Inhofe Opening Statement: Nomination of Regina McCarthy to be Assistant Administrator, Office of Air and Radiation, of the Environmental Protection Agency, April 2, 2009
On Thursday, April 2, the EPW Committee held a hearing on the nomination of Regina McCarthy to be the Assistant Administrator of the EPA's Office of Air and Radiation. The following is Senator Inhofe's opening remarks.
"Thank you, Chairman Boxer, for calling this hearing today. I welcome you, Ms. McCarthy, to our committee and I look forward to working with you.
"The Office of Air and Radiation at the Environmental Protection Agency issues regulations that protect the air we breathe. Those regulations also significantly impact the American economy. For these reasons, the job of assistant administrator for air entails serious responsibilities. This committee and the full Senate, therefore, must thoroughly assess the qualifications of the nominee to head the office.
"I understand, Madam Chairman, that you wish to hold a business meeting on Ms. McCarthy’s nomination the week we return from recess. At this point, I have no objection to that schedule. But first, I need to provide a little historical context. The Senate has not confirmed a nominee for this position in 8 years—due entirely to opposition from my colleagues on the other side of the aisle.
"Opposition arose from allegations that nominees failed to provide timely and complete answers to questions submitted to them. In effect, Madam Chairman, a standard was set by you and your colleagues: in order to advance this nomination as expeditiously as possible, the minority will need timely and complete answers to our questions. Let’s hope that occurs.
"As I indicated earlier, the next Assistant Administrator for Air will face several daunting regulatory challenges. Let me list a few: meeting new deadlines for attainment of national ambient air quality standards; addressing interstate air pollution; continuing reductions in mercury and other hazardous air pollutants; implementing the next phase of the renewable fuel standard; and a pending decision on the California waiver.
"Ms. McCarthy, these issues by themselves will overwhelm your calendar. And yet as time-consuming as these policies will be, they will pale in comparison to what will ensue if CO2 becomes a regulated pollutant under the Clean Air Act. If EPA makes an endangerment finding under the Act—and according to recent news accounts, this decision has already been made by the Administration—it could extend EPA’s regulatory reach into every corner of the U.S. economy.
"Ms. McCarthy, I hope that you will approach pending decisions on greenhouse gas regulation with great care and, to the extent you can, ensure that concerns from small businesses, families, and every American who uses energy receive a proper hearing. I had the pleasure of meeting you briefly yesterday, and I value your commitment to public service. You have an impressive background in serving Connecticut and Massachusetts with distinction. I look forward to hearing more about your record today.
"As you well know, Ms. McCarthy, there is an enormous amount at stake here. If the policies pursued are not pursued with great care and restraint, this great machine we call America will grind to a halt. That’s something I know everyone here wants to avoid. So I urge you to work with us—majority and minority—in addressing the issues now before us and those yet to come."
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Senator James Inhofe joined a strong bi-partisan majority Wednesday in voting to keep a devastating climate tax out of the budget. The Johanns amendment, number 735, to prohibit the use of budget reconciliation for cap-and-trade legislation, passed by a vote of 67-31.
"I was pleased to join an overwhelming bi-partisan majority in opposing the inclusion of reconciliation instructions in the budget resolution," Senator Inhofe said. " Reconciliation was designed for deficit reduction, not major policy initiatives like climate change, which should be fully debated through regular order in the Committees of jurisdiction. Further, use of such procedures for climate legislation rejects the twin goals of transparency and bipartisanship so often mentioned by the Administration.
"I appreciate the leadership of Senator Johanns and Byrd on this important issue. Opposition to this tactic came from both sides of the aisle, both sides of the Capitol, and all sides of the climate debate itself, including those who have co-sponsored or otherwise supported cap-and-trade. Passage of the Johanns-Byrd amendment now allows the full Senate to have a full, open, and honest debate about cap-and-trade legislation, which we all know amounts to an enormous new energy tax on the American people."
One convenient way some supporters of cap-and-trade dismiss the huge cost on families imposed by cap-and-trade is with the “rebate response.” The rebate response goes something like this: 1) We know cap-and-trade will raise energy prices—after all, that’s the whole point of cap-and-trade; 2) We’re not going to say for certain how much it will cost a family of four (though CBO’s estimate—undisputed thus far—is about $3,000 per year per family); 3) We are confident we can keep consumers whole by doling out carbon rebates; and 4) We are confident of this because a study by MIT says cap-and-trade will raise hundreds of billions of dollars in revenue, enabling the government to cut an approximately $4,500 rebate check to a generic family of four.
What to make of this?
· First, though it is asserted with certainty that $4,500 will be returned to consumers, MIT was postulating only the “potential” CO2 revenues from an auction and the “potential” tax reimbursement for a family of four—in other words, there is nothing certain here. See page 25 of the study here: Moreover, MIT estimates a range of reimbursements to consumers of $1,630 to $4,560 in 2015 and $2520 to $5190 in 2050—amounts, it’s important to note, that are contingent upon the type of bill ultimately passed by Congress. Link to MIT Study
· Second, the $4,500 assertion assumes that Congress will use all of the revenues collected from an auction for rebates. However, various climate bills—Lieberman-Warner, to name just one—divide up the revenue pie for, among other things, energy efficiency programs and research and development for renewable and clean energy technologies. The Senate Majority Leader has even suggested using auction revenues to fund health care legislation.
· Third, the Congressional Budget Office has repeatedly claimed that government cannot entirely protect consumers from higher energy prices. “Designing programs that affect low-income households could be challenging: No program could address all the region- and household-specific circumstances that could affect families’ cost.”
· Fourth, why are cap-and-trade proponents devising methods to neutralize higher energy prices? This undermines the purpose and ultimate effectiveness of cap-and-trade. As CBO has stated, “Price increases would be essential to the success of a cap-trade program because they would be the most important mechanism through which businesses and households would be encouraged to make investments and behavioral changes to reduce CO2.” Link to CBO Testimony
Diverse Groups Urge Caution on Mid-level Ethanol Blends
With the passage of the 2007 energy bill, Congress doubled the corn-based ethanol mandate despite mounting questions surrounding ethanol’s compatibility with existing engines, its transportation and infrastructure needs, its economic sustainability, and numerous other issues. A year and a half later few dispute that Congress erred in pushing too much ethanol too fast.
The Subcommittee on Clean Air and Nuclear Safety conducted an oversight hearing today where witnesses ranging from the American Lung Association to the National Resources Defense Council and the National Petrochemical & Refiners Association weighed-in with a similar theme: EPA should be cautious in implementing regulations.
“With such risks at stake, we need to know much, much more about the impact of midlevel ethanol blends. The lack of well-done research may surprise.”- Blakeman Early on behalf of the American Lung Association. Link
“Our Association strongly encourages the Congress to continue to support a technology-neutral approach and to not advantage one type of fuel or technology over another.” - Michael McAdams representing the Advanced Biofuels Association. Link
“While others at this hearing will talk about these issues more in depth, the amount of ethanol we allow to be blended into a gallon of gasoline must be based on complete testing to ensure the public’s health is protected.” - Nathanael Greene representing the National Resources Defense Council. Link
Bottom line - EPA should reject calls to short-circuit its regulatory obligation and instead fully utilize sound science to determine the feasibility of mid-level ethanol blends. An injudicious rush to approve mid-level ethanol blends could ultimately prove harmful to the ethanol industry itself if these blends harm human health, damage engines and machinery, or adversely affect the environment.
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On Wednesday, April 1, the EPW Subcommittee on Clean Air and Nuclear Safety held an oversight hearing on the EPA's Renewable Fuel Standard. Senator Inhofe delivered the following opening statement:
"I’d first like to thank the Chairman for holding today’s hearing. On a jurisdictional matter, I hope that the Chair will agree with me that we need to aggressively exercise our jurisdiction over the Renewable Fuel Standard (RFS), which is in desperate need of a thorough evaluation on a host of issues.
"With the passage of the 2007 energy bill, Congress doubled the corn-based ethanol mandate despite mounting questions surrounding ethanol’s compatibility with existing engines, its transportation and infrastructure needs, its economic sustainability, and numerous other issues. Then, as now, I argued it was just too early to significantly increase the mandate and that the fuels industry needed more time to adapt and catch up with the many developing challenges facing corn-based ethanol. From everything we have witnessed over the past year, I was right. These mandates allow no room for error in a fuels industry already constrained by tight credit, dwindling capacity, environmental regulation, and volatile market conditions.
"This overly aggressive ethanol mandate has also led to consumer backlash in parts of the country. In my home state of Oklahoma, one convenience store chain experienced a 30 percent drop in fuel sales once they began selling fuel blended at E-10 levels. The New York Times reported this growing consumer discontent in Oklahoma City last summer:
OKLAHOMA CITY — “Why Do You Put Alcohol in Your Tank?” demands a large sign outside one gas station here, which reassures drivers that it sells only “100% Gas.”
“No Corn in Our Gas,” advertises another station nearby.
Along the highways of this sprawling prairie city, and in other pockets of the country, a mutiny is growing against energy policies that heavily support and subsidize the blending of ethyl alcohol, or ethanol, into gasoline.
Many consumers complain that ethanol, which constitutes as much as 10 percent of the fuel they buy in most states, hurts gas mileage and chokes the engines of their boats and motorcycles.
"As we examine issues surrounding the blend wall, I am deeply interested in EPA's implementation of RFS 2. Few could dispute that Congress erred in pushing too much ethanol too fast. In this light, I encourage EPA to reject calls to short-circuit its regulatory obligation and instead fully utilize sound science to determine the feasibility of mid-level ethanol blends.
"Despite the drawbacks of today’s corn-based ethanol mandates, I do support a role for both ethanol and other biofuels. The idea that we can grow and produce biofuels all over the country – not just in the Midwest – is something worth pursuing, and that’s why I support research into cellulosic, algae, landfill waste, and other biofuel options.
"I have long said that America’s energy supply should be stable, clean, diverse, and affordable. I believe we must utilize all domestic energy resources. Continued development of home grown biofuels translates into energy security and keeps jobs and dollars on American soil and in American pockets.
"On that note, I look forward to working with each of you to determine if these new mandates are even achievable and to explore the many potential ramifications of and solutions to the Renewable Fuel Standard."
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Senator Inhofe commented on March 31 on the Waxman-Markey climate tax bill.
“I look forward to a full, open and honest debate over the 600-plus page Waxman-Markey climate tax bill,” Senator Inhofe said. “It appears that this legislation is yet another version of the same story: a job-killing tax increase on American consumers that jeopardizes America’s energy security, while doing nothing to address climate change. In short, it’s all economic pain for no climate gain.”
Senator Inhofe wrote the following Op-Ed for The Oklahoman, published in Wednesday's paper, urging Congress to reject proposed energy tax increases.
As demonstrated by President Obama's budget, the administration has launched an onslaught of unprecedented policies to restrict access to natural resources and increase taxes on America's homegrown natural gas and oil industry.
The attack has drawn the ire of Democrats and Republicans from energy-producing states. One Senate Democrat recently said, "I'm going to ask the president how he thinks that increasing substantially taxes on the oil and gas industry helps us to achieve our goal of domestic energy independence of a more robust domestic drilling program. It's one of the areas where I take the strongest issue with the administration. ... But independent oil and gas producers, which are the backbone of the domestic industry, cannot bear the elimination of these tax credits."
I could not agree more.
Of the nearly 6 million Americans who are directly and indirectly employed as a result of natural gas and oil exploration, production and refining, all should be alarmed with the adverse consequences of President Obama's tax increases.
His $31 billion increase in oil and gas taxes would significantly curtail the operating budgets of all exploration and production companies, big and small.
Tens of thousands of land owners from Montana to New York and Alabama to New Mexico are the beneficiaries of monthly checks coming from the mineral royalties produced on their properties. Nearly every single one of these royalty owners would face tax increases under Obama's plan.
States annually receive billions of dollars in excise and severance taxes to support the critical funding of roads, schools and law enforcement. These revenues would significantly drop due to the forced cutbacks in exploration and production caused by these federal tax increases.
Furthermore, every marginal well operator in the country should be acutely aware that these proposals will force the premature plugging of potentially tens of thousands of low-production marginal wells.
Despite the rhetoric, America's oil companies are already paying taxes at the highest rates. Figures from the Energy Information Agency indicate that America's major oil producers already pay on average more than a 40 percent income tax rate.
After President Jimmy Carter imposed a similar windfall profits tax on the oil and gas industry back in 1980, the nonpartisan Congressional Research Service later determined that its results were hugely counterproductive: "The WPT reduced domestic oil production between 3 and 6 percent, and increased oil imports from between 8 and 16 percent. ... This made the U.S. more dependent upon imported oil."
For American jobs, for the international competitiveness of American companies and for the consumers at the pump, Congress must reject Obama's energy tax increases. These counterintuitive policies will undoubtedly make our nation more dependent on foreign oil, not less.
These counterintuitive policies will undoubtedly make our nation more dependent on foreign oil, not less.
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As the Senate debates the merits of using budget reconciliation to advance climate change legislation, EPW Policy Beat found an enlightening article discussing the frequently invoked, yet inapt, comparison between cap-and-trade for greenhouse gases and the 1990 cap-and-trade program to reduce acid rain. Authors Laurie Williams and Allen Zabel, career employees of the Environmental Protection Agency who support instituting a carbon fee to address climate change, examine what they call the “Acid Rain Myth.” As the authors explain, “those who champion using cap-and-trade to address climate change claim that it has been ‘proven’ to work in the U.S. Acid Rain program. However, this assertion ignores crucial distinctions between the challenges we faced in 1990 with Acid Rain and the challenges we face today with global warming.” The Williams and Zabel study on this apples-and-oranges comparison, and the flaws of applying cap and trade to address climate change, can be found here: Link
As the following highlights from the study make abundantly clear, the experience of the Acid Rain program simply cannot be compared to cap and trade for GHG:
Another essential difference is the size of the two programs—for Acid Rain, cap-and-trade covered a limited number of sources only in the utility sector, while under a GHG cap, according to Bill Fang of EEI, “you are talking about literally millions of sources.” Link
Letter Urges Commitment to Increased Transparency, Cost-Benefit Analysis, and Best Available Science
On Monday, March 30, 2009, Senator James Inhofe and Senator George V. Voinovich (R-OH), Ranking Member of the Subcommittee on Clean Air and Nuclear Safety, sent a letter to Peter Orzag, Director of the Office of Management and Budget, urging that the Obama Administration adhere to transparency, cost-benefit analysis, and best available science in crafting federal regulations.
Each of these concepts is embedded in Executive Order 12866, first issued by the Clinton Administration in 1993. Earlier this year, the Obama White House sought public comment on whether the executive order needed to changed or revised. The following letter from Senators Inhofe and Voinovich provides their response:
March 30, 2009
Honorable Peter R. Orszag
Office of Management and Budget
725 17th Street, NW
Washington, DC 20503
Dear Mr. Orszag:
We are writing to express concern over possible changes to Executive Order 12866, which currently forms the basis for OMB review of proposed federal rules and regulations.
For 16 years, E.O. 12866 and subsequent amendments have served to help reduce regulatory duplication and inconsistency. They have empowered OMB to review significant regulations before federal agencies can finalize them.
We strongly support reducing burdensome, costly rules and regulations that can destroy jobs, increase costs for consumers and businesses, and weaken America's global economic competitiveness. Rules issued by government agencies have the effect of law, and should be used sparingly. In developing those rules, agencies must abide by several overarching principles: (1) they must be beneficial for the public; (2) they must also be developed in an open and transparent manner; and (3) the benefits they place on our nation must outweigh the burdens. These principles are important components of E.O. 12866. Any proposed improvements to the regulatory process must include these basic principles if America's taxpayers are to be well served.
The concept of openness underlies the trust the American people have in our system of government. If anything, we need to see more openness, disclosure and review in our regulatory system, not less. Anything you can do to encourage agencies to provide the public more complete and timely information about their rulemaking would serve to promote public involvement and participation.
Moreover, the principles behind E.O. 12866 should also apply to all Executive Branch officials who are currently outside the agency rulemaking process but who may be involved in the development of new regulations. We refer specifically to individuals who are commonly referred to as "czars," and who oversee broad policy areas. While not subject to confirmation and legislative oversight, they may nevertheless be playing key roles in the shaping of agency decisions. If we are to promote openness and transparency in government, these individuals and their involvement should also be covered by the President's rulemaking directives.
As for the burden that regulations place on the economy, we must continue to weigh their costs against their benefits. Cost-benefit analysis is a method of determining whether to proceed with a given course of regulatory action. Doing such analysis helps keep regulators focused on the consequences of their decisions and provides a built-in check against excesses. We may take issue with some specific cost-benefit determinations, but we cannot think of a better mechanism to test the reasoning and assumptions behind proposed regulations. We hope this provision will not be dropped along the way during your review of E.O. 12866.
We would further emphasize the importance of the authority E.O. 12866 grants to OMB for regulatory action that "will likely result in a rule that may have an annual effect on the economy of $100 million or more." We would ask that you take into account the current condition of our struggling economy when reviewing this executive order and consider a slight decrease from the $100 million threshold to coincide with the current condition of our economy. This slight decrease would ensure a greater emphasis on regulations' impact on the economy during these troubling economic times.
Finally, we trust that regulatory review will emphasize the need to test proposed rules against the best available information and science. Rigorous scientific analysis should be applied to underlying assumptions before OMB ratifies regulatory decisions affecting millions of Americans for years to come.
The principles guiding the current system of regulatory review have long been in place and are widely accepted. Any revisions to the process must keep the basic tenets that have served our nation well. We urge that any proposed changes to E.O. 12866 enhance executive branch review of regulations, while maintaining the best of the current system.
Senator James M. Inhofe
Committee on Environment and
George V. Voinovich
United States Senator