmental laws are part of power plant maintenance as mandated by the standard of Prudent 

Utility Practice. 

13 
109 


79849.088

In November, 2011, the NRDC and the Sierra Club filed a petition with the CEC alleging that 

publicly owned utilities, including M-S-R and SCPPA, have made past investments and plan to make 

future investments in existing base load generation facilities that violate the intent of SB 1368. 

Specifically, the NRDC and the Sierra Club have questioned whether the California agencies with 

ownership interests in the San Juan Generating Station violated state law by helping to pay for 

environmental upgrades completed in 2009, including the nation's first full-scale mercury removal 

system. They cite as an example of future prohibited investments the retrofitting the San Juan 

Generation Station to comply with federal Clean Air Act regional haze requirements, contending that 

such environmental mandates are intended to "extend the life of the plant" and therefore clearly trigger 

the EPS restriction. The NRDC and the Sierra Club also question whether California law will allow the 

installation of groundwater pollution prevention improvements at the San Juan Generating Station, 

notwithstanding the fact that the Sierra Club recently entered into a consent decree requiring those 

improvements. The consent decree also requires the Sierra Club to support all approvals necessary for 

the San Juan Generating Station owners to install the groundwater protections. 

In other words, NRDC and the Sierra Club argue that in the case of San Juan Generating Station, 

compliance with federal environmental law is a violation of California environmental law, 

The NRDC and the Sierra Club have asked the CEC to modify its regulations to require that 

utilities submit for CEC review and approval all expenditures at non-Emissions Performance Standard 

compliant plants, and that the CEC clarify that SB 1368 prohibits investments to bring existing coal 

plants into compliance with current environmental laws. The CEC has initiated a new Rulemaking (12-

OIR-01) to look at whether changes to the California Emissions Performance Standard are necessary and 

the Commission is working to develop the scope of that proceeding. 

14 
110 


79849.089

The NRDC and the Sierra Club say that the California owners of the San Juan Generating Station 

should simply decline to make the investments necessary to bring the plant into compliance with federal 

regional haze standards. In their petition, the environmental organizations say that if the California 

owners were to refuse to pay their share of the regional haze improvements at the San Juan Generating 

Station, "those improvements should not go forward." The clear but unstated result would be closure of 

the plant. 

But M-S-R and SCPPA utilities cannot simply decline to make the investments at San Juan that 

are necessary to comply with federal laws. We do not think that the regional haze FIP issued by EPA 

Region 6 complies with the Clean Air Act, but if the FIP is ultimately upheld, we are required by law and 

contract to comply with it. As public agencies we cannot choose to ignore such mandates on the basis 

of cost of compliance. Further, M-S-R's investment in the San Juan Generation Station was financed 

with tax-exempt bonds, and the agency has obligations and fiduciary duties to its bondholders and 

ratepayers. 

National Issue 

The New Mexico SIP is one of three dozen regional haze plans that will be acted on by EPA this 

year under the terms of a consent decree reached between EPA and environmental organizations in 

regional haze litigation (National Parks Conservation Association v. Usa Jackson). The environmental 

groups brought the litigation because the states and the EPA are far behind schedule in developing 

implementation plans for regional haze, which were supposed to have been completed by 2008. 

Under the Nov. 9, 2011 consent decree, EPA must now issue a multitude of decisions approving 

or disapproving state plans by the end of 2012. Where EPA disapproves a SIP, it must institute a FIP 

15 
111 


79849.090

instead. EPA's response to some of these SIPs has raised the same issues and questions associated with 

EPA's approach to enforcement of regional haze regulations at the San Juan Generating Station in New 

Mexico. Last December, a federal court supported North Dakota's decision to use the less-expensive 

SNCR technology at several power plants rather than the far more costly SCR controls sought by EPA. 

The decision (United States of America and State of North Dakota v. Minnkota Power Cooperative, Inc. 

ond Square Butte Electric Cooperative) affirmed that states have the primary role in making BART 

determinations. Legislation (H.R. 3379) introduced in the House last year would mandate that states 

have sale discretion, after considering certain economic factors, in determining emission limits, 

schedules of compliance, and other measures for each applicable implementation plan for a state for 

any area that is listed as contributing to impairment of visibility. 

Conclusion 

The California public agencies that have an ownership interest in the San Juan Generating 

Station are willing to do their share to ensure cleaner air and improved visibility with cost-effective 

improvements that are intended to bring the plant into compliance with Clean Air Act standards. That is 

why we support the New Mexico SIP. But our ratepayers - ordinary households and businesses - should 

not be required to pay for extremely costly emissions controls that produce only marginal benefits as 

compared to less costly but similarly effective alternatives. The environmental organizations that 

support such costly improvements do not hide the fact that their goal is to shut down plants such as the 

San Juan Generating Station. Closure of the San Juan Generating Station is the clear purpose of the 

NRDC and Sierra Club effort to enjoin the California owners from fulfilling their contractual obligations 

to help pay for regional haze improvements at the San Juan Station. 

Thank you for your attention. I am happy to answer any questions that you may have. 

16 
112 


79849.091

ATTACHMENTS: 

M-S-R Public Power Agency white paper on Reliability Impacts of San Juan Station Shut-Down 

Comparison photos of visibility improvements 

CHART- Status of Regional Haze SIPs 

Reps. Denham-Cardoza Letter to EPA re SJGS FIP 

Rep. Filner Letter to EPA re SJGS FIP 

Reps. Lewis-Bona-Mack Letter to EPA re SJGS 

EPA Letter to Rep. Bono Mack re SJGS FIP 

Sierra Club-NRDC Petition to CA Energy Commission 

WEST Associates Letter to EPA on regional haze 

17 
113 


79849.092

M-S-R Public Power Agency 

San Juan Generating Station 

System Reliability Impacts 

March 2012 

M-S-R Public Power Agency 

M-S-R Public Power Agency is composed of three public power utilities in Central California; 

Modesto Irrigation District, City of Santa Clara, and City of Redding 

M-S-R Public Power Agency employs a mix of renewable and thermal generation resources to 

provide electricity to 210,000 residential and commercial customers in a three-county area. 

San Juan Generating Station (SJGS) 

The San Juan Generating Station (SJGS) is a four-unit 1680 MW thermal-electric coal-fired power 

plant located near Farmington, NM. 

M-S-R owns a 28.8-percent undivided interest in Unit No.4 of the SJGS, which provides 150 MW 

annually to M-S-R's California customers. 

EPA Regional Haze Federal Implementation Plan (FIP) 

In August 2011 EPA issued a Federal Implementation Plan (FIP) for the SJGS requiring installation 

of additional pollution controls intended to reduce emissions that contribute to regional haze. 

In June 2011 the New Mexico Environmental Department issued a far less burdensome yet 

equally effective State Implementation Plan (SIP) - that has not been acted on by EPA. 

EPA's regional haze rule ignores electric grid reliability impacts. Federal Energy Regulatory 

Commissioner Moeller testified before Congress September 14, 2011 "the federal government 

needs to convene an open and transparent process to assess the reliability implications of the 

EPA rules individually and in aggregate." 

M-S-R identified potential electric grid reliability impacts resulting from EPA's rule in comments 

(November 28, 2011) and supplemental comments (December 9, 2011) filed before FERC in AD12-1-000 and has confirmed those concerns in recent powerflow studies. 

Reliability Impacts (Detailed Report Attached) 

Shutdown of SJGS would result in significant transmission system impacts. 

New post-contingency overloads in northern AZ, northern NM and southwestern CO. 

Increases in the number and/or severity of the post-contingency overloads in 

northeastern NM and interconnections with southern CO and northeastern NM. 

Post-contingency voltage deviations in northern NM. 

Potential voltage instability indicated. 
114 


79849.093

Locations of Impacted Transmission Facilities: 

Contact: Martin R. Hopper, General Manager 

(408) 307-0512 

mhopper@msrpower.org 

M-S-R Public Power Agency 

1231 Eleventh Street 

Modesto, CA 95352 
115 


79849.094

REPORT ON THE 

PRELIMINARY ASSESSMENT OF THE IMPACTS 

IF SAN JUAN UNITS 1-4 WERE OFF-LINE 

DURING THE 2015-2016 TIME FRAME 

EXECUTIVE SUMMARY 

The M-S-R Public Power Agency (M-S-R) presently owns 28.8% (approximately 146 

MW) of capacity in the 507 MW Unit -l at the San Juan Generating Station (San Juan), 

which is located in northwestern New Mexico. San Juan consists of four units with a 

total capacity of 1,684 MW. The United States Environmental Protection Agency has 

stated that all four units at San Juan need to be retrofitted to meet new emissions 

standards. Due to the anticipated costs for the potential retrofits and the timing to 

accomplish such, M-S-R has asked that Navigant Consulting, Inc. (Navigant) undertake 

a preliminary assessment of the potential impacts on the transmission system in the 

Study Area (i.e. Arizona, New Mexico, the El Paso area of Texas, southwestern 

Colorado, and southeastern Utah) if the San Juan units were out-of-service in the 2015-

2016 timeframe. 

This preliminary assessment (which is discussed in greater detail below) assumed that: 

The existing coal-fired generation at Apache Units 1 and 2, Cholla Units 1-3, Coronado 

Units 1 and 2, Escalante Unit 1, Four Corners Units 4 and 5, Navajo Units 1-3, and 

Springerville Units 1-4 (a total of approximately 7,300 \1W of capacity) would remain in 

service, and 

Based on the modeling in the selected WECC powerflow case, enough "underutilized" gasfired generation located in Arizona and California would be available to replace and coalfired generation that was modeled as retired or off-line in the studies. A majority of such 

generation is "non-utility" owned. 

This preliminary assessment (which included powerflow analyses only) indicated that 

operating the system with the San Juan generation off-line could: 

Result in new post-contingency overloads (of as high as 6')\,) on existing 230-kV and 11S-kV 

lines in northern Arizona, northern New Mexico and southwestern Colorado. 

Ln<:'rease tht.' nun1ber and! or severity of the post-contingency overloads noted on two 115-

kV lines in northeastern New Mexico which arc interconnected with the existing 230-kV 

line between the Walsenburg Substation in southern Colorado and the Gladstone 

substation in northeastern New Mexico. 

Result in post-contingency voltage deviations of as high as 13:;, at the Ojo 34S-kV bus in 

northern New Mexico. It is possible that such large voltage deviations could be an 

indication of potential system in-stability. Determining if such was, in fact, the case would 

require the performance of transient stability studies. 

DET AILEU DISCUSSION 

The preliminary assessment for analyzing the potential impacts if the four units at San 

Juan were out-of-service during the 2015-2016 time frame consisted of six steps; as 

follows: 
116 


79849.095

l. Reviewing the latest availabk> WECC summer peak base cases for the 2015-2016 timeframe 

to select one of the cases for use in the assessment. 

2. Modifying the selected case to create a "Reference Case" that reflected the latest publically 

available infornlation regarding the stalus of proposed generation and transmission 

facilities within the Arizona/ New Mexico area. 

3. Modifying the Reference Case developed as above to create a "Four Corners Retirement 

Case" which reflected the retirement of Four Corners Units 1-3 that are owned by Arizona 

Public Service (APS), the "transfer" of the capacity in Four Corners Units 4 and 5 presently 

owned by Southern California Edison (SCE) to APS, and adjusting thermal generation in 

the APS and SCE areas to reflect the results of these actions. 

4. Modifying the Four Corners Retirement Case as developed above to create a "San Juan OffLine Case" which reflected taking San Juan Units 1-4 off-line and replacing the "lost" 

capacity with existing thermal generation in Northern New Mexico, Arizona, California, 

southern Colorado, and southern Utah as discussed in greater detilil below, 

5. CompMing the pre- and post-Category B contingency line and transformer loadings and 

bus voltages within the Study Area for each of the three Cases discussed above and 

summarizing and comparing the results. The Category B contingencies simulated on each 

of tl1l' three Cases included all 500-kV and 345-kV lines and transformers within the Study 

Area. 

6. Documenting the results of the above analyses in this report. 

Development of Reference Case 

The initial step in the development of the Reference Case for use in this assessment 

consisted of reviewing the WECC 20l5l-IS2A powerflow case (approved by WECC in 

May 2010) and the WECC 2016HS2 power flow case (approved by WECC in September 

2010) to ascertain which case would be most appropriate for these studies. This review 

indicated that the 2015 case would be the best to use for these studies and, as a result, it 

was selected for use in developing the Reference Case. 

Table 1 summarizes the loads and generation (on a "company-by-company" basis) and 

losses (on a sub-area basis) modeled in the Arizona/New Mexico/El Paso area in the 

WECC 2015 summer peak case. As shown in Table 1, the total generation in this 

combined area is approximately 6,300 MW greater than the loads and losses in the area. 

It should also be noted that the amounts of generation in Table 1 include: 

Approximately 3,300 MW of generation from the jOintly-owned plants in the area that is 

owned by parties outside of the area, and 

Approximately 7,200 MW of generation owned by independent power producers (TI'P's). 
117 


79849.096

TABLE 1 

LOADS, LOSSES, AND GENERATION MODELED IN 

ARIZONA/NEW MEXICO/EL PASO AREAS 

IN WECC 2015 CASE 

Company Load 

(MW) 

Losses 

(MW 

Total 

(MW) 

Generation 

(MW) 

J\riZOll,1 Public ServJcl' 

s-aft -I~i\}cr Froj~'ct - -- - - - - - - - ~ 

""(u~~s()n -Eii.~clr{c}}o\\fer- - - --

Uriis()ui:"c-cAr1zori~i Ele-ctric IJZnvc-r -CO(1P --

Westeni A-rca 11o\vcr 

Total - Arizona 

Public Service of New Mexico 

YrI-State C;&f"C\,operativc - --

0,1 exico 

El Pa~o Electric Area 

Total Study Arca 

8,883 

--7,75i -- --- - -- -- -- --- 2,593 -----

-sfy---'- -----

------ ._---- 460 -----

---93Y -

21,137 60S 

2,261 

---42g2,689 164 

1,944 64 

25,770 836 

13,098 

--- ---- -----8:(;26- - --

- -- ---- -----2:586- ---

------[(----

-----527---- ---- --- -----3:945 ---

21,745 28,782 

2,655 

- 24()----

2.853 2,895 

2,008 1,279 

26,606 32,956 

Table 2 presents additional information regarding the generation mix for those utility 

systems with which jointly owned projects or IFF projects are interconnected. As noted 

in Table 2, the !PP generation includes 1,200 MW from the proposed Desert Rock 

Powerplant in the Four Corners area and SOO MW from the proposed Bowie power 

project in southeastern Arizona. All of the remaining S,SOO MW of IPF generation listed 

in Table 2 is from existing projects (primarily in the Palo Verde area). 

TABLE 2 

GENERATION MIX IN ARIZONA/NEW MEXICO/EL PASO AREAS 

IN WECC 2015 CASE 

Utility 

System 

AI'S 

SRI' 

TEl' 

Resources 

Splf-Owned 

Y{)-u-r-(\)l;1er; 4 -& 5- --

-Pain Verae -1:3 -----

-If-'f-'-I)rok-cts rTotal 

Self-Owned 

-j\J"Y"jo -1:3 - - - - ---

-Ipf)-r)r~)J(;('ts - - - - - --

Total 

Self-Owned L..-__ --l-----_ -----

Generation (Net MW) 

Available Dispatched "Excess" 

4,975 4,975 0 

-(S-O!]" . ---I,5M--- -- -0----

- - '(93(; -- ---3,936" -- ----[)----

':;;3:S-2-- ---2,687" -- --- 665 ---

]3,763 13,(198 665 

3,516 3,416 lOO 

-- 2;24'3 -- ---i,m--- - - - -0- - --

-- 2:')68-- ---:U}6S--- ----0----

8,727 8,627 lOO 

1,359 1,271 88 .-

1 Includes 1,200 MW from the proposed Desert Rock Powerplant in the Four Corners 

area 
118 


79849.097

~sj)fingci'vilfe'::i &" 4 2 -- --8'15---- ---------

815 () 

'Ipp'I'roiects r'- -- -S(i() -'--soll'--- --- -6' ---

Tot,,1 2,674 2,586 88 

WAl'A-LJSW Self-Owned 2,866 2,866 0 

-][>j'-Projc-cls --- ----- --1;(i79- -- ---i,079 --- ---'6----

Total 3,945 3,945 0 

I'NM Self-Owned 1,394 1,112 282 

-Sall}llan -1-4 -- -- ---- --n,o)--- - - -1,';43 --- ----64---' 

Total 3,001 2,655 346 

The Reference Case for use in these studies was created from the WECC 2015 summer 

peak discussed above and reflected the following changes: 

Removing the Desert Rock and Bowie projects from the case because neither of these 

projects have completed their regulatory review and/ or not anticipated to be in-service 

prior to 2018 (based on information in the WECC 2011 Power Supply Assessment 

(November 17, 2(11). 

Increasing generation as follows to replace the 1,700 MIN of "lost" generation': 

o 60 MIN from San Juan (which increased the dispatched capacity to a level closer to the 

available capacity) 

o 665 MW from the Gil" River IPP project in Arizona, 

o 315 MIN from utility owned plants in the SRI' and TEl' areas, 

o 100 :-'1W from thermal plants in the San Diego "rea, and 

o SOD MW from thermal plants in the SCE area. 

Four Corners "Retirement" Case 

Case Development 

The Four Corners "Retirement" Case was developed from the Reference Case discussed 

above by: 

Retiring Four Corners Units ]-3 that are owned by AI'S and which were modeled in the 

Rdc'rence Case with a combined output of 560 MW. 

Reducing power transfers from the Arizona area to the SCE area by 720 MW' to model the 

11transfer" of SeE's cdpadty in Four Corners Units 4 and::; to APS. 

Increasing thermal generation within the SCE area by 720 MIN to replace the capacity from 

Four Corners 4 and 5 and decreasing AI'S peaking capacity in the Phoenix area to 

accommodate the 160 MIN of additional generation from Four Corners made available to 

AI'S via the "transaction" with SCE. 

Results of Technical Studies 

Units owned by Tri-State and SRI' 

lncludes 500 MW from the proposed Bowie power project in southeastern Arizona 

4 Due to a decrease in losses the total generation added was approximately 60 MW less 

than the total generation removed 

5 The Reference Case modeled the total generation from these two units at 1,500 MW; 

SCE's ownership share (48%) is equal 720 MW 
119 


79849.098

Category 13 outages of the 34S-kV and SOO-kV lines and transformers in the Study Area 

were simulated on both the Reference Case and the Four Corners "Retirement" Case to 

assess the impacts associated with retiring and re-allocating generation at Four Corners. 

In summary, these studies indicated that retiring and re-allocating generation at Four 

Corners: 

Would result in "nevv" overloads of: 

o About 14';;. on either of the 34S!230-kV transformers at Four Corners. 

o About 8~';, on the Emon Tap-Callup l1S-kV line in northern New Mexico 

Would increase the number and! or severity of overloads on the following elements: 

o Clads tone-Clapham 115-kV line in northeastern New Mexico - 3;:;, increase in overload 

o Gladstone-Springer 11S-kV line in northeastern New Mexico - number of overloads 

increases from eight to seventeen and the worst overload increases by 4% 

o Hernandez-Norton 115-kV lines in the PNM area Overloads increase by 2% 

o McKinley-Yahtahey 345!1l5-kV transformer - Number of overloads increases from one 

to two and the worst overload increases by 4'1;, 

Would not increase the magnitude of post-outage voltage deviations at the major busses in 

the study area. 

San Juan "Off-Line" Case 

The San Juan "Off-Line" Case was developed from the Reference Case discussed above 

by: 

Taking San Juan Units 1-4 (modeled in the Four Corners Retirement Case with a total net 

capacity of 1,614 MW) off-line.' 

Replacing approximately 570 MW of the "lost" capacity with existing, underutilized utilityowned thernldl generation within the service areas of the San Juan participants, as follows: 

o Increasing thermal generation in southern Colorado by 40 MW to replace Tri-State's 

share of San Juan capacity. 

o Increasing thermal generation in Utah by 35 MW to replace UAMP's share of San Juan 

capacity. 

o Increasing thermal generation in the SCE area by 130 MW to replace the San Juan 

capacity owned by the municipal utilities within tile SCE area (Anaheim, Azusa, 

Banning, and Colton). 

o Increasing thermal generation in the LADWP arca by 20 ~lW to replace Glendale's share 

of the San Juan capaCity. 

o Increasing thermal generation in the llD area by 104 MW to replace IrQ's share of the 

San Juan capacity. 

o Increasing thermal generation in the M-S-R member systems by 144 MW to replace M-SR's share of the San Juan capacity. 

o Turning on approximately 100 MW of previously unused generation in the PNM area. 

Utilizing the capacity from IPP projects in Arizona which had previously been assumed to 

be scheduled to California to replace the remaining approximately 1,(150 MW of lost 

(, The total gross capacity of San Juan Units 1-4 modeled in the Four Corners Retirement 

Case was 1,791 MW and the total station service load for these four units was modeled 

as 177MW 
120 


79849.099

generation. This was accomplished by: 

o Turning on approximately 50 MW of previously unused thermal capilcity in the SCE 

urea, and 

o Turning on approximately 160 MW of previously unused thermal capacity in the San 

Diego area, and 

o Turning on approximately 840 MW of previously unused thermal capacity in the I'G&E 

area (such was necessary because there was no additional, unscheduled thermal 

capacity in the SCE or SDG&E areas). 

Results of Technical Studies 

Category B outages of the 34S-kV and SOO-kV lines and transformers in the Study Area 

were simulated on the San Juan "Off-Line" Case and compared to the results for the 

Four Corners "Retirement" Case to assess the impacts if the four units at San Juan were 

off-line. In summary, these studies indicated that taking San Juan off-line: 

Would result in "new" overloads of: 

o As high as 6';'. on AI'S's Verde-Yavapai 230-kV line 

o As high as 4";. on the Person-Prosperity 11S-kV line in the PNM area 

o As high as 27<. on the' Prospnity-Kirtland 115-kV line in the PNM ilrca 

o As high as 2% on the Nucla-Cahone lJS-kV line in southern Colorado. 

Would increase the number and/ or severity of overloads on the following elements: 

o Gladstone-Clapham 115-kV line - Number of overloads increases from one to two and 

the worst overload increases by 21X! 

o Gladstone-Springer lJS-kV line Number of overloads does not increase but the 

magnitude of the worst overload increases by 7(lr) 

Would result in the post-outage voltage deviation at the Ojo 345-kV bus in northern New 

Mexico increasing by about 4 1/;) (fronl about 9f/?! to about 13j~)). 
121 


79849.100

Visual Difference Between 

New Mexico State Implementation Plan and 

EPA Federal Implementation Plan 

New Mexico State Implementation Plan costs $77 million with result of-5.89 delta dv. 

Federal Implementation Plan costs = $750-850 million with a result of -3.45 delta dv. 
122 


79849.101
123 


79849.102

Q:L1nHrl'~;~; nf tIp: UniteD $>tah~l;l 

lII;n;hill~ll11!l, D([ :::051:'; 

Ihe 11(l"I)rabk Ijsa JaCKSUIl 

\dm!ni"tr:ltllr 

Fin inHlllh.'nt~t! Prokction :\gency 

I ~IJlJ I)C'IIIl,ylv:lIlI" ,\ I elluc' '\ \\' 

\\ asilill"lul!. DC 211-.[1>(1 

'1<11 c'mbc'r IX. 20 I I 

,\s I,',S, RCl'rc'Sc'llt:ltin's "I',l COIlSUlllL'H)\\l1c'd utilill thllt is a partial (l\\llerol'the Sall 

JlIall Cic'ncratin" Station (SJ(;S) in Nc" i\k,icI), I\'L' rc'spcetl'ullv rcqnest )clllr assistancel ill 

llllxting kckrall':JJ\ RcgiulwIlla7e requirclllellts "ith the most cost-en"et;,,: technology 

deScril1l'd bei:l\\, 

rile c.l-S-R Puhl;e POIIl'r Agcnc) in ('"lil(H'ni" is jointly O\\llcd by the :Vlolk-sto 

I n'i)!atil\ll District. sL'I'ling tile City of Modesto and portions of Stanislaus and San Joaquin 

Counlie,s. and the municipal utililies serving the Cities of Santa Ciar" and Redding, The 11'1-S-R 

constiluentl11el11bers collcdivc:ly OWI1 2X.S percent of the SKiS t'nit -I, :\11 of these consumerO\llled utilities "ctil'.:!Y support enl,rts to ll1c'd kderaIIT,\ Reginnall [,ve requirements, All arc 

m~lking signilic;11l1 ,llld costly in\'t'stll1l'!1ts to J11L'Cl stale energy n.::quirL'ments. including a ~UjlLTcenl l'c'ducllUIl in tirccnhuuse Cia,; (til";) c'l1lissiOIlS 0;0 pc'ru:nl hI the )ear 2115111 and a.'," 

p\.'rl"l'lll n:nL'\\abk l'Th_TE;~ standard b) the year ~()].o. 

()n .Iune 2, 21111, '<e\\' \lcxico's F:minll1ll1ent Ikpartmcnr unanilllously apprm'cd a Srate 

1111picl11enilltic'n Plan (SIP) to retrolit SKiS \I'ith Sckctil'c :\on-Cillah ric [-tcductillll technology 

(SNt 'R) Iu reduce rL')!illnal haze and meet kdcr:tl air quality guais, The S\'CR option achielcs 

Fl'Xs cstal1bhed presul1lpti\c NO" limit. retiuces NO" lilat contributes to haze by an additiul1al 

-.[-')U() t(lllS pc'r YC:lr Illid alsll results in visihilit) il1lprol'el1lents, lire 1'11111 meets Ckan ,'\ir e\er 

s(ancillrds "lid h,,, an estimated capiLli inslIllllltiun CI.st ofS7-'[ milliun 

\\;;.: u!kiel'')und. rnlor to tile '-)IP'.-.; heing app!\!\cd b.\ til..: :--;Uk ill :\c.-'\\ \k:..icu. t .S.-f-P-\ 

Rt,'~ ;l)!l () i ,",l!t·d 11', l)\\ll F\'\.kral Imp!\:mt:nultiill1 Plan (flPl tn lnl?t.'t lh'~' '~~lnt.' fc,-Il'rn! air qua!i!~, 

,-ul,i ""llh"'-·'-~LL:rlth pUb!l:-J:\.:d tile' _"~lJ1>.: In tilt.' h.'dt:ra! Rc;;,i.,,~~: ! hL' rc.:<lkral pian (,-db In!' the 

]!I';Ll;!:lli\ll) td''-;,-'ky!j\·t.' ('~Jtd)til..' R\..'dllLti~H1 (Si. 'Rj k'('hn())n.~f>. ,ll ,-1 (,{It,[ o(mOft.: th;-lll ~77i) 

flill:lll!L ~(R h,\.'!;J1l)!\)F: \Xl.)lJld 1\.'111\1\'':' a grC:jrL'r alIl{'rUlll \)1 the '\( h rHdlut:mt. l!{l\\t,'\-cr. the 

\ !"d'!ll!: imr'lJ'l)\·'.'lllcn: .:;ainc,-i i:-.. mininwi d~ ,,:,·\);ni'~in.:d wIh\..' ',--'I,'. \k'\i ... 'u ,,11m. 
124 


79849.103

f hL I !tl!ll\r~l!\It..'! i"J .I,lch ... t"lll 

'\;~)\,I.'!l1b~'r j X. ~() II 

!\Ii!\..' :.: 

\l-S-1< Public l'e)ller ,\gL'nC\ ~lIrd its public I'('"LT partnL'!". \\ho arc' ch~lrged wirh the 

deli\ cry ot' al"i'ord'lbk, reliable energy to thl'ir customer,. arl' alrcad, making enormous 

cm ironml'llwl smeles as required under Cali fornia I~r\\, The added la.' er uf EPA's SCI<. 

rt'quirL'nrent at S.I(iS wuuld he liseall)" pain/trl, with l'aeh of the !\l-S-R Puhlic Power ,\gene\' 

l'un,tituL'nt 1ll1'lllhl,r's = I 0.000 CtLstolllers oblig~llt'd to IXI\ up to '56(>0 each for their utilit,'s 

Iinancl'd sharI' ol'the SCR rctmllL This additional cost \\Cluld be a hard pill to s"allow lill" 

n:sidL'nh "I"Culi/,)rni'l's C,'ntr,lI Virile,. whieh has s,)me "fth", highest Ie\els ol"unemplo\l11cnt 

in the St,lte, 

Ikf(lre \Our agency n:quircs a tec!l!1ol,'g\" that is wughlv 13 times tl1l' e,I';t of rhe S\:CR 

~Ind produces mininl,rI \'isibilir.' impro\ ement. 1\ e respc'Ctfull\ f"ClIUI"it carci"tll cUf]sidet"atil'n (If 

tilc IcclmicaL as \\c'lI as CUfbUlllcr irnp~lcts "hcll iln<lly/il'", the t\\O \lplions, Furl her, lYe nole thilt 

Oil '\lI~lIst 1.20 I I. \"\lur .-\ssistal1t ,\dl11inistrali>r fur ,-\ir tll1d Radiation inic>r111ed 111\ colka!lucs, 

the I'!ol1orlrbk \Lir\ BOllo '-!:reL the II(>Il(lrahk Ciar\ (j, \liller, alld Ihe 1-lol1"l"abk Joe flaelt. 

Ihat FI',,\ \\ould "'1'ull: consider rhe inlcwnatioll in the NeVI \1c~ico SIP, and luke appropriate 

act!()!l. 

\\C' re-;pectilill) request \-our assisrance wilh this importlll1t f11atkr and lhat FP,-\ 

"ilhdr'l\\s its 1"11': while. pursu,rnt to Section lUI of the ('lean ,\ir I\CI. EP!\ IOllks to appro\'c rhl' 

Ne'\\ \k~ico SIP includin~ both its InltTSlalc ir:l1lsport ,mel Rcgic'n;!ll-Iaz<: components, 

Sincerel). 
125 


79849.104

BOB flI,NER 51sT D!STRICT, ('A:.IFORNI_\ 

f'HANSP1W.J'ATION AN!> I~FRAS1RI!Cil!j(f< 

llwHlv", 

CONGRESS OF THE UNITED STATES 

HOUSE OF REPRESENTATIVES 

The Honorable Lisa Jackson 

Administrator 

Environmental Protection Agency 

1200 Pennsylvania Avenue N.W. 

Washington, DC 20460 

Dear Administrator Jackson: 

June 13,2011 

31] F S'IRhb1', SI'llT A 

I 101 AIRPORT ROAD, SUITE D 

webs.ite: WWW,hODSC.gov/flloer 

As a U.S. Representative of a consmner-owned utility that is a partial owner of the San Juan 

Generating Station (SJGS) in New Mexico, I respectfully request your assistance with regard to 

federal EPA Regional Haze requirements. 

The Imperial Irrigation District (lID), which provides electricity to my California Congressional 

District, together with the municipal utilities serving the Cities of Azusa, Banning, Colton, and 

Glendale, collectively own 42 percent of the SJOS Unit 3 through the Southern California Public 

Power Authority. The City of Anaheim's utility owns 10 percent of Unit 4, directly. All of these 

consumer-owned utilities actively support efforts to meet federal EPA Regional Haze 

requirements. All are making significant and costly investments to meet state energy 

requirements, including a 30 percent reduction in Greenhouse Gas (GHG) emissions (80 percent 

by 2050) and a 33 percent renewable energy standard by 2020. 

On June 2, New Mexico's Environment Department unanimously approved a State 

Implementation Plan (SIP) to retrofit SJOS with Selective Non-Catalytic Reduction technology 

(SNCR) to reduce regional haze and meet federal air quality goals. The SNCR option achieves 

EPA's established presumptive NOx limit, reduces NOx which contributes to haze by an 

additional 4,900 tons per year and also results in visibility improvements. Its capital installation 

cost is approximately $70 million, and meets EPA standards. 

I understand, prior to the SIP's being approved by the State of New Mexico, U.S: EPA Region 6 

issued its own Federal Implementation Plan (FIP) to meet the same federal air quality goals. The 

federal plan calls for the installation of Selective Catalytic Reduction (SCR) technology, at a cost 

of more than $900 million. SCR technology would remove a greater amount of the NOx 

pollutant; however, the visibility improvement gained is minimal. 

lID and its public power partners, who are charged with the delivery of affordable, reliable 

energy to their customers, are already making enormous environmental strides as required under 

state law, The added layer of EPA's SCR requirement at SJOS would be fiscally painful, with 

each of the lID's 140,000 customers obligated to pay $850 each for the utility'S financed share of 

the SCR retrofit. A bill this size would be a hard pill to swallow for residents in the Imperial 
126 


79849.105

The Honorable Lisa Jackson 

June 13,2011 

Page 2 

COlllll:, which has Sl)lll~ of the high"! kycls of IlllclllpJoymcl1l in Ih, Stale'. Uther Calilllrnia 

custcll1ll'rS would I'''Y as much as t2,251J each. 

Ikl<H'C your ag,nc) require,.; a Icchntllogy that is roughly 13 limes the cost orthe SNCR and 

produces minimal visibility imprc" elllelll, I rc'spcctJully requl'St careful cOllsilkraliol1 of the 

tcchnical, ,1S \vell ,IS ctlnsumer impacts \1 hen analyzing the two optiolls. Further, I hope that 

I!I',\ \\ill share \Iith 1m: its assessment, prior to rc:lcasc of a lin,ti dc<:ision arti:c(illil our 

constituents ;1Ilt! their investment in SJ(iS. 

Bh't:k 

:2SilI56(, 
127 


79849.106

ot n It ~\l' I' J:' ~:i 0 flip' '1il H it !'it 

llIardiill~\!inl, D«( :~I.GE; 

The Honorable Lisa Jackson 

U.S. Environmental Protection Agency 

Ariel Rios Building 

1200 Penllsylvania /\ venue NW 

Washington, DC 20004 

Dear Aciministrator .Jackson: 

June 3, 201 1 

As U.S, Representatives of Illunicipalutilities and local officinls who arc stakeholders and 

owners of the San Juan Generating Station (SJGS) in New Mexico, we respectrully request your 

,1ssistancc in moving forward with the most cosl effective technology to reduce regional haze 

related to gcneration ji'Olll the plant. 

The California ulilities run by the Cities of I\zusa, Banning, Colton, Glendale, ane! the Imperial 

Irrigation District, collectively own 42 percent of the SKiS Unit 3 (through the Southern 

California Public Power Authority). The City of Anaheim's utility owns 10 perccnt of Unit 4, 

directly. All of these consumer-owned utilities actively support efforts to meet federal EPA 

I\.ogionaillaze requirements. These oamc constituents arc 011 tt'ack to make signi11cant and 

costly strides to achieving stale energy requirements, including a reduction ill Greenhouse Gas 

(UIIG) emissiolls by 30 percent (RO pCl"ccnt by 2(50) and meeting a }3 percent rcnewable energy 

standard by 2020. 

On Fcbruary 2R, New Mexico's Ellvironlllcnt Dcpartment tiicd a Stale fmplcl1lenlBtion Pian 

(SIP) to rctrofit SKiS with Selcctive Non-Catalytic Reduction technology (SNCR) to reduce 

regional hazc and meet federal air quality goals. Prior to the Sf I' being filed, U.S. EPA Region 6 

isslted its own federal Implementation Plan (FIP) to meet the same federal air quality goals, 

which ,'ails for the installation oj' Selective Catalytic Reduction (SCR) tecl1lloI0~y. 

While the SCI<. ll'chnology, al a cost of more than $fJIJO million, would remove a greater amollnt 

of' the NOx pollutHnt which contributes to haze, the visibility improvement gained is minimal. 

SNCR aehi<.:ves EPA's established presllmptive NOx limit, reduces NOx by an aclditional4,900 

tOllS per year and also results in visibility imp:-ovements, TilliS, SNCR is cost-effective at a 

capital insUlilntiot1 cost of approximately $7D million, while still meeting Ille EPA Slnndards. 

These utilities, which me chargee! with the delivery of affordable, reliable energy to their 

customers, are already milking enormous strides as required under state law (/\13 32), including 

nla\imizing energy efficiency, increasing their rcne,vablc resources to 33 percent by 2020 and 

meeting Gl IG reduction requirements. The added layer of F.P 1\'s possible SCR requirement at 

S.I('S would be tiseally paini'ul, with each of oUt' cOllstituents having to pay between $272 to 

more than $2,250 for their utilities' linallceci share of the SCR retro111. Before your agency 

requires a technology that is roughly 13 times the cost oftllc SNCR and produces minimal 

viSibility improvement, we would respectfully request careful consideration of tile technical, as 

well ns consumer impacts when illHllyzing the two options. 
128 


79849.107

Letter to Administrator Lisa Jackson 

june 3, 20]1 

Page 2 

Again, we respectfully request yonI' assistance with this imjlortant matter, and that EPA Jllay 

share with us your decision prior to release of the final decision affecting our constituents and 

their investment in SJGS. 

Sincerely, 
129 


79849.108

The Honorable Mary Bono Mack 

U.S. House of Representatives 

Washington, D.C. 20515 

Dear Congresswoman Bono Mack: 

AUG -1 2011 

Thank you for your letter of June 3, 2011, co-signed by Congressman Jerry Lewis, requesting that the 

U.S. Environmental Protection Agency move forward with approval of the most cost effective 

technology to reduce regional haze-related air pollution from the San Juan Generating Station (SJGS) in 

New Mexico. 

On January 5, 2011, in the absence of an approvable State Implementation Plan (SIP) from New 

Mexico, we proposed a Federal Implementation Plan (FIP) to address Clean Air Act requirements that 

emissions from sources in one state do not interfere with the visibility protection programs of other 

states. In our assessment of New Mexico's sources we found'that, with the exception ofSJGS, New 

Mexico's sources are sufficiently controlled with respect to their visibility impacts in other states. For 

SJGS we proposed specific emission limits to eliminate this source's interference with neighboring 

states' visibility goals for their national parks and wilderness areas. 

As you are aware, we proposed to find that the Best Available Retrofit Technology (BART) to limit 

emissions of nitrogen oxides (NO,) from SJGS was selective catalytic reduction (SCR). In proposing 

this determination, we evaluated all NO, reduction technologies, including selective non-catalytic 

reduction (SNCR). We also evaluated the visibility improvement that could be expected to result from 

the installation of SCR, SNCR and other NO, control technologies. 

Our analyses found that in terms of the amount of NO, reduced relative to the cost of control, SCR was 

very cost effective. Other technologies that we evaluated, including SNCR, were less expensive, but did 

not result in significant visibility improvement. The EPA's proposed estimate of the cost ofSCR on all 

four units at SJOS is well within the range that other states and the EPA have found cost effective as a 

basis for selection of SCR as BART. We are evaluating comments we received concerning our cost 

evaluation which may cause us to modifY it in our final action. 

We are aware of the concerns ofthe numerous utilities that own an interest in SJGS. Our Region 6 staff 

has met with management of the facility a number of times to discuss their concerns and I have spoken 

with them as well. We also appreciate PNM hosting the EPA Region 6 staff on a tour of the facility on 

May 19,2011. In response to a request for more time, we also extended our public comment period so 
130 


79849.109

all opinion, on our FIP could be voiced. Most recently, members of my staff and staff from the EPA's 

Region 6 and Region 9 offices participated in a conference call with staff Irom your oHices and several 

of your colleagues' oftlces to discuss the FIP proposal for SJGS. 

We received the \lew Mexico regional haze SIP on June 24, 20 II. This SIP submission includes a 

revised \lOx BART evaluation for the S]GS that would rely on S\lCR in lieu of SCR. ,";s part of our 

NOx BART evaluation for the SJGS, we did consider SNCR in our proposal, but rejected it in favor of 

SCR, which although more expensive, remained cost effective and is predicted to produce significantly 

more visibility improvement at the 16 Class I areas we examined. However, we will fully consider the 

information in the :-.Jew Mexico SIP, and take appropriate action, In the meantime, we arc reviewing and 

responding to the many comments we received during our comment period and public hearing process. 

We intend to carefully consider these comments as we make a final decision. As part of this review, we 

will address the disparity between the EPA and PNM cost estimates. 

In light of your interest in this action, we will do our best to make you aware of the Agency's final 

action on this matter before it is announced publicly and published in the Federal Register. Again, thank 

you for your letter. If you have further questior.s, please contact me or your staiT may call Diann Frantz 

it: the EPA's Office of Congressional and Intergovernmental Relations at (202)-564-3668. 

Sincerely, 

~i{a ~I McCarthy 

Assistant Administrator 
131 


79849.110

JOINT PETITION OF THE NATURAL RESOURCES DEFENSE COUNCIL AND THE 

SIERRA CLUB 

FOR INITIATION OF A RULEMAKING REGARDING 

CALIFORNIA'S EMISSIONS PERFORMANCE STANDARD 

I. INTRODUCTION 

Pursuant to Title 20, Section 1221 of the California Code of Regulation, 1 the 

Natural Resources Defense Council (NRDC) and Sierra Club jointly file this petition to 

request the California Energy Commission (CEC) initiate a rulemaking proceeding to 

ensure that current practices of California publicly-owned utilities (POUs) meet the 

requirements of Senate Bill 1368 (Perata, Chapter 598, Statutes of 2006) and California's 

Emissions Per/(Jrmance Standard (EPS). Specitically. "JRDC and Sierra Club request the 

following actions: 

(1) modify Section 2907 to require mandatory reporting requirements when 

POUs make investments in existing coal plants: and 

(2) clarify that under current law. POl! investments in existing coal plants are 

subject to the tiling requirements of Sections 2908 and 2909. 

A review of past and planned expenditures at existing coal power plants owned or 

contracted to California POUs shows that POUs have made and plan to make substantial 

capital investments in plants that do not meet the EPS. In light of these past and planned 

expenditures, \~e request that the CEC initiate a rulemaking to amend its existing 

regulations implementing the EPS in order to ensure ongoing transparency and 

monitoring of any investment at POU-owned and contracted coal plants. As part of this 

rulemaking, we request that the CEC clearly articulate a set of criteria for POUs to 

consider in determining whether a particular investment is subject to the requirements of 

SB 1368 and the EPS. 

Atthis time, NRDC and Sierra Club do not seek to initiate an enforcement action 

for any particular violation of the EPS. Rather, we request a prospective rulio:making to 

clarify that POUs fully understand the requirements imposed by the EPS and to ensure 

that future investments by POUs do not violate existing law. Nothing in this petition 

constitutes a waiver by NRDC or Sierra Club of their right to request at a later date an 

enforcement action pursuant to Section 2911 for past or future violations of the EPS. 

II. BACKGROl''iD 

I Lnless otherwise stated, all further references to code sections refer to the Energy Commission's 

regulations under Title 20 of the California Code of Regulations. 

NRDC and Sierra Club Joint Petition 

November 14, 201 I 
132 


79849.111

SB 1368 was signed into law on September 29,2006. The law requires the 

California Public Utilities Commission (CPUC) and the CEC to establish a greenhouse 

gas emissions performance standard and to implement regulations for all long-term 

financial commitments in base load generation made by load serving entities (LSEs) and 

POUs, respectively. The CPUC adopted its regulations for the imestor-owned utilities 

(IOUs) and other LSEs in January, 2007. The CEC adopted EPS regulations for POUs in 

October 2007.2 

The regulations implemented by the CPUC and CEC under SB 1368 are expected 

to result in significant GIIG emissions reductions. The greenhouse gas emissions 

performance standard is not to exceed the rate of greenhouse gases emitted per megawatthour associated with combined-cycle, gas turbine baseload generation. The CEC's 

regulations establish an emissions performance standard of 1.100 pounds (0.5 metric 

tons) of carbon dioxide per megawatt hour of electricity. This standard was established in 

consultation with the CPUC and the California Air Resources Board and is the same 

standard adopted by the CPUc. 

The objectives of the EPS regulations arc to avoid new long-term investments in 

highly polluting power generation to minimize the significant and under-recognized cost 

of greenhouse gas emissions. and to reduce potential financial risk to California 

consumers for future pollution-control costs. The law has two effects: (I) to close otT the 

possibility of California utilities or energy service providers (ESPs) developing or signing 

new contracts with base load power plants that do not mect the EPS; and (2) to rcquire 

California utilities and ESPs to reti'uin from making any new ownership investments in 

their existing non-compliant coal plants. unless thcy can bring those plants into 

compliance with the EPS. 

Since the passage of the California EPS. no California utility has proposed 

investment in the development or purchase of new coal plants. Utilities appear to clearly 

understand that the EPS prohibits investments in new coal planls without carbon capture 

and scqucslration because they would not meet the standard. However. past and planned 

expenditures at existing coal plants suggest that lItilities do not properly understand the 

requirements of the EPS with respect to existing plants. 

Ill. TIMING 

Recent and upcoming EPA regulations will require owners of existing coal-tired 

po\\er plants to decide whether to make significant capital investments in environmental 

compliance rctrofits. or whether to pursue a different strategy that could lead to 

retirement or natural gas re-powering of coal plants. As disclissed in more detail below, 

all existing coal plants arc "non-dcemed compliant" t~lCilities under the EPS because their 

greenhouse gas emissions exceed the standard. Yet California faces the prospect that 

several POUs will commit hundreds of millions of dollars toward compliance retrofit 

costs to these facilities. Such investments could significantly extend the effective lives of 

these plants, contrary to the intent of SB 1368. The CEC's oversight is therefore 

, 20 CCR J J ~ 2900 el seq. 

NRDC and Sierra Club Joint Petition 

November 14. 20 I I 

2 
133 


79849.112

necessary to provide a clear and transparent criteria and review of all POU long-term 

capital investments in coal-fired rower plants. 

IV.IDE"\TlFICATION OF PETITIONERS (§ 1221(A)(I» 

NRDC is a non-profit membership organization with over 250.000 members and 

online activists in California and a longstanding interest in minimizing the societal costs 

of the reliable energy services that Californians demand. Sierra Club is a national. nonprofit membership organization with over 600.000 members nationwide. and over 

150.000 members in Calit()rnia. Sierra Club'5 most important priority is to help speed the 

country's transition fhlln an energy economy dependent on fossil fuels to a robust clean 

energy economy based on rencwnble energy. 

Noah Long 

Natural Resources Defense Council 

III Sutter St. 20th Floor 

San Francisco. CA 94104-4540 

Phone: (415) 875-6100 

nlong@nrdc.org 

Travis Ritchie 

Sierra Club Environmental Law 

Program 

85 Second Street. 2nd Floor 

San Francisco. CA 94105 

Phone: 415-977-5727 

travis.ritchie@sierraclub.org 

V. NATURE OF EXISTING EPS REQUIRE~IENTS FOR INVESTMENTS IN EXISTING 

FACILITIES (§ 1221(A)(2» 

The CPUC monitors proposed investments in non-compliant facilities by 

Calit,xnia's IOUs. Last year the CPUC ruled on a petition for modification from 

Southern California Edi~on (SCE) regarding S8 1368's apr;licability to proposed retrofit 

investments at the Four Corners coal plant in New Mexico.' The CPUC's ruling 

explicitly limited new long term investments by SCE in the plant. The ruling provided a 

clear signal to SCE and other IOUs that California law does not allow further investments 

in non-compliant faeilities.4 

Similar to the IOUs. various California POUs have significant contractual or 

ownership stakes in out-or-state coal plants that do not meet the EPS. (Sec Attachment 2.) 

1I0wever. unlike the CPUC, the CEC docs not yet require a transparent review of 

proposed investments at these coal plants. As a result. it is unclear whether POUs have 

consistently complied with the EPS. or whether POUs have misinterpreted the 

applicability of the CEC regulations with respect to investments in existing facilities. 

, D,I 0-1 0-0 16 October I~. 20 I 0 (R. 06-04-009), 

, Id. 

NRDC and Sierra Club Joint Petition 

November 14. 20 II 

3 
134 


79849.113

The prohibition in SB 1368 against further capital investment in coal-fired power 

plants is cicar, providing that: 

No load-serving entity or local publicly owned electric utility may 

enter into a long-term financial commitment unless any base load 

generation supplied under the long-term financial commitment 

complies with the greenhouse gases emission performance 

standard established by the commission, pursuant to subdivision 

(d), for a load-serving entity, or by the CEC pursuant to 

subdivision (e), for a local publicly owned electric utility.' 

Thus far, the CEC has not monitored investments in existing coal-tircd powcr 

plants that are currently under contract to California POUs, none of which meet the EPS. 

To this point. not a single POU has submitted compliance filings for covered 

procurements at existing power plants. This lack of transparency is likely the result of 

a potentially incorrect and non-uniform interpretation by POUs of the compliance 

requiremenb established by the CEC 

The CECs EPS regulation, 3t20 CCR II § 2907, allows a POU to request CEC 

review or proposed investments or "prospective procurements:,6 POUs mllst also make 

compliance filings under 20 CCR II § 2908 and 2909 tor "covered procuremcnts,"" 

which the regulations define to include "new ownership investments." 8 Notwithstanding 

these provisions, not a single POU has filed a request for review or a compliance tiling 

for investments in existing coal plants. 9 These omissions presumably stem !i'om unilateral 

determinations made by POUs that such investments arc not "prospective procurements" 

or "covered procurements" and therefore are not subject to the CECs regulations. This 

interpretation by POlJs has potentially led to incorrect and non-uniform interpretations of 

the definitions of "covered procurement" and "new ownership investment": 

"Covered procurement" means: 10 

(I) A new ownership investment il1 {/ hase/oat! generatioll 

plilverplant. or 

(2) A new or renewed contract commitment, including a lease, 

for the procurement of electricity with a term of five years or 

greater by a local publicly owned electric utility with: 

(A) a baseload generation powerplant. unless the 

powerplant is deemed compliant. or 

5 Cal. flU Code 834 J (a) 

" :20 CCR II ~ :2907 

7 20 CCR II ~29()1 (d) 

x 20 CCR II ~2901 (j) 

"CITE (make at least some mention ofholV we know that) 

Ie 20 CCR II ~2901 (d) (emphasis added) 

NRDC and Sierra Club Joint Petition 

November! 4,20 II 

4 
135 


79849.114

(8) any generating units added to a deemed-compliant 

bascload generation powerplant that combined result in an 

increase of 50 MW or more to the powerplant's rated 

capacity. 

"New 0,\ nership investmenC means: II 

(I) Any investments in construction of a new powerplant; 

(2) The acquisition of a new or additional ownership interest in 

an existing non-deemed compliant powerplant previously 

owned by others; 

(3) Any investment in generating units added to a deemedcompliant powerplant, if such generating units result in an 

inaease of 50 MW or more to the powerplant's rated capacity; 

or 

(4) Ally investment in an existing, non-deemed compliant 

powerplallt owned in whole or part by a local puhlic~1' owned 

electric utility that: 

(A) is designed and intended to extend the l~le (!lolle or 

more genel'llting units by jive years or more, not 

including routine maintenance; 

(8) results in all increase ill the rated capaci(r ojtite 

powerplallt, not inc/uding routine muif1ten{lnce; or 

(C) is designed and intended to convert allOl/-hase!oat! 

generation powerplant to a base/oad generation 

powerplallt. 

The CEes EPS compliance requirements apply to "covered procurements:' 

which in turn incorporates the term "new 0\\ nership investments." While "new 

ownership investments" clearly include construction of new powerplants, POUs appear to 

have interpreted the term to excludc various types ofinvcstmcnts in existing coal 

facilities. for example, the Southern California Public Power Authority (SCPPA) issued 

a resolution in 2009 finding that a proposed investment in the San Juan Generating 

Station "constitutes routine maintenance and is not a 'Covered Procurement' pursuant to 

the regulations promulgated by the Calit()fnia CEC. .. pursuant to SB 1368:. 12 While we 

make no judgment at this time on SCPPA's determination regarding the applicability of 

SB 1368 to that particular investment, it is an example of the type of non-uniform and ad 

hoc interpretation that raises concern. 

As discussed further below, NRDC and Sierra Club found ample reason to believe 

that California POUs have made investments and are considering further significant 

investments in existing coal plants that do not meet the EPS. Although the POUs may 

have reason to believe that making. or considering. investments in coal plants are not 

II 20 CCR II s2901 (j) 

"SepPA Resolution No. 2009-23, February 19,2009 (Attachment 3), 

NRDC and Sierra Club Joint Petition 

November 14. 20 II 

5 
136 


79849.115

"new ownership investments" subject to the EPS. under current practices those 

determinations are not independent or subject to public scrutiny. 

We request that the CEC develop clear criteria for POUs to guide them in 

determining whether a particular investment in an existing plant is subject to the filing 

requirements of 20 CCR II §§ 2908 and 2909. 

We further urge the CEC to amend its reporting and compliance regulations to 

require the ['OUs to submit compliance filings for all past 13 and planned investments in 

plants not meeting the FPS. Such a filing would allow the CEC to publicly. transparently. 

and consistently review past and planned invcstments to indepcndently determine 

compliance with SB 1368 in a manner that individual review by POUs cannot achieve. 

VI. A REVIEW OF PAST AND PLANNED INVESTMENTS DEMONSTRATES A NEED FOR 

CEC HULDIAKI'IG (§ 1221(.'\)(3» 

A. Existing Ownership Interests 

The table included at Attachment 2 identifies the California POUs that have 

significant interests in out-of-state coal power plants. which do not meet the EPS. During 

the period after the passage of S8 1368. POUs continued to make substantial capital 

investments in several coal plants. The following are a few examples of such 

investments. 

I. San Juan Generating Station 

The San Juan Generating Station provides a troubling example of continued longterm investments by California POUs in an old and dirty t~1Cility that does not meet the 

EPS. 

In response to a 2005 consent decrec. the owners of the San Juan Generating 

Station began a four-ycar $340 million pollution upgrade project to bring the 

plant into compliance with air quality laws for particulate matter. NOx, and 

SOc emissions.l~ SepPA alone paid approximately $80 million in capital 

costs. IS 

On February 19.2009. SCCPA authorized the replacement of a high 

pressure/intermediate pressure turbine for San Juan Generating Station unit 

3/' At the time SCPPA made its decision to undertake this upgrade, PNM 

1\ Commencing with the passage ofSB 1368 in September, 2006. 

,., Rebuttal Testimony in Support of Stipulation of Patrick J. Themig. llllh~ .\tallcr (!flhe Application oj' 

Public Sen'ic~ Cumpw,v or\'~\r .\fnicol"r RerisioJ1 to ils Rctail Dec/ric Rales. cle., April 25. 20 II, New 

\lexico Public Regulation Commission Case NI). IO-00086·lJT. p.7. 

"SCPPA San Juan Unit 3 Status Report. July 200S (Attachment 4). 

"SCPPA Resolution No. 2009-23. February 19.2009 (Attachment 3). 

NRDC and Sierra Club Joint Petition 

November 14. 20 J J 

6 
137 


79849.116

estimated the total cost for the turbine at approximately $14.3 million. 17 

SCPI'A's resolution approving the expenditure concluded that for purposes of 

SB 1368. the turbine replacement constituted "routine maintenance" and 

therefore did not violate the emission performance standard. However. there is 

no CEC guidance or history of enforcement that indicates whether SCPPA's 

own interpretation of the turbine expense as "routine maintenance" is valid. 

In 2009. SCrPA reported a $7 million advance paymcnt ofO&M in thc San 

Juan Projcct. IX 

2. Intermountain Power Project (lPP) 

Over the past several years. the owners of the II'P coal-fired units in Utah made 

several substantial modifications, including cooling tower additions, high pressure 

turbine replacements, boiler capacity additions, distributed control system replacement, 

scrubber outlet modifications and rebuilds. and induced draft fan drivc replacement. 

These modifications have decreased emissions and increased plant efficiency. 

Importantly for this context. they have also increased the plant's capacity by 140 MW, 

resulting in a 68 MW increase in available capacity for LADWP.19 

3. Navajo Generating Station 

The Navajo Generating St:nion completed the installation of scrubbers to remove 

SOx in all three units of the plant and began to installlow-NOx burners to reduce NOx 

emissions starting with Unit 3 in 2009. Stringent NOx emissions control requirement by 

the federal government may require Navajo Generating Station to install Seleetivc 

Catalytic Reduction. which could cost a total 01'$600 million. or $127 million for 

LAD\VP.20 

The investments described above are just a few examples of ongoing capital 

investments in non-deemed compliant facilities that California POUs have made after the 

implementation of SB 1368 and the CECs EPS regulations. New ownership investments 

arc expressly prohibited by the Cr:C's regulations. but there is littlc if any information 

available to review these procurements. As POUs continue to face significant capital 

investments at coal-fired generation units due to the aging of the coal tleet as well as new 

and upcoming regulations. a lack of CEC oversight and enforcement could result in 

multiple violations of the EPS. 

I' SCPPA San Juan Unit 3 Status Report, December 2008 (Attachment 5). 

SCPPA. "Independent Auditor's Report and Combined Financial Statements," 2009. at p.4 available at: 

hi! l' [h~~lilj.L:;!5i:," ~Jl)l_~r~EQ_~{)J~~pi \rl _\ I. __ .l~ ~·rgJ 

,., LADWP. "20 I [) Power Integrated Resource Plan: FinaL" p.F-5 (Dcc. 15 20 I 0) available at: 

.Hlp" \\ ~\_.J'l~L~~ 11 \.-\lIll hd.\\p_. ~J.1!:. Idd·\\ p~n -L:.~t~,pdJ 

'" Id. at p. F-5-6. 

NRDC and Sierra Club Joint Petition 

November 14,20 II 

7 
138 


79849.117

B. Planned Investments at Existing Coal Plants Constitute "New Ownership 

Investments" 

The CEC must act quickly to provide guidance to POUs and prevent further 

investments in coal-fired generating units that may violate California law. POUs face 

substantial capital investment decisions in the very near term. Based on limited publicly 

available intllrmation. the non-EPS compliant plants have already undergone or are 

considering significant alteratiolls. cxpansions and investments involving potential longterm investments from California POUs. 

For example. proposed regulations may change the way coal combustion residues 

arc handled and stored at IPP and Navajo generating station. 2i If implemcnred. the rules 

would require the phase-out of wet handling systems and surface impoundments of 

bottom ash and the subsequent permitting and installation of lining under fly ash landfills. 

The facilities would have to conduct additional groundwater monitoring. and provide 

closure and post-closure care of the surface impoundments and landfills. California POUs 

account for 75% of the purchased generation of the Intermountain Power Project in Utah. 

and LADWP has a contract to receive 21.2% of the Navajo Generating Station output 

through 2019.22 These coal plants have faeed and will continue to face ongoing capital 

investment requirements for environmental compliance measures that go far beyond 

routine maintenance expenditures. Continuing to invest in these plants exposes California 

consumers to financial risks associated with future compliance costs as well as future 

reliability risks in electricity supplies. SB 1368 expressly identified the reduction of these 

risks as a goal of the greenhouse gas EPS.c

] 

The San Juan Generating Station provides perhaps the most substantial example 

of major capital investments that will be required in the near term. On August 5. 201 I. 

EPA announced its final decision to require the installation of Best Available Retrofit 

Technology (BART) pollution controls on the San Juan Generating Station coal-fired 

powerplant near Farmington, New Mexico that would include installation of selective 

eatalytic reduction (SCR) technology.24 EPA estimated that the cost of compliance could 

reach $345 million,25 and Public Serviee Company of New Mexico (PNM). which owns 

approximately half the plant, estimated the cost of eompliance at over $750 million."6 In 

either case. the retront costs to continue to operate the San Juan Generating Station 

would be substallliai. 

" Id. at p.c-n. 

22 POL! contract/ownership status from California Energy Commission, "/\n Assessment of Resources 

Adequacy and Resource Plans of Pub Ii ely Owned Utilities in California." staffrep0l1 {Nov. 2(09). 

available at: hl'l' \\'~ \\ .';lkT~: ~ \\ );n10pu!':;,< ('I ( )J.l(!'l '): 'i \ '! C- 'j)UIJ-() I 'I )lj)1 

"Sf! 1368 (2006). Sections I(i)-OJ. 

'"EPA Finall3ART Rule. 40 CPR Part 52, EPA-R06-0AR-20 I 0-0846. 

"'ld. 

". PN\l Press Release. August 5. 20 I!. available at 

wWIV.pnm.co111!news!20 11 10805 _ epa_ decisiol1_ barl.ht111. 

NRDC and Sierra Club Joint Petition 

November 14. 20 I I 

8 
139 


79849.118

Several California rous have ownership stakes in the San Juan Generating 

Station. SCPPA holds a 41.8%) ownership interest in Unit 3 on behalf of five of its 

members: the City of Azusa; the City of Banning; the City of Colton; the City of 

Glendale: and the Imperial Irrigation DistrictY The MSR joint powers ageneyn owns a 

28.7% interest in Unit 4, and the City of Anaheim has a separate 10% ownership interest 

in Unit 4. Together. these California public entities represent 24.51 % of the common 

ownership imerest in the San Juan Generating Station 2 'i By contract, capital 

improvements at the San Juan Generating Station that exceed $5 million require an 82% 

majority vote of the co-owners.30 Large capital investments such as the SCR controls 

therefore require at least one California owner to approve the expenditure. If the 

California owners do not vote to approve the capital investments in SCR, which is 

prohibited under California law, then the improvements should not go forward and 

California owners should not have to pay the costs of those improvementsY 

Given the ownership structure of the San Juan Generating Station, it is within the 

discretion of the California owners to decide whether to invest hundreds of millions of 

dollars in the SCR controls required by EPA's BART determination, or whether to refrain 

from making ne" capital investments in the plant. The BART compliance eosts are not 

routine maintenance expenses; the SCR controls are substantial investments designed to 

extend the legal and functional life or the San Juan Generating Station by bringing its old 

and dirty coal units into environmental compliance under current law. In accordance with 

~B 1368, th~ CECs greenhouse gas EPS expressly prohibits this type of new ownership 

II1vestment. -

The SCR costs described above are not the extent of future capital investments at 

San Juan. Other costs include controls to contain coal ash and scrubber waste. 

compliance with upcoming greenhouse gas cap-and-trade regulations, and potential 

remediation liability for groundwater contamination. These mounting environmental 

compliance costs will continue to accrue ifCalifornia's POUs do not abide by the ErS 

and cease new ownership investments in these plants. 

27 POLl contract 'o\:vnership status from C'~difornia Energy Commission. "An Assessment of Resources 

Adequacy and Rc"",rce Plans of Publicly Owned Utilities in California," staff report (No\'. 2009). 

available at: !JltF: \\ \\ 

"MSR is ajoint powers agency consisting oCtile City of Santa Clara, the City of Redding, and the 

\10dc5to Irrigation District. 

:u Amended and Restated San Juan Project Participation Agreement, § 6.2.6, March 23. 2006 (Attachment 

6). 

;to Amended and Restated San Juan Project Participation Agreement. ~ IS.4.2, March n. 2006 

(Attachment 6). 

;, To the extent that California POUs believe they would be forced by contract obligations to participate in 

SCR or other major investments even after voting against such investments. ~ 20 CeR II 2913 requires 

those POUs to tile a petition with the CEC requesting an exemption. 

"Title 20. Cal. Code of Regs. §§ 29010) and 2902(b). 

NRDC and Sierra Club Joint Petition 

November 14, 20 II 

9 
140 


79849.119

VII. BASIS Of CEC AUTHORITY (§ 1221 (A)(4» 

Public Utilities Code section 8341(c) requires the CEC to adopt regulations for 

the enforcement of SB 1368 with respect to a POU to establish a greenhouse gas 

emissions performance standard and to implement regulations for all long-term financial 

commitments in base load generation made by POUs. The CEC adopted EPS regulations 

for POUs in October 200733 Public Resources Code section 25213 provides that the 

CEC shall adopt rules and regulations as necessary. The CEC has the authority to initiate 

a rulemaking to amend its current regulations as requested by this petition because such 

amendment is necessary to clarify that existing law prohibits POUs from making capital 

investments in existing coal plants. 

VIII. PETITION REQUEST I: THE CEC SHOULD DEVELOP CRITERIA TO DETERMINE 

WHETHER A PARTICULAR INVESTMENT 1:"< AN EXISTI:"<G COAL PLANT CONSTITUTES A 

COVERED PROCUREMENT 

CEC action is necessary to provide guidance to the California POUs that retain an 

interest in coal plants to ensure their investment decisions comply with California law. 

The POUs have interpreted current regulations in a manner that allows them to 

effectively "selt~rcgulate" by making unilateral determinations on the applicability of the 

EPS to any given investment. In order to ensure a more consistent and transparent 

process for evaluating potential investments at POlJ-owned coal plants. the CEC must 

develop clear criteria to evaluate whether an investment constitutes a covered 

procurement under the EPS. These criteria should be added to the existing 

implementation regulations and should supersede the existing structure for determining 

"coverecl procurements." It is incumbent upon the CEC to monitor and enforce 

compliance with the EPS if any POl! makes unlawful capital investments in non-deemed 

compliant facilities. 

IX. PETITlOl\ REQUEST 2: Tm: CEC SHOULD AMEND THE EPS REGULATION TO 

REQUIRE MONITORI:"<G AND ApPROVAL Of ALL PAST AND PRO"OSED INVESTME:"<TS 

The various investments that some POUs have made in coal plants since passage 

orlhe EPS. as well as the varioLis investments being considered in light of EPA's pending 

regulations. lead us to conclude that the goal of SB 1368 -to phase out California 

investments in coal- will be undermined unless there is a more clear and transparent 

process to evaluate proposed investments. The CEC should amend its rule to require 

POUs to disclose and tile information on any proposed investment in a non-EPS 

compliant facility. We have provided recommended language for such a reporting 

requirement in Attachment I. 

" 20 CeR II ~ 2900 el seq. 

NRDC and Sierra Club Joint Petition 

November 14. 20 II 

10 
141 


79849.120

X. CONCLUSION 

For the forgoing reasons, wc rcquest the CEC: 

I) Amcnd 20 CCR II §2907 as recommended in Appendix L below. 

2) Dcvelop clear criteria for the evaluation of investments at existing coal plants 

for compliance with the EPS. 

NRDC and Sierra Club Joint Petition 

November 14, 20 I I 

II 
142 


79849.121

Attachment 1 

NRDC and Sierra Club Joint Petition 

November 14.2011 

12 
143 


79849.122

Reporting requirement recommended language: 

(Criteria for evaluation of covered procurements should be added as a new section 

and is not included here.) 

§2907 Request for Commission Evaluation of a PFOspeeti..-e ProcUl'ement and 

Investments 

(a) A local publicly owned electric utility may-must. at least 90 days prior to any 

planned investment or procurement. or by January I. 2012 for past investments. provide 

complete documentation for that thc Commission !SLevaluate u prospective procurement~ 

or investment at an\' facility cmitting more than 1100 Ibs/MWhr for an] of tile following: 

(I) a determination us to whether a pro~;pecti\e proeurement would extend the life 

of a pO\'d:!F plant by 5 years; 

(2) a determination as 10 v,hether a prospeelive procurement would constitute 

routine maintenance; or 

(3) a determination as to whether a prospective procurement would be in 

complianee wilh 1110 CPS. 

(b) A reque:;t for e Evaluation of proposed and past investments under this section 

shall be treated by the Commission as a request for investigation under Chapter 2. Article 

.:+ of the Commission's regulations. 

NRDC and Sierra Club Joint Petition 

November 14. 20 I I 

13 
144 


79849.123

Attachment 2 

NRDC and Sierra Club Joint Petition 

November 14, 2011 

14 
145 


79849.124

Table: Out-of-State Coal Plants Owned by California POUs 

Nameplate CA Dependable Expected Genenlting Unit CA Owner's 

Station Location Capacity # Owner Share Capacity End of 

(MW)' ('ydii (MW) Ownership 

Boardman Boardman. SDG&E 15.0% 89 12/3li2013'" 

OR 601 I Turlock 8.5% 56 12/31/2018 

LADWP 4R.6%t 875 6/1512027' 

Glendale 1.7<%\1 38 6/15/2027 

Intermountain Delta. UT 1640 1.2 

Pasadena 

Burbank 

4.40/0\'11 108 6115/2027"" 

3.40/01

\ 60 6/15/2027 

Riverside 7.60,,'0 37 6/1512027 

Anaheim ! 3.2% 236 611512027 

i'Javajo Page. AZ 2406 1.23 LADWP 21,2 % ' 477 12/3li2019 

Reid Gardner Moapa. NY 295 4 CADWR 67.8(j-o\1 200 2013 

555 3 SCCPA ", 41.8% 232 10/3112030 

Sail Juan San Juan. MSR\lll 28.7% 160 10131/2030 

Nt\! 555 4 City of 

Anaheim 10.0% 50 10/3li2030 

stalf report (~ov, 2009), 

_( l (. :tlU- l(.ii.l\j·()lq,FPl 

plant's rating. LAOWP has also purchased a 4<;'0 

entitlement of the plant from Ltah Power and Light. Both entitlements are valid until the 2027 

contract termination date. In addition. LADWP can re~cive up to an additional! 8.168% t,;ntitkment under 

the Excess Pl)wer Sales Agreelm~nt. ho\\evcr this percentage. or portions of this percentage. can be recalled 

from LADWP by other IPP participants. given cel1ain defined advanced notices. The Intermountain Pov .. 'cr 

which fhe plant. budgeted that LADWP \\ould LIse 8.8~·o of this entitlement in 2009 for a 

total Overthe !ast severa! years. some ofthc Utah municipal participants of the IPP have 

exercised their recall rights for IPP power. LADWP ha::. been receiving approximately JOO .'vlW from the 

Utah lllunicipalities under an Excess Power Sales Contract since the start up of the project. In addition. the 

Ctah municipalities have indicated an interest to construct a third IPP unit. LADWP has stated that it wi!! 

not participate inlhc ovmership ofa new IPP unit 3. 

<II \1__ \1:0 

Lt\[)WP's agreement began on February r. ends on June 1).1027, There is an extension clause 

for ~ontint!ation of cntitlement shares ofprojec[ output. The CEC the contract will expire 

earlier but all other sources IPA reports: LADWP JRPs - note all Intermountain 

contracts \\ith CA POUs expire June 15.2027, See. e,g.IPA 2009 annual report. available at: 

:\RDC and Sierra Club Joint Petition 

November 14. 20 II 

15 
146 


79849.125

Q!ll'" \r~\ \:~jr,!UUI)." :111 .d~~\'l .lJ!~! ;1.,-:'" pd.! ; ~.O.\)_~ __ .~,Q~ll~<~ ,; ·)0. \ il[l.~t;~!\\I~O R .. '1:1 'U~"' 

LADWP 20071RP, available at: hur \,~\\\d:\d'\L("1ll Lhil\PII 

" Glendale may obtain additional capacity under an Excess Power Sales Agreement and is estimated to 

have used an additional 0.2% in 2009, for a total share of I .9%. See note 13, supril. 

", Pasadena may obtain additional capacity under an Excess Power Sales Agreement and is estimated to 

have used an additional 0.8% in 2()09. for a total share of 5.2%. See note I}, supra. 

''''Pasadena Water & Power (PWP) committed to reducing its purchases from Intermountain JSMW by 

2016 in its 2009 fRP. available at hitl' \:\)~.~'it)\)rJ1J:':l,i.-;n;t;llC1. \\~l!'-~!".l!l'!l;,~\\\..'r !1~f.~.:.:.\hit.'i!>L~~!_J.:~_·P{J! 

PWI' claims this reflects the amount of Intermountain capacity that may be feasible to sell under the 

existing contract arrangements. 

l' Burbank may obtain an additional O.8(~,'O under an Excess Power Sales Agreement and is estimated to have 

used an additional O~-'l% in 2009, 101' a total share of 3.8%. See note 13, sliwa. 

'On March 2],1976, LAD\VP, Arizona Public Service Company (AI'S), Nevada Power Company (NPC), 

SRI', Tucson Eketric Power Company (TEP) and U.S. Department of Interior executed the Navajo Project 

Co-Tenancy Agreement effecting the participation as co-owners, operation and maintenance of the Navajo 

Project until December 31,2019. LADWP's entitlement of the Navajo Generating Station capability is 

21.2%. The Navajo Operating Agent is SRI' 

" Ownership data from "Management of the California State Water Project" Bulletin 132-05. Chapter I, 

pagl' 8. available at 1!lU::._~}~.}\ ~\ (o,!1kt11,. o~ n.\~th:::Llll ~.~-~I~j}~( 

'" SCPPA utilities with ownership interests: Azusa (14.7%), Banning (9.8%), Colton (14.7%), Glendale 

(9.8%), and Imperial Irrigation District (51 %). 

Contract term from SCPPA "Independent Auditor's RepOit and Combined Financial Statements." 2009, 

ilvailable at: Itlil' \\ II \\ "'VL;"~ 1'\.\ 1 .J.'E,.Ir: 

"" MSR is ajoint powers agency consisting of the City of Santa Clara, the of Redding, and the 

Modesto Irrigation District. 

NRDC and Sierra Club Joint Petition 

November 14, 20 I I 

16 
147 


79849.126

/ .. WEST """-] ~/ ASSOCIATES 

April 24, 2012 

The HonorJb!c Gina McCarthy 

Assistant Administrator for Air and Radiation 

U.S. Environmental Protection Agency 

Ariel Rios Building 

1200 Pennsylvania Avenue, N.W. 

Washington, DC 20460 

Dear Assistant Administrator McCarthy: 

rer,re,;entatives of the Western Energy Supply and 

on April 12, 2011, WEST Associates is a coalition of 

and investor-owned electric utilities! generating electric energy in eleven 

western states, 

EPA's implementation of the Clean Air Act's Regional Haze program Ollr Best 

Available Retrofit Technology (BART) - eligible plants, many of which owned by 

WEST Associates members. The Regional Haze program and the cost of electricity 

resulting from its implementation affect not only the states in which our plants are located, hut 

also the states into which our electricity is sold. 

EPA's proposed actions implementing the Haze program raise a number of serious 

concerns. We discussed with you EPA's low cost estimates for retroflt 

technology options, a pace of achieving re3sonablc toward 

reductions in manmade and the need for EPA to morc nimble in 

upci<.lting its models, p,,, """dny 

In Ollr discussion on costs, we noted our concern that EPA's Control Cost Manual is outof-date. The dat<l it! this handbook, which was developed in 2002 to estimate the costs 

ofinstalling controls, is now a decade old and no longer reflects current market costs of 

designing, engineering, and installing controls. We also asked you to correct the cost 

baseline used in EPA's cost estimates in the Manual. EPA should be using emissions 

from the plant as it exists today as the h~scline when calculating the cost of any new, 

prospective emissions controls, excluding the emissions benefits from control 

technology already installed (such as Low NOx Burners) on a coal unit. 

Our discussion on modeling raised similar issues. 'vVhile EPA has adopted the CALPUFF 

model as the preferred visibility modeling lool, it was developed by a group of 

professional scientists and engineers, These professionals continue to update and 

improve CALPUFF. EPA adopted and uses a version of CALPUFF that was introduced in 

2007. The developers have since updated parts of CALPUFF in 2008, 2010, and 2011, 

1 WEST Associates Members include Arizona Electric Cooperative, Basin ElectriC Cooperative, NV 

Energy, Paclf!Corp, Public Service of New Mexico, Salt River Project, Tn-State Generation and 

Transmission Association, lnc_. Tucson ElectriC Power Co, and ColoradO Springs Utilities 
148 


79849.127

but EPA has chosen not to use the most recent version of the model. We urge you to 

take steps to update the CALPUFF model and ensure that it is used in the agency's BART 

determinations. 

We also discussed how the Regional Haze program does not require that emission 

reductions occur on a date certain; rather, it is a long-term program designed to 

improve visibility in Class I areas with the national goal of achieving natural visibility 

conditions by 2064. The timing of emissions control projects is important; for example. 

they are often synched with opportunities for customer cost savings, such as scheduling 

projects to coincide with planned coal unit maintenance outages. Also. planning 

emission reductions over a longer period of time allows states and regulated entities to 

rely on coal unit retirements as part of a comprehensive emissions reduction strategy. If 

emissions reductions are front loaded (pre-2018), the remaining operating life of older 

coal units could be extended a decade or two in order to recoup the costs of expensive 

new controls reqUired by a federal plan. 

During our recent discussion, we particularly appreciated your interest in assuring that the 

regions administer the Regional Haze program consistently. We also appreciated your 

openness to looking into some of the problems we face. including the institutional issues of 

getting more accurate, realistic cost data; thinking about the cost baselines differently; 

and addressing the air quality modeling issues. 

We committed to providing you with "real world" cost data as bid information is made available 

to WEST companies as they act on Regional Haze Implementation Plans. We will follow up with 

you on this information as soon as practicable. 

In conclusion, I want to restate our appreciation for the time you spent with us and your 

openness to continuing to work with llS on implementation of the Regional Haze program. If 

you have any questions or need additional information, please do not hesitate to contact me at 

ebakken@tep.com or by telephone at (520) 918-8351. Thank you for your consideration. 

Sincerely. 

/ ,/ / 

Erik Bakken, President of the Board 

WEST Associates 

2 
149 

Mr. WHITFIELD. Well, thank you, and thank all of you for your 

testimony. I really wish we had maybe a full day for this hearing 

because there are so many issues here, and one thing that all of 

us recognize, that when you deal with EPA regulations and enforcement actions, it is very complex and it is not easy to discuss 

in a readily comprehensible way. 

Now, of the people on this first panel, how many of you have 

worked, as a part of the responsibility of the job you have, have 

worked closely with Region 6 on issues affecting you in one way or 

another? Would you raise your hand if you have worked quite frequently with Region 6? OK. Everyone raised their hand except Dr. 

Mintz. 

Now, when I go to Kentucky and I talk to farmers and I talk to 

coal miners and I talk to natural gas producers, they tell me that 

they genuinely believe that there is a bias against fossil fuel at 

EPA. So for those of you who have worked with them on a regular 

basis, would you tell me your personal belief? Do you believe honestly that there is a bias against fossil fuel within the Region 6 

EPA? Mr. Smitherman? 

Mr. SMITHERMAN. Mr. Chairman, I do believe there is a bias. I 

think it is reflected in the onslaught of regulations we have seen 

coming out of this administration first directed at coal. Effectively, 

now, you cannot build a new coal plant in America. And now more 

increasingly directed against oil and natural gas. 

Mr. WHITFIELD. OK. Mr. Shaw? 

Mr. SHAW. Yes, Mr. Chairman, thank you. I do believe there is 

a bias. It is demonstrated not only in the enforcement action we 

have talked about today but many of the regulatory actions that 

have been coming forth, which EPA seems to go to great lengths 

to attempt to justify outside of the normal process without following their own rules and regulations. And quite frankly, it follows the examples we talked about with Dr. Armendariz’ comments 

and others on EPA’s philosophy. 

Mr. WHITFIELD. Mr. Sullivan? 

Mr. SULLIVAN. Yes, Mr. Chairman, I do think there is a bias, and 

I think it comes from the top. Whenever you have a President once 

a week out there hammering against fossil fuels, it is natural for 

those in the various agencies to be very aggressive in promulgating 

that, and I definitely see a bias in their actions and in their words. 

Mr. WHITFIELD. Mr. Etsitty? 

Mr. ETSITTY. Thank you for the question, Mr. Chairman. I believe there is a difference, and I wouldn’t characterize it as a bias, 

and I would compare our work with EPA under other offices other 

than the Office of Air and Radiation, especially when we talk about 

our consultation processes. We have had successful consultation 

and worked on many issues with EPA, Region 6 and Region 9, but 

under the Clean Air Act issues, it has been very difficult. 

Mr. WHITFIELD. So it has been different under the Clean Air Act? 

Mr. ETSITTY. Yes. 

Mr. WHITFIELD. And I think you made the statement that they 

were not following their consultation obligations under the Clean 

Air Act? 

Mr. ETSITTY. That is correct. 

Mr. WHITFIELD. Mr. Short? 

150 

Mr. SHORT. Thank you, Mr. Chairman, and I would say that 

there certainly is a preference towards natural gas versus coal in 

dealing with EPA Region 6, but let me just say from that perspective, you know, you guys have great jobs in producing legislation 

and EPA regulates, and my job is to comply as best I can with the 

best technology and at the most cost-effective and reasonable approach. So even though there may be a preference towards natural 

gas, I still need to deal in the world that is given to me today, 

which is, I have got to comply. 

Mr. WHITFIELD. And you import electricity from New Mexico, the 

Four Corners Generating Station and San Juan station? Do you 

import electricity from those areas? 

Mr. SHORT. That is correct. We bring electricity in from the Four 

Corners as does SCPPA. It comes in through lines that we own 

with our friends and our partners and then it comes all the way 

up to Central Valley into Modesto and then over to Santa Clara 

and up to Redding. 

Mr. WHITFIELD. And there is no question in your mind that EPA 

and environmental groups are trying to require that you not buy 

electricity produced from coal in New Mexico. Is that correct? 

Mr. SHORT. Yes, there is a law in California. It is called 1368 

which really prohibits the investment in new coal-fired facilities 

and also prohibits the investment in upgrading existing coal-fired 

facilities to extend the life of those facilities. So there is a move to 

eliminate coal in California. 

Mr. WHITFIELD. And you said that all of this really comes from 

the effort to reduce regional haze in that area. Is that correct? 

Mr. SHORT. Well, California has a different set of rules. They established that over the last couple years in preventing coal from 

coming into California, or coal-fired electricity from coming into 

California. The regional haze issue is another concern that we 

have, which is layered on top of the California mandates. 

Mr. WHITFIELD. And you know, every time—we have had lots of 

hearings with EPA, and every time they come up here, on every 

regulation, they talk about the necessity for these regulations because of health. Now, you said that in the regional haze issue that 

health has nothing to do with that. Is that correct? 

Mr. SHORT. It is a visibility issue, not a health issue. 

Mr. WHITFIELD. My time is expired. Thank you very much. 

At this time I would recognize the gentleman from Illinois, Mr. 

Rush, for 5 minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman. 

Mr. Chairman, you asked a question of how many of the witnesses have been involved personally with the EPA. I would like 

to ask the witnesses, how many of the witnesses present at the witness table today were personally invited to testify at this hearing 

by the chairman or the chairman’s staff? Please raise your hands. 

How many were personally invited by the chairman or the chairman’s staff to testify at the hearing today? Let me ask it again. 

How many of the witnesses were personally invited by the chairman, Mr. Whitfield, or the chairman’s staff? My point is that five 

of the six witnesses were invited, but the fact that five of them are 

representing industry, that is the point that I am trying to make 

151 

and that they were invited. Only one witness is a Democratic witness. We would like to have had more, absolutely. 

Now, I wanted to ask Dr. Mintz, the Associated Press examined 

10 years of data on the EPA’s enforcement of noncompliance by oil 

and gas producers, and according to their independent analysis, the 

number of enforcement cases against oil and gas companies in Region 5 and also across the Nation has been lower every year under 

the Obama administration than any year under the Bush administration. In fact, the EPA reported that nationally, the number of 

enforcement actions against oil and gas producers dropped by 61 

percent over the last decade from 224 in 2002 to 87 in the year 

2011. And the AP notes that this decline has occurred even though 

the number of wells has increased, and EPA has listed energy extraction as a priority enforcement area. 

Dr. Mintz, are you familiar with this AP analysis? And if so, 

would you concur with the findings of this independent and unaffiliated analysis? 

Mr. MINTZ. Yes, sir, I am familiar with it, and to my knowledge, 

it is correct. From what I understand, EPA’s statistics actually 

cover a somewhat broader range than just the oil and gas industry, 

I have been informed, but nonetheless, it is, I think, substantially 

correct and I have no reason to doubt their figures. 

Mr. RUSH. As you can see, Dr. Mintz, and as I tried to point out, 

there are no witnesses today from the public health sector. All industry witnesses today, or five of the six are industry witnesses 

today. They are from industry, none from the public health sector. 

They are all from industry. As a former chief attorney with the 

U.S. Environmental Protection Agency in Chicago and here in 

Washington, I wonder if you might briefly speak about some of the 

health impacts associated with air and water pollution that EPA 

and the Clean Air Act were initially designed to address. 

Mr. MINTZ. Certainly, sir. I don’t pretend to be an expert on public health issues or epidemiology but just as a matter of general 

knowledge from my work at EPA, I know that the Clean Air Act 

was aimed at preventing or lowering the incidence of lung diseases. 

They are related to a number of times of emissions of pollutants, 

for example, sulfur dioxide, small particulate matter and other 

kinds of emissions that have an unhealthy impact. 

Mr. RUSH. I want to thank you. 

And Mr. Chairman, I do have an open letter from 350 health professionals to policymakers in support of the Clean Air Act and the 

EPA that was submitted to my office, and I would like to submit 

both the AP report and also the open letter to policymakers. I 

would like to submit that for the record. 

Mr. WHITFIELD. Without objection. 

[The information follows:] 

152 


79849.128
153 


79849.129

?£ , ~tHealtJl ProfeSsjonals' Open Letter to Policy Makers .\ i :, in'Suppott oillie Clean Air Act 

", ~,z" and llie Environmental Protection Agency 

hl"'MJi!.; ~ t ~ !i",~" ~ ""'it '" " 

As physicians, nurses, and public health experts, we urge our policy 

makers to support the Environmental Protection Agency's (EPA's) 

ability under the Clean Air Act to take action that will protect public 

health and address climate change. 

Climate change poses significant threats to the health and well-being of all Americans, with disproportionate impacts on children, the elderly, and the poor. Our own 

medical journals'·2.3,4.5 and professional organizations (such as the American Medical 

Association: American Academy of Pediatrics,' American Public Health Association," 

and American Nursing Association9 ) have sounded the alarm. Health effects will include heat-related illnesses, exacerbated cardiovascular and respiratory diseases, 

more frequent outbreaks of water-borne diseases (such as Cryptosporidium) and 

vector-borne diseases (such as West Nile virus), and mental health impacts resulting from the stress of coping with extreme weather including flooding and hurricanes,lO 

The human and economic costs of these impacts are grave. For instance, a recent 

report from the Union of Concerned Scientists estimates that in 2020, the continental United States could pay an average of $5.4 billion (in 2008 dollars) in healthrelated costs due to the increase in surface-level ozone associated with rising temperatures. ll 

On April 2, 2007, the Supreme Court ruled that global warming emissions are air 

pollutants covered by the Clean Air Act (CAA).12 Subsequently, the EPA performed 

an exhaustive review of the relevant scientific research and determined that global 

warming emissions endanger public health and welfare and therefore must be regulated under the CAA13 Because the EPA's finding is based on well-established science, any effort to prevent or delay the agency from taking action to reduce global 

warming emissions is a rejection of that science. 

The EPA is charged with protecting our public health and our environment, and the 

Clean Air Act is an extraordinarily successful and cost-effective way of doing so. In 

2010 alone, this science-based law prevented an estimated 160,000 premature 

deaths and millions of cases of respiratory and cardiovascular disease-annual benefits that are projected to grow during the next decade. The Clean Air Act is also 

good for the economy, with its benefits exceeding its costs by 26 to 1. 14 Now the 

EPA must be allowed to act on its authority under the law and begin regulating 

global warming emissions. 

Keeping in mind the urgency of America's climate and energy challen'ges, the prohibitive cost of inaction, and the many benefits of acting today, we urge you to oppose all attacks on the Clean Air Act. Please respect the scientific integrity of the 

EPA's endangerment finding and the agency's ability to act based on this finding, 

and stand up for the public health and economic good of our nation. 
154 


79849.130

~ 7':~~~ "" ~; ,,' I He~lth Professionals' Open Letter to Poli4 Makers 

~'" I ' ' in Support ofthe Clean Air Act 

'j " : an" the Environmental Protection Agency ..':t- t;~~ ,,~ " ~ " """~ j;. " M '" ~ 

ENDNOTES 

1. Costello, A., et al. 2009. Managing the health effects of climate change. The Lancet 373 

(9676): 1693-1733. May 16. 

2. Epstein, P.R. 2005. Climate change and human health, New England Journal of Medicine 

353: 1433-1436, October 6, 

3, Haines, A., and J.A. Patz, 2004. Health effects of climate change. Journal of the American 

Medical Association 291:99-103, January 7, 

4, Rom, W.N, 2008. Global warming: A challenge to all American Thoracic Society members, 

American Journal of Respiratory and Critical Care Medicine 177:1053-1054, 

5, Shea, K,M. 2007, Global climate change and children's health. Pediatrics 120:e1359-

e1367. October. 

6, American Medical Association. 2008. Report 3 of the Council on Science and Public 

Health. Online at http://www.ama-assn.org/resources/doc/csaph/csaph3108-summary,pdf. 

7. American Academy of Pediatrics. 2007. Global Climate Change and Children's Health. 

Onli ne at http://aappolicy,aappublications.org/cgi/reprint/pediatrics; 120/5/1149.pdf. November 2007. 

8. American Public Health Association. 2007. Addressing the urgent threat of global climate 

change to public health and the environment. November 6. Online at http://www.apha.org/ 

advocacy/policy/policysearch/default,htm ?id~ 1351, 

9, American Nurses ASSOCiation. 2009, ANA cautions about health effects of climate change 

at press conference, November 23, Online at http://www.nursingworld,org/ 

MainMenuCategories/OccupationalandEnvironmental/environmentalhealth/HealthProfessions-Speak-Out-About-Climate-Change,aspx. 2009, 

10. Physicians for Social Responsibility. No date. The medical and public health impacts of 

global warming. Online at http://www,psr.org/assets/pdfs/global-warming-fact-sheetpdf. 

11. Union of Concerned Scientists, 2011. Climate change and your health: Rising temperatures, worsening ozone pollution, Online at http://www,ucsusa.org/ 

climatechangeandozonepoliution, 

12. Massachusetts v. EPA, 549 U.s. 497 (2007), Text of opinion online at http:// 

www.supremecourtgov/opinions/06pdf/OS-1120,pdf. 

13. U.S, Environmental Protection Agency (EPA). 2009. Endangerment and cause or contribute findings for greenhouse gases under Section 202(a) of the Clean Air Act. OnUne at 

http://www.epa.gov/climatechange/endangerment.html. 
155 


79849.131

The signers of this statement are physicians, registered or advanced practice nurses, 

or experts with a master's or Ph,D, in public health, * denotes convening signer, 

A COMPLETE LIST OF THE 357 SIGNERS 

ALASKA 

Jill Seaman, MD 

Bethel, AK 

ALABAMA 

David Smith, MD 

Spanish fort, AL 

ARKANSAS 

Hosea Mcadoo, MD 

Sherwood, AR 

ARIZONA 

Mark Brown, MD 

Tucson, AZ 

Gerald Karches, MS 

Tucson, AZ 

M, Elizabeth Hunter, MPH 

Phoenix, AZ 

Ulrich Michael, MD 

Tucson, AZ 

linda Smith Schermer, MPH 

Sedona, AZ 

Eve Shapiro, MD 

Tucson, AZ 

Barbara Warren, MD 

Tucson, AZ 

CALIFORNIA 

John Ackerman, MD 

Santa Barbara, CA 

Zia Ahari, MD 

San Rafael, CA 

Ed Avol, MD 

Los Angeles, CA 

Jerald Abajian, MD 

Napa, CA 

Barbara Baehr, MD 

San Diego, CA 

Laura Balestreri, MD 

Oakland, CA 

Ann Blake, PhD 

Alameda, CA 

Ronald Blond, MD 

Rancho Palos Verdes, CA 

James Bronk, MD 

Napa, CA 

Elizabeth Carlton, PhD 

Oakland, CA 

Donna Carr, MD 

Encinitas, CA 

Jiu-Chiuan Chen, MD, MPH, ScD 

Los Angeles, CA 

Edward Cruz, MD 

Davis, CA 

Phyllis Cullen, MD 

Chico, CA 

Stanley Dawson, PhD 

Davis, CA 

Edward Cruz, MD 

Davis, CA 

George Ellison, MD 

San Diego, CA 

Jessica Fielden, MD 

Oakland, CA 

Austin Flte, MD 

Pacific Palisades, CA 

Charles Fischer, MD 

San Rafael; CA 

Cheri Forrester, MD 

Mill Valley, CA 

Roger Fox, M D 

Carlsbad, CA 

Kenneth Frausto, MD 

Oakland, CA 

Maria Garcia, MD 

San Francisco, CA 

Warren Gold, MD 

Mill Valley, CA 

Nayvin Gordon, MD 

Oakland, CA 

Omar Guzman, MD 

Fresnol CA 

Timothy M, Hall, MD, PhD, MA 

Los Angeles 

Jerome Hoffman, MD 

Beverly Hills, CA 

Martin Joye, MD 

Vacaville, CA 

Betty Jung, RN, MPH 

Oakland, CA 

Thomas Knecht, MD 

Oakland, CA 

James Koss, MD 

Richmond, CA 

Jeffrey Kupperman, MD 

Santa Barbara, CA 

Donald Lahti, MD 

Beaumontl CA 
156 


79849.132

~ ~ I' '" ,,~ m' W Heah:h Professionals' Open' tetter to' Policy Makers 

~'~I' , ~ ,: " , in Support ofthe Clean AirJ\ct ~D" , :':~ t" and the EnVironment;d Protection Agen!:y ~";:-;;;;;:;f, ",,"w",," ;~ ,","1: ,oc; ~ " '} " , t " 

Piper Lillehoff, MD 

Irvine/ CA 

Robert Lowen, MD 

Palo Alto, CA 

Erica Lubliner, MD 

Los Angeles, CA 

Richard Maddock, MD 

Davis, CA 

Teresa McColley, RN 

Santa Rosa, CA 

Robert Meagher, MD 

Sacramento, CA 

Lloyd Peckner, MD 

Santa Monica, CA 

DenniS Pocekay 

Petaluma, CA 

Stephen Read, MD 

San Pedro, CA 

Sidney Reiff, MD 

Beverly Hills, CA 

Linda Rosenstock, MD, MPH* 

Los Angeles, CA 

Kathy Ruppel, MD 

Stanford, CA 

Frednck Seil, MD 

Berkeley, CA 

Daniel Silver, MD 

Los Angeles, CA 

Gina Solomon, MD, MPH 

San Francisco, CA 

Robert Spear, PhD 

Berkeley, CA 

Mark Spohr, MD 

Tahoe City, CA 

Arthur Strauss, MD 

Irvine, CA 

Carl SUfit, MD 

Escalon, CA 

Robert Sullivan, MD 

Sacramento, CA 

M, Kelly Sutton, MD 

Fair Oaks, CA 

Jon Trefil, MD 

Albion, CA 

Harry Wang, MD 

Sacramento, CA 

Stephen Weber, MD 

Sacramento, CA 

Mel Werbach, MD 

Springville, CA 

Junfeng (Jim) Zhang, PhD 

Los Angeles, CA 

COLORADO 

Wayne Crill, MD 

Fort Collins, CO 

Kenneth Kutalek, MD 

Evergreen, CO 

Michael Paterson, MD 

Monte Vista, CO 

Laurel Starr, MD 

Golden, CO 

Huibert Vriesendorp, MD 

Silverthorne, CO 

CONNECTICUT 

Kathleen Cooper-McDermott, 

MSN, MPH 

Groton, CT 

Michael Corjulo, APRN 

North Haven, CT 

Vittoria Gassman, MD 

Norwalk, CT 

J. Michael Herr, MD 

West Hartford, CT 

Peter Kennedy, PhD 

West Hartford, CT 

Ruth Knollmueller, RN, PhD 

Cheshire, CT 

Mark Mitchell, MD, MPH 

Hartford, CT 

Justin Paglino, MD 

Guilford, CT 

Jonathan Stolzenberg, MD 

West Hartford, CT 

John Strauss, MD 

New Haven, CT 

Carolyn Jean Webb, SM, MS 

West Hartford, CT 

Faith Weidner, MD 

Simsbury, CT 

Monica Wheeler, MSN, RN 

Westport, CT 

DISTRICT OF COLUMBIA 

Tee GUidotti, MD, MPH 

Washington, DC 

DELAWARE 

Alyssa Pen,irikul, MD, PhD 

Wilmington, DE 

FLORIDA 

Philip Blaustein, MD 

Parrish, FL 

Raymond Bellamy, MD 

Tallahassee, FL 

Alan Delamater, PhD 

Plantation, FL 
157 


79849.133

Barrett Dick, MD 

Bradenton, FL 

Sandra Gompf, MD 

Plant City, FL 

Marybeth Palmigiano, MPH 

Tampa, FL 

Cynthia Tainsh, MD 

Orlando, FL 

GEORGIA 

Vernon Dixon, MD 

Hiawassee, GA 

Gall Heaberg, APRN 

Warner Robins, GA 

Jeremy Hess, MD, PhD 

Decatur, GA 

Karen Levy, PhD 

Atlanta, GA 

Gary Ludi, MD 

Roswell, GA 

Michele Marcus, PhD 

Atlanta, GA 

Michael McGeehin, PhD, MSPH 

Atlanta, GA 

J Paul Newell, MD 

Cartersville, GA 

Justin Remais, PhD 

Atlanta, GA 

HAWAII 

Sue Felt, RN, MS, MPH 

Kailua Kona, HI 

IDAHO 

Glen Albertson, MD 

Twin Falls, ID 

ILLINOIS 

Neil Aronson, MD 

Skokie,IL 

Carmen Del CId, CPNP 

Chicago, IL 

Linda Forst, MD, MPH 

Chicago,IL 

Jill Fraggos, MPH 

Chicago,IL 

David Ganch, MD 

Chicago,IL 

Michele Kelley, ScD 

Chicago,IL 

Kristine Kristine, APN 

Chicago,IL 

Karen Manning, NP 

Lisle, IL 

Dana March, PNP 

Chicago, IL 

Marvin Makinen, MD 

Chicago,IL 

Susanna McColley, MD 

Chicago,IL 

Rachel Rubin, MD 

Chicago,IL 

Barbara Sargent, PNP 

libertyville, IL 

Jennifer Weuve, SeD, MPH 

Chicago, IL 

Eric Wilson, MD 

Chicago, IL 

INDIANA 

Denise Ward, DO 

Bristol, IN 

Howard Christofersen, MD 

Porter, IN 

Richard Newcomb, MD 

Portage, IN 

KANSAS 

Ann Suellentrop, MS, RN 

Kansas City, KS 

KENTUCKY 

Keisa Bennett, MD, MPH 

LeXington, KY 

Virginia Bush, RN 

Louisville, KY 

Denise Puthuff, MD 

Louisville, KY 

MASSACHUSETTS 

William Abend, MD 

Wellesley Hills, MA 

Melissa Bartick, MD 

Cambridge, MA 

Doris Berger, MD 

Brookline, MA 

Suzanne Cashman, ScD 

Newtonville, MA 

Stephanie Chalupka, EdD, APRN 

Worcester, MA 

David Christiani, MD, MPH, MS 

Boston, MA 

Trina Cysz, RN, MPH 

Belchertown, MA 

Paul Epsteill, MD, MPH deceased* 

Boston, MA 

Jonna Gaberman, MD 

Longmeadow, MA 

Arthur Gionti, MD 

Amherst, MA 

Rose H. Goldman, MD, MPH 

Cambridge, MA 
158 


79849.134

: ~l :" He~ltJi Professionals' Open Letter to Polig' Makers 

; 'c!, ~ , in Support of the Clean Air Act 

~It"" It,,%~\\,,, ~\,~i?1 tJi;~E~~r~nm~nta~ Pro!ection A,~np 

Barbara Goldoftas, PhD Viviana Cuberos, MD Howard Hu, MD, MPH, ScD* 

Worcester, MA Baltimore, MD Ann Arbor, MI 

Pamela Grace, PhD, APRN Laurette Cucuzza, MPH Larry Junek, MD 

Chestnut Hill, MA Silver Spring, MD Ann Arbor, MI 

Beverly Hector-Smith, NP Monique Dubois-dalcq, MD Shawn Kimmel, PhD, MA 

Natick, MA Bethesda, MD Detroit, MI 

Ben Kerman, MD Kelly Fritz, MD Kenneth Rosenman, MD 

Arli ngton, MA Leonardtown, MD East Lansing, MI 

Gerald Keusch, MD Lorne Garrettson, MD MINNESOTA 

Boston, MA Sandy Spring, MD Ann Bajari, MPH 

Nathaniel Kuhn, MD Katie Huffling, Ms, RN, CNM Annandale, MN 

Belmont, MA Mount Rainier, MD David Councilman, MD 

Charles L1dz, PhD Mary Lo, MD Minneapolis, MN 

Sutton, MA Germantown, MD Deborah Mielke, MD 

Jack Paradise, MD Thomas Moench, MD Maple Grove, MN 

Belmont, MA Baltimore, MD MISSOURI 

Robert Petersen, MD Cindy Parker, MD, MPH Lester Bickford, MD Cambridge, MA Baltimore, MD Kansas City, MO 

James Philip, MD Liz Perera, MPH Joan Butcher, MD Chestnut Hill, MA Bethesda, MD Saint Louis, MO 

Christine Rogers, PhD Minerva Romero Arenas, MD Carmen Federowich, MD Amherst, MA Baltimore, MD Monroe City, MO 

Beth Rosenberg, SeD, MPH Marlo Teran, MD 

Somerville, MA Baltimore, MD MISSISSIPPI 

Jeffrey scavron, MD MAINE Janet Black, BsN, MSN, MPH 

Springfield, MA Janet Ordway, MD Hattiesburg, MS 

Kathleen szegda, MPH, Ms Old Orchard Beach, ME Swink Hicks, MD 

Springfield, MA Edward Walworth, MD Madison, MD 

Bruce Wintman, MD Lewiston, ME MONTANA 

Springfield, MA MICHIGAN Kathleen Masis, MD 

MARYLAND Stuart Batterman, PhD Billings, MT 

Brenda Afzal, RN, MS Ann Arbor, MI NORTH CAROLINA 

Ellicott City, MD Alfred Franzblau, MD Alan Archbold, DO 

Karyn Anderson, PhD, MD Ann Arbor, MI Hillsborough, NC 

Baltimore, MD Joseph Hess, MD William Blackley, MD 

East Lansing, MI Elkin, NC 
159 


79849.135

§ ~ 'i "" ""<Ii ~ 

~ ,1' ',~ : ,Heal~1i Professionals' Open tetter to Policy Makers 

!lI~:,~"" v: in Support of the Clean Air Act 

~ ~: , : Jlnd the Environmental Protection Agency ¥, ~ ~' !il ,,<,[,;:, "" " 

Deborah Fields, MD 

Greensboro, NC 

PrisCilla Guild, MSPH 

Chapel Hill, NC 

Jonathan Kotch, MD 

Durham, NC 

Jack LeiSS, PhD 

Mebane, NC 

Thomas Mutton, MD 

Winston Salem, NC 

Donna Newman, PhD 

Raleigh, NC 

Lewis Patrie/ MD 

Asheville, NC 

Martha Payne, PhD, MPH 

Durham, NC 

Karin Yeatts, PhD 

Chapel Hill, NC 

NEW HAMPSHIRE 

Phillip Hunt, ScD 

Newfields, NH 

Michael OSullivan, PhD 

Madbury, NH 

Nathan Sidley, MD 

Wonalancet, NH 

Mark Windt, MD 

North Hampton, NH 

NEW JERSEY 

Karen Kel'yThomas, PhD, RN 

Gi bbsboro, NJ 

Judith Klotz, DrPH, MPH 

Lawrenceville, NJ 

Luis Montesinos, MD 

Little Falls, NJ 

Marian Nowak, MEd, ~1SN, MPH 

Sicklerville, NJ 

Joseph Ponessa, PhD, MS 

Moorestown, NJ 

Ninu-Alexandri Quirk, MD 

Deal, NJ 

Derek Shende", DEnv, MPH 

Chatham, NJ 

Mary Ellen Teshima, RN 

Towaco, NJ 

Michael Yellin, MD 

Montclair, NJ 

NEW MEXICO 

Eileen Barrett, MD 

Shiprock, NM 

Robert Bernstein, MD 

Santa Fe, NM 

Yadira Caraveo/ MD 

Albuquerque, NM 

Gene Chorostecki, MD 

Santa Fe, NM 

Anita Holtz, MD 

Albuquerque, NM 

Norton Kalishman, MD 

Albuquerque, NM 

Barry Kirschbaum, MD 

Santa Fe, NM 

Jean MacPhail, MD 

Santa Fe, NM 

Stephen Markowitz, MD 

Santa Fe, NM 

James Montesinos, MD 

Santa Fe, NM 

James Sitrick Jr, MHSc 

Santa Fe, NM 

Jon Spar, MSPH 

Albuquerque, NM 

Barbara Starfield, MD deceased 

Las Cruces, NM 

Alex Stelzner, MD 

Albuquerque, NM 

NEVADA 

James Lawrie/ MD 

Reno, NV 

Nancy Menzel, RN, PhD 

Las Vegas, NV 

William Schaffer, MD 

Las Vegas, NV 

NEW YORK 

Carl W. Braun, MD 

New York, NY 

Norma MT Braun, MD 

Thornwood, NY 

Joan Budd, MD 

Pleasantville, NY 

Cenie Cafarelli, MD 

Rochester, NY 

Vanessa Calderon, MD 

Ithaca, NY 

Megan Cea, MD 

White Plains, NY 

Gordon Comstock, MD 

Arcade, NY 

Margaret Craven, MD 

Voorheesville, NY 

DominiC Ferro, MD 

Nanuet, NY 

FrederiC Joyce, MD 

Utica, NY 

Joseph Graziano, PhD 

New York, NY 
160 


79849.136

Jessica Kandel, MD Jason Chao, MD Theodore Nichols, MD 

New York, NY Cleveland, OH Painesville, OH 

Andrew Kanter, MD, MPH Elaine Connelly, RN Barbara Polivka, PhD 

New York, NY Broadview Heights, OH Columbus, OH 

Elizabeth Kinney, MS Kim Conway, RN Chris Rea, MPH 

Albany, NY North Royalton, OH Columbus, OH 

Gerald Kolbert, MD Anne Davy, RN, MS Ann Reichsman, MD 

Larchmont, NY Prospect, OH Cleveland Heights, OH 

Philip Landrigan, MD, MSc Daniel Dawley, MD Susan Righi, MD 

New York, NY Bowling Green, OH Athens,OH 

Gerson Lesser, MD Chantal Dothey, MD Jonathan Slaughter, MD 

Bronx, NY Cleveland, OH Bexley,OH 

Jaymie Meliker, PhD Therese Dowd, PhD, RN Julia Veres, MSN 

Port Jefferson, NY Akron,OH Cleveland Heights, OH 

Jill Nord, MD Lois McClelland, RN Ann Williams, MD 

Glendale, NY Sheffield Lake, OH Cleveland Heights, OH 

Stacey Plichta, ScD Theodore Nichols, MD Chadwick Wright, MD 

New York, NY Painesville, OH Lewis Center, OH 

Richard Schloss, MD Barbara Polivka, PhD OKLAHOMA 

Huntington, NY Columbus, OH G. Edward Shissler, MD 

Mary Ann Segal, MD Chris Rea, MPH Edmond, OK 

Bronx, NY Columbus, OH OREGON 

Vincent Silenzio, MD, MPH Ann Reichsman, MD Stephen Bachhuber, MD 

Rochester, NY Cleveland Heights, OH Happy Valley, OR 

Sayone Thihalolipavan, MPH Susan Righi, MD Nicholas De Morgan, MD 

New York, NY Athens,OH Portland, OR 

Ruth Walker, MD, PhD Jonathan Slaughter, MD Martin Donohoe, MD 

Brooklyn, NY Bexley,OH Lake Oswego, OR 

Mark Weller, MD Julia Veres, MSN Nancy Loeb, MD 

Scarsdale, NY Cleveland Heights, OH Portland, OR 

OHIO Ann Williams, MD Jenny Pompilio, MD 

Mary Brown, MPH Cleveland Heights, OH Portland, OR 

Morrow/OH Chadwick Wright, MD Berklee Robins, MD 

Timothy Buckley, PhD* lewis Center, OH Lake Oswego, OR 

Columbus, OH 
161 


79849.137

Irene Saikevych, MD RHODE ISLAND Celeste Monforton, DrPH, MPH 

Talent, OR Polly Walker, MD, MPH San Marcos, TX 

Rumford, RI 

Catherine Thomasson, MD SOUTH CAROLINA Marian Morris, MD, MPH 

Corvallis, OR Austin, TX 

PENNSYLVANIA Cynthia Schandl, MD, PhD Arnold Schecter, MD, MPH Charleston, SC 

Nicholas Abend, MD Dallas, TX 

SOUTH DAKOTA Philadelphia, PA Carolina Young-Ortiz, MD 

Jeffrey Bedrick, MD John Whitney, MD Houston, TX 

Rapid City, SD Newtown Square, PA UTAH 

TENNESSEE Cheryl Bettigole, MD Sherman Bloom, MD 

Philadelphia, PA David Head, MD Salt Lake City, UT 

Lisa Evans, MD Nashville, TN Cris Cowley, MD 

Philadelphia, PA Linda Head, RN Cottonwood Heights, UT 

Arthur Frank, MD, PhD Nashville, TN Dirk Davis, MD 

Philadelphia, PA F. Menking, MD Logan, UT 

Bernard D. Goldstein, MD Nashville, TN Richard Kanner, MD 

Pittsburgh, PA Joan Mitchell, RN, MPH Salt Lake City, UT 

George Leikauf, PhD Hermitage, TN Brian Moench, MD 

Pittsburgh, PA David N. Orth, MD Salt Lake City, UT 

Felicia Lewis, MD Nashville, TN Anthony Musci, MD 

Philadelphia, PA Dow Strader, MD Salt Lake City, UT Bristol, TN Walter Margie, MD Suzanne Stensaas, PhD 

Bethlehem, PA TEXAS Salt Lake City, UT 

Dora Martinez-Armstrong, RN John Calomeni, MD VIRGINIA Philadelphia, PA Lajitas, TX Laura Anderko, PhD, RN Mark Mishkin, MD Miguel Fernandez, MD Annandale, VA Philadelphia, PA San Antonio, TX Kenneth Ballew, MD 

Marvin Rosenthal, MD Ronald Fisher, MD Ivy, VA 

Easton, PA Houston, TX Virginia Barber, MD 

Michael Rusli, MD Diane Graves, MPH Crozet, VA 

Hummelstown, PA Austin, TX 

Walter Tsou, MD, MPH Paul Mayer, MD Larry K. Heath, MD 

Philadelphia, PA Livingston, TX Broad Run, VA 

D. Sandra Whipple, MD Lynnette Mazur, MD, MPH George Hoke, MD 

Menon Station, PA Houston, TX Charlottesville, VA 
162 


79849.138

~,>-,~ ~ \ ~ '%: )if' 2\ '" ~ t 

, 'u ~' ~ , Health Professionals' Open Letter to Policy Makers 

, ;! ~ ,l ' "" in Support of the Clean Air Act . 

\, ~ 1 L< "' ., k ilnd the Environmental Protection Agency ~00.."it;! if"\ ,.<Q~\¥3: ";J}%~t~w*" ~ ,J ",00 ,x 0' ~ ~ ,', ! 

Irma Mahone, PhD, RN Mary Hutchison, NP Bruce Krawisz, MD 

Charlottesville, VA Seattle, WA Marshfield, WI 

Steve Kohl, MD Jed Maker, MD 

Marcia McDuffie, MD Brush Prairie, WA Milwaukee, WI 

Roseland, VA Jeffrey Paul LaGasse, MD Wanda Martinez, MD 

Mary Picardi, MD Freeland, WA Milwaukee, WI 

Virginia Beach, VA Ralph Myer, MD Dennis Ryan, MD 

Peliavi Sharma, MPH Seattle, WA La Crosse, WI 

Arlington, VA Tracy Ouellette, MD Richard Schmelzer, MD 

Surili Sutaria, MS Bow, WA Madison, WI 

Arlington, VA Robert Stagman, MD Peter Sigmann, MD 

David Williams, MD, PhD Mercer Island, WA Sturgeon Bay, WI 

Midlothian, VA WISCONSIN Joseph Thompson, MD 

WASHINGTON Robert Block, MD Tigerton, WI 

John Butler, MD Madison, WI Erika Voss, RN 

Lake Forest Park, WA Mary Canales, PhD Wauwatosa, WI 

Sari Lisa Davison, MD Eau Claire, WI WEST VIRGINIA 

Seattle, WA Derek Clevidence, MD Sarah Knox, PhD, MS 

Jerrold Eichner, MD Cottage Grove, WI Morgantown, WV 

Seattle, WA Theresa Guilbert, MD 

Howard Frumkin, MD, MPH* Madison, WI 

Seattle, WA 

" denotes convening Signer 

This letter was compiled by the Union of Concerned SCientists on behalf of the signers, 

Union of Concerned Scientists 

Citizens and Scientists for Environmental Solutions 
163 


79849.139

YAHOO! NEWS 

Discover Yahoo! With Your Friends 

Explore news, video!', and much more based on what your friends are reading and watching. Publish your 

own nctlvity and retain fuB control. 

FACT CHECK: Oil stats belie tough enforcement talk 

By DINA CAPPIELLO and RAM IT PLUSHNICK-MASn ! Assodated Pre'>s - 11m, May 31, 2012 

Page 1 of2 

WASHINGTON (AP) -In tbe three years since f,e.~.i.~~.n.t}ar.?"k. .. ().!l.~!Jl.? took office, Republicans have made the 

~!).Y~~~~~~.~.~~.~t~g.t~~<~j9,~.N;~!:I.~Y a lightning rod for complaints that his administration has been too tough on 2.~t~~,1..g~~ 

producers. 

But an Associated Press analysis of enforcement data over the past decade finds that's not the case. In fact, the ~r:'?: went 

after producers more often in the years of .~~P'~.9.H~!1.~,~~.~.i.~~~~,t~.9:rg~.~~:.~R~.9.~ a former Texas oilman, than under 

Obama. 

Also, the agency's enforcement actions have declined overall since 2002 and reached their lowest point last year. the review 

found. 

Accusations of EPA overzealousness peaked in April. That's when a regional administrator resigned after a two-year-old 

video surfaced in which he compared enforcement of oil and gas regulations with how the Romans used to conquer villages, 

by finding "the first five guys they saw and they'd crucify them." 

GOP critics publicized the video of Al Armendariz, who headed the region that includes Texas and other major oil- and gasproducing states, as an example of what was wrong with an agency that Republican presidential contender Mitt Romney 

calls "completely out of control." 

"We have a genuine concern that his comments reflect the agency's overall enforcement philosophy," six Republican 

congressmen from Texas, Oklahoma, and Louisiana said in a joint statement the day Armendariz stepped down. 

Romney has expressed distaste for the EPA's tactics. The agency, he said late last year, "is a tool in the hands of the 

president to crush the private enterprise system, to crush our ability to - to have energy, whether it's oil, gas~ coal, 

nuclear," 

Actually, the U.S, produced more oil in 2010 than it has since 2003, and all fOnTIS of energy production have increased 

under Obama, but be can't take credit for aU of it. 

Armendariz' territory, which also includes Arkansas, Louisiana, New Mexico and Oklahoma, has mote oil and gas wells 

than any of EPA's nine other regions. But the number of enforcement cases against companies worldng those wens has 

been lower every year under Obama than any year under Bush. 

That trend extends to the rest of the country, where the number of enforcement actions against oil and gas producers 

dropped by 61 percent over the past decade, from 224 in 2002 to 8713st year. The decline came despite an increase in the 

number of producing wens and despite the EPA's listing of energy extraction as an enforcement priority under Obama. So 

far this year, the administration has filed 51 fonnal enforcement cases against energy producers. 

\\-'bile there has been an uptick in the average fine against companies producing oil and gas since 2007, when the penalty 

reached a low in the decade evaluated by theAP, the average is still lower than during some years under Bush, who was 

viewed as sympathetic to the oil and gas industry. The year 2011 was an exception; the average soared due to a $20·5 

million fine against a BP subsidiary in Alaska, That was the largest penalty against an oil and gas producer under Obama, 

but it was for a pipeline spill tbat bappened five years earlier. 

http://news.yahoo.comlfact -check -oil-stats-belie-tough-enforcement-talk-1906500 15--fma... 12/4/2012 
164 


79849.140

Page 2 of2 

States usually take the lead on oil and gas enforcement, and federal regulations make dear that is preferred. The EPA's role 

is mostly limited to ensuring that state rules aTC in line with federal regulations designed to protect drinking water, 

waterways and the air, 

EPA officials said the lower enforcement numbers reflect a strategy that focuses on the violations that pose the most 

significant risks to human health and the environment. Many of those occur not at wen sites, but at other points in the oil 

and gas process, such as collection sites and refineries. 

The agency, struggling with constant budget cuts in recent years, also doesn't have the manpower to police all the wells 

nationwide. The states often have more inspectors on the ground than the feds. 

In Texas, for example, the Texas Commission on Environmental Quality has 500 inspectors, all of whom do some work 

with the state's nearly 400,000 oil and gas wells. The Texas Railroad Commission, the agency that oversees drilling, has 

153 inspectors. The EPA in all of Region 6 has two oil and gas inspectors. 

EPA critics say the problem is bigger than enforcement. They point to regulations that they say hamper oil and gas 

production and raise refining costs, while giving an advantage to renewable fuels. 

"It is this whole mentality that this administration continues to have as they try to pick winners and losers in the 

marketplace, as they force consumers off oil and gas," said Charles Drevna, president of the American Fuel and 

Petrochemical Manufacturers, a trade group that represents the refineries and chemical plants that process oil and natural 

gas, 

In articles, Drevna has written that "resignation or not, Obarna and the EPA are detennined to pursue policies that 

Armendariz so accurately described." 

Critics also say that the data only tell part of the story, since it doesn't include violation notices or emergency orders - such 

as the one that Annendariz issued in 2010 to Range Resources to stop contaminating a drinking water well and to supply 

residents with dean water within 48 hours, The order was later withdrawn after a state court ruled that the evidence 

linking the company's hydraulic fracturing to the well's contamination had been falsified. 

Plushnick-Masti reported from Houston. 

Online: 

EPA: http://w ::CorAxis'l 'A New Way to'S8illCh ancl8rowse the Web' ~ ::~ r,'?" 

American Fuel and Petrochemical Manufacturers: http://www.afpm.org/ 

Follow Dina Cappiello's environment coverage on Twitter (at)dinacappiello. 

Ramit Plushnick·Masti can be followed on Twitter at bttps;/ltwitter.com/IRamttMastiAP 

http://news.yahoo.comlfact -check-oil-stats-belie-tough·enforcement-talk-1906500 15--fina... 12/4/2012 
165 

Mr. WHITFIELD. And I might say Mr. Smitherman, Mr. Shaw, 

and Mr. Etsitty have responsibility for health issues. I am positive 

of that, because you enforce the Clean Air Act under your State Implementation Plan. 

OK. At this time I recognize the gentleman from Texas, Mr. Barton. 

Mr. BARTON. Thank you, Mr. Chairman. 

A couple of editorial comments before I ask my question. All witnesses are invited by the majority staff in consultation with the minority and the minority staff, and I wasn’t involved in the witness 

decisions but my understanding is that if the minority had wanted 

additional witnesses, I won’t say they would have all been accommodated but certainly an effort would have been made to accommodate some of them, and I know from personal interaction with Mr. 

Whitfield that he is very accommodating to members when they 

have specific requests. 

Mr. RUSH. Will the gentleman yield? 

Mr. BARTON. As long as it doesn’t come out of my time. 

Mr. RUSH. I don’t want to take your time, but I just want to note 

that at one of these hearings, we need to have public health officials, and it would have been real good if we had invited public 

health officials. 

Mr. BARTON. The Chairman of the Texas Railroad Commission, 

the Chairman of the Texas Commission on Environmental Quality, 

I believe we have a chief from the Navajo Nation. I believe the gentleman from Oklahoma has statewide responsibility. So to say that 

those do not represent public health would I think be somewhat 

disingenuous. That is their function, especially the Texas Commission on Environmental Quality. Its sole function is to protect the 

public health. They are appointed by the Governor on the advice 

and consent of the Texas legislature and I would assume similarly 

in the Navajo Nation and the State of Oklahoma. So they represent—— 

Mr. RUSH. I don’t have the time but if you would yield just another 2 seconds—— 

Mr. BARTON. I hope that I don’t have—I have some really good 

questions and I hope—— 

Mr. RUSH. I just want to say to my friend from Texas that you 

are a very accomplished man and I really respect you a lot, and 

you have a lot of responsibility as a former chairman of this committee, but I would not want you to testify as a public health expert before this very committee. We need public health experts, not 

people who have some kind of tangential relationship with public 

health issues. 

Mr. BARTON. Mr. Chairman, I would ask unanimous consent that 

my clock be reset to 5 minutes. 

Mr. WHITFIELD. Mr. Rush insists that that be the case. 

Mr. BARTON. Thank you. 

Mr. Shaw, you are the Chairman of the Texas Council on Environmental Quality. Is that not correct? 

Mr. SHAW. That is correct. I am the Chairman of the Texas Commission on Environmental Quality. 

Mr. BARTON. Is Texas air quality improving, about the same, or 

getting worse? 

166 

Mr. SHAW. It is improving, and consistently and fairly dramatically improving. 

Mr. BARTON. When President Obama and his Regional Administrator decided to throw out the Texas Flexible Permitting program 

several years ago, was that because there was statistical evidence 

that air quality in Texas was disintegrating? 

Mr. SHAW. No, sir. There were allegations that somehow the 

playing field was unlevel, that we were somehow achieving financial success because we weren’t upholding the environmental rules, 

yet the data clearly show we were making continuing environmental improvement. 

Mr. BARTON. Mr. Smitherman, you are the Chairman of the 

Texas Railroad Commission. Is that correct? 

Mr. SMITHERMAN. That is correct, sir. 

Mr. BARTON. And your agency has regulatory authority over oil 

and gas operations in the State of Texas. Is that not correct? 

Mr. SMITHERMAN. Yes, we regulate oil and gas, lignite coal development. We protect correlative rights, and we have a mission to 

protect and prevent waste. 

Mr. BARTON. And under both Federal and State law, it is your 

agency that would regulate the practice that is generally called hydraulic fracturing. Is that not correct? 

Mr. SMITHERMAN. That is correct. The fracking process, all of 

which happens underground, is overseen and monitored by our 

agency. 

Mr. BARTON. And when in December—well, actually in August of 

2010—a local homeowner in Parker County, a Mr. Lipinski, made 

a complaint to your agency that he had natural gas in his well 

water and he asked your agency to investigate that. Is that not correct? 

Mr. SMITHERMAN. Yes, sir. 

Mr. BARTON. And within days, your agency sent experts to conduct that investigation. Is that not correct? 

Mr. SMITHERMAN. That is correct. 

Mr. BARTON. And your investigators forwarded their findings to 

the Region 6 Office of EPA. Is that not correct? 

Mr. SMITHERMAN. Yes, sir. 

Mr. BARTON. And when the Region 6 Administrator decided to 

issue a press release, give a television interview and render an enforcement, an emergency enforcement order, against Range Resources, is it also not correct that your predecessor, Chairman 

Coreo, sent an email to Mr. Armendariz saying that that was premature? 

Mr. SMITHERMAN. Correct. 

Mr. BARTON. And in spite of that, they went ahead and issued 

this enforcement order, emergency enforcement order? 

Mr. SMITHERMAN. In addition to that, former Chairman Barton, 

the language used by Mr. Armendariz said that houses could explode if they did not go forward with the enforcement order. 

Mr. BARTON. Now, as it turned out, as the Texas Railroad Commission conducted its investigation, they had a hearing and invited 

the EPA and the homeowner to participate. And it is my understanding that neither the EPA nor the homeowner participated in 

that hearing. Is that correct? 

167 

Mr. SMITHERMAN. That is correct. 

Mr. BARTON. But in that hearing, evidence was presented that 

showed beyond a shadow of a doubt that the natural gas in the 

well water was not because of hydraulic fracturing. Now, I want to 

read a statement. This statement is from the pleading of Range Resources. I am going to read it and I want you to tell me if you agree 

that this is factually correct, and I quote, ‘‘The evidence in the 

record is overwhelming and conclusive. The Range gas wells in the 

Barnett shale are not the source of the gas in the Lipinski or Haley 

water wells or in any other area wells, and hydraulic fracturing 

and all other oil and gas activities have not in any way contributed 

to the contamination of freshwater in this area. All of the evidence, 

historic, geologic, microseismic, engineering, gas fingerprinting and 

water well sampling, establishes that the source of natural gas in 

the Lipinski well and in the other area water wells is not the 

Barnett shale but is shallow gas-bearing strong formation. The migration of natural gas from the strong formation to freshwater 

aquifers is not the result of oil and gas activities but has occurred 

over decades through a regional natural geologic connection exacerbated by increased pumping from the aquifer and by water wells 

drilled into the strong.’’ Do you agree with that statement? 

Mr. SMITHERMAN. That is correct. That was the conclusion, the 

gas was naturally occurring. The fingerprinting of it did not match 

the gas being produced in the Barnett shale. 

Mr. BARTON. My time is expired, Mr. Chairman, but what I want 

to state is, we have strong environmental laws. We expected those 

laws to be enforced strongly. We expect them also to be enforced 

fairly. In this case, the Obama administration and the Region 6 

Administrator, Mr. Armendariz, had a preconceived conclusion to 

shut down hydraulic fracturing. They took this case, the Range Resources case. They thought they had the smoking gun. They found 

out they did not, and yet they continue in a public way to try to 

castigate hydraulic fracturing. That to me is inexcusable. 

Mr. WHITFIELD. The gentleman’s time is expired. 

At this time I recognize the gentleman from Texas, Mr. Green, 

for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Following up my colleague and good friend from Texas, sometimes you have your preconceived conclusion but the facts don’t always get there. I have a number of questions I want to get to, but 

for State regulators, we are all aware of how the EPA got ahead 

of itself in Parker County, Pavilion, Wyoming, and Dimock, Pennsylvania. Are any of you aware of other instances, maybe not as notable, where the EPA seemed to get ahead of the data and issue 

a notice of violation or emergency order and just to retract it later? 

Mr. SMITHERMAN. Congressman Green, I would say these particular three cases have a fact pattern that is so similar that that 

is why they are routinely identified as being egregious cases, and 

those are the ones that we focused on the most. 

Mr. GREEN. But if there are other examples, obviously—because 

these are three separate regions. 

Mr. SMITHERMAN. Right. 

168 

Mr. GREEN. It is not just Region 6, it is ours in Texas and Pennsylvania, which has had some great success in producing natural 

gas. 

Mr. SMITHERMAN. But the Parker County one was the first, and 

the others followed behind that. 

Mr. GREEN. Any other from any of our State regulators? 

My next question is for the Chair of the TCEQ. Mr. Shaw, in 

your opening statement, you mentioned that the AP analysis that 

focused on EPA enforcement actions on upstream production. Have 

you noticed any noticeable trend in enforcement actions on downstream production? 

Mr. SHAW. Well, let me say, Congressman Green, first of all, because of the relationship I have, I am not able to talk about enforcement actions within the State because they may involve me 

making an ultimate decision and so I have to avoid that. But my 

staff would certainly be able to provide that type of information. 

Mr. GREEN. OK. We will ask that on a staff level. 

Also, I was frustrated when Texas was included in the Cross 

State Air Pollution Rule for sulfur dioxide and tried to work with 

EPA, and again, my colleague Joe Barton and I worked with EPA 

to no avail, and then talking with Management and Budget and 

the EPA many times before the rule. Even though Texas was not 

included in the proposed rule, once they obviously made the decision to include Texas, did they try to work with TCEQ at all before 

the rule went final? 

Mr. SHAW. No, sir, and in fact, we made several requests for an 

opportunity to meet with either Ms. Jackson or other officials on 

that issue and were unable to do so, primarily to express concern 

that without opportunity to comment on that, they were moving 

forward with the rule. And in fact they did move forward without 

allowing us to provide input that would have shined a different 

light on some of the data they used to make that determination. 

Mr. GREEN. Well, and one of the concerns I had about that was 

that a lot of their modeling, although originally most of us who 

looked at it, Texas wasn’t included, but then much after all the discussion, all of a sudden we were, but it was modeling instead of 

actual on-the-ground facts. 

Mr. SHAW. That is correct. The reason they justified including 

Texas was based on updated data which they didn’t give us a 

chance to evaluate and point out some problems with the updated 

emissions data as well as modeling to predict that Texas was going 

to contribute to a downwind monitor, which by the way, is attaining air quality standards. It is not projected to exceed the air quality standards, but nonetheless, they used that modeling to somehow tie Texas to that rule. 

Mr. GREEN. And my next is about flex permits, but I appreciate 

TCEQ. I probably have the most monitored district in the country. 

Mr. SHAW. Yes. 

Mr. GREEN. Five refineries and lots of chemical plants, both 

TCEQ, EPA, my local Harris County pollution control agency. The 

industry now to their credit is fence line monitoring because they 

don’t want to get blamed for what their neighbors are doing because we have them literally fence to fence. 

169 

There is data available instead of doing, you know—you can actually get real-time data on whether we are contributing to Illinois 

and Indiana’s pollution from central and east Texas, but like I said, 

I come from an oil and gas area, not a coal area, so I will let Joe 

Barton and folks work on that. 

On the flex permit, EPA’s disapproval of the Texas Flexible Air 

Permit program and how the deflexing process is going, I know I 

have worked with all my plants along the channel and was concerned because on any given day, we have such huge facilities, if 

they have a slowdown in getting permitting, you are going to slow 

production. Can you tell how the deflexing process is going? Because it is the first time in history. 

Mr. SHAW. It is the first time, and it is moving along. We have 

65 facilities successfully deflexed. The key component to that, Congressman, is that there have been no environmental benefits associated with that. It has been a great bureaucratic waste of time 

and effort. All that has occurred has been lots of time and money 

spent and some loss of flexibility for those facilities. Quite frankly, 

it was and still should be a program that is held up as innovative 

and creative and the way we ought to be relating to industry to encourage and incentivize reduction. 

Mr. GREEN. Well, I know some of the concern is that Texas had 

huge numbers of these flex permits compared to our neighbors in 

Oklahoma. You give us a hole, we will drive a truck through it. But 

it worked because the air quality had improved, and I understand 

the problem was that they couldn’t understand the flex permitting, 

so they wanted all the paperwork to add up even though the results from the monitoring were still good and getting better. 

Mr. SHAW. In fact, the requirement to get a flexible permit was 

that they had to model a facility on worst-case scenarios and so effectively they were having to overcome an even greater burden so 

that the worst-case operation would be protected, which is even 

more stringent than a typical permit requirement. 

Mr. GREEN. Mr. Chairman, I can’t see the clock. Am I out of time 

or have a couple of seconds left? 

Mr. WHITFIELD. Yes, you have gone 30 seconds over. 

Mr. GREEN. Oh, I apologize. 

Let me just say, because the concern about underground injection, and I know our wells, and I know the Railroad Commission 

does that. We will submit questions. 

Mr. WHITFIELD. Thank you. 

At this time I recognize the gentleman from Oklahoma, Mr. Sullivan, for 5 minutes. 

Mr. SULLIVAN OF OKLAHOMA. Thank you, Mr. Chairman. 

Mr. Sullivan, I would like to ask you a couple questions. You 

stated in your testimony that the former Region 6 Administrator 

Armendariz met with your organization in 2010 and made it clear 

‘‘he intended to initiate an attack on oil and natural gas producers 

within Region 6.’’ Could you tell us more about that meeting and 

why he gave the impression that he would be aggressive with the 

oil and natural gas producers? 

Mr. SULLIVAN. Yes. You are referring to a meeting 2 years ago 

this week, actually our annual meeting of the OIPA, and we invited 

him to come to present, and there were probably 600 Oklahoma 

170 

producers at that meeting. How many of them attended the actual 

session he was involved in, I can’t tell you. But I do know that 

when they came out of that room, there was concern because the 

theme of his remarks was, there is a new sheriff in town and we 

are going to enforce oil and gas regulations with vigor. So that was 

the first straw in the wind that we had frankly, and the attitude 

listening to him by our group was one of fear. 

Mr. SULLIVAN OF OKLAHOMA. Wow. While he has resigned, do 

you continue to be concerned about the aggressive rhetoric and actions of the EPA from that meeting and going forward with what 

you have in some of the actions they have taken? 

Mr. SULLIVAN. Well, I am not here to pile on Mr. Armendariz’s 

remark, but in the context that is indicative of an attitude and a 

messaging that is coming at us every day, I am very concerned 

about it, and let me mention something that has not been mentioned in this hearing. One of the two biggest ingredients in our 

business are technology and capital, and capital comes towards any 

business or industry where it is invited. It flees where it is discouraged. And with this kind of air or threat, if you want to call it that, 

of overreaching by EPA into our industry, that capital can very 

easily go anywhere else. 

Last year, calendar 2011, I plowed back 130 percent of the cash 

flow from our little company. Well, how did you do that? Well, I 

put all mine back on the table and went out and attracted some 

other capital. In sitting with those people who I am asking to write 

checks to go drill wells for, they are reluctant to put money into 

an industry that has this kind of overreach, the cloud there. So 

when these messages are being sent, not just from Mr. Armendariz 

but from the entire EPA experience where we deal with them along 

the way, it is very harmful to our company. As I testified, every 

dollar we put into the business, there is $5 of benefit. So that is 

the way I kind of measure it is, is it scaring away money? 

Mr. SULLIVAN OF OKLAHOMA. Well, do concerns about EPA regulatory overreach impact economic growth? You talked about that, 

job creation, and, you know, one of the things that—one of the biggest complaints I get when I go around the district or Oklahoma 

or in the country, for that matter, it kind of underscores what you 

said, is that they say, ‘‘What are you politicians going to do to create jobs?’’ You know, unemployment is high, unacceptable levels, 

and the thing is, we don’t create jobs. Politicians don’t, but we can 

get out of the way. And regulations, some are very necessary but 

there is an overreach out there right now, and it is keeping a lot 

of cash on the sidelines. The cash is not the problem. Capital formation is there. Their debt is cheap. There is a lot of private equity. Interest rates are low. But there is still a lot of money on the 

sidelines, like you were talking about, Mr. Sullivan, and this cash 

is not going to go to places that have so many barriers there and 

uncertainty, and that is what we can do to create jobs in America, 

especially in this industry, is if we can just get out of the way. And 

any regulations going forward should have some cost-benefit analysis and address how it affects job creation and global competitiveness and how fuel prices will go up and how it affects electric reliability. And so I think that your testimony is extremely important, 

and thank you so much. 

171 

Mr. WHITFIELD. Thank you, Mr. Sullivan. 

At this time I recognize the gentleman from California, Mr. Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Dr. Armendariz is not here today but he apologized for the comments he made 2 years ago in DISH, Texas, and he resigned. He 

also made it very clear that his comments were an inaccurate way 

to describe EPA’s enforcement efforts. Critics of EPA claim that his 

comments provided ‘‘a rare glimpse into the Obama administration’s true agenda.’’ They claim that ‘‘EPA’s general philosophy is 

to crucify and make examples of domestic energy producers so that 

other companies will fall in line with EPA’s regulatory whims.’’ 

They interpret his comments as proof that EPA is happy to take 

enforcement actions against companies regardless of whether they 

violated the law. 

Mr. Mintz, you are an expert on EPA enforcement. We are looking to you for a reality check. Who at EPA is making decisions 

about when to bring an enforcement action in specific cases? Are 

the decisions made by political appointees? 

Mr. MINTZ. No, sir, not at all. They are generally made by career 

staff on a case-by-case basis. 

Mr. WAXMAN. Do EPA Regional Administrators dictate whether 

EPA takes a specific enforcement action? 

Mr. MINTZ. Not typically, no. 

Mr. WAXMAN. We have heard claims that Dr. Armendariz’s unfortunate remarks about crucifying oil and gas companies reflect 

the hidden agenda of the Obama administration. Mr. Mintz, based 

on your own research on EPA enforcement, does the Obama administration’s approach to enforcement differ significantly from past 

administrations? 

Mr. MINTZ. No, it does not. 

Mr. WAXMAN. And the facts support that statement. According to 

nationwide enforcement data provided by EPA, the Obama EPA 

has taken fewer civil enforcement actions on average than the 

Bush administration. The same holds true for Region 6, which Dr. 

Armendariz led. The average amount of annual civil penalties 

across the country has not increased, either. So that is the big picture. 

Let us take a couple of examples from this panel. Mr. Short, the 

regional haze issue you raised today isn’t an enforcement issue, is 

it? This involves air rules and implementation plans. Isn’t that 

right? 

Mr. SHORT. That is correct. The State has responsibility along 

with EPA to develop and implement a plan to address the regional 

haze piece. 

Mr. WAXMAN. And EPA issued a proposed rule on the State Implementation Plan a few days ago indicating that the parties 

should discuss the issue to see if they can resolve it. Isn’t that 

right? 

Mr. SHORT. Yes. 

Mr. WAXMAN. Mr. Etsitty, are there areas where the Navajo Nation EPA has worked well with EPA? Are you supportive of their 

enforcement approach with regard to the remediation of abandoned 

uranium mines? 

172 

Mr. ETSITTY. Thank you for the question. Yes, we have had good 

working relationships with EPA Region 9 and Region 6 addressing 

the problem of abandoned uranium mines and the cleanup necessary. 

Mr. WAXMAN. Well, Dr. Armendariz’s poor choice of words did 

not represent some sinister, previously undisclosed EPA enforcement policy or philosophy. Frankly, the absurdity of the anti-EPA 

rhetoric coming from the other side of the aisle and from some industry groups is stunning. These extreme accusations are completely divorced from reality. EPA should be enforcing the laws on 

the books. That is common sense. Career professionals have been 

doing that important work for the last 40 years. Congress should 

be supporting their efforts, not attacking them with fact-free rhetoric. 

Thank you, Mr. Chairman. I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Texas, Dr. Burgess, for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman, for the recognition. I 

want to thank our witnesses for being here today. 

You know, it is a shame that Dr. Armendariz could not be here. 

It would have been good to get his perspective on things. He obviously said the things he said that many in my district—because the 

concern of the people on the ground in DISH, Texas, about what 

they saw happening in their community and Dr. Armendariz went 

there because of that concern that had been expressed to him by 

the mayor and other people in the town. I am just absolutely 

stunned and puzzled by Mr. Waxman’s comments where he says 

that Dr. Armendariz did not result in any additional enforcement 

action. So what was accomplished? He got some headlines. He lost 

his job but he got the attention that I guess he sought, but what 

about the long-suffering people of DISH, Texas? Did they get any 

remediation for the problems for which they sought a solution? And 

what did happen, and I will just tell you this, as a consequence of 

that night, the public perception that their safety and health was 

being protected, whether it be by the State agencies, the Federal 

agencies, local agencies, the public perception was badly damaged. 

Now, Mr. Smitherman has already eloquently outlined just how 

important the oil and gas industry is to our State. We didn’t know 

about the recession until a full year after the rest of the country 

found out about it because of, in my area, the Barnett shale and 

the production of natural gas from that shale formation and the 

jobs that resulted from that. So it is an integral part of the economy and they are all linked together. So I would just ask the question of Dr. Armendariz if he was here, what did you attempt to accomplish and what do you think you did accomplish by making remarks like this? 

Now, unfortunately, with Dr. Armendariz, there is a history of 

not meeting with people. I reached out to him at several points to 

have a discussion. I had met with Richard Green, the previous Region 6 Administrator in the Bush administration, had a good relationship, we met several times over the 6 years that he and I communicated in the 26th District. I met with Mr. Coleman since Dr. 

Armendariz has left so I have already established a relationship 

with his successor. I was not successful in securing a meeting with 

173 

Dr. Armendariz and then as we all know, at the end of April, the 

Deepwater Horizon blew up and that took a lot of his time. So unfortunately, it just never happened, but it wasn’t for lack of trying 

on my part. 

Let me just also reference the comments that were made by 

Chairman Emeritus Barton, or the question that was asked actually by Mr. Rush to Chairman Emeritus Barton about the health 

officials, and I would welcome the opportunity for health officials 

to come to this committee. Dr. Shaw, as you know, shortly after I 

met with you all, or I guess we had a conference call in May of 

2010, I also invited in the folks from the Department of Health 

Services in Texas because there was an ongoing investigation as to 

cancer clusters, particularly in Flower Mound, Texas, but other 

areas as well, and although those results were preliminary and I 

have not been informed that anything has changed, the resultant 

study of the cancer cluster revealed that there was no anomaly. 

And again, I have not had any recent follow-up from them to tell 

me that that is different, and maybe that would be a good question 

to ask. 

Mr. Smitherman, I think you said it so well. We need you all, 

your State agencies, TCEQ and the Texas Railroad Commission, we 

need you to be functional and working organizations and we need 

for the public to have confidence that when you are working, you 

are there on the job, the cop on the beat to protect them and additional help is needed from the EPA. If it is required, great, they 

are there as an ally, not as someone who is going to come in with 

a bludgeon and try to destroy what you are doing. I just welcome 

both Mr. Smitherman and Dr. Shaw to make comments on that. 

You guys have seen this on the ground. Mr. Smitherman, I guess 

you weren’t there when DISH was having all the problem, but 

since then, let me just ask you the question, did Dr. Armendariz 

do any good for the long-suffering people of DISH, Texas, with his 

remarks that night? 

Mr. SMITHERMAN. No, he didn’t do any good, and again, what we 

come back to at the Railroad Commission is, these investigations 

should be grounded in science and the facts, not in an anti-fossil 

fuel agenda, because when they are grounded in science and facts 

and the facts do come out and it is determined without question 

that the gas was naturally occurring, it was from a different formation, it was unassociated with the drilling activity in the Barnett 

shale, that gives everyone the confidence to allow this process to 

continue, and this process is creating this wonderful bounty of oil 

and gas that we have leading us to energy independence and creating great jobs, not only in Texas but throughout the Southwest 

and across America. 

Mr. BURGESS. Dr. Shaw? 

Mr. SHAW. Let me, if I can, quickly say that the role of TCEQ 

is the enforcement agency for environmental rules in the State of 

Texas, so we were engaged in DISH in enforcement and the reason 

that we don’t see an impact of what Dr. Armendariz accomplished 

is because we were already on the ground. We were already there 

making certain that those rules were being followed and were 

being protective, so that was not—there was not a need for him to 

step in. 

174 

Mr. WHITFIELD. The gentleman’s time is expired. 

At this time I recognize the gentleman from Texas, Mr. Gonzalez, 

for 5 minutes. 

Mr. GONZALEZ. Thank you, Mr. Chairman. 

Before I pose any questions, I want to give some context. More 

activity logically means more attention, so this is a story from the 

San Antonio Express News way back in July of 2010. We could update it on the numbers. Texas supplies 20 percent of U.S. oil production, 25 percent of natural gas, 25 percent of refining capacity 

and 60 percent of chemical manufacturing. So I think there is a lot 

of activity. 

Now, there are consequences to that. This is from a story on January 12, 2012, from the same newspaper, San Antonio Express 

News. Texas coal-fired power plants and oil refineries generated 

294 million tons of carbon dioxide and other heat-trapping gases in 

2010, more than the next two States combined. Those two States 

happen to be Pennsylvania and California, by the way. Too bad my 

colleagues are not here. 

So there is probably going to be more EPA activity in Texas for 

all those reasons. Now, the question as posed by some of my colleagues and a legitimate concern is, what is going to be the economic impact, so I will just go all the way back to a September 

2011 Express News story again, and that is that the Texas oil and 

gas industry actually was back at pre-recession employment highs 

as of June 2011. So despite this onerous EPA regional director, obviously Texas is still doing fairly well, all things considered. So 

that is context. 

So what I want to ask my two chairs from the great State of 

Texas is simply, is the United States’ health and environment better as a result of EPA? Just yes or no. 

Mr. SMITHERMAN. Well, let me say in particular, Congressman, 

in Texas, a lot of the benefits we have seen are the result of increased use of natural gas to make electricity. So natural gas is a 

very clean fossil fuel and we are using more of it. 

Mr. GONZALEZ. And I know, Mr. Chairman, my time is so limited. The coal-fired plants in Texas contribute about 61 percent of 

the greenhouse gases, and I am all for natural gas. I mean, we are 

producing. We don’t know what to do, we have so much out there. 

I am just asking a simple question for the legitimacy of an agency 

such as the EPA, which obviously was created during the Nixon administration: Are we not better as a Nation for the work of EPA? 

Chairman Smitherman? 

Mr. SMITHERMAN. Here is my response. When the EPA’s regulations are grounded in science, then they should be legitimately adhered to and followed, but if you look at the CSAPR rule, the 

MACT rule and the greenhouse gas rulemakings that are occurring, I would argue that they are not grounded in science. 

Mr. GONZALEZ. But my question is a simple one. I will get to the 

science if I can get in my last minute because my next question is 

going to be about science. Is this country’s health and environment, 

conditions of our health and environment, better as a result of the 

EPA to date? 

Mr. SMITHERMAN. Well, I would speak to Texas where we have 

reduced SO2 and NOx dramatically over the last 8 to 10 years for 

175 

a variety of reasons. I would not fully attribute that to the EPA’s 

actions. 

Mr. GONZALEZ. Chairman Shaw? 

Mr. SHAW. Congressman, I would suggest that during the last 3 

years, our ability to continue improving the environment in Texas 

has been diminished because of actions by the EPA. That is, some 

of our tools that we use most effectively to achieve environmental 

reductions have been taken away from us. The flexible permit and 

others have been taken away from us. I would like to refer to it 

as EPA forcing us to chase the wrong rabbits. We are chasing agendas that don’t have the environmental and health benefits associated with them, and that takes away from our ability. 

Mr. GONZALEZ. And I understand that, but I think both of you 

are still not addressing the central question is that there is a Federal role to be played as long as it is in a cooperative, collaborative 

spirit. The attacks today are that we don’t have that, and I am just 

saying, OK, what is going to be reasonable under these circumstances. Both of you say that good science is not being followed. 

I will tell you now, when I was a judge, we had expert scientists. 

We had experts all the time. One side would hire one, the other 

one would hire one, same facts, same figures, different conclusions. 

The only way we ever got around that was if we could have some 

sort of a neutral arbiter that both sides would agree was a recognized expert and then the court would run that particular list, appoint somebody. 

So I am going to ask both Mr. Smitherman and Mr. Shaw, who 

should be the arbiter of what is good, acceptable, credible, legitimate science? 

Mr. SMITHERMAN. I would say it should be done in a collaborative 

way. The Cross State Air Pollution Rule is a great example of a 

rulemaking that went forward without any input from anyone in 

Texas, industry, regulators, citizens or anyone else. 

Mr. GONZALEZ. I could agree with the proposition that that is accurate, of course. It makes sense. 

Mr. SHAW. And that is the challenge, Congressman, is that we 

have not had the opportunity to discuss that science because EPA 

has failed to engage on the science because that is the ground we 

can work with. And, unfortunately, EPA’s message has been, we 

are not interested in the science and even following the law. They 

want to have, for example, the flex permit program go away even 

though they didn’t have a scientific or legal reason to make it go 

away. 

Mr. GONZALEZ. And I understand the flex issue. If you are from 

Texas, you are a little more familiar with it because we have had 

great discussions at the EPA and with Dr. Sunstein. 

I yield back. Thank you for your patience, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Kansas, Mr. Pompeo, for 5 minutes. 

Mr. POMPEO. Great. Thank you, Mr. Chairman. 

I want to talk about a specific provision that is in the Clean Air 

Act, but before I do, Representative Waxman talked about the fact 

that we thought that the former director of Region 6 was enforcing 

some hidden agenda. There is nothing hidden about this agenda. 

I don’t think anybody that could reasonably look at what is going 

176 

on—you can read it on the pages of Sierra Club. We start with beyond coal, we go to beyond oil to now beyond natural gas. We are 

beyond common sense is where we have really gone today, and so 

I don’t think there is anything hidden about the attacks on the fossil fuel industry from coal and natural gas and all the others. 

I want to talk about the general duty clause of the Clean Air Act. 

I started to read about lots of enforcement actions under this provision. It is exactly what it says. It is a general duty. It says a stationary source has a general duty to be safe when handling extremely hazardous substances. There is no definition for safe. 

There is no definition for extremely hazardous substance. And Region 6 is the perfect example of what happens when you have provisions that are this general. They engaged in over 83 oil and gas 

production inspections and wrote over 23 administrative orders 

under Section 112(r) in Region 6 with hundreds of thousands of 

dollars in fines. 

In their own report, they talk about using infrared cameras in 

the Barnett shale area to find gases that are escaping and issuing 

citations under the general duty clause. They conducted aerial surveillance in Oklahoma. Mr. Sullivan, I don’t know if they were 

looking for you or if this was a more general expedition using aerial surveillance to find gas leaks at different places. 

I just wondered if any of you, Mr. Smitherman, Mr. Shaw, Mr. 

Sullivan, have any comments on the impact of the enforcement 

techniques being used under Section 112(r), this general duty 

clause, any of the three of you. 

Mr. SHAW. Sure, Congressman. I will certainly chime in. We use 

the infrared camera as a great tool. One of the things that—back 

to the science and making sure that we have enforcement that 

makes sense and is fair and just is to recognize that that technology is not able to quantify emissions. It can identify when there 

is an emission occurring but we always follow up with our proven 

technologies to make sure we can quantify and accurately determine what emissions are so that we can take the proper enforcement action if and when necessary. 

Mr. SMITHERMAN. The only thing I would add, Congressman, is 

earlier we heard about the deterrence theory of enforcement, and 

I would say this is an extremely slippery slope. If we are going to 

allow regulators to go forward without any evidence just because 

there might be a problem, then we have completely unbridled regulation and that should never be the case. It should be always 

grounded in a reasonable belief in science. 

Mr. POMPEO. I appreciate that. I am actually drafting some legislation to try and force the EPA to put definitions around this and 

quantify and use science-based approaches instead of a very general, very unspecific thing that is just prone to enforcement abuse 

and enforcement that is inconsistent across regions and across the 

country. 

With that, I yield back my time, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time he yields back. 

At this time I recognize the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate all of our 

witnesses being here today. 

177 

I would like to start with a little correction in history. While we 

have been referring to Mr. Armendariz’s comments, he got his history all wrong. It was not the policy of the Romans to go into a village and crucify people to hold the village in check. There may 

have been—because history is not complete, there may have been 

a rogue actor somewhere along the way, but I think it is important 

that we don’t perpetuate his statement as if it were fact. It may 

have been his opinion but it was not historical fact. And in the history of Western tradition, obviously there have been many brutal 

acts committed along the way but with rare exception, it was not 

the policy of any regime to execute individuals in any manner 

willy-nilly without some cause. We may not have agreed with that 

cause but generally—there are some exceptions but generally that 

has not been the case. So I would hope that anybody who might 

be studying this would not be thinking that that was real history. 

It may be history in his mind but not facts. 

That being said, Mr. Shaw, you started on one of the questions 

previously to talk about the last 3 years and the fact that you have 

lost some of the weapons that you have had to try to make health 

concerns better. Could you expand on that for me, please? 

Mr. SHAW. Sure. Thank you. It ties into the reason that the concerns or the statement that Dr. Armendariz made were concerning. 

It is not because of the statement itself, it is because it was reflective of what wasn’t a rare glimpse. It was a common thread where 

we see the current EPA willingness to circumvent good science, to 

circumvent their own regulations. And that showed up not only in 

some of the enforcement cases you have heard today, but it was 

also very prevalent in the Flexible Permit program, which is an innovative process that we had that was and should be held up as 

a very necessary process for moving forward to get additional reductions in emissions. It is prevalent in the process that was used 

in the Cross State Air Pollution Rule whereby EPA subjected Texas 

to that rule without the opportunity for us to comment on data and 

correct those data so that we could indeed have more meaningful 

regulation. 

Having that does a couple things. One, it makes us chase the 

wrong rabbits. We spend resources, time, money and others, trying 

to get these improvements where there is no real environmental 

benefit because the science is not there and the benefit is not real. 

Mr. GRIFFITH. Are you saying that you are chasing the wrong 

rabbits because they may be basing their opinion on some false fact 

or some false historical fact like the previous one mentioned or 

some other false science and therefore you are having to chase that 

down and correct that record before you can go on to help clean up 

something that is a real problem? 

Mr. SHAW. It is both: Bad data—which is unfortunate, in this 

day and time we should all make sure we have the best data, we 

would have been happy to have provided more accurate data to 

EPA for their analysis; it is also their analysis that they utilize, 

which again is very difficult to analyze because they are not forthcoming in sharing that process. And then finally, it is the way they 

apply. For example, to be very brief, but in the CSAPR, the Cross 

State Air Pollution Rule, EPA was subjecting Texas at the time to 

a 47 percent reduction in SO2 emissions from July until DecemVerDate Aug 31 2005 15:50 Mar 22, 2013 Jkt 037690 PO 00000 Frm 00181 Fmt 6633 Sfmt 6633 F:\111425~1\112-14~1 WAYNE
178 

ber—we were supposed to come up with those reductions—based on 

a model which is flawed and very challenging to use, in any case, 

that predicted that we would have a .18 microgram per cubic 

meter, a very, very unmeasurable component, to a monitor in 

Granite City, Illinois, which you couldn’t measure, couldn’t monitor, and at the same time, EPA’s own data show that that monitor 

is in compliance and will be projected to be in compliance continually. And so we were going to be looking at spending millions of 

dollars for no real environmental benefit, and ultimately what you 

see, the common denominator of many of these rules, it was going 

to put much coal and other electric generation out of business. 

Mr. GRIFFITH. And that touches on Mr. Sullivan’s comment that 

if you are using capital for these things, you don’t have capital 

available to expand other jobs or industries. Is that correct? 

Mr. SHAW. That is correct, and quite frankly, our generation capacity in Texas is suffering because people are hesitant to build 

new generation capacity because of that uncertainty. 

Mr. GRIFFITH. And Mr. Etsitty, am I correct in assuming that if 

the facilities that you mentioned in your testimony are not allowed 

to go forward, that that will cause economic stress and loss of jobs 

in the Navajo Nation? 

Mr. ETSITTY. I thank you for the question, Congressman. Yes. 

Mr. GRIFFITH. And would it be fair to say that if you had a similar situation like my district, which is heavily dependent on coal, 

both for jobs and production of electricity, that the same would be 

true there or any other area of the Nation where people are relying 

on their natural resources? 

Mr. ETSITTY. I would say it is a similar situation, yes. 

Mr. GRIFFITH. And so the policies of the current administration 

by not working with you all are in fact killing jobs or could kill 

jobs? 

Mr. ETSITTY. That is correct. 

Mr. GRIFFITH. Thank you. I yield back my time. 

Mr. SMITHERMAN. Congressman, if I may add, in Texas, had we 

not got a 6-month delay in the CSAPR rule, we would have seen 

two coal-fired plants shut down and the elimination of at least 500 

good-paying jobs. 

Mr. GRIFFITH. Thank you very much for the addition. 

I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Thank you all for coming. We have gone down this path numerous times, and part of it is the administration’s own doing, and we 

aired the clip from his San Francisco Chronicle editorial board in 

which he basically says, ‘‘My goal will be to bankrupt the coal industry.’’ Isn’t it any wonder why that sector is concerned, the fossil 

fuel sector in this country? And then you add to the Region 6 Administrator down there, boiler MACT, mercury MACT, cooling towers, attack of current generation, attack on future generation 

greenhouse gas rules. 

And Dr. Mintz, just a quick answer. I should really read your 

analysis a little bit better. Have you done stuff on EPA—in your 

analysis, have you done things on the costs of compliance and litiVerDate Aug 31 2005 15:50 Mar 22, 2013 Jkt 037690 PO 00000 Frm 00182 Fmt 6633 Sfmt 6633 F:\111425~1\112-14~1 WAYNE
179 

gation before the rules get promulgated, the cost to business, the 

environmental community going and using the courts versus regulation, court ruling and then the judgment fund paying off the litigants? Have you done any analysis on that and the cost or the effect of doing business? 

Mr. MINTZ. Well, no, sir. Most of my research on enforcement 

doesn’t focus on those issues, which are really policy issues and 

regulatory issues. 

Mr. SHIMKUS. But you would agree that there is a cost of doing 

business if there are processes moving to a regulatory regime and 

different communities going through the courts to try to get a new 

standard outside of their whole regulatory process kind of shortening their ability? You would agree with that, would you not? 

Mr. MINTZ. I am not sure I understand the question, sir. 

Mr. SHIMKUS. Well, it is really a statement. What we know is occurring is the environmental community goes to the Federal courts, 

we think on encouragement by the environment community, to get 

a judgment that creates a higher standard versus them going 

through the regulatory process. And then they use the judgment 

fund to reimburse the environmental lawyers. Maybe you want to 

look into that as another research project, and we can have you 

back and talk about that. 

Mr. MINTZ. Well, I will be happy to do that. 

Mr. SHIMKUS. No, it is—— 

Mr. MINTZ. If you would like me to respond, I don’t know if 

you—— 

Mr. SHIMKUS. Well, no, I actually wanted to go to Mr. Sullivan 

because he made a point on, you are not Big Oil. So let me go 

through these three Big Oil tax cuts and tell me why you say that 

is normal business expenses. Expensing intangible drilling costs, 

why is that normal business? 

Mr. SULLIVAN. Well, first of all, it is a funny phrase to most nontax folks. 

Mr. SHIMKUS. You are going to have to go quick to get through 

all these. 

Mr. SULLIVAN. OK. It is the part of the cost of drilling a well, 

and we are allowed to deduct that just as anybody running an 

apartment house or anything else would deduct expenses, but it 

has become a lightning rod because it is the oil and gas business. 

Mr. SHIMKUS. So bottom line is, it is the cost of doing business, 

so if you are doing income and revenue, you have got to take off 

the expenses and that is part of the expenses of operating a business. 

Mr. SULLIVAN. Right, roughly 30, 40 percent of the cost of a well. 

Mr. SHIMKUS. How about the manufacturing tax deduction for 

domestic oil and gas companies? 

Mr. SULLIVAN. As I understand it, that applies only to very large 

companies over 500 employees or something of that sort. 

Mr. SHIMKUS. They define themselves as manufacturers so they 

are getting the same manufacturing tax break that any manufacturing company is getting, correct? 

Mr. SULLIVAN. That is correct. Dollar-wise, it means—— 

Mr. SHIMKUS. No difference? 

Mr. SULLIVAN. Right. 

180 

Mr. SHIMKUS. What about the percentage depletion allowance? 

Mr. SULLIVAN. Well, that just simply—it is an akin deduction to 

depreciation of an apartment building. We have a wasting asset 

down there under the ground. 

Mr. SHIMKUS. So you are telling me that the attack on Big Oil 

and their sweetheart tax deals is current tax law that applies to 

anybody who is in business? 

Mr. SULLIVAN. I believe. I am not a tax expert but I believe that 

the major oil companies are not entitled to percentage depletion. I 

think they are forced to do cost depletion. 

Mr. SHIMKUS. Yes, I have got the Illinois oil basin, a lot of marginal producers. These are the ones that are getting lumped in. 

And would we have marginal oil well production in a lot of the 

small basins in this country without these provisions? 

Mr. SULLIVAN. I think it would not only terminate the lives of 

some wells that are on hospice, which are marginal wells, but it 

would also prevent—or reduce the cash flow for drilling new wells. 

Mr. SHIMKUS. I have never heard that terminology. I might use 

that one of these days. 

Yes, sir. I am trying to figure out which one you are. Real quickly 

on—— 

Mr. SHORT. Me too. 

Mr. SHIMKUS. You said that the haze ruling, the change is imperceptible to the human eye, did you not? 

Mr. SHORT. That is exactly what I said, to go from $77 million, 

which is what the State plan called for and met all the goals and 

objectives, to $705 to $800 million, it is imperceptible to the human 

eye. 

Mr. SHIMKUS. So why would we do it? 

Mr. SHORT. That is exactly our point. Why would we do it? And 

we have been trying to sit down with EPA for a long time, even 

though the Congressman asked me, will they sit down and talk 

with us. The answer is they are supposed to. They didn’t in this 

case, and as a result, we are continuing to ask for that meeting to 

sit down and talk because we think we can come to a resolution. 

We just don’t think spending $77 million or $805 million is a good 

investment in resources and dollars, and certainly from that perspective, the customer is going to have to pay for it. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Texas, Mr. Olson, for 5 minutes. 

Mr. OLSON. I thank the chair, and welcome to the witnesses. 

Thank you all for your time and expertise, and a special welcome 

to Commissioner Smitherman and Commissioner Shaw. I know 

back home, the Aggies of Texas A&M University have a little more 

swagger in their steps with you guys up here testifying before Congress today, so thank you all for coming. 

And before I get to my questions, I want to publicly express my 

disappointment that the lone witness for the first panel, the former 

Region 6 Administrator for EPA, Al Armendariz, canceled out and 

did not testify before this committee today. I represent Texas 22. 

Over 920,000 people depend on me up here in Congress to speak 

with their voices and get answers to their problems back home in 

Texas, and because they are very concerned that a former Regional 

181 

Administrator had a political agenda. His agenda wasn’t about any 

sort of clean water, clean air. It was an agenda about getting rid 

of American production of energy, specifically, fossil fuels—oil, gas, 

coal. They deserve answers, and unfortunately, he did not come up 

here today and give me a chance to get those answers. 

There is no need for me to bring up Range Resources. I mean, 

my good friend Joe Barton, former chairman of this committee and 

coach of the Congressional baseball team on the Republican side, 

knocked that thing out of the park and so I don’t want to talk 

about that. 

But I do want to focus on a developing problem in Texas, and it 

is with EPA as well, and it is the Las Brisas Energy Center in Corpus Christi, and so my question is primarily for you, Commissioner 

Shaw, but Commissioner Smitherman, if the spirit moves you to 

get involved, please make some comments. But this project right 

now—we have the second most populated State in the Nation and 

the fastest growing State and we are expected to have a 2,500- 

megawatt shortage in generating capacity, the equivalent to five 

large power plants, in as little as 2 years. So we need power plants 

being built. The Las Brisas Power Plant is being built right there 

in Corpus Christi, Texas, a 1,320-megawatt electric power generating station that will bring 100 percent petroleum coke, a byproduct of nearby refineries in Corpus Christi in the Gulf Coast. It will 

generate enough power to provide power to more than 850,000 

homes. And after a 3-year permitting process, the Las Brisas Energy Center received his final prevention of significant deterioration, its PSD, from the Texas Commission on Environmental Quality. But due to EPA’s new greenhouse gas regulations released 

after Las Brisas Energy Center received its permit from PCQ, the 

project may have to begin the permitting process all over. Las 

Brisas could actually provide a net reduction in greenhouse gas 

emissions by locally sourced petroleum coke—by using locally 

sourced petroleum coke more efficiently and effectively than greenhouse gas emissions from shipping. So my question for you, Chairman Shaw, is, can you give us an update on your progress with 

EPA on Las Brisas? 

Mr. SHAW. I have to be somewhat cautious in discussing it because it is a case that is going to be coming back before my agency 

so I can’t, for ex parte communication, can’t talk specifics about 

that case. But I will concur that the process you laid out is accurate, and with regard to the greenhouse gas regulation requirement, it is somewhat challenging that we have many of these rules 

that are up in the air and pending, and as we try to have additional resources built to generate electricity, the clock never stops. 

We get through the process of permit application and then there 

are new regulations that come out of EPA, and those also apply. 

And so there is some challenge with how we ever move forward to 

getting one completely permitted and able to be built when there 

is this continued uncertainty that is associated with that, the 

greenhouse gas permitting requirement being one of those, and the 

challenge of getting EPA to timely act on issuing those greenhouse 

gas permits because the State of Texas, you are aware, has not 

agreed to accept that responsibility of regulating greenhouse gases 

and writing those permits. So it is an ongoing issue, and it has the 

182 

great potential to exacerbate that problem that you lay out where 

we imminently need more production. We have about a 2 percent 

growth in energy demand each year and somewhere about 1–1/2 

percent, I believe, of new generating capacity being brought online 

and that is not improving because of the uncertainty associated 

with pending regulations. 

Mr. OLSON. Thank you. Again, our first panelist couldn’t be here 

today so I am not asking you to read his mind, but do you think 

the fact that he was retained to testify against Las Brisas prior to 

his role in EPA, do you think that had presented a conflict of interest? 

Mr. SHAW. Certainly, if one looks at the challenges that Dr. 

Armendariz faced, it appears that he had a difficult time 

transitioning from his role prior to being Regional Administrator. 

Much of that we have talked about in the Barnett shale and others 

where he seemed to not be able to turn loose some of the activist 

activities he had taken prior to working with EPA. He seemed to 

have a hard time making that transition from someone who is trying to push for, as an activist, to a regulator, who has to balance 

and decide based on the facts and science and the issues. So it is 

not unreasonable to make that determination. 

Mr. OLSON. Thank you. I yield back. 

Mr. WHITFIELD. Thank you. 

At this time I recognize the gentleman from California, Mr. 

Bilbray, for 5 minutes. 

Mr. BILBRAY. Thank you, Mr. Chairman. 

Mr. Chairman, before we start, I would like to say I am sorry 

that the witness in the first panel didn’t show up, and I think there 

is one thing that both sides of the aisle here on this panel can 

agree on. I think we would all be shocked if a local law enforcement officer went into the suburbs of, let us just say Chicago, and 

had a punitive attitude about a small businessman or somebody 

engaged in their neighborhood activity and came out with an attitude that somehow we are going to sock it to one guy to set an example for the rest of the community that, you know, ‘‘I am here to 

enforce the law and even if it is a little overbearing, I am going 

to do it, I am going to profile this guy and we are going to make 

a point.’’ I think we would all be outraged at a local law enforcement officer doing that. 

And as somebody who has worked with environmental enforcement, I think we should be just as outraged when a Federal law 

enforcement officer for an environmental group takes the same attitude. I think it is not just unfair, I think it is immoral and I think 

it is outrageous when we think about the fact that we will not accept local people being paid with government funds, taxpayers’ 

funds and then being punitive against a citizen, but we are kind 

of not shocked that when a Federal bureaucrat takes the same attitude with the same punitive attitude being paid by the same taxpayers. I think we should be just as outraged that this is a violation of everything that this country stands on and it matters just 

as much if the Federal Government is the bad guy here as it would 

be a local guy, and I think we have almost got this attitude that 

well, if they are environmentally leaning, we can justify it. That is 

the same kind of attitude that justified vigilante groups saying 

183 

well, it is law enforcement, it is public protection justifying this violation of common decency and fairness, and I think both sides 

should be able to address that. 

Now, I will say this and I will move on. As somebody who has 

supervised environmental agencies, I mean, let us face it, the air 

districts in California are pretty darn powerful. I managed one for 

3 million population, bigger than 20 States of the union, and the 

air resources board has got a whole lot of environmental stuff. I 

would never accept an Administrator taking the kind of attitude 

that I heard being stated by a Federal Administrator, and I think 

this is one thing that we should be able to address. 

Doctor, I want to get to the details of what you are doing over 

there. Isn’t it true that the original legislation of the Clean Air Act 

was sold to the American people and to Congress based on the fact 

that it was targeted to protecting the public health where no other 

strategy was going to be able to protect that public health and the 

innocent bystanders who were going to be impacted by one person’s 

activity on their public health? Wasn’t public health the real backbone of the selling of the Clean Air Act? 

Mr. MINTZ. Well, yes, that is the stated objective of the Act, to 

protect public health and the environment, and that was always at 

the root of it, still is, I believe. The language hasn’t changed. 

Mr. BILBRAY. And what we have done is that there has been 

things like the clear sky issue and the modification of crossing 

away from the public health, which justified the heavy, strong actions that we have taken that have economic impact. We have 

moved away from that into fields that were never intended originally by either the public that wanted the Clean Air Act or those 

who passed it originally and now we have reached a situation 

where we get these conflicts with what has been happening in New 

Mexico and the way the EPA has handled that comes right into 

conflict with—I am trying to remember the California law—oh, 

1368 and comes into conflict with our strategies on greenhouse 

gases where now you are saying that California is going to be 

forced to change our greenhouse gas strategies because it appears 

to be in conflict with what EPA is trying to do in New Mexico, and, 

that is, our people are saying we cannot legally pay for electricity 

if that electricity rate is going to pay to retrofit a coal plant that 

is being mandated by the EPA. Doesn’t that create sort of a catch22 between Federal and two States? 

Mr. MINTZ. Well, that has been an argument that has been made 

in litigation and there were counterarguments made in litigation as 

well, and I guess that is before a court. I think the Clean Air Act 

has been changed over time. It was amended in 1990 to add some 

provisions including the haze provision that was mentioned earlier. 

At the same time, the fundamental structure of the Act was not altered in 1990 and the thrust of the Act toward protecting the public health has not changed and that is still an important part of 

the statute. 

Mr. BILBRAY. Well, let me tell you something as somebody that 

was on the air resources board at the time, we were very concerned 

about the modification in the early 1990s and we warned the Federal Government of mistakes they were making, and in fact, if you 

remember, that was the time they started requiring those of us in 

184 

California to put methanol and ethanol in our gasoline when we 

warned them, the EPA, that it was a terrible mistake then. So mistakes have been made, and it is interesting you bring that up. 

I would just like to thank you very much for being here today 

and being able to raise these issues and hopefully we can get both 

sides working together to avoid these problems in the future. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from Louisiana, Mr. Scalise, for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate you holding 

this hearing and I appreciate the second panel for appearing before 

us today to answer the questions that we have. I share my colleagues’ disappointment and anger with Mr. Armendariz for not 

showing up today. And if you go back, we have had many attempts 

by this subcommittee to bring him before our committee when he 

was in his official capacity at the EPA, and for whatever reason he 

was not allowed to come testify. The fact that now that he’s no 

longer there, he had finally agreed to come testify and then at the 

last minute canceled out suggests that there may be some foul 

play, and I do think, Mr. Chairman, we ought to look into whether 

or not there was any influence, any bullying, any intimidation by 

the White House or EPA or anyone else in this administration to 

get Mr. Armendariz to not show up because he had finally agreed 

as a private citizen to come and answer some of the questions that 

our constituents surely have about the agenda he was carrying out 

at the EPA and the fact that this is not an isolated incident. If his 

was the only division within EPA that was carrying out this kind 

of radical agenda, it would be bad enough, but the fact that we are 

seeing it from other divisions within the EPA begs a lot of questions throughout their various regions but I think it goes well 

above his pay grade and the fact that he had agreed to come and 

at the last minute backed out suggests that there may have been 

some bullying and intimidation going on by some people who didn’t 

want him to come here and answer these tough questions that 

many of us had. And so hopefully, Mr. Chairman, our committee 

can look into that because I think there are a lot deeper questions 

now to ask than just the ones we had for Mr. Armendariz before 

this hearing was scheduled. 

Now, I want to go into some specific questions. Mr. Sullivan, you 

in your testimony talked about him coming before your agency, 

your organization, and speaking at, I guess, an annual meeting 

that you invited him to and from your testimony it seemed pretty 

clear that he was not just there to be a regulator. You know, in 

our view, a regulator is a referee, somebody that is showing up 

there with the zebra-striped jersey just calling—just implementing 

the rules, calling the plays as they see them and making sure that 

both sides are doing everything by the rules. From your impression, it seemed like that was not the case at all, that he was actually there to carry out an agenda, which is not the case of what 

a regulator is supposed to do. Can you share with us, expand a little bit on your experience? 

Mr. SULLIVAN. Certainly, the impression—let me make it absolutely clear. I may be the only producer in the room, but I want 

to be clear that we as producers welcome regulation, responsible, 

185 

fair-minded, fair-handed regulation. We get that from the Oklahoma Corporation Commission, which is the equivalent of the 

Texas Railroad Commission. 

Now, we also have to comply with certain Federal regulations, 

but mostly the oil and gas industry is regulated at the State level 

and it is our strong feeling that that is where it should stay because there are, as has been said, very uniquely, very separate and 

unique circumstances in each State having to do with everything 

from the rock to the practices to the streams and everything else 

and it is best handled at the State level. 

But having said that, to the extent that we are involved in Federal regulation, we don’t mind that as long as it is conducted the 

way the Oklahoma Corporation does and the Texas Railroad Commission which—— 

Mr. SCALISE. And just like we do in Louisiana where we fracture 

wells. You have to think 100,000 wells hydraulically fractured safely in Oklahoma—— 

Mr. SULLIVAN. There are 800,000 wells that have been drilled in 

Oklahoma back from literally 100 years ago, and I would invite you 

to come down. We don’t live in a cesspool. It is very well regulated 

and very well implemented. So I think the main thrust of my remarks is that the attitude that came across from Mr. Armendariz 

is not unique to him, it pervades the EPA and we don’t understand 

why it can’t be as it should be, you know, collegial, fact-based interplay. 

Mr. SCALISE. And I think, you know, if you look at agencies, take 

the FAA, for example, I mean, when there is a plane crash, it is 

a tragedy, yet you don’t ground all planes. You go find out what 

happened in that incident and you do all the things you can with 

the science to make sure it doesn’t happen again, but in the meantime, you allow the industry to move forward. I don’t think we have 

seen that from this entire Obama administration as it relates to 

American energy unless it is wind or solar where they will take a 

gamble and a bet on something like Solyndra. But whether it is 

coal or natural gas or oil, there seems to be a bias against all of 

the above, surely not for all of the above, and if I can, Mr. Shaw 

and Mr. Smitherman, if you all want to add anything to the experiences you all have had as people at the State level who are dealing 

with the regulations and doing the things you need to do to try to 

produce and make sure your State can create the jobs that it does. 

Mr. SHAW. Sure, and I will simply state that as the primary environmental regulatory agency in the State of Texas, the comments 

that Dr. Armendariz offered were, as you mentioned, indicative of 

the overall philosophy of the agency. And it wasn’t the first time 

that we had heard him, and he wasn’t the only one who made comments that concerned us with regard to their lack of following the 

rules and law. And he made that comment to his staff expressing 

what EPA’s philosophy was, not as rhetoric at a town hall meeting. 

It was comments he initially made to his staff, and that is the concern, that it clearly illustrates that philosophy that is not successful for having a successful environmental program. 

Mr. SMITHERMAN. Congressman, I would add to that, that the 

statements and the actions of the EPA in Texas would appear to 

have set in motion similar actions in Pennsylvania and Wyoming. 

186 

For example, in December of 2011, a draft report out of Wyoming 

said that the EPA believed there was a likely association between 

groundwater quality issues and fracking. That came after the EPA 

initiated in Texas. We now know that the EPA has walked back 

those statements in Wyoming and in Pennsylvania. 

Mr. SCALISE. But the damage is done. 

Mr. SMITHERMAN. Correct. 

Mr. SCALISE. Thank you, and I yield back the balance of my time, 

Mr. Chairman. 

Mr. WHITFIELD. Well, thank you very much, and I certainly want 

to thank the panel. 

Before we conclude the hearing, Mr. Short, I noticed you appeared to want to say something when Mr. Bilbray was asking 

questions about the conflict between Federal law and State law as 

it relates to the San Juan Generating Station. Did you want to 

make additional comments about that? 

Mr. SHORT. Well, I just wanted to agree with that. There are 

some issues with that. I also wanted to make it clear when Congressman Waxman asked a question about the EPA sitting down 

with us, the real question is getting them to the table. That has 

been a problem. We were not consulted during the rule itself and 

so that has been a problem, and again wanted to say that we did 

put a plan—New Mexico did put a plan together that would meet 

the objectives of the rule and EPA said it wasn’t good enough and 

essentially just mandated the larger expenditure of, you know, 

$750—I said $705—I am getting my fives and zeros mixed up— 

with $750 to $805 million. So I wanted to be very clear on that, 

and there is problems with California as well increasing the level 

of mandates that we as utilities are required to meet now with this 

additional piece on top of it. It continues to drive the cost of serving 

electricity up to our consumers, which are your consumers as well. 

Mr. WHITFIELD. OK. Well, thank you, Mr. Short. 

I want to thank all of you for—— 

Mr. BURGESS. Mr. Chairman, just before we wrap things up, Mr. 

Scalise from Louisiana brought up an excellent point. I mean, Dr. 

Armendariz is not here today, and as a private citizen, that is his 

right. But I think we also should have available to us any information exchanged between Mr. Armendariz and the White House as 

to whether or not he would testify today because it seemed like he 

was quite agreeable to coming and defending his positions, and 

then he wasn’t, and with all the stuff that we have been dealing 

with, with the backroom deals on the drug negotiations, I just feel 

like we need to look at that and find out if there in fact was any 

communication between Mr. Armendariz and the White House regarding his testimony here today because, as a private citizen, they 

should not interfere with that activity either. 

I fully respect his decision not to come. That is his decision as 

a private citizen. But at the same time, we need to know the back 

channel information on that, and I would just encourage the committee to follow up on that, and I will yield back. 

Mr. WHITFIELD. Well, thank you. As I said in my opening statement, we do intend to explore the reasons behind this. 

So, once again, thank you for coming. The testimony was quite 

enlightening, and I must say that when—those people who are 

187 

dealing with Region 6 alone on a regular basis, we do from the testimony see a bias against fossil fuel, lack of collaboration and frequently insisting on FIPs instead of SIPs, which are frequently 

meeting the requirements of the acts that EPA enforces. 

Mr. RUSH. Mr. Chairman. 

Mr. WHITFIELD. Yes, sir. 

Mr. RUSH. I have to respond to my friend from Texas’s remarks. 

I mean, there is no basis for his allegations or his request for inquiry to the White House, and I don’t know what that is based on. 

Certainly, to me, this speaks of proverbial witch hunting. I mean, 

you know, let us use the resources of the American people. Let us 

use those resources in a more productive manner. 

You know, it is just kind of insane to be trying to determine 

whether or not the White House asked the proposed witness that 

he would come or not show up at this hearing. It doesn’t make 

sense. And I certainly want to go on the record as being strongly 

opposed to that. 

Mr. WHITFIELD. Well, thank you very much. 

We do have very strong feelings about Mr. Armendariz, and I 

don’t think there is any question that he has poisoned the well in 

the enforcement of EPA laws in Region 6. And he had agreed to 

come and then yesterday his lawyer said he would not come, and 

I don’t know that we are going to take any formal action or not but 

we intend to have some further discussions with him and then obviously the committee as a whole would have to make any decision, 

but thank you for your comments and thank you all very much. As 

I said, it was very enlightening and we look forward to working 

with you as we move forward for hopefully a more collaborative effort at enforcing our environmental laws. Thank you. 

The record will remain open for 30 days. 

[Whereupon, at 12:27 p.m., the subcommittee was adjourned.] 

Æ