researchers. one thing that we have done which is now been i think quite helpful in that regard is to make sure if you're an early stage investigators who hasn't come to nih before with a proposal that you compete against other others who have been at this for a while. and that has done quite a bit to equal lies the success rate amongst the new bies. that is one thing. another thing is increase the number of awards a bridge to independence from a post doctoral fellowship. which we are finding to be a very successful way to make that leap from a training position to an independent faculty position in a research intensive university. we're also making sure that we have our graduate students and post docs exposed to multiple different career paths because not all need to end up as

research tract faculty. there are jobs in industry, journalist, many where needed and we want to be sure people find the right match for themselves. we have started new programs, an early independence award which i'm excited about which allows a talented phd to skip the post doc and go to an independent position. i go to the presentations each year and it's the most exciting day of the year because of their vision and their ideas. similarly we have this new award where you can't apply if you've previously had a grant and your valentine's day has to be out of the box, a little wacky for you to be allowed to apply for that proposal mechanism. and when we look at the output it has been truly impressive. all that is great but of course it doesn't solve the main problem we have which is this loss in purchasing power for

research. we can try to balance things as best we can, protect those young investigators. we can only go so far. >> i appreciate that. and resources are obviously key to this as well as the coordination of programs that we've discussed in the bill that i've introduced and will be reintroducing. the flip side of that is what would be impact be of nih's current programs for new researchers as well as the impressive new initiative if congress should not reverse sequestration? >> i think we continue to see this downward curve which is very troubling indeed. surveys have indicated close to 0% of researchers supported by nih are now contemplating moving to another country or to another kind of career path because of the concern they have. i just spent last week i was in

san diego. i met with the training students so-called medical scientists training program. there was a room full of the most incredibly gifted talented future physician scientists you can imagine. in the past when i met with groups like that ten years ago it was all about the science and how excited they were. but this was a group whose brows were if you areoed who are really deeply anxious about whether there is a path for them. and their questions weren't so much about science as to whether i could give them some sense of optimism about the future. i tried but it wasn't as easy as it should have been given the talent in that room. >> senator casey. >> thank you mr. chairman. i want to thank you and the ranking member for having this hearing. these are deadly serious issues the ones that dr. collins just spoke to about the impact of funding diminution. it's probably the worst example

of penny wise and pound foolish that we can imagine. and sometimes it comes down to one name, one person, one case. the young girl in pennsylvania 9-year-old, who thankfully is healthy right now, emily white head who had a particular kind of leukemia. and the only way her life was saved was because of an experimental so-called t-cell therapy that was pine nird by folks researchers i should say nih-funded researchers at children's hospital in philadelphia. when it comes to these debates about funding levels which frankly are rather bizarre when we consider the outcomes positive outcomes that we have through nih. i have to ask, what if down the road because we didn't make the investment because congress failed would the next elly

white head be saved? so i think it's worth not just contemplating but using those examples as a springboard to action. dr. collins, i just want to go back to something you mentioned before. and i know it's by way of reiteration but it's important to repeat ourselves around here people get the message a little better. did you say that nih has lost 23% of its purchasing power since 2003? is that accurate? >> that is in fact accurate. and i can actually show you a graph that would maybe make that more clear. if you look there at the yellow line that is the nih budget adjusted for the effects of inflation. you can see the doubling that happened with that peak going up to 2003. and you can see the steady detier ration since then and that adds up to about 23% loss in purchasing power over the last 12 years. >> the other part you

highlighted, i had not heard the percent of those contemplating moving because of lack of funding or uncertainty regarding funding. what percent of that is researchers? >> in this particular what happened to emily you can trace back 50 years of hard work understanding the immune system and understanding cancer ultimately getting to that

point. >> i wanted to ask you about the president's initiative, the precision medicine initiative. in the context of emily and other children. tell me about how that initiative can or any other undertaking or initiative that nih will be involved that will focus more on the pediatric research the pediatric research that leads to those breakthroughs. >> well, the precision medicine initiative aims to have an early focus on cancer and a longer term effort to try to build this million strong cohort across the nation to try to take advantage of a coalesance of really exciting technological opportunities. one is of course the genomic revolution, the ability to get information about dna at a remarkably low cost considering where we have been. the other is the advent of electronic health records which is now the norm.

another is the ability to use wearable sensors that people are excited about having access to detect various aspects of human physiology, whether it's glucose or something monitoring your environmental exposures or your diet or your blood pressure. all of those things are coming into their own to have a very large scale court across the age distribution, gender, geoif i. we could really begn to figure out what are the risk factors and what can we do about them and how can we monitor and treat chronic disease. this is a joint effort between nih, our partners at fda and onc involved with meaningful use. and we're excited about how this could transform our understanding of biomedicine. >> thank you, dr. >> could i just add one brief comment. i just want to underscore that

as you think about what can be done to really harness the extraordinary advances in science that are occurring today and the resources that nih so rightfully needs and desperately needs to ensure that importance work basic clinical and translational gets done, that you not forget that in order to actually see those products those ideas become real world products, it has to be accompanied by appropriate investments in f.d.a. that give us the opportunity to develop our area of science to ford that final bridge to a real world product and to help ensure that the investments are being done in the most efficient and streamlined way as they are trying to actually move that product through the development pipeline into the product. and one of the disconnects that worries me a lot and i'm sorry but i have to say it since it's the last time before this

committee that everyone thinks that if you want to deliver on the promise of science more investment in nih that is absolutely critical and foundational but you do not want an f.d.a. that isn't fully equipped to oversee the product that is are coming before them, that isn't well staffed to do efficient modern regulatory reviews. and you want to be able to bring the nonl and expertise of f.d.a. and product development into those early stages. >> may i say i heartily agree with my colleague and would like to endorse everything she says. >> i agree as well. thank you for your service. >> thank you for calling this hearing. and thanks to you both for your service. thank you work closely with you on a couple of things and thank you for your service. and we are sorry to see you go.

one of the -- and i also apologize for just getting here. i had a hearing in judiciary that was also very important. i'm proud to represent minnesota as you know dr. hamburg and our medical device industry and we have spent some time working together and when i first got in this job and had some -- dr. suren came to minnesota and had some discussions with the industry roundtables with him and i noticed a kind of different culture between the regulators and the device manufacturers. i wonder why that would be. but -- and life science along with the f.d.a. did something i think was for the first time ever a private-public

consortion on regulatory science and i just want to ask you how you believe that's going. the name of it escapes me. >> medical device innovation consortium. >> yes. which it says what it is. i like names like that but can't remember them. the medical device innovation consortium. can you from your perspective how has that been working? >> well, i think it is an example of the kind of thing we can and should be doing more of as you know bringing together private industry academic researchers not for profit organizations, and government, together under one organization that is committed to advancing the regulatory science needed to advance medical device development. it has grown enormously sips it

was started. i think there was initially some skepticism perhaps. but it has grown. and it has identified critical areas of research whereby advancing the research through this partnership it will benefit medical device development much more broadly bauds it's doing things like helping to design innovative clinical trial approaches that will make the clinical trials less cumbersome and make it easier for products to go into clinical trials to demonstrate safety and efficacy, developing computer models, and other simulations where without the costs, the time, and the potential risk to patients you can really examine whether a device is going to work and how the design should be tweaked, et cetera, looking at how can we better integrate patient reported outcomes and their

experience of using a device into the development and review process. so focusing on some of the most important issues before us doing it in a way that advance it is science and doing it in a way that actually creates knowledge that becomes a common good for other product development in the future. >> thank you. and i'm glad that -- we're proud of that private-public partnership is working. i want to talk a little bit about precision medicine, what it's done, and sometimes when i think about precision medicine i think i was born a little too early. i think of all what things are going to be like 20, 30, 40, 50 years from now. let's talk about digenostic -- lbts. the university has developed a panel of more than 1200 genetic variations that can be tested

for to identify risks for specific genetic diseases. the mayo clinic which is in rochester, minnesota, has also made significant investments in developing evaluating. but these folks are concerned that regulation that is not thoughtful or careful enough could hamper the life saving potential and undermine the medical research designed to identify and target root causes of disease. i applaud the chairman and the ranking member for working with the f.d.a. and industry efforts to hold series of briefings on this relatively new topic. but dr. collins, i would like to know what role nih will have in advising the f.d.a. with regard to regulation, to what extent are your two agencies engaged with one another, which i think senator collins talked

about. no relation. as a researcher yourself what is your view on how the two agencies should work together for safe effectively technologies without interfering with the innovative work? >> senator i appreciate the question. and this is an area that nih and f.d.a. have been working together closely over the years and are particularly closely working right now to try to accomplish just what you said to be sure that the kind of laboratory developed tests particularly in the field of genetics where things are growing so quickly are offered to patients in a way that benefit them and doesn't slow down innovation but also has appropriate oversight particularly in high-risk situations where false results are actually lead to decision that is can be quite harmful. f.d.a. released back in the fall guidance on risked-based oversight of laboratory developed tests. we think that is a very

thoughtful document that has now sort of become the foundation for multiple conversations and workshops including one february 20 that was held on the nih campus to try to get additional input about this. what we can do that i think is actually turning out to be quite a nice partnership in a very specific way is we have already a data base which samples across the entire medical literature what has been reported as far as this particular dna variation being connected with this particular disease or zeeds risk. so that data base is being cure yated in a way that people can find the information. bru you can't necessarily look at that and know which of these should you rely upon and which might be a result that one person found but somebody else didn't. so you need an expert panel on top of that. a group that we call clin jen which is basic clinical genomics. and looks at the data base and makes decisions about whether a

particular dna variation has been shown to be associated with a medical risk like a mutation that has been seen in many people with breast and over varne cancer and what they think about the whole set of information that's there. f.d.a. is very interested in that particular nih funded effort in order for them to be able to have expert advice about what you can trust and what you can't. but we're not the regulators. f.d.a. has that role. this is a great i think opportunity for our relatively roles to be nicely interdigit yated and it will be critical for medicine as we see more and more opportunities playing out with this cohort of a million or more people. we want do be sure if we feed them back information that it's right and they can trust it and it's been reviewed by the regulatory agencies. >> since this is your last hearing in your current capacity would you like to have the last word on that question? or any other question before we wind the hearing up. >> well, on that question i

would just say that the world of digenostics is complicated but it's very, very important because at the end of the day it is what guides the ability of a health care provider or a patient consumer to make sure that they are getting the best possible treatment for the condition that they have. it also having accurate reliable digenostic tests is crucial to our actually being able to do the fundamental research that will reveal the opportunities in treatment prevention and care because if the test isn't accurate all of that research isn't going to mean much. so we think that at the core of all of this is our responsibility to make sure that digenostic tests work, whether they're laboratory developed tests or much more advanced next generation sequencing which dr. collins was talking about at the end there which is really using jen middle class science and technology to give us vastly

expanded sets of information so that one digenostic tells you information about thousands millions of potential vareyants not just one dige not yick one disease. but at the end of the day our goal is not to create unnecessary regulation but to be able to assure the american people their health care providers and the companies that make these products that when a product goes into the marketplace it will do what it says it will do. and in fact, that kind of regulatory foundation is common sense. it also is what enables innovation to be driven forward. because when you have some tests that aren't held to the same standard as other tests then the incentive for those who are coming from the device, the traditional device industry developing f.d.a. regulated digenostics, the inyent for them to stay in that business when someone else can create a

test and market it without any of the same assessment and review is problematic. so i think it is kind of an interesting example of why things get very complicated but at the end of the day f.d.a.'s role is to help feed innovation to patients who need that innovation but we want innovation that works innovation that will make a difference in promoting and protecting their health and that will benefit our health care system and the industries that are so much part of the united states economy. >> thank you for doing that. and i apologize mr. chairman for going so far over my time. >> that's fine. senator murray do you have any concluding remarks? >> i would just say dr. hamburg, well stated. thank you to both of you for excellent testimony. i think this was a really good hearing. senator alexander, i look forward to working with you on this. >> thank you, senator murrifment and dr. collins just for the record, you mentioned the success rate has declined over 30 years.

what about the absolute number of grants? has that gone down too? >> the absolute number of grants that we fund versus those we receive it's been bouncing around but it's under 10,000 now for new competing -- >> but 30 years it was what? >> i would have to get you the number. >> that's what i was trying to compare that. >> the biomedical research community has grown in that timetable. i can get you the specific numbers. >> it would be interesting to see that. but thanks to both of you. thank you for being here. and it's very important that you were here and that we thank you for your six years of service at f.d.a. and i hope you will accept our invitation to stay in touch with us especially over the next year as we work on these issues. dr. collins, we are going to stay -- you'll still be here and we're going to stay in close touch with you. this has been a good conversation in the fact that the two of you were here helps signal the importance of it,

the tenants of the senator's. of course by 2017 we'll be in the midst of the user fee discussion. but the issues that we intend to get in here are different from those. and what i would say to those in your agencies and to the administration is this is a train that's on a track to get to the station. it's going to get somewhere. some of us are on the appropriations committee and we'll be working on the sequestration, the funding levels. that's one thing that we can do. but there's also the question as i mentioned of that 42 presidents administrative cost. if there's some things that we need to do some laws that we need to change, some other agencies if you can get that from 42 to 43 that's $3 billion one time. so there's the question of reallocation. there are questions of other obstacles that you've run into that o you would say if you could change that that would make our life better. this is in no way trying to diminish the accomplishments of the f.d.a. or the nih over the

last few yeerings as to say we're in this exciting era the house, the president the senate all headed in the same direction. we would like to get there within a year or so and we would like to have your help in making sure we do that, that we do that well. this is an unusual opportunity to get a result in a town that doesn't that often see the president and the republican congress on the same train headed in the same direction toward an important station. so i by your being here you help to emphasize that. we look forward to continuing our discussion. the hearing record will remain open for ten days. members may submit additional information for the record. within that time if they would like. thank you for being here today. the committee will stand adjourned.

i will make of note who is here if you will do that. and we will bring this meeting to order. great to have the panel. had a chance to meet each one of you and i do think that the most important thing when we get into these rules and regulations is the state perspective because they're the one whose have to carry these things out, have to pay for all this stuff. so we are here today with the state officials. the clean power plan is unpress depted in scope complexity and requirements it will impose on state governments.

the proposeful undermines the longstanding concept of cooperative federalism under the clean air act where the government is meant to work in partnership with the states to achieve the underlying goals. instead the rule forces states to redesign the way they generate manage and use electricity in a manner that satisfies president obama's extreme climate agenda. to date we have 32 states who have opposed this rule. 12 states including my state of oklahoma are suing the agency over a lack of authority to promulgate the proposals. nine states have passed resolutions in their legislatures that express limits tolt proposals' application. five states have passed laws that would limit the proposals' application. had the e.p.a. engaged in a meaningful dialogue with all these states the agency would not be rushing ahead to impose

such an unfair and unworkable and likely illegal regulation. while the e.p.a. is busy selling this as a plan to save the world from global warming, we know that this rule will have miniscule impacts on the environment. in fact, last week during the budget hearing administrator mccarthy admitted that the agency has yet to do anything modeling that would measure the proposals' impacts on temperatures and sea level rise. there's a reason for that and the reason for that is that neara, a highly respected group, on economic modeling an analysis used the e.p.a.'s models and numbers and found that after spending $479 billion over a 15-year period we would see the double digit electricity prices increase in 4r states, reduce grid reliability resulting in voltage collapse and cascading

outages. however, the clean power plant would reduce co2 concentrations by less than 0.5% global average temperatures rise would be reduced by only 0.01 degrees farenheit and sea level rise would be reduced by 0.3 million meters which is the thickness of three sheets of paper. further any perceived benefits would be rendered pointless by the continued emissions growth in india and china. hold that up a little higher. that's a good chart there. these -- you can see the problems. this is the whole point that administrator jackson was talking about. what we do unilaterally here in the united states isn't going to have that much effect because it doesn't affect other countries. these results or lack thereof show that this rule is not about protecting the environment or saving lives of

the local citizenry. this proposal is about expanding the government's control into every aspect of american lives as mit climate scientists richard litsen's noted to be one of the foremost climatologists in the country. controlling carbon is a bureaucrat's dream. if you control carbon you control life. e.p.a.'s rushed timeline in practical assumptions and arbitrary mandates pay no mind to the fact that this will be damaging to state economies and local residents. their proposals are nothing more than a power grab. we have been through these arguments multiple times before most recently when the president failed to garner enough support for cap and trade back when nancy pelosi was a majority so they had the white house the house and the senate. they couldn't get a majority vote in order to support this. so i appreciate very much all of the people coming so we can

hear the voices from the states and it's nice of you to take the time to be here. senator boxer. >> thanks so much mr. chairman. and i want to welcome all of our witnesses. i'm very proud that mary is here. she is really a legend in our state and has worked on the environment for her whole adult life and she now is executive director of the california air resources board. she is going to describe the successes that we are having. i'm also proud that my home state of california has been a leader in this field and here's the deal. we're prossperging. we have to reduce carbon pollution in order to reduce dangerous climate change and we can't wait any longer because we're seeing the impacts all around us. according to nasa the ten warmest years on record occurred in since the year 2000 and 2014 was the warmest year on record. people can put their head in the sands but that's the fact

and facts are stubborn things. according to a new peer reviewed research and the proceedings of the national academy of sciences and i trust my colleagues respect the national academy of sciences, california's record temperatures are driving the state's extreme drought and scientists predict it will get worst over the coming decades. just two weeks ago scientists at nasa, cornell and columbia found that if we fail to act aggressively to cut carbon pollution we have an 80% chance of a mega drought in the entire west.

our majority leader senator mcconnell told state governments to ignore the law of the land. and one of the most popular legislative actions in our history. so we know we can reduce carbon while growing the economy but i want to talk about california here and the regional greenhouse gas initiative where new york is prost. petersburg as well. we'll hear some of that from our witness. california is on a path to cut its carbon pollution by 80% by 50e as required under our law in our state.

during the first year-and-a-half of the state's cap and trade program california added 491,000 jobs, a growth of almost 3.3%, which outpaces the national growth rate of 2.5%. we are living proof that growing the economy and a safe environment go hand in hand. and we are a very large state. this has benefited the middle class. it may interest you to know that the energy information administration found last month that california's monthly residential electric bill averaged $90 compared to oklahoma's monthly bill which averaged $110. under california's climate program many consumers are even receiving a twice a year climate credit of $35. that's further lowers their utility bill. so california, new york, and other states around the country should be proud of their leadership. and putting forward real solutions to climate change.

and showing that meeting the goals of the clean power plan will benefit our states and our people. i look forward to hearing from today's witnesses. thank you, mr. chairman. >> thank you senator boxer. we're going to have some introductions by their request of some of our members of the panel. let's start with senator brasso. >> thank you very much mr. chairman. and it gives me great pleasure to bring greetings from the committee to one of our -- those witnesses this morning which is todd par fit who is the director of the director of environment quality. he has a long history working in the state of wyoming and specifically working in this department. you will remember mr. chairman that our former wyoming department of environmental quality director spoke here testified a number of years ago. todd has worked closely with him and has succeeded him is now our director.

it's interesting because today as todd testifies he will have worked with a democratic governor and a republican governor in wyoming and has always put wyoming first, has done what's best for our state and our environment. so it's a prifflidge today for me to introduce one of those testifying director of the department of of environmental quality for wyoming. thank you. >> anyone else here for introductry purposes? i don't believe they are. we're going to go ahead and start with our testimony. we would like to ask you to do your best to keep your time. we'll start with mr. meyers and we'll work to the end. you're recognized. >> thank you chairman inhoff, ranking member boxer, and members of the committee for inviting me today to testify. i'm michael meyers from the new york attorney general's office. my perspective is slightly

different from those of other members of the panel. as an environmental lawyer i've worked for the past 15 years at the attorney general's office counseling state regulators on legal issues related to air pollution and climate change. and also lit gating those issues in the courts. it's particularly appropriate the committee should seek to hear state perspectives because under the provision of the clean air act that e.p.a. is using for the clean power plan states are in the driver's seat. but for us to succeed in this critically important area, each state has to be willing to take the wheel. from the perspective of state new york that has already taken action to cut power plant greenhouse gas emissions, i have good news for other states. you can significantly reduce these emissions from the power sector and do so in a way that helps grow your economy. new york and other states in the regional greenhouse gas

initiative have reduced greenhouse gases from electricity sector in our region by 40% from 2005 levels. and reinvesting the proceeds from the optional pollution allowances in renewable and nrnl efficiency projects has kept down electricity costs in our region. e.p.a.'s clean power plan would build off the work that states like california have done in this area. the plan would cut greenhouse gases from power plants by about 730 million metric tons, equivelnt to the annual emissions of powering half the homes in america. the shift to cleaner generation would also result in substantial public health benefits including 50,000 fewer asthma attacks by 2030. but back to the point i started with. for this plan to work, states have to be willing to step up. some are discouraging states from doing so on the grounds that the clean power plan is

unlawful. my written testimony highlights why such arguments are meritless. first, under section action under section 111 d to address greenhouse gases from fossil fuel power plants is required under the clean air act. the law requires e.p.a. to ensure that states achieve emission reductions from power plants necessary to protect human health and welfare from the harms of carbon pollution. second e.p.a.'s regulation of hazardous air pollutants from existing power plants under one provision of the clean air act does not preclude the use of section 111 d to require those plants to cut the greenhouse gas emissions. the implication of that claim is that e.p.a. had a choice. it could either use the air pollution program to cut power plant mercury emissions that poison the fish we eat, or it could combat climate change by

using the provision the supreme court said speaks directly to power plant carbon emissions. not only does this interpretation defy common sense, it's wrong as a matter of law. third, it is clear that e.p.a. has the authority to set substantive emission limitations for states to meet. in the absence of such a benchmark, state plans could vary widely in terms of their stringsy and effectiveness. states have a lot of flexibility, however, on how to achieve their emission targets in a way that best suits their respective circumstances. fourth. it's also clear that e.p.a. has the authority to i want pret the best system of emission reduction to reflect the various ways in which states and utilities have reduced greenhouse gas emissions from the electricity sector. e.p.a.'s building blocks approach appropriately recognizes successful strategies such as cap and

invest programs, renewable portfolio standards, and energy efficiency that states and utilities have already shown can significantly reduce carbon emissions and do so cost effectively. in conclusion, here's what i would urge state regulators to consider. the world scientists are telling us that we need to act now if we are to have a chance of avoiding catastrophic harms from climate change. our faith leaders are telling us we have a moral imperative to act. the law the clean air act requires us to act. and e.p.a.'s plan for cutting greenhouse gases from existing power plants is on sound legal ground. both e.p.a. and your fellow states are open to working with you on how best to cut emissions in your state. the time is now for state leadership. so take the wheel. thank you for the opportunity to testify and i look forward to answering the committee's questions. >> thank you. mary nichols is the chairman of

the california air resources board. you're recognized. >> thank you chairman inhoff, ranking member boxer, members of the committee. thank you for inviting me to be here. i am mary nichols, chair of the california resources board. and i'm honored to be here to support e.p.a.'s proposed clean power plan which we believe will unlock state innovation across the country to protect our people and grow our economies. the framework proposed by e.p.a. is a workable, practical plan that will cut carbon pollution along with other forms of pollution with a focus on increasing energy efficiency and the use of cleaner domestic energy sources. it provides an opportunity for a better future. this is the future that we are already working to create in california. our success story has been one of bipartisanship. the 2006 california warming -- global warming solutions act was signed by our republican

former governor civil wars snagor who appointed me to this position and our democratic governor jerry brown who has reappointed me and has placed climate change at the core of his agenda champ ynging our enormously successful carbon market ramping up green energy programs and working nationally and internationally to spread solutions that will protect our vulnerable citizens, our extremely valuable agricultural industry our coastline, and our forests against the already growing reality of climate change. californians overwhelmingly support our board's efforts to move california towards cleaner and more efficient sources of energy, and to address the grave threat that global warming poses to america and to the world. i am here today to share some of our successes with you and to emphasize the e.p.a. is

using its clean air act authority in the way that it was meant to. to spread success across the country and to encourage each state to develop its own plans to cut carbon pollution and to grow its economy. and i am going to skip some of what's in the prepared testimony because i really want to focus on the fact that we believe that working together not just as an environmental agency but under the direction of our governor with the public utilities commission and our energy commission as well as the independent system operator that controls the transmission wires, we can deliver not only a more resilient energy system but we can also meet and even exceed the targets that e.p.a. has set. we're on track for a third of our state's energy needs to be met by renewable energy by the year 2020 20 and governor

brown's established a goal of getting to 50% of our energy from renewable resources by 2030. our carbonwide carbon intensity has already fallen by nearly 5% since 2009 and it will keep falling. now, that's not only due to electrical power plants. it's also due to cleaner fuels and cleaner vehicles which are an integral part of our plan. the power plan, the e.p.a. power plan is only one piece of the overall president's climb plan but it is an important one. but the main thing i want to emphasize is that this is happening at the same time that california is prospering. we're growing jobs, we're growing our economy faster than the rest of the country. we have grown our jobs since the carbon market has gone into operation by 3.3%. personal income and wages are up. again, growing at rates well above the national average. our electric power grid delivers power relibey

resiliently and efficiently thanks to the continued stewardship of the transmission operators and as senator boxer indicated power bills are actually down. californians pay the ninth lowest elect trystry bills in the country. states all across the country and we do talk to many of our colleagues are discovering that clean energy pays big dividends. for example, oklahoma is on track to exceed its 15% renewable energy target for 2015 thanks to a very successful wind energy industry, a policy that has yielded billions of dollars in investment in that state and helped to cut pollution. and of course california and oklahoma are not alone. we know that texas often billed as our rival in many ways leads the nation in wind industry. as many states in the midwest as well as the west and the south are taking action to ensure their rate payers and their citizens against risks to

reliability that come from dirty and inefficient coal plants by replacing them with cleaner power and energy efficiency investments are being used again in states red and blue to cut power bills. we think that the clean power plan will encourage states to take broader advantage of strategies that they're already using saving money and invigorating economies across the country. and of course to the extent that they choose to work together around their regional grids they will do even better because we all know that a regional approach will be more cost effective for all. as a result, we believe the net benefits of this plan amount to something like 48 to 82 billion in 2030 representing lives saved, six days avoided and climate risks abated as well as greater productivity lower

costs and a more efficient energy system. so it builds on 40 years of success, federalism as the chairman indicated and now confronts us with an opportunity to address one of the most severe challenges of our time in a way that can also create new jobs and increase our energy security. thank you very much. >> thank you. thomas easterly is commissioner of the indiana department of environmental management. you're recognized. >> thank you. good morning. my name is thomas easterly and i am the commissioner of the indiana department of environmental management also. i bring you from the governor and i appreciate the opportunity to share with you indiana's current perspective on the proposed 111 d regulations for fossil fueled electric generating units. the proposed regulations will

detrimently impact indiana for a number of significant reasons. we are the most manufacturing intensive state in the united states. more than 80% of indiana's elect ristty comes from coal. we have a 300 year of supply of coal in our state and 28,000 hoosiers are employed in the coal industry. we recognize that we need all forms of energy to power our economy and the pence administration is developing an updated energy plan for the state that will continue to foster greater use of renewables and other energy sources. at the same time we know that coal is a crucial energy resource that must continue to be utilized. following the release of the proposed rule my office carefully examined the proposal in light of our mission. we also engaged private sector stake holders and other state agencies in an extensive review of the proposals and its potential impacts. our analysis came to only one conclusion. this proposal will cause

significant harm to hoosiers and most residents of the united states without providing any measurable offsetting benefits. for those reasons indiana's office of energy development office of utility consumer counselor, department of natural resources utility regulatory commission, and my agency filed joint comments urging the u.s. e.p.a. to withdraw this proposal. the comments that accompany the joint comments has been shared with the company. the most ironic impact of the proposed regulations is that they are likely to increase worldwide greenhouse gas emissions by decreasing the international competitiveness of u.s. businesses due to increased energy costs. competitive businesses have been investing in cost effectively energy savings activities for decades. under this proposal the total cost ot products repro-deuced will need to increase eroding our international competitiveness and resulting in the loss of manufacturing jobs in indiana and across the

nation. when these businesses close u.s. emissionless decrease. the worldwide greenhouse emissionless increase as our businesses move to areas with less efficient and more carbon intensive energy supplies. indiana once held a competitive advantage. but not any more. indiana's low cost of elect trystty advantage has slipped and e.p.a. regulations have significantly contributed to that change in position. the state utility forecasting group in indiana has forecasted a 30% increase in indiana electrical costs in part from u.s. e.p.a. furthermore increasing in energy cost hit

the poor, elderly and most vulnerable in our society first. at a time when indiana is doing all that it can to grow its economy, and create jobs, the e.p.a.'s proposal creates a very real possibility that the increased energy costs will slow our economic progress and raise people's utility bills. in indiana we are obviously concerned about the economic impact of e.p.a.'s proposed rules on business and consumers but we have also filed 31 pages of technical comments. we want to make sure the rule does not result in unintended consequences such as reduced reliability resulting in brownouts or not yet having all the neskry infrastructure in place to convert from coal to natural gas. for purposes of due diligence, indiana is evaluating all available responses to the regulations. however, the fact that this

misguided policy will harm hoosiers and other people in our country while actually increasing the worldwide level of the very emissions it is designed to increase compels indiana to oppose the proposed regulations. thank you for the opportunity to share our views and welcome your questions. >> thank you. todd par fit is the director of the wyoming department of environmental quality. you are recognized. i am the director of the wyoming department of environmentalmr. parfitt: i thank the quality. committee for inviting the state of wyoming to share its perspective of the clean power plan. the state of wyoming has provided extensive comments to the environmental protection agency on its proposed rule. we take great pride and how we manage our natural resources providing for environmental stewardship in energy production.

as our governor has stated, it is a false question to ask, do we want energy production or environmental stewardship? we must have both. wyoming sends electricity to both the eastern and western power grids, reaching from iowa to washington. wyoming generated 49.6 million megawatts hours of electricity in 2012 with 66% of the electricity consumed beyond our borders. this electricity generation includes 88% coal and 9% wind. the epa's proposal impacts states differently. each state has unique characteristics that drive the application of the building blocks. for wyoming, the proposed goal is unrealistic to achieve. each state has unique characteristics in energy portfolios that drive the application of each of the four

building blocks. for wyoming, the proposed goal is automatic and unrealistic to achieve. the epa is proposing a compressed timeline in which states are asked to submit state plans. considering the perplexities of the proposal and developing a compliance plan along with needed legislation, the timelines are problematic if not unrealistic. wyoming's emission reduction requirement by 2020 is far greater. this disparity is referred to as the cliff. wyoming's evaluation identified data errors or incorrect assumptions. a focus on key concerns with renewable energy, since it has the largest impact on the proposed goal. 100% of co2 emissions from fossil fuel power plants regardless of end user, will be attributed to the energy producing states. 66% of electricity generated in wyoming is consumed outside its borders. according to the epa, renewable energy credits will be contributed to the consuming state, not the producing state.

85% of 4.3 million megawatts hours of wind energy generated in wyoming is consumed outside its borders. yet when epa calculated the state goal, they applied the 6% escalation factor to all 4.3 million megawatts hours generated in wyoming. more than half the land in wyoming is owned and managed by the federal government. subjecting many renewable projects. while the intent is good, the process is slow. the blm high-priority wind project took over four years. now the fish and wildlife service requires an additional decision. two federal fast-track transmission projects in wyoming are in their eighth year of the process. both are still awaiting a final decision. finally, the epa's assessment of available land in wyoming for wind development failed to consider environmental

conflicts such as greater sage grouse habitat, other critical habitats, and protected areas of cultural and historical significance. factoring in these considerations reduces lands for renewables, as proposed by 83%. all of these factors lead to an unrealistic goal for wyoming. now directing your attention to the graphs. graphs one depicts wyoming's path as proposed by the epa. senator inhofe: which one? mr. parfitt: it is on the right. graph one depicts a bar graph of wyoming's path as proposed by the epa. one can observe the dominant influence of the renewables component as shown in green. after review, wyoming determined what is practically achievable given epa's proposed avenues. this is shown in graph two.

the colored bars were derived through extensive analysis by the state, representing what may be possible in wyoming. as can be seen, there is a wide gap between the analysis. based on the proposed goal and with limited options, the simplest illustration to meet the goal is to consider how many coal-fired power plants must be closed. this would result in four plants closing, representing nearly 4200 megawatts of the states total coal fleet of over 6700 megawatts. strengthened investment would be nearly $1.5 billion and does not include the cost of replacement power. we look forward to continued dialogue with the epa and other states as the epa considers our comments and reconsiders their proposal. thank you for allowing me to

provide for the committee. senator inhofe: thank you. the commissioner of the service commission of wisconsin is recognized. summary of our state assessment and our concerns with the clean power plan. i am ellen nowak. i am the chairperson for the public service commission of wisconsin. last fall i was intimately with the construction of the comments the state of wisconsin submitted to the epa, and i submitted those comments together with my written testimony for the record. wisconsin is a manufacturing heavy state with industrial customers representing over one third of sales and over 60% of our state's power generation comes from coal. if the problems in the clean

power plan are not remedied, the work wisconsin has done to restore a manufacturing sector will be threatened. as a regulator, i also remain concerned about the reliability of the grid, considering the fast shift in energy production -- reduction required by this proposal. with that background and because of the far-reaching impacts of the epa's clean power plan, we brought together an interdisciplinary team. this team consisted of public service commission experts and utility rate modeling, economics, environmental regulation, and engineering, along with department of natural resources experts in environmental regulation. particularly the clean air act. using a standard accepted modeling utility program, we forecasted the cost of this regulation under a number of scenarios with varying assumptions about the future. candidly, our team felt that taking into account the impacts of these regulations on every

family and business in the u.s. is a kind of analysis that should have been done by the epa before making such a proposal. the result of our analysis have been provided to the committee. here are two highlights. first, this single federal regulation will cost wisconsin ratepayers between $3.1 billion and $13.4 billion. this is only a production cost increase. it does not include necessary upgrades to the gas and electric infrastructure that will add significantly to the cost of compliance. these costs are also on top of the 11.6 billion carbon dioxide reduction numbers that wisconsin ratepayers have paid for since 2000. not only do we not receive credit, but the proposal actually penalizes wisconsin for being an early actor. second, as our assumptions about the rule became more realistic the costs rose. for instance, would you assume that this massive increase on

this reliance on natural gas would drive natural gas prices higher? that reasonable assumption raises the cost of this. at the heart of the matter, we question the very foundation of this proposal. the epa constructed four building blocks, each of which was evaluated independently. then to determine the foundation for each states' target reduction, the best system for emission reduction, they added the carbon dioxide reductions resulting from each of those building blocks. unfortunately, the epa ignored how the building blocks would affect each other when all four were implemented together. for example, increasing reliance on natural gas, as suggested by building block two, would severely decrease too far below the 6% required by building block one. furthermore, epa used indiscriminate and unsupportable approaches to determine the building blocks. building block one applies a

national level he rate to each coal power plant regardless of , the ability to realize those gains. in contrast, building block three takes a regional approach and is driven by average or noble portfolio standards found in states arbitrarily grouped together. as currently written, under any previous interpretation of the clear -- clean air act, the system proposed by the epa is actually not a system at all. first, the building blocks are outside of the coronation or control of the omission owner or operator. second, they are not recognizable systems that can be applied to an emission unit, and they cannot guarantee a certain conclusive greenhouse gas emission reduction when implemented as a whole. to further highlight this point, engineers of the public service commission modeled the epa plan and concluded the building blocks would deliver a 15.6% reduction in carbon dioxide emissions.

this is a far cry from the 34% that the epa claims is attainable and necessary for wisconsin to comply. finally, the compliance timelines are unrealistic and unworkable. the lead time required for planning, permitting, and construction will require the full proposed compliance period through the end of 2030. in conclusion, i sincerely appreciate the opportunity to speak to this committee today. you will find my submitted written testimony delves much deeper into the issues of modeling and the technical aspects we find troubling. we can all agree on the need to protect our environment, but this proposed rule does not strike the right balance in protecting public health reliability of the grid, and economic security. thank you very much. senator inhofe: thank you. the end of your remarks answered the first question i was going

to ask, the problem you submitted in compliance with building block one, and yet they say they have to fit the federal program for 2 3 and four, would that create a problem? you adequately answered that. similarly, i would like to ask you -- north carolina proposed to delay the clean power plants until a final ruling i the courts on the many legal uncertainties. if your member during our legend hearing, the administrator of the epa talked about $3.5 million to hire a bunch of new attorneys because of all the losses and problems. i would ask you in your state of wisconsin, you could end up taking steps to comply with the clean power plan and the state came back and found it was out of compliance. what kind of problem would that be for wisconsin? ms. nowak: it creates a lot of uncertainty.

as a regulator, the parties we regulate and the ratepayers all want certain he about where the rates will go and what we may do. when we become commissioners they don't give us crystal balls. we cannot look into the future but we have to make the best decisions based on the information before us. we ran into a similar issue with the cross-state air pollution rule, when it was hung up in the courts and utilities were , starting to make movements to comply. we have to do the best to allow them to try to recover, and we have to be judicious in spending ratepayer dollars. we will work closely and obviously monitor the legal proceedings that wisconsin is involved in so we do not unnecessarily pay ratepayer dollars. senator inhofe: mr. easterly, in your written testimony you elaborated a little bit more

how the clean power plan proposal could actually increase the cost -- increase the amount of emissions. this is a position i have held ever since lisa jackson said that no, doing something unilaterally in the united states is not going to affect it -- the positions or problems. because this is not where the problems are, as you saw in the chart. did you want to elaborate any more on the concept about the increase instead of decrease in emissions? mr. easterly: most of our businesses, the basic bottom of our economy, the steel industry , the auto industry rely on energy costs, and they are internationally competitive. you can buy steel from brazil and india and russia and use it. why would you bother to bring the steel to the united states? you bring the finished product here. the emissions will happen in those countries.

some of those countries have decided -- i understand china signed an agreement to consider stopping the growth of their emissions by about 2030, but between now and 2030, those missions are still much higher than the unit of production than we have here. so our businesses have to maintain internationally competitive, i am concerned total emissions will go up. senator inhofe: thank you very much. ms. nowak, have you done an analysis as to how much of a rate increase would the psc have to approve to implement this plan? ms. nowak: we expected to be in the double digits, depending on which method of compliance we use. a good he easily in the upper 20% of an increase. right now we have more of an aggregate number of $3 billion

to $13 billion for the state to comply. how that is broken down on a per ratepayer increase will be fleshed out. as they come in and ask for recovery, but this is going to be a significant increase on ratepayers all across the board, low-income to large manufacturers. senator inhofe: i'm going to be either asking you for the record, mr. myers, or if there is time at the end of my six minutes, if you would agree with the position many have taken that wouldn't it be better to wait until these controversial legal issues are cleared up before requiring them to comply? i hope you have time, because i do want to hear your answer to that, so i would say to you, ms. nowak, mr. easterly, and mr. parfitt what parts of the clean , power plan will require enactment of new laws in your state, and how long would it take to develop and implement

these laws? let's start with you, mr. parfitt. mr. parfitt: mr. chairman, as far as legislation that may need to be put into place, anything that would relate to a multistate plan, if there were to be one developed, would need some legislative discussion. anything dealing with a renewable portfolio standard -- basically building blocks three and four would likely require some sort of legislation. now, the timing of that is our legislature meets for a 40-day session and a 20-day session, so alternating. our next session is a budget session. there are some timing concerns related to when something can be brought to the legislature in a meaningful way through an interim topic study as well. mr. easterly: in indiana, our

legislature doesn't meet year-round. the next time they could consider things is 2016. we don't have authority for building blocks 2, 3, and 4. if i have to pass rules we have , an 18-month rulemaking process. senator inhofe: any further comment? ms. nowak: we have at least a three-year rulemaking process on a controversial rule. which i would submit this would be one. you would also have to change -- we don't have authority over building blocks three and four if we were to increase or change energy efficiency standards, those all required legislative action, which adds to the timeline. senator inhofe: thank you. senator boxer? senator boxer: what i am stunned by his some of the states' attitude. we have states during this prospering far more than your states. that is what stuns me. but it's ok. i respect your view. i want to ask mary nichols this question.

when you listen to mr. easterly respond to my chairman, and where they said actually these rules could mean we would be increasing carbon worldwide because some companies will leave the states. they will be so upset at these rules. have we found companies running away from california? last i checked silicon valley was booming. we have increases in manufacturing. am i wrong on that? ms. nichols: you are not wrong. we have experienced growth across the board. but particularly in the clean energy sector in california because of our policies. we are the leading state in terms of investment in clean technology and renewable energy in the country. solar energy in particular is booming. obviously, we have some natural advantages in california in terms of renewables. it is important to say there needs to be transition time for all industries in all states.

when we implemented our cap on carbon emissions with a trading program, there were many who were concerned about the rising cost of electricity to our manufacturing sector. it is a critical concern for everybody, along with reliability. no state, no governor can afford to take risks with lights going out in their state. that's job one. no matter how much we care about the environment or greenhouse -- greenhouse gases, and we do we , know our job is to make sure the lights stay on. i think it's important to recognize that this proposal that epa put out does have within it the flexibility and the time needed. i recognize the concerns of my fellow states and i think they are legitimate concerns, but i would assert the proposal as epa put out, which admittedly they

will be modifying as they go forward can address those , concerns. senator boxer: i think that's an important point. because you make it very clear that we need a transition time. i think epa does get that. i think gina mccarthy does get that. she is sensitive to the states. mr. myers, i wanted to ask you. last year, former epa administrator, christie todd whitman, testified before our clean air subcommittee that it was settled law that the clean air act can be used to control carbon pollution. our epa's proposed carbon standard supported by the three supreme court decisions in massachusetts in 2007, 2011, and the utility air regulatory group versus epa, june 23, 2014. mr. myers: yes, they are. the massachusetts versus epa

case, as you may recall, but denies that epa has the authority under the clean air act to regulate greenhouse gas emissions. the connecticut versus american electric power case was a case new york was involved in where we sought to get at the same emissions that the epa clean power plan is going to get at. the supreme court in that case told us federal common law did not apply because section 1, 11 speaks directly to the power plant emissions. with respect to the last decision, the decision you mentioned, the supreme court again reaffirmed epa's authority under the clean air act to regulate greenhouse gas emissions and found under the stationary permitting program if you're a limiting certain pollutants, you also have to apply the best control technology for co2 emissions. i think all told, those

decisions provide a sound foundation for the clean power plan. senator boxer: mr. parfitt, last month the council which owns a dozen utilities, including rocking on power in wyoming stated about the compliance with the power plan, and i would like to get your reaction, if the state wants push back against the plan, that is ok, but we really do have to have a backup plan. because if we do not, we will be caught in a situation without any option. and that is the worst of all positions to be in. she also stated the clean power plan's 2030 targets are achievable and urged wyoming to collaborate with other states to achieve them. do you agree with rocky mountain power that wyoming would be best served by completing a state compliance plan? mr. parfitt: i can't speak

specifically to the comments of rocky mountain power. what i can say is, our evaluation, when we look at the entirety of the plan, it does not work for wyoming. because as i showed in the charts, the options in building blocks as presented by epa in the proposal do not work for wyoming. so we would say no. because we have more than one utility. senator boxer: i appreciate that. last question. have you told epa your concerns? have you given some options to the epa? because they want to work with the states. have you let them know how you feel and specifically what is wrong with what they are doing for wyoming? mr. parfitt: we have provided comments and have had discussions since the comment period. senator boxer: thank you.

senator inhofe: thank you, senator boxer. senator rounds. senator rounds: thank you, mr. chairman. during the time we were on the campaign trail this last year and i am new to the committee and process, one of the items we talked about a lot was the anticipated cost to the average american family with regard to an increase in their costs for electric rates. the u.s. chamber of commerce , last summer, estimated the average cost to the average american family would be approximately $1400 more per year in their electric rates. i was curious, mr. parfitt. a recent statistic that comes in the case of my state, south dakota. that our electric rates would increase probably about 20% or more as a result of the clean

power plan. this is significantly more than 8.8 cents per kilowatt hour that we pay now. compliance costs could well exceed $50 per ton of carbon. what impacts will this have on ratepayers in wyoming and in surrounding states? i know people in south dakota receive power from wyoming. wyoming supplies power because of your location to the national -- natural resources available as you indicated. you have been an exporter of power. could you sure about what impact this will have for the rates in other states as well. mr. parfitt: we do provide power to many other states. if our compliance path, as we

have viewed it based on the proposal, results in the premature closure of plants, it would likely result in the raising of rates for all customers, not just those in wyoming. it would be shared across the network. senator rounds: what does the epa propose, how do they propose you respond to those stranded costs? what is their expectation? mr. parfitt: this is an issue we had raised with epa before the proposal was put out to notice. in hopes that would be taken into consideration. in our view, it has not been taken into consideration. we do not see, at this point the off ramp. we have expressed this concern to epa in our comments. we are waiting to see how they might respond in june with the final proposal.

senator rounds: so you have not had a common back or there is not a process in place to get a response back for the stranded costs that you have indicated your stay would have and would have to pass on to other states the also expect the electricity or where your organization has contracts with to provide ongoing electrical power? those stranded costs, you don't know how they will be handled? mr. parfitt: epa has not conveyed to us how they will address that particular comment at this the conversation we have point. had has been primarily to get clarification on some of the corrections that we pointed out within the proposal itself. senator rounds: the epa claims the rules give states flexibility to create their own plans. but it appears that it overlooks the fact that electricity transmission does not stop at state borders. many states including south dakota depend on neighboring

states to help support their own electricity generation and ensure the reliability of the great. the epa's modeling suggests under the proposal wyoming could cut generation by 7.5 million megawatts hours. how will wyoming -- how will you continue to power the regional economy with cuts like this? and is that an accurate statement? mr. parfitt: as far as how we would continue if we are looking at closing down existing power plants, that would create a reliability issue. however, this is getting a little out of my expertise. in terms of how to minute -- how to maintain reliability to customers. senator rounds thank you, i

: appreciate your time. i yield back. senator inhofe: senator carper. senator carper: thank you for the work you do, thank you for presenting your thoughts and responding to our questions. i come by these issues, not as a sitting senator, but as a recovering governor. i just want to share with you the perspective from the state of delaware and someone who was born in west virginia, whose father was a coal miner. .com out of a lot of different perspectives. when i was governor, i could shut down the economy of my state. we would have been out of compliance. the reason why was because folks were creating cheap elegy city to the rest of us. we are at the end of america's tailpipe as well as pennsylvania and maryland. we have to be aware how people want to be treated. i think there are important

concerns we have to be mindful of. i get it. the epa needs to be mindful of them as well. i just want you to know that there are other folks who have been affected by your ability and the ability of some to develop cheap and dirty electricity and we suffer the consequences. we have not liked it and we have tried to go to court to resolve it and have not succeeded. i want you to get in the car with me, use your imagination. born in southern delaware. we are driving east. to the delaware bay. we get to the delaware bay. there used to be a parking lot a big one. it is not there anymore -- it is, but it is under water. there are bunkers sticking out of the water. they used to be about 500 feet on the land. now it is 500 feet out in the water.

what is going on? the key is, how can we have cleaner air. how can we address the issues of rising waters. it is a real problem for us. in delaware is the lowest lying state in the country. it is a problem for us. we need to figure out how to do it together. i'm not interested in seeing epa jam something down your throats, but we need to figure out how to work it out together. it sounds like you export electricity. you don't get a lot of credit for that. the credit goes to california and other states. we have to be able to do with that. -- deal with that. i want to ask a question read the lady from california. sounds like your economy is doing pretty well. is it possible to have a cleaner environment and stronger economy? we think the answer is yes. it is a false choice. the folks from california are in

a situation where you acted early and have been good citizens, good stewards. my sense is you are going to be punished for it by epa. we are in the same situation. ms. nichols: your comment about states needing to work together is correct. to my friend from wyoming, my local utility, the los angeles department of water and power, concluded an agreement from a wyoming wind company to import wind generated electricity from wyoming to replace some of the coal fired energy they have been relying on. they are taking responsibility for being the largest demand are -- demander in our state, even though the electricity we were

using was coming from utah. there will be costs associated with transitioning into the wind. overall, the net of it is los angeles ratepayers will still be doing ok because the utility is taking steps to help their customers become more efficient. that is the critical ingredient. if our rates go up because of new investments we are making, that has to be offset in some way to shield ratepayers from rate shocks. from things that would make it untenable for them to move forward on this cleaner plan we are on. given some time for the transition, we can do it. i do think it was right to come up with a crediting mechanism.

i think epa needs to do this if they want to encourage regional cooperation as they say they do. they are going to have to allow states to work together on either a bilateral or regional basis to come up with programs where they can share the cost and benefit. that is what we are doing right now through our agreement with the canadian province of quebec. where we now run a binational trading program with emissions allowances. not everybody is going to want to go that far afield. the concept is one that has been proven to work. senator carper: can you give me what you think is a fair compromise. wyoming generating clean electricity by wind, not getting credit for it. the credit, it sound like goes to california. what is a fair compromise?

ms. nichols: i did not fully understand your question. senator carper: mr. parfitt can you try to answer this? you must have thought about it. mr. parfitt: as it pertains to the clean power plant, the two or three issues at play. the attribution of fossil fuel emissions, 100% to the energy producing states. the other issue at play is the renewable energy generated in wyoming, 85% which is shipped out of state. applying an escalator to that, 100% of that to the producing state, is unfair. senator carper: we have to

figure out a good compromise. you will have to help us. senator capito: i would like to thank the ranking member. let me say a few words about my home state of west virginia. our own epa has called the plan illegal. it has been put forward with the finesse of a bowl in a china -- shop -- bull in a china shop. i would note that 32 states have commented in concern. i would like to talk about the reliability issue. west virginia has joined with other states to block this plan. we will be hearing about this in the next several months. the dep has said these goals are unattainable. i would like to talk to this

mr. esterly. we have a lot in common. 95% of our electricity is generated by coal. we have a lot of coal, although not as much as wyoming. epa indicated it does not have concerns about reliablity. last week, pgm interconnection release a new analysis that the new powerplan -- the equivalent of electricity that could power 50 million homes. it calls into question the reliability issue. ms. nichols did mention the reliability issue as an important one for the state of california. mr. parfitt:easterly: we are.

we have a group that deals with reliability. here is the fundamental problem with the plan. it has more fossil fuel -- it will necessarily reduce the flexibility of our electric supply. you add this to the fact we have had record pjm demand days. they are better handled this year than last year. we have increasing demand. decreasing supply. and the renewable supply is valuable but is not reliable.

sometimes the wind is blowing, sometimes it's not. sometimes the solar panels have clouds or snow. their name plate capacity is higher than stated and they are not always available. i am concerned we will see catastrophic results sometime during the implementation of the plan to read we do not know where or when. -- plan. we just don't know where or when. senator capito: you have a comment on the reliability issue? ms. nowak: we have significant concerns from the perspective of system reliability. the modeling program used by the epa to evaluate the building blocks. they are responsible for maintaining our grid. unfortunately, the epa never asked to do any studies of the grid prior to releasing the proposal. work we think needs to be done involves gathering work about the gas firing units. the increase on renewable

resources on reliability. the network deliverability of units to be expected to be retired. the modeling used to buy the epa does not appear to consider these fundamental and necessary vectors. senator capito: i would note, in my state, we are reliant on coal. we have a lot of natural gas. to transition these older plants to gas is not a realistic endeavor. it is exceedingly expensive. to build new ones takes a lot of time and energy. you are going to expend energy to move forward on this as well. you have recently closed one of your nuclear plants. the plan put forward for you under this clean power plan does not take into consideration your loss of nuclear power.

ms. nowak: the loss of that plant is huge for wisconsin. we think, eventually, that is going to have to be replaced by a carbon neutral source. that was not taken into account for. it will increase the cost for wisconsin to comply. senator capito: had a hearing on ozone. the new regulations going into effect. is every county in compliance with the current regulations? ms. nichols: know, senator, we are not. -- no senator we are not. we have remaining challenges in both southern california and the central valley meeting ozone standards. the new ozone standard will add an extra challenge as well as time to that effort.

senator capito: you put that on top of what we are doing with clean power. ms. nichols: we care about the health of our citizens. senator capito: i care about that as well. ms. nichols: we rely on science. senator capito: in terms of how we are going to meet this challenge, the extension of timelines and measures, i will ask the gentleman from wyoming. what will be the easiest thing to knock down on this clean power plan that will help you meet the challenges? deadlines, timelines, lower standards, less reductions? mr. parfitt: certainly timelines are a big component of this when you consider developing a plan anytime involved. -- and the time involved. the amounts of agencies and states involved in the discussion. let alone the legislation and rules we have mentioned.

senator inhofe: thank you, senator. senator murphy. senator murphy: thank you very much. underlying this entire discussion is the challenge we have with carbon pollution methane pollution. the impact it is having across the world. we don't have to look across the world. we can look to my home state of oregon. we are seen that the fire season has grown by 60 days over the last several decades. the number of acres of forest burned has increased dramatically. we have a oyster industry having great trouble because baby oysters have trouble forming shells. the ocean is 30% more acidic than before the industrial revolution. the snowpack in the cascades is

steadily declining. this year is a trouble. brine can fill a reservoir, but if you do not have the snowpack, you are in trouble in august. we are not talking 50 years in the future to read we are seeing it right now. just like delaware, the sender talking about land underwater. -- the senator is talking about land underwater permit should the entities damaged by carbon pollution be able to sue? mr. easterly: i'm not a lawyer so i can not answer who should be able to sue. remember that the environment is changing. for all of recorded history. indiana used to be under ice. the things you are talking about are due to -- likely to continue.

senator murphy: thank you, mr. easterly. mr. parfitt, would you like to answer? mr. parfitt: i would echo those comments. this is a legal question. i'm not an attorney. senator murphy: a legal question, but the principle of polluter pays, when you do some damage to your neighbor, shouldn't you bear responsibility? as a fundamental principle?

mr. parfitt: i think it's a couple located -- complicated question. you have users that have responsibility as well. senator murphy: you don't want to answer the question, that is fine. >> if the utilities and entities -- ms. nowak: if the utilities and entities are following law and regulation, i think it would be a very chilling effect to have been subjected to legal claims. senator murphy: everybody in their first year of economics learns about externalities. image done by activities. -- damage done by activities. libertarians would say, when you do damage, you should compensate. carbon and methane produced in a million different ways, there is no state that does not produce a lot of them. we are seeing a differential and how states are taking this on. oregon is now 70% nonfossil format. mr. nichols, you were talking about a goal of one third. if you include hydro, what would that be? what's we would already be at above the 33% goal. -- ms. nichols: we would already be above 33%. or nuclear. they were trying to push for new solar, wind, geothermal.

senator murphy: say what that percentage would be if those other non-fossils would be included. ms. nichols: we would be about 40%. senator merkley: you have to aim for oregon, where it is 70%. ms. nichols: we envy oregon. senator merkley: we often respect greatly the examples you are sitting. you set up a marketplace. if we turn back in time, there was a proposal from right-wing think tanks about using markets to take on acid rain. it was not to regulate every smokestack but proceed to set up a marketplace and find the most cost effective solutions. how did that work out? do you have a memory of that? ms. nichols: i was the assistant

administrator at epa when we implemented the acid rain program. it did reach its goal. it did so less expensively. we relied on that plan in designing our cap and trade program in california. senator merkley: the marketplace used extraordinarily well. faster results than anyone anticipated. it was an off the charts success. why would that strategy worked well with carbon dioxide? ms. nichols: we believe it would. it was defeated here, but within california, it was put on the ballot. the voters chose to keep that system. they became convinced it would lead us to a cleaner energy environment. senator merkley: they wanted to see carbon dioxide produced in the most cost effective manner. isn't the clean power plan based around that same principle?

states developing their own plan with a range of different choices. ms. nichols: it is clearly allowable. i know epa was familiar with our program, but i understand they tried hard, it doesn't seem like they have succeeded it yet, to indicate to states that they would have the ability to design a plan that fit their own unique situation. senator merkley: thank you. senator inhofe: thank you, senator merkley. senator bozeman. senator bozeman: thank you very much. ms. nichols, following up on senator merkley's question, you are out of compliance for ozone. the regulatory impact says the annual cost to california would

be $800 million to $2.2 billion a year. to think individual should be able to sue for noncompliance? -- do you think individuals should be able to sue for noncompliance? ms. nichols: under the clean air act, they have the ability to sue epa or the state. california has submitted an implementation plan. we are moving forward steadily bringing down levels of ozone. we have come into compliance. >> your argument is the same as -- senator boozman: your argument is the same as hers. if you are doing things as required by law, you should not be sued. ms. nichols: one of the regions we are here to defend the carbon plan. the epa plan. it helps us with our ozone standard. we need all the help we can get.

senator boozman: with regard to the question, you agree with the ms. nowak that if you are in compliance, you should not be sued? senator boozman: i went to law school, too. we were taught anybody can file a lawsuit. sometimes they can win. i am an optometrist. when do you are going to be ozone compliant? ms. nichols: at this point, we are projecting off into the future. we are working as hard as we can to read it will probably be as challenging if not more challenging to meet the ozone standard as greenhouse gas. that is why we are supporting the epa rule because it will help us with oath.

senator boozman: to agree it will cost you $800 million-$2.2 million? ms. nichols: i can't verify that number. the analysis by epa use the same tools. senator boozman: thank you chairman. senator whitehouse: thank you to the panel for being here. let me ask first, the commissioner, in 2013, the "milwaukee sentinel" published an editorial that said, and i will quote, climate change is happening. human activity plays a huge role in that. the consequences of doing nothing could be dire. and expensive.

do you agree with the "milwaukee journal sentinel"? ms. nowak: thank you for the question. my role as a regulator, and economics regulator, we insure the reliability of the grid. i do not endeavor to take on policy behind what is before us. my role is analyzing it. rules that come before us. i look for three things, if an environmental rule, doesn't compromise the affordability safety, and reliability of our grid? that is the lens i see through. senator whitehouse: no amount of environmental cost would figure into your analysis. ms. nowak: that is not what i said. senator whitehouse: that is exactly what you said.

ms. nowak: the environmental rules cannot unduly compromise -- senator whitehouse: no matter how great the environmental cost? ms. nowak: there is a balance that needs to be struck. senator whitehouse: how do you strike that balance if you don't know whether climate change is happening and whether human activity plays a role in it? and the costs could be dire and expensive? ms. nowak: we look at what the impact on our great payers would be and the benefits to the environment. senator whitehouse: the impact could be felt through climate change as well as the rate they pay? that is not part of what you looked at? ms. nowak: the benefits have been put fourth by the epa. we are weighing it against the costs the epa has proposed.

senator whitehouse: the executive director of the wisconsin business alliance has called renewable energy and economic opportunity. she said, we should look for opportunities to promote jobs and the environment. the clean power plan is a great way to do that. there are other voices from wisconsin. rocky mount power's owner, the spokesperson, has said multistate approaches are likely to be less costly ways to meet the clean power plan's targets. the casper star tribune in wyoming, they held earlier discussion -- consistent with the multistate approach. the wyoming counterpart

continued, have thus far rejected regional advances. montana, also a rural state that generates a significant torsion of the -- portion of electricity from coal, has come up with five draft options including those that would not buy a montana to shutter coal power plants. if montana can do it, why can't wyoming? if wyoming will work with other states, why won't wyoming? mr. parfitt: let me address montana's alternatives. they assume they will get credit for 100% of the wind energy. that is not what has been conveyed by epa. we were told we would get no credit. as far as the multistate discussions, we have been involved with the same group the center for the new energy and environmental. participating in those conversations along with montana and 13 other states. there are challenges with the

multistate plan. particularly when we do not know with the end goal is going to be. all we have is what has been proposed. we don't know how epa is when to change it based on the comments that have been received. senator whitehouse: do you agree that climate change is happening? human activity plays a role in it? the consequences of doing nothing could be dire and expensive? mr. parfitt: i am here to talk about the clean power plan. if we are going to do something to address co2 emissions whether or not this is a good plan and workable for wyoming and the answer is it is not. senator whitehouse: irrespective of the amount of damage co2

might do. there is no number from co2 harm that could cause you to change your point of view. mr. parfitt: not on the proposed plan and what that does. senator whitehouse: mr. easterly, how have you built the costs of climate change for indiana to your analysis of the value of the clean power plan? mr. easterly: i don't think you can quantify in the cost of future climate change. let's go back to your other question. senator whitehouse: why don't you think you can? mr. easterly: there is nothing concrete. there is speculation. senator whitehouse: there was a report that says 8-20 3% increase. mr. easterly: those are from the clean power plant.

senator whitehouse: this is not from the clean power plan, increased cooling load. you are not familiar with that report. mr. easterly: not that one. senator whitehouse: when you're talking about the cost of electricity, are you talking about on a per kilowatt hour basis? i am sorry to go over. can i make a rhode island point? senator inhofe: how long is it? senatore whitehouse: less than a minute. average monthly bills in wisconsin are $95. in indiana, $110. wyoming, $90. rhode island, they are lower then two of the states even though the kilowatt hour costs are higher. we have invested in energy efficiency. that is the number that matters for the pocket book.

senator barrasso: ms. nowak, affordability, reliability, and safety, are those what you consider? ms. nowak: correct. sen. barrasso: just to review, when it comes to how the epa credits renewable energy wyoming, which produces a significant amount, stands to be disadvantage. you talked about how much wyoming could produce in terms of wind energy. 85% of the wind energy is exported. i heard chairman nichols say california wants to buy more. but the epa has said, no. renewable energy is only going to be credited to the state where it is consumed. not where the energy is created. which means wyoming gets no credit for the wind energy and -- it develops. i appreciate the senator saying

this needs to be addressed. how is this going to impact wyoming's plan to meet the target? mr. parfitt: this makes it difficult for wyoming to achieve its target. the estimate of renewables would be somewhere around 9 million megawatts of wind energy that would have to be developed. right now, wyoming consumes 600,000 megawatts. that equates to a 1400%-1500% increase. sen. barrasso: you mentioned a lack of flexibility from the epa in giving wyoming what we would need to continue to produce renewable sources. more than half the land is federally owned. this has a significant impact on meeting mandates coming out of the epa. you referenced permits requirements. of which wyoming has no control.

it does not seem the epa is proposing any sort of relief in plans to address these. you specifically cited, only 1/6 of the total area the epa has identified is available. due to sage grouse considerations, permitting requirements. it seems that epa is telling people to move faster while refusing to acknowledge washington's foot is still on the regulatory breaks. -- brakes. can you go into detail about federal land ownership and the red tape going with developing energy resources? it is a washington roadblock epa ought to address if they want wyoming to develop clean energy faster? mr. parfitt: what we have seen for wind energy projects, you have to go through the need the

-- nipa process, they have taken anywhere from 4-8 years. there is an additional fish and wildlife process for eagle permits. the other part of it is transmission. you need transmission to move energy out of the state. we have two projects that have taken up to eight years to get through the permitting process. they are still in that process. sen. barrasso: we had previous discussions and debate about transmission lines under the democrat controlled line. democrats voted to block transmission lines on public lands.

half of wyoming land is public land so, that has played into exactly what you're talking about as well. you also talked about potential closure of four coal-fired power plants. that is lost investment. who knows how much it will cost to replace lost power in prayer that will be passed on to citizens in the six state territory. would that mean folks, not just in wyoming but california, washington state, oregon, idaho, and utah are going to get a big energy tax increase? mr. parfitt: that is correct. the costs would be just to be did among the states involved with that system. sen. barrasso: california would have higher electric bills as a result of the epa mandate?

mr. parfitt: there is a portion of northern california part of the system. sen. barrasso: a growing number of states are raising concerns any project will become federally enforceable. making a state vulnerable to sue and settle lawsuits. unlike most sue and settle arrangements, which deal with a single plant, a state's entire electricity system could become subject to environmental lawsuits. epa agrees with this concern. during question and answering in february, the acting chief says she sees potential for this. we have heard it from the texas public utilities commissioner as well. if there is time, i would like to ask a couple folks if you believe epa can promise some sort of protection?