As prepared for delivery:
Gentlemen, thank you for appearing before the Committee today.
I have three main concerns that I’d like to bring to your attention today.
First, I am concerned that the EPA has a bias in its interpretation of federal court cases. In a recent case involving Summit Petroleum, the EPA required the company to combine, or aggregate, the emissions of multiple oil and gas wells spread out over 42 square miles in Michigan and consider them as though they were one source. This triggered an expensive permitting requirement and would have given EPA a foothold of additional regulation over this entity.
Litigation ensued, and Summit Petroleum won in the 6th Circuit Court of Appeals late last year. The court said that EPA could not combine sources unless they are truly right next to one another. On December 21, 2012, EPA issued a memo explaining how the Agency would apply this decision moving forward, and instead of applying it nationwide, the Agency said it would be limited to the states within the 6th Circuit. This is problematic to me because it underscores the adversarial nature of the Agency toward the oil and gas industry.
But it was easy for EPA to apply this decision – even if only in the 6th Circuit. All EPA did was essentially revive a 2007 memo on the same topic. This memo is important because it was first repealed by Administrator McCarthy when she was head of the Air office in September 2009. While the previous administration had interpreted the law correctly, Administrator McCarthy made a policy decision that was intended to require more EPA permitting of oil and gas wells by inappropriately combining the emissions of multiple sources into one.
The EPA lost in court after reversing an appropriate policy in 2009. But EPA is not applying this decision nationwide simply because it does not like it.
EPA has done the opposite in cases where it does like the outcome of the court, quickly applying a circuit or a district court’s decision nationwide. For instance, in a Colorado District Court case involving Louisiana-Pacific, the court adopted a highly constrained view of what it takes to establish “federally enforceable” emissions limitations. Had the court respected a more broad view of these limitations, it would have lowered the total emissions of certain facilities and eliminated their need to receive major-source permits from the EPA. But because the EPA wanted to increase the number of sources requiring permitting, it issued a new guidance document applying the District Court’s decision nationwide soon after the decision was made, at great cost to the affected entities.
I am also concerned about the Agency’s use of highly unreliable and objectionable methods to calculate the “benefits” of rules it is putting together. Most notably, the Water Office’s 316(b) Cooling Water Rule relies on a “stated preference survey,” to justify its high cost. This survey asked respondents to name a price they’d be willing to pay to keep fish from being killed. These surveys are notorious for not being well constructed, and in this case it does not provide respondents with a true picture of the trade-offs being made. But the EPA is in the process of using this rule to inflate the benefits of a rule so that it can justify one that is more costly to the power generation and manufacturing sectors of the economy.
Finally, the EPA’s pursuit of guidance over “Waters of the U.S.” continues to be a major concern of mine. Congress flatly rejected proposals to expand the agency’s jurisdiction beyond navigable waters when the Clean Water Restoration Act was considered in the 111th Congress. But the Agency and the rest of the Administration continue to develop guidance that would expand its ability to regulate rain puddles at a construction site or a farm. This is concerning because it could trigger astounding permitting and compliance requirements for all industries around the country, and at enormous cost. With Congress being so clearly involved in this topic – and deciding not to give the Agency this authority – I am alarmed the agency is continuing its work to unilaterally expand its powers in this way.
The EPA’s aggressive push for more regulation and control over the country is suppressing our economy’s ability to recover. If you are confirmed, it is my hope that you will respect the opinions of the courts and protect the separation of powers in this country by not pushing for the agency to have additional powers that have not been delegated to it by Congress