EPA’S GREENHOUSE GAS AND CLEAN AIR ACT 

REGULATIONS: A FOCUS ON TEXAS’ ECONOMY, 

ENERGY PRICES AND JOBS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 24, 2011 

Serial No. 112–26 

( 

Printed for the use of the Committee on Energy and Commerce 

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EPA’S GREENHOUSE GAS AND CLEAN AIR ACT REGULATIONS: A FOCUS ON TEXAS’ 

ECONOMY, ENERGY PRICES AND JOBS 

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EPA’S GREENHOUSE GAS AND CLEAN AIR ACT 

REGULATIONS: A FOCUS ON TEXAS’ ECONOMY, 

ENERGY PRICES AND JOBS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 24, 2011 

Serial No. 112–26 

( 

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 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

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 

JAY INSLEE, Washington 

JIM MATHESON, Utah 

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 ......................................................................... 2 

Prepared statement .......................................................................................... 4 

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

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

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

opening statement ................................................................................................ 22 

Hon. Charles A. Gonzalez, a Representative in Congress from the State 

of Texas, opening statement ................................................................................ 24 

Hon. Pete Olson, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 25 

Hon. Kevin Brady, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 27 

WITNESSES

Greg Abbott, Attorney General, State of Texas .................................................... 30 

Prepared statement .......................................................................................... 33 

Todd Staples, Commissioner, Texas Department of Agriculture ......................... 46 

Prepared statement .......................................................................................... 48 

Bryan W. Shaw, Chairman, Texas Commission on Environmental Quality ...... 55 

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

Answers to submitted questions ...................................................................... 255 

James Griffin, Plant Manager, Dianal America ................................................... 71 

Prepared statement .......................................................................................... 74 

James Marston, Regional Director, Texas Office, Environmental Defense 

Fund ...................................................................................................................... 78 

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

Kathleen Hartnett White, Director, Armstrong Center, Texas Public Policy 

Foundation ............................................................................................................ 209 

Prepared statement .......................................................................................... 212 

Gina McCarthy, Assistant Administrator, Office of Air and Radiation, Environmental Protection Agency .............................................................................. 234 

Prepared statement .......................................................................................... 238 

Answers to submitted questions ...................................................................... 473 

SUBMITTED MATERIAL

Letter, dated September 25, 2007, from John Blevins, Director, Compliance 

Assurance and Enforcement Division, Environmental Protection Agency, 

Region 6, to Flexible Permit owners, submitted by Mr. Green ........................ 9 

Letter, dated April 11, 2006, from David Neleigh, Chief, Air Permits Section, 

Environmental Protection Agency, to Steve Hagle, Special Assistant, Air 

Permits Division, Texas Commission on Environmental Quality, submitted 

by Mr. Green ........................................................................................................ 13 

(1) 

EPA’S GREENHOUSE GAS AND CLEAN AIR 

ACT REGULATIONS: A FOCUS ON TEXAS’ 

ECONOMY, ENERGY PRICES AND JOBS 

THURSDAY, MARCH 24, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:30 a.m., at the Garrett-Townes Auditorium, South Texas College of Law, 1303 San 

Jacinto Street, Houston, Texas, Hon. Ed Whitfield (chairman of the 

subcommittee) presiding. 

Present: Representatives Whitfield, Olson, Barton, Green, and 

Gonzalez. 

Also present: Representative Brady of Texas. 

Staff present: Allison Busbee, Legislative Clerk; Cory Hicks, Policy Coordinator; Mary Neumayr, Counsel; Anita Bradley, Senior 

Policy Advisor to Chairman Emeritus; and Jacqueline Cohen, 

Democratic Counsel. 

Mr. WHITFIELD. Welcome. My name is Ed Whitfield. I am chairman of the Energy and Power Subcommittee of the Energy and 

Commerce Committee in Washington, DC. We’re delighted to be 

here today. We’re having a hearing on the EPA’s Greenhouse Gas 

and Clean Air Act Regulations and its focus on the impact on 

Texas’ economy, energy prices, and jobs. 

I’m sure I don’t need to introduce the other Members here because you all know all of these people very well, but we certainly 

have with us this morning Mr. Joe Barton, the co-chairman of the 

Energy and Commerce Committee. Still—is now emeritus of the 

committee and is one of the leaders of our committee for many 

years and has been a strong advocate, as you know, for energy 

issues and has provided great leadership in the State of Texas. 

Mr. Gene Green here is with us because I saw him just a few 

minutes ago. He is the ranking—serving as ranking member of the 

Energy and Power Subcommittee today. And, of course, you all 

know him because he’s from Texas. 

In addition, we have Pete Olson, who is a member of the subcommittee from Texas. 

And we have Mr. Kevin Brady, who is not a member of the Energy and Commerce Committee but provides great leadership within the Congress. And we’re delighted that he’s here. I know he represents part of this area. 

2 

And, of course, Charles Gonzalez, who is also from Texas, and is 

a member of the Energy and Commerce Committee and the subcommittee. 

So, we are delighted to be here today. And before I give my opening statement, the way we’re going to operate this today is that 

each member is going to have 5 minutes for an opening statement 

and then we’re going to introduce the panel and then they will give 

their 5-minute opening statements. And then at that point, well, 

each member will have the opportunity to ask questions and answers—have a question-and-answer period. And when that is over, 

not because we’re trying to discriminate against Mr. Brady, but the 

rule is that since he’s not a member of the committee, he simply 

would wait until last to ask his questions. His questions may be 

the very best, but the rules are he waits until we all finish. So, I 

know that he’ll do a tremendous job. 

VOICE. Mr. Chairman, don’t they have different rules in Texas? 

Mr. WHITFIELD. Well, I haven’t been informed yet. I’m sure I will 

be. I’ve heard that Texas frequently steps to its own drummer. So, 

I want to be compliant and flexible with Texas. 

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

But I’m delighted to be here today. The Environmental Protection Agency, as you know, has begun to impose greenhouse gas regulations under the Clean Air Act affecting both mobile and stationary sources, including new rules establishing initial new 

preconstruction permitting requirements under the Prevention of 

Significant Deterioration program which became effective January 

2nd, 2011, and initial new operating permit requirements that will 

become effective July 1st, 2011, under the Title V program. These 

greenhouse gas rules, which have been subject to a variety of legal 

challenges, represent the beginning of EPA’s regulation of greenhouse gas emissions under the Clean Air Act, and additional greenhouse gas-related rulemakings are scheduled or expected, including 

for power plants and refineries and other sectors. 

I will tell you that we’ve already reported out legislation in the 

Energy and Commerce Committee to prohibit the regulation of 

greenhouse gas emissions. We did that for a number of reasons. 

Number one, Congress, on three separate occasions, has said no 

specifically to that issue. In 1990 Congress said no. In 2007 the 

U.S. Senate by a vote of 97 to nothing sent a resolution asking the 

President not to even send up the kill of protocol for ratification. 

And then last year the Senate refused to act on the Cap and Trade 

bill. 

So, Congress has made its will very clear on this issue. In addition, the greenhouse gas regulations in 2010, EPA formally disapproved the Texas Commission on Environmental Qualities’ Flexible Air Permits program. TCEQ submitted the original rules for 

this program to EPA for approval as a revision of the State Implementation Plan in 1994; and only recently, after about 16 years, 

has that issue been resolved. And, of course, we don’t consider it 

over yet. 

3 

I might also say that it’s very perplexing to see EPA trying to 

take this authority away from the State of Texas because from 

2000 to 2008 Texas lowered nitrous oxide levels by 46 percent, 

ozone levels were reduced by 22 percent, all major urban areas in 

Texas currently meet the Federal 8-hour ozone standard of 85 

parts per billion except Dallas; and they have made remarkable improvement. 

Suffice it to say that Texas in this—on this regard has really 

been a leader in the Nation in meeting EPA standards. 

So, our objective today is to find out what’s going on. And Congress is going to reassert itself into the Clean Air Act because for 

the last 10 or 15 years we’ve almost had a laissez faire attitude 

about it. But we cannot stand to simply sit by and we are going 

to reassert ourselves. And we want some questions answered. And 

if we have to do legislation, we’re going to consider that, as well. 

[The prepared statement of Mr. Whitfield follows:] 

4 

5 

6 

7 

Mr. WHITFIELD. So, with that, it’s my pleasure to introduce the 

ranking member at this time, Mr. Gene Green, for his opening 

statement. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. I want to welcome you 

not only to Texas but to Houston. It’s great to have a Congressional 

hearing here. We don’t always get these type of field hearings in 

our community. In fact, this is home. I wast born about five blocks 

from here at St. Joseph’s Hospital. So, I take my Texas roots very 

seriously. 

And I want to welcome my colleague to Houston. As the energy 

capital of the world, I hope you enjoy your time here and that you 

have an informative visit. Sometime when you have more time I 

would love to take you over to what I call our ‘‘jobs corridor’’ on 

225 in East Harris County where you can see the huge amount of 

investment in the energy sector we have over there, along with the 

Port of Houston. 

In our district, which encompasses most of East Harris County 

here in the Houston area, we do everything energy, both upstream 

and downstream, including being the home of five refineries, several manufacturing facilities, and 50 plus chemical plants. For this 

reason I have closely watched the Texas Flexible Permit debate in 

order to ensure that our facilities have the permits they need to operate. 

In August of 2008, the Business Coalition of Clean Air and Fuel 

Group, the Texas Association of Business, and the Texas Oil and 

Gas Association filed suit against the EPA to take action on pending permit-related SIP actions such as flexible permits. In July of 

2009 these groups reached an agreement regarding the timing of 

Federal Review of aspects of Texas’ Air Permitting program, and 

in July of 2010 EPA took final action disapproving Texas’ flexible 

permit program SIP provision. The EPA determined that the revisions proposed by the TCEQ’s New Source Review program did not 

meet the Federal Clean Air Act requirements. Reaching a workable 

agreement that would make Texas compliant with the Clean Air 

Act without imposing excessive and unnecessary costs on refiners 

and other businesses is in the best interest of both the EPA and 

the TECQ or TCEQ. I would hope that both the EPA and the 

TCEQ would agree, and I look forward to an update from both on 

the status of these discussions. 

Now, I, like my colleagues on the other side of the aisle, have 

concerns about the timing of this issue, in particular, that the EPA 

did not object to the Texas Flexible Permit when they originally 

issued it in the early 1990s. But it’s completely false to say that 

the EPA voiced no concerns over this program until they disapproved last year. 

In fact, both the Clinton and Bush Administration sent several 

letters to TCEQ outlining their concerns with the Texas SIP provisions. Additionally, the Bush Administration sent a Fair Notice letter to flexible permit holders in 2007 emphasizing that they must 

comply with the Clean Air Act provisions in addition to the Texas 

Flexible Permit provisions. 

8 

Mr. Chairman, without objection, I would like to ask unanimous 

consent to insert a copy of the Fair Notice letter that was sent to 

the flex permit holders into the record as well as a copy of the Warren TCEQ letter sent by the Bush administration to TCEQ. 

Mr. WHITFIELD. Without objection. 

Mr. GREEN. Thank you. 

[The information follows:] 

9 

10 

11 

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13 

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15 

16 

17 

18 

19 

20 

21 

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Mr. GREEN. It was only when the courts forced the EPA to make 

a decision on the flex permit program that they finally disapproved 

the program. I don’t say this in an effort to take sides. I say this 

because I think it’s important to set the record straight because unfortunately most of the rhetoric on this issue would have you believe that the issue just came to light in the last couple of years, 

when instead it was percolating for several years. 

Finally, concerning upcoming greenhouse gas rules to utilities 

and refineries, I must emphasize that I’m opposed to the EPA moving forward with regulations on large utilities and refineries in our 

country because I believe it’s the Congress who should be the decision maker on these carbon-control issues. 

However, we can’t discount the Supreme Court decision and say 

‘‘climate change is not an issue’’ and move on without it, which is 

the approach some of my colleagues want to take. Instead we 

should pass a bill that would delay the EPA from moving forward 

with these regulations so that the Congress has the time to address 

this issue with input from Members that represent diverse constituencies nationwide. 

Again, I look forward to the testimony of our witnesses. And, 

again, thank you, Mr. Chairman, for coming to Houston and to 

Harris County. And you’re welcome back any time. 

Mr. WHITFIELD. Thank you, Mr. Green. 

At this time I recognize the chairman emeritus, Mr. Barton. 

Mr. BARTON. Well, thank you, Chairman Whitfield. We sincerely 

appreciate you coming to Houston, Texas. There are lots of things 

you could be doing in Kentucky, and we appreciate you spending 

a day to come down to the energy capital of the world and focus 

on a hearing that’s very, very specific to Texas. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

I’m a strong proponent of strong environmental protection. I was 

a co-sponsor and voted for the Clean Air Act in the early 1990s. 

I am a past subcommittee chairman of the Oversight Subcommittee 

of this committee and of the Energy Subcommittee with Mr. 

Whitfield, who is currently the chairman, and of the full committee. I have probably participated and chaired more hearings on 

the Clean Air Act and greenhouse gases than almost any current 

member of Congress and perhaps any member of Congress, ever. 

I want a strong EPA. I want a strong Texas Counsel of Environmental Quality. I want an Attorney General in Texas who enforces 

the environmental laws not only of the State of Texas but of the 

United States of America. 

So, we are not engaged today in a witch hunt against the Environmental Protection Agency, but we do believe that the Environmental Protection Agency, like every other agency of the Federal 

Government, should follow the law and not make it. And with regards to the air—Clean Air Act and the flexible permits that have 

been issued under that Act and with regards to the issue of greenhouse gases, you know, it is my strong belief that the EPA has 

acted without legal foundation in terms of the air quality permits 

and without due consideration in their promulgation and decision 

to try to regulate greenhouse gases under the Clean Air Act. 

23 

There are two separate issues. Let’s look at the first issue, the 

air permits. Under the Clean Air Act, beginning in the mid 1990s, 

States had to comply with the new law and submit to Washington 

State implementation plans and specific permits for various facilities that were jurisdictional under that Act for six criteria pollutants. 

In Texas, you know, our region and our industry were compliant 

with five of the six, I believe, almost from the get-go. We have had 

a problem in the Houston area, the Beaumont-Port Arthur area, 

the El Paso area, and the Dallas-Fort Worth area on ozone. So, 

Texas decided to use a facility-wide flexible permitting approach 

where they would set a cap for a facility and not try to set a standard within each facility for each piece of equipment. This was done 

under Governor Ann Richards’ direction and under President Bill 

Clinton’s Presidency. So, this was not some Republican initiative. 

Basically, as I understand it, the policy difference between the 

EPA today and the State of Texas today is that the Texas legislature and the Texas Counsel of Environmental Quality, all the various officials in Texas have decided to take a facility-wide approach 

where you decide to cooperate with the affected regulated industry, 

share a joint goal, and try to meet the Federal law that way. 

The EPA under President Obama has decided that they want a 

command and control and that we have got to force people to do 

things equipment by equipment. And I’m going to ask the Attorney 

General and the chairman of the Council of Environmental Quality 

here how many permits have been affected. But my information is 

it’s about 180. So, we want strong air quality enforcement in Texas, 

but we want a State that can grow economically. And as the testimony will show, depending on your baseline, 1990 or 2000, Texas 

employment is growing, Texas population is growing, but Texas air 

quality is also improving. OK, if you can add 4 million people in 

10 years and decrease emissions, that should be something that 

you’re patted on the back and given a medal for, not something 

that your permits are revoked. 

So, Mr. Chairman, we are here to get to the bottom of this, to 

put some things on the record. We’re going to hear from our State 

officials and then our industry officials, and then we have been 

blessed that the number two person at the EPA, the head of the 

Air and Radiation Agency there, is going to come and—what we’re 

not going to hear from, Mr. Chairman, is the Regional VI administrator. He and his aides couldn’t make it 180 miles from Dallas to 

testify in public about this. So, we will have some questions for the 

record for our friends from Dallas, who probably had to get a haircut or something this morning and couldn’t make it down. 

With that I yield back. 

Mr. WHITFIELD. Thank you, Mr. Barton. 

Yes, we are quite disappointed that the regional director of EPA 

is not with us this morning. Although, we certainly asked at the 

time. 

At this time I’d like to recognize the gentleman—another gentleman from Texas, Mr. Gonzalez, who will give a brief statement. 

24 

OPENING STATEMENT OF HON. CHARLES A. GONZALEZ, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GONZALEZ. Thank you very much; and, Mr. Chairman, welcome to Texas. You are surrounded by Texans today from both 

sides of the aisle. And I can tell you now that regardless of party 

affiliation that I think and I believe that we often agree on the following: And that is that Texas has been, is, and will remain an energy State. We understand what we’ve done historically. We understand what need to effectuate as it relates to traditional fuels and 

sources of energy but we also will be a leader in the alternatives 

and the renewals. 

Now, much time is lost in the politics of the present subject matter that’s before us today. If we were to believe in areas surrounding the flexible permit program, the Obama Administration 

disapproved the program in order to punish Texas and take over 

its program. What seems to get lost is that previous Administrations, as pointed out by Mr. Green, have expressed concerns with 

the flex permitting program for the past 16 years. Rather than favoring the EPA on this decision, the responsible thing to do is to 

figure out the past program. Past permit holders are now in limbo 

and that cannot be good for business. To create the regulatory certainty that businesses need, TCEQ and EPA need to reach an 

agreement. I’ve been told that they’re at an impasse. They don’t 

have ongoing discussions and negotiations, which is very unfortunate. I look forward to hearing both the EPA and TCEQ on what 

the next steps are and how we plan on working together to reach 

a resolution amenable to both sides. 

On the question of greenhouse gases, rather than stripping EPA 

of its authority to regulate greenhouse gases, Congress should pass 

legislation that creates a framework for how we deal with greenhouse gas emissions. We know that the House acted on this previously. The Senate did not. We’ll see where we vote in 111th Congress. 

However, I’ve not been presented nor have I seen any proposals 

that would address this issue in a legislative way if we don’t want 

a regulatory agency to do the work for us. All we’ve witnessed are 

against a critical EPA and to redebate the climate items without 

putting forward any new ideas on how we are going to address the 

problem and how we are going to compete with China, Germany, 

and other countries who have made key investments in alternative 

energy and positioned themselves to be leaders in this new energy 

sector. 

A secure energy future will no doubt include fossil fuels for the 

foreseeable future. It is needed and will serve as our transition fuel 

as we move to cleaner energy alternatives. Our State and Federal 

Government have a responsibility and a role to play in mitigating 

the effects of climate change and putting us on a sound path to 

making that energy transition. I believe our constituents expect 

and deserve as much. 

Again, thank you very much, Mr. Chairman. I yield back. 

Mr. WHITFIELD. Thank you, Mr. Gonzalez. 

At this time I recognize the gentleman from Texas, Mr. Olson, 

for 5 minutes. 

25 

OPENING STATEMENT OF HON. PETE OLSON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. OLSON. Thank you, Mr. Chairman. And I want to thank you 

for bringing this hearing to Space City, USA, and the energy capital of the world. And I appreciate your courtesy for letting me deliver this speech. Unfortunately, I have to leave a little bit early 

here; and I apologize to the witnesses. Thank you for coming today; 

and, unfortunately, I won’t be here for much of your testimony but 

we do have a record and we know we’re going to be working close 

with you in the future. 

But make—make no mistake, we are here today because the 

EPA has overstepped its bounds and it does not respect the authority of the individual States. Unfortunately, Texas has found itself 

in the crosshairs of this radical EPA that simply refuses to acknowledge our successes in increasing production while reducing 

pollution. All this while we’re the fastest-growing State in population in the Nation. Since the recession of 2008, the great State 

of Texas has produced half the private sector jobs in our country— 

half the private sector jobs. 

Even with adding to the Nation’s jobs, population and economic 

growth, Texas has improved air quality through its flexible permitting program, which the EPA has disapproved. We’ve had a 22 percent reduction in ozone and a 53 percent in NOx emissions. The 

national average was 15 percent for ozone, 27 percent for NOx. And 

this was from the time period 2000 to 2008. With those numbers, 

it’s very clear: Flexible permitting works. These are successes that 

the EPA refuses to recognize. 

Another great example of the EPA overreach was in the emergency administrative order issued late last year by EPA to raise resources. Earlier this week the Texas Railroad Commission announced that it had determined that range resources was not—was 

not the source of the contaminant in any domestic water wells. 

This finding rightly indicates that the Texas Railroad Commission 

handled the contamination incident properly. And the EPA had no 

authority to take the extraordinary steps they did by going around 

our State regulators. 

The EPA improperly usurped State authority and has repeatedly 

demonstrated a disturbing pattern of behavior of abuse of their 

Federal authority in the State of Texas, and it must stop. I will 

continue to press the EPA to remain within their Federal parameters and exercise common sense and caution when attempting to 

intervene in matters under the jurisdiction of this State. 

And, finally, as our Nation’s economy struggles to regain its footing, this Administration has continued its backdoor approach to 

cap and trade through EPA regulation. I believe this act is unconstitutional. We know these regulations will destroy jobs and hurt 

an already weak economy. At a time of near record gas prices, 

these regulations will only force Americans to pay more at the 

pump. 

This document, the Constitution, dictates that Congress, not 

unelected bureaucrats, has the authority to decide whether and 

how greenhouse gases are going to be regulated. As our chairman 

said in his opening statement, just last week this committee 

passed, with my strong support, the Energy Tax Prevention Act, 

26 

which would prevent the EPA from implementing a cap and tax 

scheme through onerous regulation and restore much-needed regulatory certainty to businesses trying to grow our economy. This bill 

would also roll back the rule that EPA has already implemented 

that has allowed them to seize control of Texas greenhouse gas permitting authority. 

Texas and American business owners alike need the assurance 

that this Government will not continue to regulate them out of 

business. 

Again, I appreciate the chairman’s courtesy and I apologize to 

the witnesses for an early departure. I yield back my time. 

Mr. WHITFIELD. Thank you, Mr. Olson. 

We’re sorry that you have another engagement, but thank you 

very much for coming on this issue. We appreciate your being here. 

In Washington we really do not allow members that are not 

members of the committee to make an opening statement. However, since Mr. Brady is with us today and he’s informed me in 

Texas they have different rules, I thought I would give him an opportunity to speak. 

Mr. BARTON. Mr. Chairman, point of parliamentary inquiry? 

Mr. WHITFIELD. Yes, sir. 

Mr. BARTON. If we allow Mr. Brady—and I’m certainly encouraging you do that—if Congresswoman Jackson Lee comes, I would 

hope that we would give her the opportunity to give a statement, 

also. 

Mr. WHITFIELD. We will—we will do that. 

Mr. BARTON. OK. Thank you. 

Mr. WHITFIELD. Mr. Brady, do you want to go? 

Mr. BRADY. Thank you, Mr. Chairman. I thought you were just 

picking on us Ways and Means members. 

Mr. WHITFIELD. We just want your jurisdiction. 

Mr. BRADY. I do have a compelling opening statement that is 

likely to bring you all to your feet. So, just save your comments 

until [inaudible]. 

[The prepared statement of Mr. Brady follows:] 

27 

28 

29 

30 

Mr. BARTON. The guys from Agriculture are fighting for jobs here 

in Texas and for the authorities to state to permit these businesses 

and to the fight that these mandates, the Federal Government has 

no authority to impose on us. I want to make two points. One is 

that there is, so far this morning, this belief that because there has 

been an exchange of letters between Texas and the Federal Government, that gives Washington the authority to seize our permitting process. The truth of the matter is this is to the contrary. With 

an exchange of letters between Washington and every State on 

issues for Medicaid, Medicare, clean water, highway transportation, 

and endangered species, and fisheries, and water, a normal routine 

exchange of letters between and among Federal programs is no 

basis for seizing our authority. 

And, secondly, let me be real clear, this isn’t a choice between 

clear air and jobs. Texas is achieving both. The question here is, 

does Washington have the power to seize these States’ permitting 

authority and impose among other mandates a global warming 

agenda that Congress has rejected? If the answer is yes, well, there 

is no limits to the power of the unelected, unaccountable bureaucracy in Washington. If the answer is no, factually, it restores Congress’ constitutional jurisdiction over the districts and restores the 

State’s rights as a partner with the Federal Government to achieve 

these goals. 

I’m anxious to hear from our witness, Mr. Shaw. Thanks for joining us, as well, today. Chairman, thanks for having me. 

Mr. WHITFIELD. Thank you very much. 

And I want to welcome the first panel. We appreciate you being 

here today. 

We have as a witness the Honorable Greg Abbott, who is the Attorney General of the State of Texas. In addition, we have Mr. 

Todd Staples, who is the Commissioner of Agriculture of Texas. 

And then we have Mr. Bryan Shaw, who is the chairman of the 

Texas Commission on Environmental Quality. So, we appreciate 

your being here. We look forward to your testimony. 

And Attorney General Abbott, I’ll recognize you first for your 

opening statement. 

STATEMENTS OF GREG ABBOTT, ATTORNEY GENERAL, STATE 

OF TEXAS; TODD STAPLES, COMMISSIONER, TEXAS DEPARTMENT OF AGRICULTURE; AND BRYAN W. SHAW, CHAIRMAN, 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

STATEMENT OF GREG ABBOTT 

Mr. ABBOTT. Thank you, Mr. Chairman. And let me join in in 

welcoming you to Texas. I hope you could get some good food while 

you were here. Thank you for the opportunity to appear before this 

subcommittee. 

For the record, my name is Greg Abbott, and I am the Attorney 

General from Texas. And I’m here today to focus primarily on the 

litigation that Texas is waging against the EPA and explain why 

Texas believes the EPA is violating the Clean Air Act, as well as 

other laws. 

First, before I go into that—and we have submitted in greater 

detail in our prepared remarks—Texas has worked effectively with 

31 

the EPA to enforce environmental laws. Texas also strives to prevent pollution before it occurs. Over the last decade, as has been 

recounted already, Texas cut NOx in half and reduced ozone more 

than any other State in the country. And Texas has achieved one 

of the largest reductions in greenhouse gas emissions of all the 

States in the country. Texas remains committed to working with 

the EPA to improve air quality and to hold polluters accountable. 

But Texas cannot support the EPA’s efforts to regulate greenhouse 

gases and federalize the Texas air permitting system. Texas believes the EPA’s actions are not only bad policy and harmful to creating jobs but also believes that EPA has repeatedly violated the 

law. 

Along these lines, the EPA has ignored the plain language of the 

Clean Air Act, violated notice and comment requirements, and attempted to rewrite Federal laws that were written by the United 

States Congress by way of the administrative rulemaking process. 

Texas lodges several legal challenges. I’ll mention just three because of lack of time that reveal legal problems with the EPA’s regulations. One is called the ‘‘Tailoring Rule.’’ The Clean Air Act defines in precise numerical terms the emission thresholds that trigger permitting requirements for stationary sources. The EPA conceived that the regulation of greenhouse gases at these stationary 

thresholds are inconsistent with the Congressional intent concerning the Clean Air Act by subjecting thousands of schools, 

churches, farms, and small businesses to Clean Air Act regulation. 

These harsh results show that greenhouse gases simply are not the 

kind of substance the Clean Air Act was designed to regulate. To 

get around Congress’ clear instructions, the EPA basically amended 

the Clean Air Act by administrative fiat. The EPA calls the revised 

language the ‘‘Tailoring Rule.’’ The Tailoring Rule purports to create new thresholds for greenhouse gases in place of the thresholds 

that were mandated by Congress, itself. 

These new thresholds are several hundred times higher than 

those in the Clean Air Act. Well, with this Tailoring Rule, the EPA 

effectively rewrote the Clean Air Act by unilaterally raising emission thresholds. 

A second legal violation is in the SIP call rule issued by the EPA. 

The Clean Air Act gives States up to 3 years to bring their programs into compliance with major new Federal mandates, such as 

the greenhouse gas regulations. Well, the time allowed by the EPA 

violated the Clean Air Act by giving States only 15 months rather 

than the allotted 3 years to change their laws and regulations to 

comply with the new greenhouse gas mandate. The EPA bases its 

decision on statutory provisions for bringing a SIP into compliance 

with existing standards, but the greenhouse gas rules are new 

standards. So, the 3-year requirement applies. EPA’s failure to give 

States 3 full years violates the Clean Air Act. 

The last one I’ll mention is the legal violation in the FIP rule. 

Absent an overriding emergency, the Administrative Procedure Act 

requires the EPA to solicit notice and comment from the public before issuing regulations. The FIP rule was issued without notice 

and comment in violation of the APA. There was no emergency to 

rush the rule. The EPA had plenty of time to respond to Texas’ position on greenhouse gases. A notice and comment period was, 

32 

therefore, required by the FIP rule. EPA’s failure to provide it 

should doom the rule. Thank you. 

[The prepared statement of Mr. Abbott follows:] 

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Mr. WHITFIELD. Thank you, Mr. Abbott. 

Mr. Staples, you’re recognized for 5 minutes. 

STATEMENT OF TODD STAPLES 

Mr. STAPLES. Thank you, Mr. Chairman and members, for the 

opportunity to be here with you today and thank you for your leadership for our country and our State. 

I’m here today to share with you concerns of Texas agriculture 

with a number of efforts underway to regulate greenhouse gases 

and to discuss the negative consequences not only to American agriculture, but particularly to consumers and its negative impact on 

jobs here in our country. 

American agriculture produces the safest, the most affordable, 

and the most reliable food supply in the world. Texas is a big part 

of that. Texas leads the nation in the production of cattle and cotton and sheep and goats and many other categories. It has an economic impact annually of about $100 billion on our State’s economy 

and represents about 9 and a half percent of our entire gross State 

economy. 

To demonstrate the connectivity between agriculture in urban 

Texas right here in Houston, the Port of Houston is the biggest exporter of Texas agriculture products. We’re all involved in agriculture at least in some form today. 

The EPA’s regulation of greenhouse gases in Texas under the 

Clean Air Act will have a detrimental effect on Texas’ agriculture. 

It will increase input costs which farmers and ranchers will have 

no choice but to either absorb or stop producing the food that we 

eat and the clothes that we wear. Ultimately, in this process, it is 

the consumer, American families, that will be picking up the tab 

for these higher costs. Based on a USDA study, released just this 

year, Americans spend about $41 billion for the transportation of 

food from the farm to the consumer. The Department of Labor reported that the increase in food costs are the highest in four decades. All with very minimal inflation. And I might add that these 

are natural, market-driven costs. And costs associated with greenhouse gas regulations will only add to these already higher costs 

that consumers are facing. 

Uncertainty of regulation threatens the health of production agriculture. Agriculture is an industry more vulnerable than most. Agriculture producers have to fight pests, disease, weather, and volatility of the market each and every day. They should not have to 

fight their own Governmental regulatory agencies. 

Since the EPA began consideration of the endangerment finding, 

analysts have sounded statistical alarm bells loudly and clearly. 

Costs estimates run the gamut but all prove that greenhouse gas 

regulation will have a negative impact on agriculture and a negative impact on consumers. 

If the input costs for American agriculture are higher than those 

of our competitors in other countries, this will have the net effect 

of moving production agriculture outside the borders of the United 

States and along with it the jobs that are created. 

These regulations, members, are proven in their cost but they 

are questionable in their benefit. 

47 

Generally, when establishing regulations, we’re doing it to 

achieve an end. There are consequences for every regulatory action. 

That’s why following sound science is a fundamental principle by 

which all regulators across the United States have always lived 

and practiced. Now we believe the EPA is abandoning these principles and this process. In this case, there’s no measurable positive 

impact and no way to determine if your regulation is achieving the 

result worth the economic disruption that it’s causing. 

And this isn’t just a disruption to farmers and ranchers. It’s disruption to the consumers who benefit from American agricultural 

products is what is on the table. Today Americans spend about 10 

percent of their disposable income on food. That compares to about 

24 percent in Mexico and, roughly, 33 percent to our competitors 

in China. 

Food security is a part of national security. There are no greater 

better stewards than our farmers and ranchers. No one cares more 

for the land and air and water than them. We’re pleading to you 

for your help today to turn to the courts, we have turned in voluminous communication to the EPA, and we’re asking for your help in 

this process. 

Thank you for the opportunity to be here. 

[The prepared statement of Mr. Staples follows:] 

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Mr. WHITFIELD. Thank you, Mr. Staples. 

And, Mr. Shaw, you’re recognized for 5 minutes. 

STATEMENT OF BRYAN W. SHAW 

Mr. SHAW. Thank you, Chairman and members. It is an honor 

to be here and to be able to address this group and talk about the 

issue of flexible permitting in Texas. And I hope to take the time 

that you’ve allotted me to give some background on why we are 

where we are as well as to address some of the issues as far as 

what is that path forward looking like. 

As a way of background—and, by the way, I am Bryan Shaw, the 

chairman on the Texas Commission on Environmental Quality, for 

the record. 

The flexible permit program is one of the tools in our toolbox to 

allow us to accomplish our agency’s mission, which is to protect the 

environment in the state of Texas, to do so to induce it to continue 

economic development. As we recognize that we need to have both 

a strong economy and a strong environment or we’ll have neither. 

So, toward that end we perceive that the Clean Air Act’s delegation of authority to States such as Texas not only gave us an opportunity but we believe affords us a responsibility to customize our 

environmental regs with the program to find innovative ways to 

approach and to obtain the environmental goals that are set either 

by our State or by the Federal Government and to do so in a way 

that we can economically get there and ensure that we have a 

strong economy so that we can continue to improve our environment as well as recognizing the strong influence that a strong economy has on the health of our Texans because of the nutritional and 

other health care issues that are positively effected by a strong 

economy. 

If you look at the process of the flexible permit program, it was 

a tool that was developed largely to help us to find innovative ways 

to incentivize enhanced environmental performance. We were able 

to trade flexibility to the regulated communities for reductions in 

environmental emissions. This is something that was on the heels 

of a Federal program known as ‘‘Project XL.’’ It’s a program that 

we believed and to this day believe not only does it provide for a 

stronger economic base and in job creation because of that flexibility but also provides opportunity for environmental reduction 

and ensures the technique through the way that the program is set 

up. 

It has been in the past, as is mentioned, there have been letters 

exchanged between my agency and the EPA expressing concerns 

about the permit program. There have even been concerns expressed about individual permits. And when my agency has been 

given the opportunity to sit down with the EPA and address individual permits, we have been able to identify and explain where 

the misperceptions occurred, where the permit authorizations were 

indeed correct. And to this day, I’m unaware of any permit that has 

been discovered where our flexible permit program led to the exceedance of the Federal requirements. 

I think that’s critical because we have indicated, I have multiple 

times, that I stand ready to stand with the EPA to identify a flexible permit when our program allows that facility to then operate 

56 

to exceed Federal requirements. And, in fact, both the State, Federal laws as well as the State regulations prohibit flexible permit 

holders from circumventing Federal permit review to know where 

if the permit holders were to try to use that permitting program 

to get around the requirements of the Federal Government, the 

Federal emission laws, we would have enforcement action and it 

would potentially render that permit null and void. 

And, so, we had this process where these letters were exchanged 

over the years; and certainly it was miscommunication. And if we 

tried to address those off and on, we had occasional bouts of success and failure with regard to communicating that to the EPA. 

And the lawsuit that was mentioned previously where EPA was 

forced to go to the Federal Register with their perceived deficiencies in the program happened in 2009 and the final disapproval 

came in 2010. That forced the EPA to lay out what the perceived 

deficiencies of the program were. 

This was actually a relief for me because it allowed us to finally 

have EPA put into a legal context those concerns that they had 

with our program. And we were able to then take those concerns 

and explain how they were misconceptions. We did make some 

changes in an agreed rulemaking process with the EPA, an expedited process, to address and clarify concerns they had with the 

program. Unfortunately, the EPA has yet to consider those rule 

changes we made that only worked to clarify why our program does 

indeed meet Federal requirements. And, instead, they went ahead 

and disapproved our program without considering those changes 

that we need to address and clarify, concerns they had with the 

program. 

With regard to the path forward, we believe that our program 

has led to environmental enhances and the program was developed 

and it also is one of the concerns I have is that as we move away 

from the flex permit program, we’ve had several unintended consequences. Among those are environmental benefits that we had 

because of the way this program was set up which will be lost if 

we allow companies to overcontrol facilities located near grandfathered facilities, for example, and we’ve got additional reductions 

from that and if we start underflexing it, if you will, your options 

are—in many cases my concern is to either increase those emissions or to shut some of those facilities down. 

We have a number of facilities that are in the process of 

deflexing through the State. And I’m concerned that we may see 

the impact of that as we move forward. But we stand committed 

to allowing them to take advantage of the permitting tools we have 

and work with the EPA for a path forward. Hopefully, we can retain as much of the environmental benefit and economic development aspects of the flexible permit program as we move forward 

as possible. 

Thank you, sir. 

[The prepared statement of Mr. Shaw follows:] 

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Mr. WHITFIELD. Well, thank you very much for your testimony. 

And I was just reading a sentence from Ms. McCarthy’s testimony. She is the administrator for the EPA on air quality, and 

she’ll be testifying later today. But in her testimony she said, 

‘‘Texas has been a part of the Clean Air Act success. For example, 

in 2000 the number of bad air days in Houston exceeded those in 

Los Angeles. Today Houston’s ozone levels have decreased so that 

the area is currently meeting the 1997 ozone air quality standards.’’ 

So, one of the perplexing things about the flex permit issue is 

that it does appear that the flex permit worked well for Texas and 

did—as a result of that, Texas was able to meet the ambient air 

quality standards and did very well. I mean, would you agree with 

that, Mr. Shaw? 

Mr. SHAW. Yes, I would agree that the flex permit is one of those 

tools in our toolbox that has helped to obtain hundred of thousands 

of tons of reduced emissions based on what staff has reported to 

me. And, certainly, it’s been one of those tools that has helped to 

incentivise companies to make voluntary reductions, which I will 

submit is one of the best ways we can move forward with environmental enhancement, to have regulations that offer to incentivise 

companies to move forward on their own, to develop better technologies. 

Mr. WHITFIELD. And, you know, one thing about the Clean Air 

Act, it is so complex and there are so many aspects to it that any 

way that you can simplify it and still meet the goal, seems to me 

to be an advantage. 

And on the Tailoring Rule, for a minute—we’ll switch from there 

over to the greenhouse gas for just a minute. I know the EPA has 

been sued for their Tailoring regulation and my recollection is the 

Tailoring regulations would give the EPA authority to regulate any 

greenhouse gas emissions above 100,000 tons per year. And as the 

law says, the Clean Air Act, itself, says anything above 150 or 250, 

depending on what it is. So, there’s no question that the clear language is that the EPA violated the Clean Air Act and State of 

Texas did not sue them on the Tailoring Rule. 

Did you or didn’t you? 

Mr. ABBOTT. We did. 

Mr. WHITFIELD. And environmental groups have also sued them 

on that. And—is that correct? 

Mr. ABBOTT. I’m not sure if they have done so yet. We anticipate 

those lawsuits coming, if they haven’t been filed yet. 

Mr. WHITFIELD. Well, my understanding’s that there was, but I 

maybe should be corrected on that. 

Mr. ABBOTT. I can’t confirm it or deny it right now. 

Mr. WHITFIELD. But I do remember when Ms. Jackson—Lisa 

Jackson, the administrator of the EPA, appeared before our committee. She was asked a question back on the greenhouse gas 

issue, with—will your regulations be effective in reducing greenhouse gases. And she said it would be negligible because unless 

other countries are willing to take the same stand that we do in 

America, it’s in the stratosphere, it’s very difficult to control. And 

there’s been a lot of discussion today about China. So, we know 

that China is relying more and more and more on coal. And, so, 

61 

the whole issue here that bothers a lot of us is the ability of America to remain competitive in the global marketplace. 

But—but on this—back to the flex permits, just a minute, Mr. 

Shaw. Am I correct that you set an overall limit of emissions; and 

as long as you fall within that limit, then you’re in compliance. Is 

that—is that true? 

Mr. SHAW. That’s correct. And it’s actually more complex than 

that. We actually require those companies to do what we call 

‘‘worst case modeling’’ in order to prove that if that facility operates 

with that flexibility under that cap, if you will, under the worstcase scenario, the worst emissions and the worst location in that 

facility, that it will be protective of the health and environment offsite. And, so, it actually means that facility is going to be operating 

safer in normal operating mode because they have to model the 

worst-case scenario. So, yes, they do have to stay under that. 

There are rumors that they can, then, spew the evil things over 

the fence line. That’s not correct. They have to upfront model and 

improve under the worst-case operating errors to ensure they meet 

the standards. 

Mr. WHITFIELD. And over the 16 years that we’ve been issuing 

these, it’s my understanding you’ve issued over 120 permits and 

that EPA never expressed any opposition at the time; is that correct? 

Mr. SHAW. Well, there have been those letters we’ve talked 

about. I think it’s maybe 140. We can confirm the total number. 

But there has been a hot-and-cold relationship. The EPA has expressed concerns; we’ve addressed them in—on a—case by case. 

And, in fact, in one facility the region administrator was at a ribbon cutting and held his program up as innovative and what 

should be taken back to the EPA in DC and be spread across the 

United States as the type of program that we ought to be having 

for combating environmental challenges. 

Mr. WHITFIELD. I might just add, on the Tailoring Rule, Mr. Abbott, that when we know that it strictly violates the letter of law 

but the EPA—the officials at the EPA will tell you that the doctrine they use to give them the authority to change it administratively debate that they want to prevent an absurd result. And the 

absurd result is that they do not have the manpower, the money, 

or anything else to issue all the permits and do anything everything they would be required to do if they do not have the Tailoring 

Rule. 

Mr. ABBOTT. Right. And we don’t believe the so-called ‘‘Absurd 

Results Doctrine’’ is going to hold up in court. What is absurd is 

that a regulatory agency can come in and have unelected bureaucrats rewrite a law that the United States Congress wrote. We 

don’t think the court will uphold that rewriting of a law by a Federal agency. 

Mr. WHITFIELD. Thank you. 

Mr. Green, you’re recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Shaw, how long have you been the chair of the TCEQ? 

Mr. SHAW. Since September of 2009. 

Mr. GREEN. OK. And you know the letters we put in the record. 

There has been an exchange of letters in the last 7 years, even 

62 

back to President Clinton when the flex permits were started in 

’94, I think. And they’re—they—TCEQ has worked out those differences between those administrations since 1990. 

Mr. SHAW. We had worked on regular basis, but I would say that 

while we attempted to bring those to a point where we thought the 

EPA would then approve the permit program, it’s sort of getting 

put on the back burner historically and then maybe a couple years 

later there will be another letter. And, so, it was—and interestingly, those same concerns in those letters were finally in the Federal Register in 2009. 

Mr. GREEN. And I guess this didn’t happen in January of 2009. 

Those letters were far back and there’s always been a relationship 

between the EPA and the TCEQ. Sometimes it’s good and sometimes it’s not so good. 

Mr. SHAW. I think I described it as ‘‘hot and cold’’ on this issue, 

sir. 

Mr. GREEN. Yes. I understand how Federal agencies work. Sometimes another fire picks up somewhere else and they get on that, 

not unlike a lawyer having one file and going to another one. 

So, we heard that TCEQ is at an impasse on this deal coming 

to a mutually agreeable resolution on deflexing the Texas permits. 

And I understand the concern, I think is—and correct me—that 

EPA needs to look back to ensure there are no Title V violations 

on the SIP cap. 

Are you still in negotiations with EPA or—and I know the lawsuit has been filed; but, you know, frankly, I’ve been told that because the lawsuit’s filed, there’s no new negotiations. Frankly, I 

thought that was when most attorneys negotiated. 

Mr. SHAW. We certainly stand ready to have additional discussions. And the key thing is there’s really not a lot of fertile area 

for negotiations. I stand ready, but what has happened instead, 

Congressman, is that most facilities because of the uncertainty associated with the EPA’s denial of the program and the threats that 

they want, I believe I’ve been told that I can’t know specific permitting issues because of ex parte prohibitions under the Texas statutes. But I’ve been told that those permit holders have all indicated 

to the EPA that they would agree to get into more conventional 

permits. And, so, we have a number of them that I suppose are inhouse going through and converting from flexible permits to a conventional permitting program. 

And my concern is are we going to have negative environmental 

components of that? That’s sort of the path forward at this point 

is companies are availing themselves of an opportunity to get permits with more certainty. 

Mr. GREEN. Are you hearing from individual companies on the 

problems they’re having deflexing their permits? 

Mr. SHAW. I can’t hear those because that would officially be an 

ex parte prohibition. So, I’m not trying to avoid your question, but 

I—my staff may be hearing those, but I cannot. 

Mr. GREEN. I know we have a saying here, ‘‘if it ain’t broke, don’t 

fix it.’’ And Texas air quality has improved and Ms. McCarthy, who 

will be here later, will testify to that. Having represented a lot of 

these industries that achieved that reduction over a period of time 

and I congratulate them on that. My understanding is that the 

63 

EPA does not contest that emissions have gone down, but rather 

they can’t specifically tie the use of flex permits to this reduction. 

Is that your understanding? 

Mr. SHAW. My staff—and, again, it makes it somewhat difficult 

for me to look at individual permits. But when I’ve asked staff specifically that question, my staff has identified technologies that 

were developed through this flexible permit program because it 

incentivized developing new technology to overcontrol new facilities. That incentivized those companies and I understand that 

some of those areas are in the cat cracker unit. To reduce emissions, I suspect, if not, that those have then led to nominal reductions in those flexible permits holders but also led to reducing the 

control standard or the threshold for other permit areas in Texas 

and across the U.S. So, it incentivized development of greater technology for pollution reduction. 

Mr. GREEN. You may know this because I know we’ll hear it later 

from the EPA. The number of flex permits that have been issued 

in Texas compared to our neighboring States, that I understood in 

discussions with the EPA, part of the problem is that other States 

are saying why can’t we do this when Texas is doing hundreds, and 

I don’t have any problem with that; but obviously some of the 48 

States or 49 States may. 

Mr. SHAW. I haven’t heard that complaint from other States. I 

know that there are a handful of other States that do have somewhat similar programs, and some—including, I believe Virginia 

and Florida have had EPA approve those fairly recently. They do 

have a similar flexible permit type. They call it something different, obviously. But it’s similar to the Project XL that I mentioned in my opening remarks. So, there are other States that do 

have similar programs that EPA apparently hasn’t taken issue 

with yet. 

Mr. GREEN. But Texas took advantage of it, and I don’t fault 

that, in the ’90s. You gave us some rules that we abided by to the 

best we could. But it seems like you give the numbers from other 

States that are very small compared to ours, but we’ll get to that 

testimony later. 

Attorney General, again welcome. Welcome home. 

Mr. ABBOTT. Great to be back. 

Mr. GREEN. You appeared before our committee in Washington 

a few weeks ago, and your testimony states that Congress in effect 

they should decide on regulating carbon dioxide emissions; and, believe me, I agree with that. It should be a congressional responsibility. 

And I strongly agree with you. That’s why I supported delaying 

regulations. Given Texas’ opposition and EPA’s approach to this 

issue, I’m curious, what type of Federal carbon-controlling program 

could Texas support? 

Mr. ABBOTT. Well, you know, my perspective comes from the 

legal perspective. And that’s really a policy-laden question that I 

would have to defer to the policymakers. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Mr. Barton, you are recognized for 5 minutes. 

Mr. BARTON. Thank you. Thank you, Mr. Chairman. 

64 

Each of you gentlemen is an official of the State of Texas and as 

such have been elected by the people with the exception of Mr. 

Shaw, who is appointed by the Governor and I think confirmed by 

the Senate. But each of you do take an oath to defend and uphold 

the laws of the State of Texas but you also take an oath to defend 

and uphold the laws of the United States; is that not correct? 

Mr. SHAW. Yes, sir. 

Mr. ABBOTT. Yes, sir. 

Mr. BARTON. So, there’s not any of you that’s here to say ‘‘Let’s 

just do what’s good for Texas and don’t worry about the laws of the 

United States?’’ I mean, we’re all—we want to defend the laws at 

both the State level and the Federal level; is that not correct? 

Mr. ABBOTT. That’s correct, sir. 

Mr. SHAW. Correct. 

Mr. BARTON. Now, Mr. Shaw, I’m going to ask you, as the chief 

regulator for environmental protection, the chairman of the Texas 

Commission on Environmental Quality, is it your understanding 

that the reason the Flexible Air Quality permitting program was 

disavowed by the Federal government—was it disavowed on its 

own merits, that it wasn’t effective, or was it disavowed because 

the State refused to submit a State Implementation Plan incorporating the greenhouse gases into its existing air programs? 

Mr. SHAW. The flexible permit program was disapproved theoretically because of concerns of it having deficiencies to meet Federal programs. Although, interestingly, what the EPA went forward 

with in the Federal Register was addressed both verbally with officials in the EPA and especially with the regional administrator. 

And when we addressed that those were incorrect, the discussion 

moved from it fails to meet those requirements to we don’t want 

to have Federal flexible permit programs. That’s separate from the 

greenhouse gases—— 

Mr. BARTON. Well, it’s an important distinction. My understanding at the time was that the Federal—the EPA was disavowing our flexible air permits because of—of defects in that as 

a stand-alone program. Not because the State was refusing to submit greenhouse gas regulations to comply with the endangerment 

findings. So, that you’ve got two separate issues. You’re looking at 

air quality and flexible permitting of existing permits in one box 

and then the whole debate that the Attorney General has educated 

us on is whether the Federal Government has the right to basically 

make law on its own by proposing these Tailoring Rules and all of 

that. So, it’s two issues. 

Mr. SHAW. Correct. 

Mr. BARTON. It’s not one that’s linked. They didn’t—they didn’t 

refuse or reject our air permits under flexible air permitting program because of controversy on greenhouse? 

Mr. SHAW. That’s correct. 

Mr. ABBOTT. I agree. 

Mr. BARTON. And Commissioner Staples, you agree? 

Mr. STAPLES. Yes. 

Mr. BARTON. Now, having said that, did they—did the EPA allege specific permits that were not in compliance? Did they say the 

permit for Dow Chemical was not in compliance or did they say 

the—generically the ambient air quality standard for ozone in the 

65 

North Texas region is deteriorating because your flex permitting 

systems are not working? 

Mr. SHAW. Yes. Their objections to these programs were based on 

our not having the same program that they have. The differences 

they perceived in theirs, but not on an individual failure to meet 

the ozone requirements that were individual permits. They did 

later take issues with individual permits. But in the Federal Register announcement, clearly it was based on those perceived initiatives. The program didn’t do—— 

Mr. WHITFIELD. So, the letter that Mr. Green or Mr. Gonzalez 

put in the record where EPA officials have had some problems with 

their flex permitting, those letters don’t allude to a specific substantive difference. They basically refer to how to implement a particular permit or something like that. 

Mr. SHAW. Right. And—and to that end, when they have identified individual permits they thought they had concerns with, when 

we were able to sit down with them, we were able to explain where 

those were misunderstandings were. 

Mr. WHITFIELD. Now, Mr. Attorney General, I’ve got a document—a sworn affidavit that Ms. McCarthy put in the court record 

in one of the lawsuits that you’re defending the State on. It’s dated 

October the 28th, 2010. 

Have you seen that affidavit? 

Mr. ABBOTT. Personally, I have not. I am aware of it because it 

is a part of—frankly it was a part of the testimony that was provided—— 

Mr. BARTON. Is my time expired, Mr. Chairman? 

Mr. WHITFIELD. No. Go ahead. 

Mr. BARTON. In that—that’s a sworn affidavit and in that affidavit, at the end of the affidavit, she says that not only with regard 

to Texas, but I think with regard to any State, the EPA is not 

going to—to use a slang term—FIP a State program. In other 

words, they’re not going to take over for a State if you don’t have 

a State Implementation Plan that the EPA has agreed meets all 

the requirements under the Clean Air Act and their new greenhouse gas regulations. Isn’t that true? 

Mr. ABBOTT. That’s true, and it is part of our lawsuit—part of 

our FIP lawsuit in explaining to the Court why we think that the 

EPA has acted illegally and improperly. And—— 

Mr. BARTON. And her sworn statement was that they weren’t 

going to do anything for at least a year. 

Mr. ABBOTT. Her sworn statement was they were not going to do 

anything. They could not take over Texas’ Air Permitting program, 

quote, until December 2nd, 2011, at the earliest. That, of course, 

is about eight months. 

Mr. BARTON. And how many days later did they do just that? 

Mr. ABBOTT. It was—that was in October and it was about two 

months later where they issued an emergency FIP rule on December 23rd. The reason why I point that out is because it was done 

right before the Christmas/New Year’s holiday. And—— 

Mr. BARTON. So, in October she says you’ve got at least a year 

and then two months later they do exactly opposite what she said 

they would do? 

Mr. ABBOTT. Under the cover of darkness. I don’t—— 

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Mr. BARTON. My time has expired, but we’ll come back to it. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. Mr. Gonzalez, you’re recognized for 5 minutes. 

Mr. GONZALEZ. Thank you, Mr. Chairman. 

Mr. Shaw, first of all, thank you for service and thank you for 

coming to Washington and meeting with us. You’ve always been incredibly informed and it’s helped us, again, come to where we are 

today, trying to understand who [inaudible]. 

Who is Dan Eder? 

Mr. SHAW. Dan Eder is a former employee of the agency TCEQ. 

Mr. GONZALEZ. And the reason is we’re going over the history 

and correspondence between your agency and the EPA—and there’s 

numerous letters that have been introduced today—but there is a 

letter back in March 12th, 2008, and that’s the date that I have 

here that’s on it. And in it Congress meets Carl Edlund, director 

of Multi-Media Planning and Permitting Division of the EPA, does 

write a letter to Mr. Eaton and the reason that I want to read this 

to you is that you referred to the fact that other States have some 

sort of flex permitting protocols and you didn’t indicate whether 

they’re substantially different than the State of Texas. There may 

be a reason why EPA may be looking at Texas differently than 

other States. I think that may be the composition. 

Let me ask you if this still holds true, because in Mr. Edlund’s 

letter, there’s an enclosure. And it says unlike flexible permit programs in other States, the Texas Flexible Permit program is not 

limited to minor sources. 

Can you clarify? Is that a distinction? Are those others—those 

other flex permit programs in other States different in that respect? 

Mr. SHAW. That is one of those—the reason—there was probably 

a lot of frustration because it was only in the last year and a half 

that EPA was made to realize that their perception that our program applied to major NSR was incorrect. In other words, our flexible permitting does not apply to major sources of NSR—— 

Mr. WHITFIELD. So, that would be incorrect; and, in fact, in 

March 2008—— 

Mr. SHAW. EPA was—was confused about our program. And it 

applied to major NSR [inaudible] where people specifically prohibit 

companies from circumventing major New Source Review. And 

that’s one of the things that we were able to clarify then whenever 

EPA clearly explained—— 

Mr. GONZALEZ. To their satisfaction? Let me ask you that because I’m not in your position. I—you say you’ve explained it. I’m 

just wondering did they communicate that is a fair, complete, and 

acceptable explanation? 

Mr. SHAW. Not in writing, but we had several meetings. And this 

is important because we had a meeting where we talked about each 

of those individual items and it seemed that the consensus within 

the room was ‘‘we now understand this.’’ And I made the comment, 

to paraphrase, was not that we’ve addressed that these perceptions 

or the perceived failures of our program have been addressed, can 

we now move with how we can move forth to get this permit program approved. And the discussion moved to we are not interested 

67 

in having the flex permit program fixed. So, that was our concerns. 

We had those issues that were legitimate—— 

Mr. GONZALEZ. Well, I mean—— 

Mr. SHAW. And I think—— 

Mr. GONZALEZ. And that when you get that kind of an admission 

on a major issue, that it simplify would inquire and request something in writing from them. OK. And simply to recite it in letter 

and transpire it our discussion, that is our understanding, if we 

don’t hear from you, we will assume that we are correct in our interpretation. 

But my question is, I think we’re going to go round and round 

on these issues because your perception of things and their perception of things are different. And that’s something that we just—I 

only have 5 minutes here. 

I’m going to go to General Abbott. It’s good seeing you again. I 

must say it’s been a lot more fun than our previous encounters, but 

it is good to see you, sir. 

Let me ask you a couple of questions about the lawsuit—or lawsuits. And this is from a memorandum that was prepared by the 

staff. In the 2007 decision, Massachusetts v. EPA, the Supreme 

Court held that greenhouse gases, including carbon dioxide are air 

pollutants under the Clean Air Act. Is that accurate? 

Mr. ABBOTT. Yes, sir. 

Mr. GONZALEZ. And, so, that means that EPA would be the regulatory agency that would have jurisdiction regarding certain policies enforcing, regulating and such pollutants including greenhouse 

gases. Is that fair? 

Mr. ABBOTT. The jurisdictional component of your questions 

would be correct, that the issue does require a tiny bit of lead 

which it sounds like you may be getting to, before they can go 

ahead and begin that process of the regulation, they must have arrived at the endangerment finding. So, there’s a predicate or a 

threshold that must be satisfied. And that’s exactly what the Supreme Court said, that their decision was. Now, EPA, you can no 

longer avoid making the decision about whether or not there is an 

endangerment posed by greenhouse gases. You have to go ahead 

and make that decision and then if you make that decision, there’s 

several other predicates that must be satisfied before they can 

begin the process of doing the regulation. 

Mr. GONZALEZ. Fundamentally, then, I think you have an argument that they have not met certain preconditions and such requirements. 

Mr. ABBOTT. That would be one umbrella, if you would. There 

are several key points under that one umbrella or silo, but, yes, 

that would be one. 

Mr. GONZALEZ. Mr. Chairman, if you’ll allow me one last question because it is the Attorney General, and I’m going to read one 

paragraph from the memorandum. 

Once greenhouse gas became subject to regulation and the EPA 

issued the Tailoring Rule, State PESE permitting authorities needed to ensure that they had adequate authority to issue key PESE 

permits for greenhouse gases and that State permitting requirements would not be triggered and so on. 

68 

Only Texas failed to take the necessary action. The chairman on 

the Texas Commission on Environmental Quality and the Texas 

Attorney General wrote to the EPA on August 2nd, 2010, saying, 

quote, on behalf of the State of Texas we write to inform you that 

Texas has neither the authority nor the intention of usurping, ignoring, or amending each clause in order to compel the permitting 

of greenhouse gas emissions. 

Is it an issue of greenhouse gas emissions more than anything 

else, as Mr. Barton has already pointed out that may be a twoprong issue going on here. 

Is that statement that I just read to you about the intentions or 

the authority of Texas to do anything regarding permitting of 

greenhouse gas emissions something that is going to remain in 

place even if the EPA went through the three conditions that you 

have already outlined? 

Mr. ABBOTT. Well, a couple of things. The point of your question 

seems like it asks about the permitting process, and I’m not in 

charge of that. I would have to defer to Chairman Shaw about that. 

On the legal side, it is our contention and my—my position, unless 

I’m instructed otherwise by my client or other clients in the State 

of Texas, to press on with our lawsuit about greenhouse gases because of multiple reasons. 

The—we—we live under the rule of law. And the EPA has clearly 

violated the rule of law by failing and refusing to follow the Clean 

Air Act, by failing and refusing to follow the APA as well as other 

laws. And we—we believe that the regulations that they have come 

up with for greenhouse gases are completely noncompliant with the 

laws passed by the United States Congress. And, also, I will submit 

that—I’m sorry. 

Mr. WHITFIELD. No. Go ahead. 

Mr. ABBOTT. I submit, also, that what the EPA is doing is inconsistent with the Massachusetts v. the EPA decision upon which 

they claim provides them the authority to do this. 

Mr. GONZALEZ. Thank you very much. 

Mr. BARTON. Mr. Chairman, could I ask a follow-up question—— 

Mr. WHITFIELD. Sure. 

Mr. BARTON [continuing]. Since we were—yes. You’re being very 

generous in allowing both sides more than 5 minutes. 

Your contention as the official legal representative of the State 

of Texas representing the Texas Council on Environmental Quality 

is that the EPA is violating the law because they’re clearly ignoring 

the plain statutory language of the Clean Air Act and that any 

source that emits at least 100 tons per year is subject to the Act. 

Mr. ABBOTT. That’s one of the things. That’s—that’s the Tailoring 

Rule. 

Mr. BARTON. And my understanding is that the Tailoring Rule 

is exempting massive facilities from that requirement and I could 

speculate, but I don’t won’t do it, but—but that’s one of the contentions of the lawsuit is that the EPA is not a legislative body and 

they’re clearly legislating by exempting under the Clean Air Act 

large numbers of facilities, that according to the clear language, 

should be subject to the law. 

Mr. ABBOTT. Well, it—it creates that level of uncertainty because 

what they—the impression that we have is they have created this 

69 

one level for now and they are going to be lowering that threshold 

later and when they lower that threshold later, it will begin to get 

into farms, ranches, hospitals, schools. 

But here’s the key point, if I could bring this back to the one case 

that authorized and categorized the EPA to begin this in the first 

place, and that is the Massachusetts v. the EPA. And here’s the 

key deal: What they said is if—if I could read one sentence to you 

from this opinion. 

If EPA makes a finding of endangerment, the Clean Air Act requires the agency to regulate emissions of the deleterious pollutants from new motor vehicles. I could repeat sentences like that in 

here. I don’t have time; but the bottom line, this applies to new 

motor vehicles. It doesn’t apply to stationary sources like what 

they’re using the Tailoring Rule to try to apply to. 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Mr. Staples, I’ve been told that you have a previous appointment. Do you need to leave now or—— 

Mr. STAPLES. [Inaudible.] A few more minutes—— 

[Simultaneously speaking.] 

Mr. WHITFIELD. OK. All right. Mr. Brady is recognized for 5 minutes. 

Mr. BRADY. Thank you. I’ll be [inaudible]. 

Mr. Whitfield, Chairman, thank you for hosting this and coming 

to Houston. 

Mr. WHITFIELD. Very much appreciated. 

Mr. BRADY. Ranking Member, to you, as well. 

A quick question to [inaudible] Commissioner Staples and the Attorney General. You testified that the Federal Government violated 

regulations and timetables regarding our State Implementation 

Plan. Are States allowed to ignore and violate Federal regulations 

and timetables in this regard? 

Mr. ABBOTT. Not that I’m aware of. 

Mr. BRADY. What happens when we do? 

Mr. ABBOTT. We get sued. 

Mr. BRADY. I thought it might be appropriate for you to respond 

to, as well [inaudible]. 

Commissioner Staples, thank you for your leadership, too. You, 

as well, Commissioner. 

Energy is a big part of the Texas economy, but agriculture. As 

you [inaudible] before—we are very good at selling our ag products 

around the world and reaping the benefits with jobs as a result of 

that. If these greenhouse mandates piled a half a billion dollars or 

more on our Texas ag producers, does that make us less competitive? And what’s the impact if they drive the prices up when we’re 

competing around the world? 

Mr. STAPLES. Agriculture becomes extremely dependent on energy for its production. In fact, it’s about 15 percent of the production costs, alone, for fuel and fertilizer and chemicals and utilities. 

And each and every day we compete with Countries that have 

lower labor standards than we do, lower environmental standards 

than we do. And we’re having and seeing and dealing with this Environmental Protection Agency regulating us away from marketbased solutions. And that’s a concern and impact on jobs and food 

security. 

70 

Mr. BRADY. So, we lose sales and it drives up the prices at the 

dinner table because we lose sales, as well, for our local—— 

Mr. STAPLES. Lose sales and lose the associated jobs with that 

and the domestically-based food sources that Americans have come 

to rely upon. 

Mr. BRADY. Thank you for testifying on this issue. I appreciate 

it. 

Chairman Shaw, Texas has outperformed the rest of the country 

in reducing ozone and NOx emissions. That’s correct? 

Mr. SHAW. That’s correct. 

Mr. BRADY. I get the impression from the EPA that we’ve literally done nothing to really make that happen. And one question 

is how much has Texas spent over the years to make our air cleaner? Is it a couple thousand dollars or—— 

Mr. SHAW. No, Congressman. It’s a fairly large expenditure. The 

agency that I chair typically has about a billion-dollar biannual 

budget. So, about $500 billion per year is spent in the various aspects of what we do. Perhaps, more importantly, if you look at 

these challenges that dictate fate meeting the ozone in our metropolitan areas, one of the big concerns and challenges have been 

that largely local sources are responsible to the tune of about 60 

percent of ozone count being Dallas-Fort Worth and Houston are 

mobile sources which we are pre-empted from regulating because 

they are Federally regulated sources. That indicates legislature has 

appropriated and we’ve spent almost a billion dollars over the last 

5 to 10 years in enhancing and speeding up [inaudible] over a 

motor vehicle to get those reductions. And that’s just one of the 

many areas of expenditures. So, it has been a great investment 

that’s taken seriously. And we’re seeing the fruits of that investment. 

Mr. BRADY. So, Texans have spent billions of dollars—— 

Mr. SHAW. Yes. 

Mr. BRADY [continuing]. To make our air cleaner and businesses 

have invested, as well, over the last decade; and yet the EPA is imposing and seizing our permits. Is that right? 

Mr. SHAW. That’s correct. 

Mr. BRADY. Thank you, Mr. Chairman. 

Mr. GREEN. Mr. Chairman, could I just—Attorney General, far be 

it from us to say you can’t go to the courthouse since we’re sitting 

at the South Texas College of Law. All right. 

Mr. WHITFIELD. Thank you, Mr. Brady. And I want to thank the 

first panel. We appreciate your being with us and answering our 

questions. 

Mr. BARTON. Could I ask one question to the Ag Commissioner? 

Mr. WHITFIELD. Yes, sir. 

Mr. BARTON. Mr. Commissioner, under the—under the—if greenhouse gas regulations were to be implemented and you did not 

have a Tailoring Rule, how much of Texas agriculture would be 

subject to the Clean Air Act? 

Mr. STAPLES. Let us thank you, the Congress, for exempting us. 

Even though the rules say that we would be and you have made 

certain that the appropriations process does not impact that directly; but if we were, just—we’d have 575 dairy facilities, 58 swine 

operations, 1300 corn farmers, and 28,000 cattle ranchers would 

71 

fall under this permitting and reporting process. And we’re very 

concerned about that as it moves forward. We’re particularly concerned about the impact on our energy costs today that we’re so 

heavily intensive users of. 

Mr. BARTON. And is there any truth to the rumor that, again, if 

greenhouse gas regulations were imposed on Texas agriculture, 

that animal emissions would be mobile source emissions under the 

Act? 

Mr. STAPLES. We have seen many different scenarios that are extremely troubling and we do support policies such as cat 3 methane 

from our animal facilities, carbon sequestration. There are many 

things that we can do and want to do and are doing to help address 

this in a market-based program. 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Well, if this Tailoring act is ruled invalid, you 

will come under it and the only way that would be able to be 

stopped would be to change the law or stop appropriations in some 

way. 

Mr. STAPLES. That’s absolutely right, Mr. Chairman. 

Mr. WHITFIELD. Well, thank you all very much. And we look forward to continuing to work with you. 

Mr. WHITFIELD. At this time I’d like to call up the second panel. 

And on the second panel, we have Mr. James Griffin, who is plant 

manager of Dianal America and he’s also chairman of the board of 

the East Harris County Manufacturers Association. We also have 

Mr. James Marston, who is of the Environmental Defense Fund, 

from Austin, Texas. And we have Ms. Kathleen Hartnett White, Director of the Armstrong Center, Texas Public Policy Foundation. 

So, I want to welcome all of you. We appreciate you being with us 

this morning very much. 

Well, once again, thank you all for joining us this morning and 

we do look forward to your testimony. And at this time, Mr. Griffin, 

we’ll recognize you for your opening statements; and you’ll be recognized for 5 minutes and the light there will denote where we are 

in the process. Thank you. 

So, if you would like to proceed. 

STATEMENTS OF JAMES GRIFFIN, PLANT MANAGER, DIANAL 

AMERICA; JAMES MARSTON, ENVIRONMENTAL DEFENSE 

FUND; AND KATHLEEN HARTNETT WHITE, DIRECTOR, ARMSTRONG CENTER, TEXAS PUBLIC POLICY FOUNDATION 

STATEMENT OF JAMES GRIFFIN 

Mr. GRIFFIN. Well, Mr. Chairman, and local Congressman Gene 

Green and all the Representatives from Congress, welcome to 

Houston, Texas, on this beautiful day in spring; and we just appreciate you hearing from the constituents regarding the important 

issues on greenhouse gas. 

As you know, Houston is a global leader in energy and almost 

50 percent of all the petrochemicals in the United States are right 

here in Houston. As we sit here in the shadows of these refineries 

and petrochemical plants, I want you to rest assured that we’re in 

full compliance with the Clean Air Act and our skies are bluer and 

we continue to improve in emissions. 

72 

The industry has worked very hard on this and over the years, 

working with the Texas Commission of Environmental Quality, 

we’ve continued to reduce these emissions and achieve compliance 

of with the Clean Air Act. And, of course, that’s delegated with the 

authorities of the EPA. 

Again, my name is Jim Griffin, and I’m the chairman of the East 

Harris County Manufacturers, called ‘‘EHCMA.’’ And I’m one of 

your local plant managers. I’ve been in the industry for 30 years. 

The East Harris County Manufacturers, EHCMA, is an organization of 120 manufacturing facilities, made up of refineries and petrochemical plants. We have 300,000 jobs here in East Harris 

County. 300,000 good jobs, scientists, engineers, skilled labor. The 

products that we make range from products that go into 

healthcare. Of course, chemicals for pharmaceuticals; ag chemicals, 

which we talked about earlier; and, of course, the fuel that brought 

you in on your plane today and fueled your car; also the plastics 

that make car more energy-efficient and that plane more environmentally-friendly. 

We do support regulations that are based on sound science and 

result in healthful air quality for our region. We’ve invested billion 

of dollars towards meeting regulations that reduce the ozone in the 

Houston area, leading to the unprecedented 2 years running of 

measured attainment with the EPA’s air quality standard in ozone. 

And we’re very proud of this accomplishment. Yet when it comes 

to greenhouse gas, we believe that the EPA is heading completely 

in the wrong direction. 

EHCMA members fully expect that implementing greenhouse gas 

regulations as planned and designed by the U.S. EPA will result 

in closures of manufacturing facilities here in Texas and across the 

United States. We already have a struggling economy and this will 

do us further harm. 

EHCMA fully supports action by Congress to strip EPA of any 

authority to regulate greenhouse gases. Overly burdensome and 

uncertain U.S. regulations which drive U.S. industry to developing 

countries with less or no regulations will likely increase greenhouse 

gas emissions. 

Last night I was at a community advisory panel. Once a month 

all the plant managers meet with the community and the community sets the agenda. Last month we covered air emissions. We do 

that every year. The trend is continue to improve. Last night’s 

agenda was all about the economy and jobs and the importance of 

the industry to this community. 

EPA’s greenhouse gas regulations require a convoluted regulatory path that is neither appropriate nor supported by EPA’s authority. In order to move the program into play so quickly, EPA required individual States to develop State Implementation Plans in 

a fraction of the time required to develop these plans. The net result is 12 to 18 months for permits and high costs for permits, and 

it’s unfortunate that Region VI is not represented here today because we met with senior officials, our committee, our environmental committee, our experts. And Region VI officials were unable 

to answer many questions that must be resolved in order to issue 

the very first Texas greenhouse gas permit. 

73 

EHCMA urges members of Congress to work towards congressional legislation that fully strips EPA of any authority to regulate 

greenhouse gases unless and until Congress adopts new legislation 

structuring the policies and granting the authority to EPA. 

Prudent regulations must not only be based on sound science but 

also recognize the balance between clean air and a strong economy. 

Texas has proven we can do both. In my job as a plant manager, 

my boss is in Tokyo. I work for a global company. It’s a very capital-intense business. When we make decisions on where to spend 

capital, we base that in big part due to regulations; and when regulations are burdensome and uncertain, we spend that capital in 

other geographic locations around world. 

So, again, thank you for allowing East Harris County Manufacturing to address the esteemed House and Energy Committee and 

we sure do appreciate you being in Houston. 

[The prepared statement of Mr. Griffin follows:] 

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Mr. WHITFIELD. Thank you, Mr. Griffin. 

Mr. Marston, you’re recognized for 5 minutes. 

STATEMENT OF JAMES MARSTON 

Mr. MARSTON. Thank you. I’m Jim Marston. I’m the Regional Director of the Environmental Defense Fund and have been for 22 

years. 

In 1867 Mark Twain wrote, ‘‘The most outrageous lies that can 

be invented will find believers, if a man only tells them with all 

his might.’’ Sadly, I think this committee and many members of 

Congress have been told a bunch of Texas-sized whoppers by Texas 

officials. And my testimony is really to talk about the myths and 

the lies that have been permeating this debate. I’ll talk about a 

couple of them in my oral testimony; and, certainly, will welcome 

questions on the rest. 

Let’s start with the idea that this is somehow an Obama Administration vendetta against Texas. Since 1994 EPA has been saying 

the Texas flex program is illegal. It is a unique program. It’s illegal, not like anything else in the country. And the Bush Administration in 2006 and 2008 wrote to TCEQ and said the program is 

illegal. And in 2007 said every one of the permit holders under the 

flex permits to tell them their permit was not legal. This is not 

new. There also is—and I will agree, the air quality has improved 

in Texas; and we’re happy about that. But it did not improve because of the flex permits. 

In my testimony, I have six programs that are documented to improve the air quality in Texas. I’ll be happy to talk about those in 

detail. But they’re not the flex program. 

As proclaimed by Professor Shaw that the—the flex permit program improved our air quality reminds me of the rooster who believes that his crowing caused the sun to come up. The truth is 

that where we are on the flexible permit issue is really a much ado 

about nothing. Seventy-four companies had flex permits. Seventyone of them have already come into EPA and said, ‘‘We get it. 

We’re fixing it. And we’ll have a legal permit within a year.’’ This 

is an issue that’s now already passed. It’s not an ongoing issue. 

And EPA is not also picking on Texas in regard to its greenhouse 

gas permits. The reason why we got sued, we were the only state 

that did not actually ask to get its permitting program in line. 

What we should have done is what Wyoming did. Start moving toward fixing our permit. If we didn’t like it, sue like Wyoming. We 

got our permit program taken over because we did not file what 

other States did. 

Finally, let me talk just a bit about the science. Congressman 

Barton, you and I agree on a couple of things. 

Mr. BARTON. Well, miracles do occur. 

Mr. MARSTON. You and I agree we need a college playoff system. 

Mr. BARTON. Good. 

Mr. MARSTON. And we also agree that Texas A&M is a fine university. I’m a little confused—— 

Mr. BARTON. That’s not debatable. 

Mr. MARSTON. I’m a little confused why we’re here today and 

why you didn’t take this committee and, frankly, Professor Shaw 

and the Attorney General down to A&M to the preeminent climate 

79 

scientists there. And I wish you would ask them what their opinion 

is on the climate science. If you had—and they’ve just published 

this—they say we are all, the tenured and tenure tract faculty 

members of the atmospheric science program at Texas A&M University. We believe science is clear. Climate change is happening. 

It’s caused mainly by humans. And if we don’t act soon, we could 

have serious adverse impacts. 

I know the committee has already voted out this bill to strip EPA 

of the greenhouse gas authority. Before you actually go to the floor, 

I ask that—with that bill, I ask you all to go talk to the Aggie scientists. Please ask the Aggies about what role science plays. It’s 

clear. And I know we think that this is the going to harm the 

Texas economy for claiming this. But there will be winners and losers in the greenhouse gas regulations. The States that are going to 

win are those who have large amounts of natural gas, a lot of wind 

and solar, have geologic formations that can handle carbon dioxide 

storage, where we use enhanced oil recovery, we have a good clean 

community, and where we have little energy deficiency investments. 

By the way, welcome to Texas. If we do it right, God has placed 

Texas in a perfect position to win under a low carbon economy. 

[The prepared statement of Mr. Marston follows:] 

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Mr. WHITFIELD. Thank you, Mr. Marston. 

Ms. White, you’re recognized for 5 minutes. 

STATEMENT OF KATHLEEN HARTNETT WHITE 

Ms. WHITE. Thank you. I, also, would like to add I was chairman 

and commissioner of the Texas Commission on Environmental 

Quality for 6 years previously, and I’ve observed comments—my 

comments, in part, come from observing EPA actions over 25 years. 

And this is not business as usual. 

On March 4th an editorial in the Wall Street Journal referred to 

an—EPA’s unprecedented regulatory spree. And I—I very much 

agree that I have never observed in the 40-year history of EPA 

what is going on now. Not merely issues like greenhouse gas regulations which get, appropriately, most of the headlines but the 

number of major rules now with billion-dollar impacts at EPA’s 

own estimate and not merely million-dollar impacts, all of which 

have an effective date which may converge in the very near future, 

like 2012 to 2015. And part of the written testimony that I submitted has a time line, which shows the magnitude of these rules. 

So, I want to offer to this hearing something a little different, 

which, because of confines of time, will be very brief. It’s highlights 

of 10 of these I call ‘‘mega-major rules.’’ And as an alarm bell that 

most people would view from a source which has no vested interest 

in the issue, the National Electric Reliability Council, NERC, on 

the basis of an analysis of only four of these rules, NERC concluded 

there’s a risk of loss of up to 77 gigawatts of electricity in this 

country by 2015. Other studies, one done by Credit Suisse and others have found that those are actually conservative numbers and 

that perhaps 100 gigawatts of U.S. electricity could be lost. 

On the State level, for those NERC numbers means a risk of a 

loss of about 5700 megawatts of Texas electricity. This is a growing, growing State, our population and economically. ERCOT, Electric Reliability Outfit in Texas, projected this State needs up to 

183,000 megawatts of electricity by 2020 to meet demand at that 

time. So, if—I think that it is fair to say from what most of you, 

as disinterested sources, the magnitude of impact of the EPA rules 

that are coming down the pike now is something we have never experienced. 

As many have said here before, I would also like to draw attention to the extraordinary record of economic improvement in Texas. 

This city, Houston, Texas, home of the Nation’s petrochemical complex, with a Gulf climate that is—uniquely enhances ozone formation, did what almost no one would predict on the basis of what 

was really a statewide effort. Everybody worked, in my opinion. 

The State legislature, the Texas Commission on Environmental 

Quality, industry invested billions, State and local government, voluntary groups. It’s really an extraordinary. The day when I was 

chairman that we finalized the plans for Dallas—in 2007 for Dallas 

and Houston, I believe it was no more than two weeks later EPA 

proposed a significant change in that standard. So, the goal post 

continually goes over. 

But for reasons of very little time, just let me go very quickly 

through the ten rules coming down the pike, either adopted, proposed, or amended. Of course, EPS’s greenhouse gas regulation. 

210 

The Clean Air Transport Rule, which in EPA’s own estimate 

would cost about—the private sector about 7 billion. 

The Cooling Water Intake Structure Rule would impact about 

444 electric-generating plants. That’s 30 percent of the national capacity, with potential costs of 64 billion. That rule would be to prevent fish ‘‘impingement’’ and has no real human health impact. 

The Coal Combustion and Residual Rule, affecting the units of 

disposal of fly ash, bottom ash, and residuals after coal combustion. 

The EPA has not decided whether they may classify those materials now used as valuable materials in road materials, in drywall, 

and other things. EPA may classify them as solid waste or either 

hazardous waste. The estimate on the cost of compliance if solid 

waste is 43 billion and if it’s hazardous waste, perhaps 80 million. 

We proposed just last week what is called the ‘‘Utility Maximum 

Achievable Control Technology Rule.’’ It’s probably the whopper of 

them all. A 900-page rule to control emissions of mercury and hazardous air pollutants have cost estimates of over 100 billion. 

The NERC report, that this risks perhaps 15 gigawatts of electric 

utilities. 

And then all the new ambient air quality standards. Never has 

EPA taken on changes in four of the national standards for four 

criteria pollutants: Ozone, PM, sulfur oxides, and nitrogen oxides. 

The ozone proposal would, pending and could be finalized at any 

time, according to congressional research service, would increase 

the number of non-attainment counties in the Nation from about— 

from currently about 85 to 650 of the approximately 3,000 counties 

in the country. For Texas that might mean going to eight or twelve 

non-attainment counties, including Brewster County, Texas, which 

is about the most sparsely populated part of the country. 

I won’t go into particulate matter but now, because of rule 

changes several years ago, actually country dust is not immune to 

control measures under a particulate standard. And the EPA has 

even mentioned that no-till days may be something that Texas 

farmers face in the future. 

Utility Boiler Rule, one of many of these rules that have the intense opposition from organized labor, the United Steel Workers, 

their numbers claim that rule risks 700,000 U.S. jobs. 

And then the Portland Cement Rule could have a remarkably 

broad impact. It impacted 165 of the 181 Portland Cement kilns. 

It was interesting to learn that we import now about 20 million 

tons of cement from—importing cement seems to be quite a challenge—but from China. And this rule has estimates of increasing 

that—that number to 50 million tons of imported cement. 

At this time of our struggling economy and high unemployment, 

I think it’s really important that U.S. Congress really looks at the 

magnitude of all these rules, and what they mean. A kind of potential impact which has at EPA, I don’t think has ever—could ever 

have had in the past. 

I think—and one quickly. Science is at the root of all this. And 

I think maybe everyone here that testifies wants good, rigorous 

sound science to ground our standards for environmental protection. I believe we need actually legislative reform to set really clear 

criteria to the science that EPA legally uses to base its standards. 

Thank you, sirs. 

211 

[The prepared statement of Ms. White follows:] 

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Mr. WHITFIELD. Thank you, Ms. White. 

And how long were you the chairman of Texas Commission on 

Environmental Quality? 

Ms. WHITE. Yes. I was chairman for 4 years and the commissioner for 2 years. 

Mr. WHITFIELD. And did you deal with this issue on the flexible 

permits during your tenure? 

Ms. WHITE. It never really came up in a sharp way. No. I remember—I remember the good news about it in the time—an era where 

there was far more easy cooperation with EPA. So, we—— 

Mr. WHITFIELD. What were the years that you were the chairman? 

Ms. WHITE. I was—2001 to 2007. 

Mr. WHITFIELD. And during that time, there was never a significant issue over this? 

Ms. WHITE. I dealt with the regional administrator on a regular 

basis and there was never a time when this issue was ever 

raised—— 

Mr. WHITFIELD. And did you feel that Texas’ flexible permit program worked and accomplished—— 

Ms. WHITE. I did very much and I thought it was a way of actually getting more emission reductions from many of the facilities by 

using a very creative and targeted method that still allows them 

to vary it—vary production in parts of their unit, but ultimately to 

get more emission reductions. 

Mr. WHITFIELD. Now, Mr. Griffin, does your company have a 

flexible permit or—— 

Mr. GRIFFIN. No. We have an NSR, New Source Rule. 

Mr. WHITFIELD. OK. And you’re in compliance, as far as you 

know? 

Mr. GRIFFIN. Yes, we are. And I would comment on that and you 

heard Dr. Shaw talk about flexible permit as a tool. And I have operated at plants that had a flexible permit. We don’t have it at the 

current plant that I have. It’s single source; but, you know, the way 

I would look at it is if you had two stacks like this and they could 

total 20, it really doesn’t matter if 18 is coming out of here and 2 

out of here or 10 and 10. It’s a bubble over the plant and it gives 

that plant manager absolutely the skill to work with his engineering team and reduce the overall emissions. 

My particular plant, it isn’t the tool for my plant. But, again, we 

have 130 petrochemical plants that are all a little bit different. 

Mr. WHITFIELD. Well, in preparation greenhouse gas emission 

regulations, does your company emit enough greenhouse gases that 

you would be over 100,000—— 

Mr. GRIFFIN. We would be below that level, sir. 

Mr. WHITFIELD. You—— 

Mr. GRIFFIN. My particular plant. 

Mr. WHITFIELD. OK. So, if the Tailoring Rule determined to be 

invalid, then you would be included at that point. And are you taking the steps now to address that issue? 

Mr. GRIFFIN. No, I’m not. 

Mr. WHITFIELD. OK. Now, Mr. Marston, let me ask you a question. Did you support the EPA’s Tailoring Rule? 

Mr. MARSTON. Yes. 

227 

Mr. WHITFIELD. And do you think that it’s a—that it will withstand court challenge? 

Mr. MARSTON. Yes. 

Mr. WHITFIELD. And you say that because why? 

Mr. MARSTON. Because the EPA has a lot of authority to interpret its own statute and the lawyer—the APA—or, first off, let’s go 

to Massachusetts versus EPA. 

Mr. WHITFIELD. Well, no. I don’t want to get into that. I just 

want to know about the Tailoring Rule. 

Mr. MARSTON. OK. 

Mr. WHITFIELD. And you think it’s valid, though? In other words, 

you are willing stand—— 

Mr. MARSTON. Yes. 

Mr. WHITFIELD. OK. OK. Ms. White, I had noticed that EPA proposed in the Federal Register an audit program for Texas’ flexible 

permit holders accompanied by consent agreement and final order. 

That was basically an enforcement decree. And, although, it was 

labelled as voluntary, the audit agreement to allow continued operation, it’s my understanding is not subject to negotiation. It requires, number one, an admission of violating Federal law. 

Are you familiar with that? 

Ms. WHITE. Yes, I am. 

Mr. WHITFIELD. And then, also, it’s my understanding, mandates 

payment by the company to a community project. And I’m not 

aware of anything in the Clean Air Act that gives EPA authority 

to say, ‘‘You’re going to pay a fine and I want you to make it to 

this community project.’’ 

Now, you’ve been involved in these issues much longer than I 

have. Am I correct in my—— 

Ms. WHITE. I think you are correct and I think that is what I 

will call ‘‘rulemaking by enforcement action,’’ which is adding something which is not—which EPA is not authorized as an EPA action 

in formal rule. 

I—I—your comment about the audit, I think, is a very important 

one. As a former regulator, I feel the flexible permit issue is really 

about rule language and terms between TCEQ and EPA, yet EPA 

chose to interpret that to mean all of the facilities who are in legal 

compliance with their State-issued flexible permit are violating 

Federal law and subject to enforcement offers a voluntary audit but 

it is an enforcement consent decree is what it is, requiring acknowledgement of violating Federal law. 

Mr. WHITFIELD. OK. Well, thank you. My time has expired, and 

I recognize the gentleman, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

Let me just ask, that issue of payment to a community project 

in lieu of a fine has been around for, it seems like, decades and you 

weren’t aware of that while chair of TCEQ? Because I know a lot 

of my industries have done that and we’ve had a win-win. One, 

they recognized their wrong but we also had some benefits in our 

community. 

Ms. WHITE. Those are what we call in Texas, ‘‘supplemental environmental project.’’ That’s an option to the enforcers sometimes 

that has various criteria. And on the Federal level there also are 

those. This was—and I won’t remember the exact language in the 

228 

proposed EPA audit, which I have read, but it just—it binds the 

person who signs the audit of a community project, but I believe 

would be determined by members of the community and not by— 

I mean, the supplemental environmental project that the State of 

Texas uses as well as EPA. They’re very orderly and as far as what 

kind of project for this and what open-ended—— 

Mr. GREEN. Oh, I thought that that was a shock to you that that 

program was available because I know a number of companies 

have—some of the companies have benefited from the public relations efforts that we worked on. I submitted some statements and 

some letters into the record. And one was when you were chair of 

TCEQ, to Steve Hagle, who was a special assistant. 

Ms. WHITE. He was in the Air Quality Permitting Control Program. I’m not sure of his exact position at the time. 

Mr. GREEN. And we have a letter dated in April of ’06 to him expressing the concern and follow-up on a meeting in ’05 and it 

seemed like in your testimony that you weren’t aware of the disagreement between the EPA and TCEQ and the State of Texas on 

the flex permits. 

Ms. WHITE. It was—in the 6 years I was in the office, it was 

never brought to my attention, and I recall this specifically because 

right after I left, I remember I heard about EPA had expressed 

concern about the program. 

Mr. GREEN. Well, we have a copy of a letter that was sent, I 

guess, to every flexible permit holder that was dated September of 

’07 and this letter is April 11. And understand, I know TCEQ is 

a big agency, and—but there were correspondence or was correspondence between TCEQ and EPA prior to January of 2009. 

Let me go back. Mr. Griffin, I want to welcome you here. I appreciate it. I’m glad we were able to work it out to get an invitation 

to the East Harris County Manufacturers. I’ve worked with you 

and you’ve worked with our office for years. And it’s great—on Port 

security, on air quality, on quality of life. It’s amazing. And you 

represent a great bunch of companies that not only provide a tax 

base and employees’ jobs but also just a resource in our community 

to work with. 

I’d like to ask you about the deflexing issue and the company’s 

perspective. And I may have talked with you. I’ve talked with a lot 

of companies along this channel about my concern that deflexing 

may slow down some of the things they have to do because any 

given day, at any given minute, whether it’s from Rhodia that’s the 

closest petrochemical plant to downtown all the way out to 

ExxonMobil in our district, there are things going on and they need 

to have the ability to get permits and to expand their business. I 

know right now you go over the Beltway 8 bridge, and there’s a 

Shell plant, a huge expansion there. 

Have you and any of the companies had problems getting permits under the deflexing on any of the plant expansions? 

Mr. GRIFFIN. Yes. You know, certainly—you know, the issue with 

permitting, it’s a very, very arduous process. You know, if you’ve 

looked at air permits, they write volumes and volumes. And I like 

to use the terminology we have so many calories to spend a day 

and we can optimize the process and we can grow our business or 

we can yet take another spin at permits. These permits worked. 

229 

They work, the results are there, and we’re held accountable. You 

know, I often get asked about the TCEQ. You can probably tell by 

my accent, I was not born and raised in Texas. 

Mr. GREEN. Stay around awhile, you’ll get our accent. 

Mr. GRIFFIN. Yes, sir. I’m working on it. But I have operated 

plants in Illinois and Ohio. And what I would tell you about the 

TCEQ is they’re tough but fair and these permits work. 

Mr. GREEN. Yes, but—well, since the battle between TCEQ and 

EPA—and I know plants now are having to get their permits 

through the EPA. Has there been a problem at any of those plants, 

that you know of, because we’ve asked our plant managers and 

anyone else, including our new members, that we want to know if 

there’s a problem because the last thing we want to do is shut 

down the biggest petrochemical complex in the country. 

Has there been any—have you heard of any problems or anything? 

Mr. GRIFFIN. Yes, I don’t have exact examples to share with you 

today, but I’ll go back to our membership and get some more definition on that. 

Mr. GREEN. Great. And you know how to get ahold of me—— 

Mr. GRIFFIN. Yes, sir. You’ve been very accessible. Thank you. 

Mr. GREEN. Ms. White, let me go back to you. In December 2002 

the EPA finalized its reform of New Source Review regulations and 

did not include flexible permit programs but did include plantwide 

applicability limits called ‘‘PALs.’’ They’re provisions that allow 

caps under an actual emission-based concept, not in an allowablebased concept such as Texas’ flex permit. And yet in February 

2006, Texas adopted a separate PAL in its New Source Review regulations and retained its flexible permit regulations. 

Shortly thereafter, the EPA forwarded a letter to TCEQ informing Texas of EPA’s concerns with the flexible permit rule and its 

reasons why it does not consider the current flexible permit rule to 

be approvable as a SIP provision. Then in February of 2007, the 

EPA additionally met with TCEQ where they discussed concerns 

with the flexible rule. 

Did TCEQ respond to this? And, again, this was under your 

watch as chair, I guess. When did you actually leave in 2007, I 

guess? 

Ms. WHITE. August. 

Mr. GREEN. August. OK. So, it was during that time. I have some 

other questions that, Chairman, I would like to submit to you on 

what happened and how far back this disagreement goes with the 

TCEQ. 

Mr. WHITFIELD. Thank you very much. 

Mr. Barton, you’re recognized for 5 minutes. 

Mr. BARTON. Thank you. Mr. Chairman, I just want to read a 

Tweet that came out not 2 minutes ago from Mr. Armendariz. He— 

he didn’t have the time to come to a formal field hearing of your 

subcommittee and Mr. Green’s subcommittee, but he is in Houston. 

This is what he Tweeted out about—oh, about 45 minutes ago. 

‘‘Fantastic morning so far in Houston with Juan Parras’’—and I 

apologize if I don’t get the pronunciations right—‘‘Matthew T., Hilton K. and others at the EJ Encuentro. I am humbled by their 

dedication.’’ 

230 

So, he is here in Houston. 

Mr. WHITFIELD. In Houston? 

Mr. BARTON. He’s in Houston. He’s just not at the formal hearing 

of the Energy and Power Subcommittee. 

Mr. GREEN. Well, Mr. Chairman, I think we’ve got the boss here 

that will testify next. 

Mr. BARTON. Well, that’s good and I’m glad that she’s here. And 

I give her credit for that. 

Mr. Marston, before I ask my formal questions, are you any kin 

to Ed Marston? 

Mr. MARSTON. I’m not. A lot of people ask me that. But my father is Dale Marston, who was in the oil business for 37 years. 

Mr. BARTON. OK. Well, Mr. Ed Marston is a good friend of mine, 

and I thought maybe you were related to him in some way. 

Mr. MARSTON. I’ve heard good things about him. I don’t know 

him. 

Mr. BARTON. OK. You talk about the State officials basically telling lies and doing illegal actions, if I heard what you said correctly. 

Mr. MARSTON. Well, I do think that there’s been lies from Texas 

officials and it’s in my testimony and I’ll describe lots of those. 

Mr. BARTON. All right. Can you give the committee even one letter where EPA has rejected a flexible permit here in Texas? 

Mr. MARSTON. Well, certainly the letters in 2007—— 

Mr. BARTON. No. Can you give us a copy where they rejected a 

letter? 

Mr. MARSTON. Well, they’ve only—— 

Mr. BARTON. So, the answer is ‘‘no’’? 

Mr. MARSTON. No. You’re asking a question—— 

Mr. BARTON. I’m asking a question. I want a straight answer. 

Mr. MARSTON. It does not have an answer to it—— 

Mr. BARTON. Is there an existing copy, that you’re aware of, the 

rejection letter of a flexible permit here in Texas—flexible air permit in Texas? 

Mr. MARSTON. Until Texas lost the power over its permitting and 

never—never corrected the flex permit, there was no authority and 

no process—— 

Mr. BARTON. Now, that’s—so, there is no rejection letter? 

Mr. MARSTON. I’m sorry, sir? 

Mr. BARTON. There is no rejection letter? 

Mr. MARSTON. Well—— 

Mr. BARTON. I want to read something from the appendix that 

you sent. This is your—your information—— 

Mr. MARSTON. Yes, sir. 

Mr. BARTON [continuing]. That you provided to this committee. 

Mr. MARSTON. OK. 

Mr. BARTON. This—this is the signed by Mr. John Blevins, who 

is the Director of Compliance, Assurance, and Enforcement Division of the United States Environmental Protection Agency in Dallas, Texas. So, this is a letter—— 

Mr. MARSTON. Yes, sir. 

Mr. BARTON [continuing]. That he signed and you provided to the 

committee. 

Mr. MARSTON. What was—— 

Mr. BARTON. It says—— 

231 

Mr. MARSTON. What—— 

Mr. BARTON. Listen, listen. I’m going to read this. You submitted 

it. I’m going to read it. And then you can tell me—— 

Mr. MARSTON. My only question—— 

Mr. BARTON [continuing]. If this was a rejection letter. 

Mr. MARSTON. OK. 

Mr. BARTON. OK? TCEQ and the EPA both agree that it is now 

time—this is in 2007—that it is now time to focus resources on ensuring that all major sources with the State of Texas have federally 

enforceable State Implementation Plan-approved permits. The two 

agencies are working together—are working together to develop a 

flexible permit rule that can be approved as part of the Texas State 

Implementation Plan. Both TCEQ and the EPA have been aware 

of issues related to the flexible permit rule and have worked over 

the last several years to address various permitting issues as part 

of EPA’s program revisions including permit streamlining within 

the context of Title V, the Federal PAL program, and the New 

Source Review reform. Because TCEQ is committed to ensuring the 

continued success of its efforts to maintain and improve the air 

quality of Texas, EPA is providing its assistance to ensure that the 

sources are also meeting their Federal obligation under the Clean 

Air Act. 

Does that sound like they’re rejecting the Texas flexible permitting program? 

Mr. MARSTON. Well, sir, you’re reading part of the letter, but it 

told you—— 

Mr. BARTON. I’m reading what you provided to the committee. 

Mr. MARSTON. I don’t think you read the entire letter, sir. 

Mr. BARTON. There is not one letter on the record where TCEQ 

has had a flexible permit rejected. There are letters—and some of 

them boilerplate—that seem to be just put a different date and— 

and various intermediary officials have—have questioned some 

parts of it. But there is not until this year a rejection of even one 

permit. 

Mr. MARSTON. May I answer your question? 

Mr. BARTON. Now, I want to ask Ms.—you were the chairman of 

Texas Council of Environmental Quality—— 

Ms. WHITE. Yes. 

Mr. MARSTON. May I answer your question? 

Mr. BARTON. I think you have failed to answer my question because you can’t answer it, sir. 

Mr. MARSTON. Will you let me answer? 

Mr. BARTON. I’m going to ask her. Did you, as your authority as 

chairman of the Texas Council of Environmental Quality ever receive a rejection letter? 

Ms. WHITE. No. 

Mr. BARTON. Did you ever have a discussion with a senior official 

at the EPA in Dallas or in Washington where you were told that 

they were going to reject the flexible permitting program in Texas? 

Ms. WHITE. No. 

Mr. BARTON. Were you ever briefed by your staff of such a concern at the Federal level? 

Ms. WHITE. No, I was not. It was not brought to my attention 

and in my many, many conversations and interaction with the 

232 

former regional administrator, the issue of flexible permits never 

were brought up. 

Mr. BARTON. OK. Well, Mr. Chairman, time is expired, but I 

have asked the Attorney General of Texas, I have asked the chairman of the Texas Council of Environmental Quality, I have asked 

the commissioners of the Texas Council of Environmental Quality 

repeatedly to give me documentary evidence where the Federal 

EPA officials in Dallas or in Washington have done what Mr. 

Marston claims they have done and they have repeatedly told me, 

admittedly, not under oath, we haven’t asked them to put their 

hand on a Bible, that that’s never happened. There have been normal discussions about tweaking the program and things of this 

sort, but there has never been a rejection not only of the whole program but of a specific permit within the program. 

I yield back. 

Mr. WHITFIELD. Mr. Gonzalez, you’re recognized for 5 minutes. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. I want to 

thank the members for taking time to be here today. We do appreciate your testimony today. 

Again, areas that we can agree on and that is when you have a 

Federal Government working with another other form of identity, 

they should be partners. There should be reasonable timelines and 

there are going to those that at are issue. And they should, as far 

as possible and with these days of camaraderie come politely with 

solutions and answers to whatever the problems may be. 

Now, the way I see, the only thing missing here is you have two 

differences of opinions as to what the problem is. For one party the 

problem exists. For the other party, it does not. So, maybe that’s 

why things have come to a screeching halt. 

And, Ms. White, what years were you with the TCEQ? 

Ms. WHITE. From fall 2001 to August of 2007. 

Mr. GONZALEZ. All right. So, that would be the time period. And 

I know that you may have not been specifically involved in the ongoing questioning of the flexible permit protocol and requirements 

in the State of Texas, but there is no doubt that the record is replete, whether it was with Clinton or whether it was the Bush Administration, now the Obama Administration about the efficiencies 

of the flex permitting process in the State of Texas. 

But I’m going to ask you because I want to go back to the simple 

question because I think we’re all going to talk about this because 

we just are ignoring what is the obvious. 

Do you believe that greenhouse gases are an air pollutant? And 

then the question is to Ms. White who has the most experience in 

this in the years that you served at State level. 

Ms. WHITE. I will answer you in my opinion legally. Under the 

Supreme Court that—the 2007 Supreme Court ruling, under the 

language of the Federal Clean Air Act, carbon dioxide or other 

greenhouse gases might fit under that. 

Mr. GONZALEZ. Do you think—— 

Ms. WHITE. I am not—— 

Mr. GONZALEZ. Massachusetts versus EPA, now it’s a Supreme 

Court of the United States—it ends there. It doesn’t matter what 

we have to say, the legislative branch or the executive branch. 

233 

That’s the way our founding fathers said it should be and it’s 

served us well. 

Did it not find that greenhouse gases are an air pollutant? Can 

we agree on that? 

Ms. WHITE. It said under the broad, broad language in the Federal Clean Air Act, carbon dioxide and—and carbon dioxide and oxygen is—as something in the ambient atmosphere could be determined a pollutant. 

Mr. GONZALEZ. OK. 

Ms. WHITE. Could be determined a pollutant. That’s a legal decision—in a legal decision that EPA—— 

Mr. GONZALEZ. How about carbon dioxide that comes out and is 

inhaled by cars? Did they establish that as an air pollutant? 

Ms. WHITE. I don’t think—I don’t think—— 

Mr. GONZALEZ. And I don’t want to be—I think General Abbott 

could have better addressed some of these things, but I used up all 

my time and then additional time. 

But I do believe that General Abbott did acknowledge that Massachusetts versus EPA did establish carbon dioxide are a greenhouse gas or greenhouse gases as air pollutants. Now, I know what 

the General is saying. He’s saying, ‘‘Yes, Charlie, but only those 

that are emitted from the tailpipes of cars.’’ And that sounds fairly 

reasonable except that I believe—and I think where this is going 

to end up, I’m not the lawyer for this and I’m surely not going to 

be the judge—but once you identify that as an air pollutant, it becomes regulated under the EPA, does it not? 

Ms. WHITE. Not—no, it doesn’t. There’s—and—and the Attorney 

General referred to this. The EPA—and this is the most important 

for most people and for our country—in deciding the importance 

whether it is a pollutant that endangers human health. And that 

is the legal decision that EPA makes as the so-called 

endangerment finding. And that was the decision the Court left to 

EPA. 

Mr. GONZALEZ. And EPA—and I know you are going to argue 

with the manner in which it has arrive at that determination and 

the timeline and the process. What if the timeline and the process 

and the reasoning is basically found to be valid? Would you still believe that greenhouse gases are air pollutants? 

Ms. WHITE. I really—it doesn’t matter to me what you call them. 

I do not believe that carbon dioxide endangers human health. 

Mr. GONZALEZ. All right. That’s my whole point. Now, the other 

point I want to make in my last few seconds is the same arguments 

that we’ve had today—and, believe me, I believe that this so prosperous a nation the we can even do better—because we have under 

the Clean Air Act and we did it and we have under the Clean 

Water Act. The same arguments that are here today, that’s it’s all 

going to be [inaudible] in jobs are—were advances at that time. 

There’s no doubt that we learned lessons and we were more efficient about doing it. 

I think we can still do it. This is the United States of America. 

We’re not some other Third World country. We’re not someone else 

out there that doesn’t have the history that we have, the pride, innovation, and the creativity that this country has. 

With that, Mr. Chairman, I will yield back. 

234 

Mr. WHITFIELD. Well, thank you, Mr. Gonzalez. And I want to 

thank the panel very much for being with us this morning. We do 

appreciate your testimony and we look forward to working with 

you. 

Mr. BARTON. Mr. Chairman, before—before we let this—I want 

Mr. Marston to be given every opportunity, if he wants to take advantage of it, to try to answer my question. My time ran out. So, 

I didn’t—— 

Mr. WHITFIELD. OK. 

Mr. BARTON. I wasn’t able to give him that, and I don’t want him 

to walk away—— 

[Simultaneously speaking.] 

Mr. BARTON. I don’t want him to go away and say he wasn’t 

given a chance to answer his question. 

Mr. MARSTON. I am a very proud Horned Frog. 

Mr. WHITFIELD. So, would you like to respond, Mr. Marston? 

Mr. MARSTON. Well, I do think those—the letters in 2006 and 

2008 gave fair notice to the TCEQ and the permit did not meet the 

legal standard. They tried working with the agency for a long time. 

They were hopeful they could work out an agreement. In the end, 

the agency made some minor modifications but never made enough 

to meet the Federal Clean Air Act. 

Sadly, we’re in that predicament because they wouldn’t go further. Texas has a program that’s unique among the States and 

they’re in this predicament because they have a program that’s different than everybody else, it doesn’t follow the requirements of the 

Clean Air Act. 

Mr. WHITFIELD. OK. Thank you all very much. And we look forward to working with you as we move forward. 

Mr. WHITFIELD. At this time we’ll call up the witness on the 

third panel, and I saw that she came. That’s Ms. Gina McCarthy, 

who is the Assistant Administrator for Air and Radiation, United 

States Environmental Protection Agency. 

And, Ms. McCarthy, we appreciate your joining us here today in 

Texas and we look forward to your testimony. We were disappointed that Mr. Armendariz was not able to be with you but he 

did send a letter saying that he was attending another event here 

in Houston. So, we’re delighted you’re here and appreciate your 

coming down from Washington. 

And at this time, I’d like to recognize you for your 5-minute 

opening statement. 

STATEMENT OF GINA McCARTHY, ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND RADIATION, ENVIRONMENTAL 

PROTECTION AGENCY 

Ms. MCCARTHY. Thank you, Chairman Whitfield, Ranking Member Green, Members of the Committee, I’m pleased to be here in 

Houston to discuss how EPA is implementing the Clean Air Act to 

protect our locale. 

I bring Al’s regrets. I’m sure he would have loved to have been 

here if he didn’t have a prior speaking engagement. 

Air pollution threatens human health. It contributes to asthma 

attacks, other bronchial disorders, nervousness, and developmental 

problems, cancer, and even death. The very young as well as the 

235 

elderly are especially vulnerable. Every citizen in every State, including Texas, has the right to the health protection provided by 

America’s Clean Air Act. 

For 40 years the Act has reduced air pollution for all of us to 

breathe easier. In the last year alone, programs implemented pursuant to the Clean Air Act Amendments of 1990 are estimated to 

have reduced premature mortality risks equivalent to saving over 

160,000 lives, preventing millions of cases of respiratory problems, 

including bronchitis and asthma, and enhanced productivity by 

preventing 13 million lost workdays. 

In 2000 Houston’s air quality was worse than Los Angeles’. 

Today Houston is meeting the ’97 ozone air quality standard. Why? 

New Federal and State pollution control regulations. These include 

tighter Federal standards on passenger vehicles and diesel truck 

emissions, and vigorous enforcement of Clean Air Act requirements 

focussed on the largest polluters. 

However, few of the Federal emission control standards that gave 

us these huge gains in public health were uncontroversial when 

they were issued. They were adopted amidst claims that they 

would be bad for the economy and bad for the employment. 

It is terrifically misleading to say that enforcement of the Clean 

Air Act has cost jobs. That claim is simply untrue. Enforcement of 

the Clean Air Act has saved lives and allowed economy to grow. 

Families should never have to choose between a job and healthy 

air. They’re entitled to both, and the Clean Air Act has delivered 

on both. 

In contrast to doomsday predictions, history has shown that we 

can clean up pollution, we create jobs, we grow our economy all at 

the same time. In the 40 years since the Act passed, the Gross Domestic Product of the U.S. grew by more than 200 percent. In fact, 

some economic analysis suggests that the economy is billion of dollars larger today than it would have been without the Clean Air 

Act. 

One of the important benefits of the Clean Air Act is that it ensures equal public health protection nationally. Unfortunately, the 

Texas air permitting program does not ensure the same level of 

public health protection to its citizens that other States provide. 

And citizens in Texas have time and again asked EPA to rectify 

this problem. For example, the Texas program allows changes to 

occur at industrial facilities without adequate public notice, allows 

increases in actual emissions to go unchecked. It doesn’t ensure the 

enforceability of the permit requirements. 

Unfortunately, the Texas State Government rules simply trust 

industrial sources to take action to protect public health without 

giving the citizens of Texans the ability to verify the results. No 

other State allows this. Instead, they ask for inherent enforceable 

permits that provide flexibility to industry. Even in Texas fewer 

than 10 percent of the major air pollution sources have these socalled flexible permits. 

These flexible permits failed to comply with Clean Air Act requirements to protect public health. EPA has been raising issues 

with Texas’ permits since the 1990s. The problem worsened last 

decade when the Texas Government failed to take action to adjust 

their flexible permit program as other States did to keep it in line 

236 

with the rules of the agency and with court cases that clearly said 

that the permit needed to be—the permit system needed to be adjusted. 

Then in 2006, 4 years ago, under then President Bush, EPA 

wrote a letter to the State of Texas outlining our concerns with the 

air permitting program and the failure of State Government to fix 

these programs. 

In 2007 EPA sent letters to every one of these flexible permit 

holders, letting them know that they had to worry about being in 

compliance both with their flexible permit and with EPA’s Clean 

Air Act to ensure that they had a federally enforceable permit. 

We continue to work hard with representatives in industrial facilities, Texas officials, and other concerned citizens to fix this 

Texas air program. Our regional office in Dallas has long consulted 

with the Texas Government and citizens in efforts to achieve a 

State program that meets the necessary obligations under our Nation’s Clean Air Act. I have personally come to Texas to try to work 

through these problems with the State, industries, environmental 

groups, and other stakeholders, as have other EPA officials and 

members of my staff. 

Our goals are rules that meet the minimum requirements of Federal law and clean air permits that are understandable to the public, that are enforceable by their regulators, that are legally valid, 

and that protect public health to the full extent that the Clean Air 

Act requires. 

A more recent problem has also arisen and that is really unique 

to Texas. And that unlike all other States, Texas’ State Government is refusing to cooperate with EPA to address greenhouse 

gases in its permitting processes. It has forced EPA actions to prevent industry from being placed in an untenable position of having 

an obligation to obtain a legally valid permit addressing greenhouse gases before starting major construction, but when they have 

no way to obtain such a permit. 

In January, that’s why EPA stepped up and hopefully temporarily began to issue and be responsible for greenhouse gas permitting in the State of Texas. Without that action, sources could not 

obtain legally required permits, projects could not go forward, and 

economic and jobs would really suffer. Some try to emphasize this 

recent disagreement between the State and EPA as if for decades 

EPA has not had to work with the State year after year to push 

and prod to get Texas to do what the Clean Air Act requires. This 

is simply not the case. But what is unique about greenhouse gas 

permits is that Texas has decided that it would simply not do what 

the Clean Air Act required and, in addition, it would take action 

to sue EPA and the Federal Government to ensure that we could 

not do what the Clean Air Act required. 

It’s time for this bickering to stop. It’s time for us to work together to find a common ground to deliver an effective Clean Air 

Act program, one that the Texas State Government can clearly implement, one that will meet legal obligations, one that would be 

amenable to the State, one that would provide clear public health 

protection, that is cost effective and that the people in this State 

deserve to have delivered to them in accordance with the laws of 

Congress. 

237 

We pledge to keep trying to work with Texas leaders in the spirit 

of partnership and not adversarial politics to achieve these goals. 

Thank you very much. 

[The prepared statement of Ms. McCarthy follows:] 

238 

239 

240 

241 

242 

243 

Mr. WHITFIELD. Ms. McCarthy, thank you for your testimony. 

And, you know, one of the reasons Congress is getting really interested in this Clean Air Act and wants to reassert ourself is primarily because there is so much animosity about the whole issue. 

And you, in your opening statement, talk about how Texas has 

filed a lawsuit to prevent you from doing your job. I asked Lisa 

Jackson at our last hearing to provide us with the total number of 

lawsuits pending against the EPA today. She hasn’t had enough 

time to do that yet. But I would ask you to do that. And I will tell 

you that Columbia Law School did do an analysis and they presented us with 290 pages of current lawsuits pending against EPA. 

So, you’re probably involved in one of the most—agencies that 

has more lawsuits than any other part of the Federal Government. 

And that’s one of the reasons we want to try to revisit the Clean 

Air Act, itself. 

I would ask you—one of things I find puzzling, as a layman, is 

that if you—in your testimony, you said that Texas had done a 

good job on its ambient air quality standards and ozone and it’s 

really cleaning up and meets the 1997 standards. Well, if you have 

a flexible permit program that sets an overall emission cap over 

one particular industry that allows maybe one machine in there to 

exceed limits but another one to emit below limits and the overall 

comes within the regulated limit, why is that a problem? 

Ms. MCCARTHY. Well, not all flexible permits are alike, Mr. 

Chairman. And, so, the agency worked very hard over the course 

of the past—— 

Mr. WHITFIELD. Well, excuse me for interrupting. But are you— 

you’re saying, then, that not all of these permits that—that have— 

some of these permits, they exceed their limit overall. They exceed 

the overall limit? 

Ms. MCCARTHY. I’m saying that fundamentally the provisions of 

the Clean Air Act are not complied with in the way that the State 

of Texas has designed its program. 

Mr. WHITFIELD. Ma’am, could you tell me the specific legal authority under the Clean Air Act that gives you the authority to say 

that the flexible permit is illegal? 

Ms. MCCARTHY. Actually, the—the Federal Government has the 

ultimate authority to ensure Clean Air Act compliance. 

Mr. WHITFIELD. OK. 

Ms. MCCARTHY. We—we essentially enter into contracts with 

States about how they can co-regulate with us. 

Mr. WHITFIELD. But is there a specific—— 

Ms. MCCARTHY. There is a specific—— 

[Simultaneously speaking.] 

Ms. MCCARTHY. We have actually noted—— 

Mr. WHITFIELD. Is there is specific section of the Clean Air Act 

that gives you the authority? 

Ms. MCCARTHY. I actually would have to come back and tell you 

what the specific section is, Mr. Chairman, but we have noticed our 

decision to disapprove the flexible air permits. 

Mr. WHITFIELD. Well, would you do that for me, just to—— 

Ms. MCCARTHY. Sure. 

Mr. WHITFIELD. And provide that? 

Ms. MCCARTHY. Sure. 

244 

Mr. WHITFIELD. Thank you. Now, in the testimony before one of 

the panels here today before you, one of the witnesses said that 

other States have similar flex permits. Is that true? 

Ms. MCCARTHY. No, no. 

Mr. WHITFIELD. No, that’s not true? 

Ms. MCCARTHY. No, that’s not. Although other States use flexible 

permits, EPA has developed a flexible permit program that we call 

our ‘‘PAL permit,’’ which is similar to what you’re describing. It is 

in no way similar to Texas. Texas is missing—really consistently 

missing fundamental principles under the Clean Air Act discounting enforceability—— 

Mr. WHITFIELD. OK. But what EPA does—— 

[Simultaneously speaking.] 

Ms. MCCARTHY [continuing]. Enforceability—— 

Mr. WHITFIELD. EPA does allow flexible permitting? 

Ms. MCCARTHY. Absolutely. Absolutely. 

Mr. WHITFIELD. But you’re saying that in Texas, they do not enforce it—— 

Ms. MCCARTHY. That’s correct. 

Mr. WHITFIELD. They do not enforce it? 

Ms. MCCARTHY. We have issued rules—— 

Mr. WHITFIELD. Tell me the three things they don’t do in Texas 

that bothers you. 

Ms. MCCARTHY. They don’t require emissions to be calculated by 

actual emissions. They look at emissions based on what they assume that the plant could generate running 24 hours, 7 days a 

week, which we call—— 

Mr. WHITFIELD. OK. And what else? 

Ms. MCCARTHY. They don’t provide transparency. They don’t provide enforceability, they don’t provide reporting, they don’t provide 

monitoring of the climate. So, they are unforceable under Federal 

law. 

Mr. WHITFIELD. OK. And the other States that have similar flexible permits, they do all of those things that you say? 

Ms. MCCARTHY. That’s correct. 

Mr. WHITFIELD. Now, if that’s true, why did it take the EPA 16 

years to take some action? 

Ms. MCCARTHY. Well, let me try to clear that up. The actual— 

the—Texas proposed this permit—this flexible permit back in 1994. 

Actually ’92, then it was approved in ’94. During that process we 

were looking at piloting different types of flexible permits. We actually wrote the State a letter and said you’re going way out in front 

of this. We haven’t yet developed our own rules about that—— 

Mr. WHITFIELD. Look, I’m running out of time. 

Ms. MCCARTHY. OK. 

Mr. WHITFIELD. So, let me just—so, basically—— 

Ms. MCCARTHY. Well, let me—— 

Mr. WHITFIELD. Let—— 

[Simultaneously speaking.] 

Ms. MCCARTHY. Let me look at my—— 

Mr. WHITFIELD. So, initially—— 

Ms. MCCARTHY. Let me say that we put them on notice. 

Mr. WHITFIELD. Initially, you all worked with them and over 

time, you just felt like it was not—— 

245 

Ms. MCCARTHY. No. We put them on notice when they developed 

it that they might have to adjust it. 

Mr. WHITFIELD. OK. 

Ms. MCCARTHY. The rules—they did not adjust themselves to the 

rules that were enacted. 

Mr. WHITFIELD. OK. 

Ms. MCCARTHY. And they did not adjust themselves in court 

cases that told them that the way in which they were calculating 

emissions in their permits were—— 

Mr. WHITFIELD. Now, let me ask this one final question—— 

Ms. MCCARTHY. Yes, sir. 

Mr. WHITFIELD [continuing]. Since my time has expired, too. We 

were already talking about all of the lawsuits pending against 

EPA. 

Ms. MCCARTHY. Yes. 

Mr. WHITFIELD. We know there’s a lawsuit pending on the Tailoring Rule, correct? 

Ms. MCCARTHY. Yes. 

Mr. WHITFIELD. And in your testimony, you had indicated that 

if the Tailoring Rule was invalid, that the permitting authorities 

would have to spend in the neighborhood of $24 billion to issue 

these permits. And the question I would have, if the EPA Tailoring 

Rule is determined to be invalid by the court, are you all—do you 

have a plan right now to deal with that? 

Ms. MCCARTHY. We do not believe that the Tailoring Rule will 

be invalidated. We believe it’s consistent with Federal law. 

Mr. WHITFIELD. But there is a pending court case? 

Ms. MCCARTHY. There are many; but there are—in every rule 

that we do, we have challenges. 

Mr. WHITFIELD. So, you’re not making any significant plans on 

this? 

Ms. MCCARTHY. We do not need to, no, sir. 

Mr. WHITFIELD. Thank you. 

Mr. Green? 

Mr. GREEN. Ms. McCarthy, how long have you been with EPA? 

Ms. MCCARTHY. I have been with EPA since June of 2009. 

Mr. GREEN. OK. So, it’s relatively recent? 

Ms. MCCARTHY. Yes. 

Mr. GREEN. Following up on what the chairman said, and I 

talked about it in my opening statement, in August of 2008, the 

Business Coalition of Clean Air, Texas Association of Business, and 

Texas Oil and Gas Association filed suit against the EPA to take 

action on pending permits related to the SIP actions and the flexible permits. In July of 2009, there was a settlement reached between you two on that lawsuit regarding that. 

So, you know, this goes back to what the EPA was told and the 

agreed settlement by the parties was that EPA would enforce what 

you’re trying to do now. 

Ms. MCCARTHY. Yes, that’s correct. We were sued by citizens and 

industry, and it resulted in that settlement. 

Mr. GREEN. And I know you testified that this started actually 

in 1992 and goes back. I’m looking at a timeline and in late 1994, 

Texas adopted its flex permit regulations. Did EPA notify them at 

that time that EPA wasn’t through with their New Source Review 

246 

program and that their rules may be inconsistent so that was in 

late ’94. 

Now, October of ’94 EPA sent a letter to—at that time TNRC 

Commission—TNRC expressing concerns regarding the proposed 

flexible permit and the SIP revision. We’re talking about October 

1994. 

Ms. MCCARTHY. That’s correct. 

Mr. GREEN. This has been an ongoing discussion between whatever agency we call it in Texas and the EPA—— 

Ms. MCCARTHY. Yes. 

Mr. GREEN [continuing]. Under at least three Presidents. 

Ms. MCCARTHY. Yes. 

Mr. GREEN. And I guess that’s my concern. You know, I like the 

flexible permits. I didn’t come to Congress until ’93, but 20 years 

before that, I served in the legislature. And let me address Congressman Barton’s concern. I remember in my 20 years in the legislature, we complained with the EPA on lots of issues, but we also 

recognized that they had the preemption right and over that 20 

years, that was suggested many times that EPA could take over 

the permitting in Texas, I know between 1973 and 1993. And that’s 

why the privacy of the Federal law is the issue here. And I 

know—— 

Ms. MCCARTHY. It is also the protection of the industries who are 

operating under the permits that may not protect them. 

Mr. GREEN. Well—and that’s my concern. And I don’t know if 

you were here earlier, but at any given time any of the plants in 

our district are doing things that they need permits to do because 

they’re expanding. We’re fortunate. Most of those plants and our 

refineries have all expanded beyond the production of gasoline, but 

they need to have things going on. And they just can’t have a battle 

between a Federal agency and a State agency or otherwise that 

would shut down the investment in our community. 

So, frankly, I’m a little frustrated. I have some questions about 

the PAL program, but I’d also like—somewhere along the way, we 

have to get the attention and say, TCEQ and the State of Texas 

need to sit down. They may do it on the Attorney General’s lawsuit 

that he’s filed, but there is going to be a negotiated settlement not 

unlike what was done back in 2009 that’s from the lawsuit filed in 

2008. And that’s what the hesitancy, I think, everyone has of doing 

anything. Because we have to deal with it. 

And I just encourage you, as best you can, to sit down with 

TCEQ and the Attorney General under that lawsuit and see what 

we can come up with. But we already have a settlement on the earlier lawsuit in 2009. 

Now, let me—I know the Chairman asked about the difference 

between the Texas flex permit and the plantwide applicability limits. Can you explain the difference between what the Texas flex 

permit does and the PALs? And why wouldn’t Texas be able to fit 

under some of those plantwide applicability limits or PALs? 

Ms. MCCARTHY. I—I mentioned this before, but let me try and 

be clear. The Federal PAL is based on actual emissions. The Texas 

Flexible Permits are based on allowable emissions. Essentially 

what this means is that in Texas, a plant could significantly inVerDate Nov 24 2008 12:20 Mar 01, 2012 Jkt 037690 PO 00000 Frm 00252 Fmt 6633 Sfmt 6633 F:\112-026 EPA TEXAS (FIELD)-SUBMIT FOR OK 2-14\112-26 EPA TEXAS (FIELD) PENDI
247 

crease its pollution and not have to use the proper pollution control 

technologies. 

Secondly—— 

Mr. GREEN. Well, we—— 

Ms. MCCARTHY. I’m sorry. 

Mr. GREEN. Go ahead and finish. 

Ms. MCCARTHY. The number of—the permit program in Texas 

fails to meet a number of provisions to ensure that the permit is 

enforceable and the process is open entry apparent to the public. 

And, finally, the permit process in Texas does not meet the requirements of the Clean Air Act. 

Mr. GREEN. OK. When you show actual emissions, that’s done by 

either—and we have fence-line monitors in so many of our plants 

already. We have so many monitors in East Harris County. That 

would be what we would need to find out, what was actually being 

emitted. Is that true? That’s part of it? 

Ms. MCCARTHY. The total emissions and what timetable. That is 

the currency of the Clean Air Act. That’s right, actual emissions. 

What you can measure leaving the plant that can injure public 

health. 

Mr. GREEN. So, we actually have some facts on the ground because I can tell you, I know, ExxonMobil, the biggest refinery in 

Texas and the country, actually, has fence-line monitoring right 

now. And I can go down—and I know Jim knows for sure, there’s 

a whole bunch that in the last 10 years, even though it wasn’t necessarily required, but they were doing it. So, they have the capability now to do that. 

Mr. Chairman, you’ve been gracious; and I appreciate you letting 

me run over my time. 

Mr. WHITFIELD. You say they have the ability for the actual 

emissions—— 

Mr. GREEN. I think they’re measuring right now. 

Mr. WHITFIELD. Actual emissions? 

Mr. GREEN. Actual emissions. 

Ms. MCCARTHY. We—we actually—we model those and we measure them directly, that’s correct. 

Mr. WHITFIELD. Mr. Barton, you’re recognized 5 minutes. 

Mr. BARTON. Thank you. 

Well, first of all, thank you for showing up. 

Ms. MCCARTHY. Thank you for having me. 

Mr. BARTON. It’s amazing to me that the lady from Connecticut 

can fly 1400 miles and our Region VI Administrator can come to 

Houston but can’t come and actually appear before an official committee of the United States Congress. 

Ms. MCCARTHY. He did send his regrets. He would have loved to 

have been here. 

Mr. BARTON. Well, we will have an opportunity hopefully in the 

future to have him before our committee or subcommittee. But I 

am sincerely appreciative of your being here. 

I listened to—I read your testimony. I listened to what you said 

in response to the chairman’s questions and the ranking member’s 

questions and I feel like I’m in some alternative universe. I have 

not reviewed comprehensively all the documentation that’s gone 

back and forth between the EPA and the State of Texas since the 

248 

early ’90s, but I have at least scanned most of the relevant documents. I have yet to find one that substantiates what you said in 

your testimony, that the Texas Flexible Permitting program is not 

transparent, it’s not enforceable, it doesn’t comply with the Clean 

Air Act. 

Let’s set aside for a minute—I know there’s a debatable issue 

about whether the greenhouse gases are regulated under the Clean 

Air Act. I know that you have the Supreme Court decision and the 

endangerment finding, which I think the endangerment finding is 

very flawed; but I’ll put that aside and just focus on the Clean Air 

Act and its amendments. 

There are six criteria pollutants and the only one that Texas, unless you tell otherwise, is in noncompliance on is in some parts of 

the State, ozone. Do you agree with that? 

Ms. MCCARTHY. Yes. 

Mr. BARTON. So, which of these flexible permits—and Mr. 

Marston, I think said there were 70. I’ve been told there are 180. 

So, I don’t know what the exact number is, but it’s a finite number. 

Where in the Record do we have the documentation that they have 

been noncompliant in terms of their emissions being larger than allowed under the Clean Air Act? I don’t find it. 

Ms. MCCARTHY. Well, let me explain. We did put a public notice 

out. We explained the reasons why we were proposing this. There’s 

a due process here. We put that out September of ’09. We explained 

what was wrong with the process—— 

Mr. BARTON. Where—where—where do you substantiate and 

back up what you’ve just said, that they’re in noncompliance? 

Ms. MCCARTHY. It’s in the notice. And any—any—and since that 

time any permit that has been a logic error—— 

Mr. BARTON. Can you—can you give the committee—— 

[Simultaneously speaking.] 

Mr. BARTON [continuing]. An example of—— 

Ms. MCCARTHY [continuing]. We have objected—— 

Mr. BARTON [continuing]. A permit that is noncompliant? 

Ms. MCCARTHY. I can get all of the permits since—that have 

been issued since October—I’m sorry—September of ’09 that we 

have objected to. And there have been many. I’m now in the process of trying to be corrected, either by going to the State or 

EPA—— 

Mr. BARTON. And I’m—I’m not trying to be argumentative. 

Ms. MCCARTHY. No, I’m trying to explain. There are many. 

Mr. BARTON. I just—I don’t see in the record where TCEQ or a 

particular company has knowingly and willfully violated the Clean 

Air Act on the regulated pollutants—again, separate greenhouse 

gas, which is a different debate that’s—you know, your testimony 

would have one believe that we’re some sort of an outlaw State and 

our regulatory authority kind of snubs its nose at the EPA and 

doesn’t even require enforcement of the basic standards. Yet somehow our emissions are within the allowable, except for ozone. And, 

in that, even you admit we’re making tremendous progress. It 

doesn’t jive. 

Ms. MCCARTHY. Well, I think we’re confusing the actions that 

you take to address ozone with a permitting program that is solely 

249 

designed to mitigate additional emissions that contribute to air pollution. 

Mr. BARTON. But ozone is part of that. 

Ms. MCCARTHY. It is part of that. But the efforts that have been 

ongoing at the Federal level are through the State implementation 

planning process. And, then, what has been successful in reducing 

very high levels of pollution down to more manageable levels. 

The permit process had nothing to do with that. That is not what 

contributed to that success. That is simply a way to try to make 

sure that you’re not going to go back to fully emitting pollutants 

that will then bring you out of attainment with ozone standards. 

Mr. BARTON. OK. My light’s already on amber. Let me—I want 

to follow up with something that I asked the Attorney General. 

Ms. MCCARTHY. OK. 

Mr. BARTON. Because of the lawsuit that the State of Texas has 

against your agency, you filed an affidavit in Federal court on October the 28th of 2010 in which you—you’ve, obviously, under oath, 

say that the information you’re giving in this affidavit is correct 

and la-tee-da, da, da. And in that affidavit at the very end and in 

the annex—the appendix that you add to it say that it is not the 

intent and you had no knowledge that EPA is going to revoke any 

existing permits until at least 2000—in December of 2011. Yet 

within a few months, if not a few days, your agency did exactly 

what you said they wouldn’t do. 

How do you reconcile that? 

Ms. MCCARTHY. I believe that my statement was referencing the 

fact that we were taking action to try to work with 13 States that 

needed to make adjustments in their own State laws in order to 

provide an opportunity to greenhouse gas permitting. And 

what—— 

Mr. BARTON. This is—this is regarding directly the State of 

Texas. 

Ms. MCCARTHY. Well, that—— 

Mr. BARTON. It says no permitting authority will be in place as 

of January 2nd, 2011. FIP cannot be promulgated until December 

the 2nd, 2011, at the earliest. It’s specifically on Texas. 

Ms. MCCARTHY. The particular issue that you’re talking about is 

part of a larger effort to get 13 States into a position to either immediately regulate, to regulate afterwards, or to delegate back 

their—— 

[Simultaneously speaking.] 

Mr. BARTON. Well, did you know at the time that you made this 

affidavit what the EPA was going to do with regards to Texas? 

Ms. MCCARTHY. What I wasn’t aware of is that the State of 

Texas prior to that had not made a statement either by the Governor or by the agency, itself, that it would simply refuse to regulate greenhouse gas permits, period. 

Mr. BARTON. But this has nothing to do with greenhouse gases. 

We’re talking about the State Air Quality permit. 

Ms. MCCARTHY. I’m sorry. I’ll have to look at it. I thought we referencing the greenhouse gas permitting process. 

Mr. WHITFIELD. Gentlemen, the has time expired. Do you have 

another question, Mr. Green? 

250 

Mr. GREEN. No. I’m just interested because, again, I know Texas, 

starting in ’92, ’94, really, we had—sometimes they call them ‘‘loopholes’’ in Washington, sometimes they call them ‘‘opportunities’’ to 

be able to create a program that would make it easier and—and, 

you know, the EPA has been, it looks like from the records, we 

can’t quantify what you’re doing. But it’s been going on so long that 

we just need to deal with it. 

And we had one court case already that was an agreed judgment. 

Maybe we have to have another one to see what we need to do in 

Texas. But my concern is with the fight between Texas and EPA, 

I want to make sure Mr. Griffin’s plants can still do what they 

need to be doing, producing the products—but, also, without being 

held up by our fight between two States and there are—the country 

and the State. 

Ms. MCCARTHY. Congressman, I’m unaware of any business that 

has been interrupted as a result of our attempt to work with the 

State in resolving the issue. 

Mr. WHITFIELD. Ms. McCarthy, I have one other question and 

one comment and then, I think, Mr. Barton has another question 

or a comment or two. 

Under your SIP Call Rule, which was proposed in September 

2010 and finalized in early December 2010, you all require Texas 

and other States to changes their laws and regulations by December 22nd, 2010, in order to comply with the new greenhouse gas 

permitting requirements. And, usually, when you do these change 

in the State implementation plans, you typically give States up to 

3 years. 

So, why in this instance did you give them, like, weeks to amend 

their State Implementation Plan? 

Ms. MCCARTHY. Well, what we did was we worked with all of the 

States and we developed a process where we would either take over 

the permitting, ourself or else they would identify a phased approach where they would be able to provide opportunities to change 

their laws and then take back the permitting process. In the rule 

we gave a number of choices to States on how to do this. What we 

were unaware of is that Texas would choose neither to accept or 

reject our offer but simply to refuse to do the greenhouse gas permitting, period. Which forced our hands in order to protect the interests of the business here to be able to get permits in a timely 

way, to at least temporarily take that—— 

Mr. WHITFIELD. What I was told is that Texas made EPA aware 

of their position in August of 2010. 

Ms. MCCARTHY. I am not aware of that. 

Mr. WHITFIELD. We—I mean—well—oK. Let me just make a couple of other comments. One, would you please have your legal department provide us with a list of at least a number of lawsuits 

pending today against EPA and the actual budget amounts to defend those lawsuits in your budget. 

And then, number two, just a legal analysis, maybe a two-page 

or so from your legal authorities on what the Federal authority is 

for your position on the flex plans—the flex permits. 

Ms. MCCARTHY. All right. 

Mr. WHITFIELD. Thank you. Mr. Barton? 

Mr. BARTON. Isn’t it Mr. Green’s turn? 

251 

Mr. GREEN. Following up on what the Chairman said, could 

Texas, by Administrative Rule, change their—what it takes to statutory law changed by the legislature? 

Ms. MCCARTHY. I believe it would take statutory change, but we 

will work with them in whatever they feel is legally appropriate. 

Mr. GREEN. Because I know sometimes most States meet every 

year. The Texas legislature only meets every 2 years and most governors don’t really want the legislature there. So, they don’t call 

special sessions. And we’ve had that problem in the past. A good 

example is the State—Children’s Health Care Program created in 

’97. Texas didn’t go back in session until ’99 and didn’t have any 

law until 2 years later for the Children’s Healthcare Program. And, 

you know, our legislature is only in session in the spring of every 

odd year, which is sometimes good. 

Ms. MCCARTHY. We’d like nothing better in the world [inaudible] 

to phase approve legal authority to do it more quickly, we’ll certainly be able to help you with that. 

Mr. WHITFIELD. Mr. Barton, you’re recognized. 

Mr. BARTON. Madam Administrator, am I correct in that the disagreement between Texas and EPA on greenhouse gases is a separate issue than the disagreement between Texas and EPA on their 

flexible permitting program under the other terms of the Clean Air 

Act? 

Ms. MCCARTHY. Yes. 

Mr. BARTON. They’re two separate issues? 

Ms. MCCARTHY. Yes. 

Mr. BARTON. OK. Now, you said in your testimony and you said 

in response to a question that Texas is not requiring monitoring of 

their flexible permitting program? 

Did I hear you correct? 

Ms. MCCARTHY. Not sufficiently providing an opportunity for enforcement under the Federal law. 

Mr. BARTON. Now, I’m not familiar with all the plants here in 

the Houston area; but I have several cement plants, I have a General Motors assembly plant, I have some defense plants, I’ve got a 

coal plant—several coal plants, several natural gas power plants. 

I have a number of qualified facilities under the Clean Air Act in 

my district and I that almost—I think every one of those, they have 

continuous monitoring of their smokestacks? 

Ms. MCCARTHY. They may very well. I’m not saying there is no 

monitoring, certainly; and I’m not implying that the businesses are 

doing anything inappropriate. 

What I’m suggesting is that the permit that they’re operating 

under doesn’t provide sufficient detail for it to be enforceable under 

Federal law and to mutual compliance. 

Mr. BARTON. I don’t—— 

Ms. MCCARTHY. They simply don’t have the recordkeeping requirements and in some cases, the monitoring necessary for us to 

measure actual emissions and to determine whether or not there 

are increased emissions when they’re making and providing the 

changes, that the State allows to happen without public process 

and without permitting. 

Mr. BARTON. Well, we just have a disconnect here because I’m, 

personally, familiar with several of the plants, again, in my conVerDate Nov 24 2008 12:20 Mar 01, 2012 Jkt 037690 PO 00000 Frm 00257 Fmt 6633 Sfmt 6633 F:\112-026 EPA TEXAS (FIELD)-SUBMIT FOR OK 2-14\112-26 EPA TEXAS (FIELD) PENDI
252 

gressional district that have continuous monitoring for SO2 and 

NOx and ozone. I’m aware in the Dallas-Fort Worth area and I assume here in the Houston area that you have these ozone monitors 

that are not plant-specific that are at locations around the community that continuously monitor and you’re saying those are noncompliant with Federal law? 

Ms. MCCARTHY. What I’m saying is that—that the flexible permit 

is based on what’s allowable for emissions and not based on actual 

emissions. It is a critical issue under the Clean Air Act. 

Mr. BARTON. But isn’t that a resolvable issue without revoking 

all these permits that have been existence for 16—I mean, you’ve 

known about it for 16 or 17 years. 

Ms. MCCARTHY. Well, we’re kind of stuck between a rock and a 

hard place here. Because they were called ‘‘regulators,’’ the region 

respectfully worked for many years to try to resolve the problem. 

We were, then, sued because we didn’t take quick interim action. 

We were sued by citizens under petition, the new supervisor of the 

business community who was worried about the legality of their 

permits. We were then forced to take the type of action that is now 

raising your eyebrows. I understand this. 

None of us want to be in this position. If we could sit down, we 

could easily resolve this problem. And, in fact, we are doing that. 

It’s just—it’s just we now do not have a flexible permit program 

under the State that the State and major industries can rely on to 

receive permits that will meet Federal requirements under the law. 

Mr. BARTON. Well, I have a different opinion of our State regulators than Mr. Marston does. I think they’re people of good conscious, and they want to enforce law—both the State and the Federal law and they want to work with our Federal officials at EPA. 

I also believe that our industry groups want a clean environment. 

I mean, they live in the same communities, they shop in the same 

shops, they have the same health interest as a regulator in Washington, DC. 

And when I look at the record, I go back 16, 17 years—and, 

again, I’ve not looked at every document. I can’t stand here and 

take an oath that I’ve read every document. But the documents 

that I have read really refer to kind of generic—I won’t say ‘‘minor 

problems,’’ but just general disagreements and uncertainty that 

they don’t show what you just said. They don’t say, ‘‘You’re not 

monitoring. You’re not doing it. You’re not’’—I don’t see any of that. 

And—and I would—you know, Mr. Green and I are not of the 

same political party, but we share the same general conclusion on 

this flexible permitting program that it ought to be able to be 

worked out. I don’t see any irreconcilable issues here. If you need 

more monitoring, I have a pretty good feeling that the TCEQ people will agree to more monitoring. 

If you need some more transparent paperwork process, if you 

need a different calculation methodology, I’ve not—and I’ve repeatedly pushed the State officials, you know, tell me the truth, the 

whole truth, and nothing but the truth about what’s going on here. 

So, is it—is it the Obama Administration’s position that under no 

terms or conditions are they going to approve the flexible permitting program for existing facilities in Texas at all? 

253 

Ms. MCCARTHY. Absolutely not. In fact, Texas does take advantage of our PALs Program. We certainly can take care of the 10 

percent of major sources that are using the flexible permit. We certainly can provide an opportunity to transform those permits into 

Federally enforceable, compliant permits. 

Mr. BARTON. Well, if can—— 

Ms. MCCARTHY. And I’d much rather do that on a programatic 

level than individually. But right now we’re working individually. 

Mr. BARTON. If we can get some concrete issues that need to be 

addressed, I am sure that Chairman Whitfield and Chairman 

Upton, and Mr. Green, and Mr. Waxman and—I mean, whoever 

you want to be in the negotiations, can work with EPA in Washington and TCEQ in Texas and we can resolve this issue. 

I mean, I just—I can’t stress enough, Mr. Chairman, it is important that we have an environmental program Nationally and at the 

State level that every citizen has confidence in that’s going to give 

us the best air quality and the best water quality that is obtainable 

in the modern era with the technology that’s available. 

Mr. WHITFIELD. I agree. It almost seems to me, from what you’ve 

said, that the objection is that in the flex permitting language, it 

does not say certain things; and, yet, we know that these industries 

around here we were just talking about, you didn’t mention the difference between actual and what is allowed because it almost 

seems like the language in the permit needs to be changed to make 

sure that you’re giving the information that you need. 

Ms. MCCARTHY. Mr. Chairman, it’s a much more fundamental 

issue than that because under the Clean Air Act, if you significantly increase your emissions, you’re required to look at controls 

and modernize them. 

So, what you’re doing is providing—by basically casting in stone 

allowable, you are never going to operate those facilities from that 

point forward at an increased emissions—— 

Mr. WHITFIELD. And you’re talking about individual sources of 

emissions within an industry, as well? 

Ms. MCCARTHY. Or the entire facility. 

Mr. WHITFIELD. Yes. 

Ms. MCCARTHY. It’s not that we’re requiring unit by unit—— 

Mr. WHITFIELD. And you will have your legal department provide 

us with a two-page or so—— 

Ms. MCCARTHY. I will. And if I may, I am not indicating or trying to malign anybody at TCEQ. I’ve been met many of the commissioners and met with the staff. They’re honorable human 

beings. I think right now we’ve made a lot of progress that we had 

to make since we had the noticed our disapprovals of their permit 

process being objected to permits. I wish we could do this in a little 

more gracious way so that it wasn’t—so this disagreement wasn’t 

so apparent. We are getting there. It’s not easy, but I will pledge 

EPA’s continued cooperation with TCEQ and we will get there. 

Mr. WHITFIELD. Well, good. You know, I think there’s something 

wrong when we’ve got a Government agency with 290 pages of lawsuits pending. Of course, I recognize that the law encourages the 

lawsuits and the law also gives Federal judges authority to reimburse the legal cost. 

254 

But we appreciate your time today. We look forward to continuing to work with you on a lot of issues. And we’ll keep the 

record open for 30 days for any additional material or questions. 

Mr. GREEN. I just want to thank South Texas Law School—I 

have a lot of friends and family who attended here—for allowing 

us this venue. 

Mr. WHITFIELD. Yes, so do I. And I appreciate the staff for helping get this organized. And with that, we’ll conclude this hearing. 

[Whereupon, at 12:17 p.m., the subcommittee was adjourned.] 

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