Extremism at the EPA: A Discussion on Federal Overreach, Regulation Costs, and Climate Realities

[00:00:00] Speaker 1: NICHOLAS LORIS: Hosting our discussion today is Nicholas Loris. Mr. Loris is our Herbert and Joyce Morgan Fellow in the Thomas A. Rowe Institute for Economic Policy Studies. He is an economist and focuses on energy, environmental, and regulatory issues. He examines energy prices and other economic effects of environmental policies and regulations. He is also a great advocate of the free market environmentalism. He is published in many of the major newspapers in the United States, has appeared often on television appearances, and is a major contributor to Heritage's policy blog. Before joining us here in 2007, Mr. Loris was an associate at the Charles G. Koch Charitable Foundation. He has also served as an intern, an editorial intern, for the townhall.com site. Please join me in welcoming Nick Loris. [00:00:54] Speaker ?: Nick? [00:00:55] Speaker 2: NICK LORIS: Thanks, John. I'm going to stay down here because I don't know if you saw I hobbled up here on crutches, and it won't be a pretty sight if I hobble over to that podium. Well, thank you for joining us today for what's going to be an important and lively discussion on the EPA's overreach and really how its tentacles have spread into just about every sector of the economy and impacting the lives of American families and businesses. And it's especially timely as the EPA will be holding its public hearings this week on the proposed rule to cut carbon dioxide and other greenhouse gas emissions from existing power plants. I don't know if you saw Politico reported this morning that the EPA actually had to move the location of its Atlanta hearing because of, ironically enough, a power outage. And the website says that it was an electrical problem, and if these regulations to cut GHG emissions from new and existing power plants move forward, I think we're all going to have a lot of electrical problems in the future. Now, today's event is entitled Extremism at the EPA, a discussion on federal overreach, regulation costs, and climate realities. The word extremism, to me, is pretty harsh. And I think, in fact, when discussing energy and environment policy, I try not to use it too often because then often I'll get labeled as an extremist myself or a sensationalist, and it really isn't conductive to good policy discussion. But sometimes I think you have to call a spade a spade. And if you look at what the EPA's done over the past few years or even the past few decades, you know, extremism is an appropriate word. For instance, when a family wants to do some construction or build a pond on their own private property, and the EPA ignores due process and private property rights to impose daily fines of $75,000 for violating the Clean Water Act, that seems a tad extreme. And if you don't pay those fines, the EPA wants to garnish your wages, again, without due process. That also seems a bit extreme to me. Fortunately, the EPA withdrew its plans to garnish those paychecks, thanks in large part to some great works my colleagues here at Heritage have done, David Addington, Andrew Kloster, and Rob Gordon. But the EPA's assault on private property is both alive and well. And that's really just the tip of the iceberg. Another example, many of you are already familiar with this one, is the sue and settle tactic that environmental activists sue the EPA and demand that the EPA implement a regulation in an expedited time frame. The EPA and the environmental groups will settle behind closed doors, and that settlement is approved by a federal court in a consent decree. And all taxpayers will foot the bill, not only for the agency implementing the regulation, but also for the legal fees of both the government and the environmental organizations. And the result is a burdensome, onerous regulation arrived undemocratically with unreasonable compliance time frames. That all seems a bit extreme to me. And the EPA is also using useless policy models, effectively these garbage in, garbage out, extremely arbitrary models to increase their figure for what's called the social cost of carbon that will greatly exaggerate either the environmental costs of a project or the so-called benefits from the regulations, like things like efficiency mandates. And again, my colleague, David Kreutzer, who you'll hear from later, and my other colleague, Kevin Diorotna, have done some extremely tremendous work on this. And we actually have papers outside that elaborate on why the EPA's social cost of carbon figures are bogus and really shouldn't be used in any cost-benefit analysis or any environmental assessment for a project like Keystone XL or a highway. And now we have the EPA effectively putting in place the regulatory equivalent of cap and trade legislation, which in large part is what we're here to discuss today. The EPA set greenhouse gas emission standards for new coal, for new power plants, excuse me, that would effectively prohibit the construction of new coal-fired power plants and is moving forward with regulations and existing plants. And the list really goes on and on. So I don't think the word extremism is too harsh at all. It's actually quite appropriate. And that's why I'm really pleased here to have such a great line of speakers to discuss these issues. And leading that discussion is the Honorable Congressman Mike Kelly. Congressman Kelly was born in Pittsburgh and spent most of his life in Butler, a northern suburb of Pittsburgh. After finishing college at Notre Dame, Congressman Kelly moved back to the Butler area to work at Kelly Chevrolet Cadillac, a company founded by his father in the 1950s. He then took over that ownership of the dealership in the mid-1990s, expanding its operations to include Hyundai and Kia franchises. That currently employs over 100 people from the region, and he is a leader in the local and national automotive industry. In 2011, Congressman Kelly was sworn into office as the U.S. Representative of the 3rd Congressional District of Pennsylvania, where he now sits on the House Ways and Means Committee and the Subcommittees on Human Resource, Social Security, and Oversight, as well as the House Committee on the Education and Workforce. Please join me in welcoming the Honorable Congressman Mike Kelly. [00:06:06] Speaker 3: Thank you, Nick, and it's really good to be with you all. I've got to tell you, being here is really exciting for me because I think you look at Heritage and you understand that the battle we're in isn't just a battle for today or for tomorrow, for this week, or for this election cycle. This goes on and on and on, and if we ever think that somehow by winning one fight, we won the war, we're really misguided. But I've watched Heritage and what they've done over the years. You know, with Dr. Fulner, what Senator DeMinn has done. Heritage is the one source that Americans go to. Conservative Americans look to Heritage to be that beacon of freedom and liberty. That's who you are. That's who we are. Now, I'm fortunate. Tom Colter is in our office right now. He comes from Heritage, by the way. So we have a real strong vein that goes through our office, and people ask me, "Tell me a little bit about your staff." I said, "You know what? I guess we're kind of like the Three Musketeers, all for one and one for all. They all think the same way. They all believe the same things, and they all love this country to a degree that each American has to have if we're going to be able to maintain what the founders gave us into the future, because it is that much in jeopardy right now. I know I'm preaching to the choir, by the way, when it comes to that. So to be here today with you, though, and to stand on the same stage as so many great Americans, so many great conservatives, it's wonderful. Dr. Kreitzer, nice to have you with us, and Dr. Eamon, thank you for being here, because you're the experts on this. But let me just tell you, from my standpoint, you know, sometimes you have to know where you came from to know where it is that you need to go. Now, I want you to picture something. You're looking at me right now, and I'm serving in Congress. Four years ago, I was on a blacktop selling cars. I have a business that my dad started in 1953. I bought it from him in 1997. Now, my father was a parts picker in a Chevrolet warehouse during the 30s. One of nine kids. Family never had a car. In fact, the only person in his home that ever had new shoes, new shirt, or new pants was his oldest brother, because they all got handed down. Now, if you were to talk to my dad and say, "My gosh, Dad, that must have been tough." He would say, "No, that's the way it was for all of us." But they also had a deep understanding of what it was going to take to move forward. So we went off to war. He came back home. We started our dealership in 1953. A little tiny one-car showroom in a town called Verona, Pennsylvania. Had about five service stalls. My dad and my mom worked seven days a week to keep that business going. I had four children that were growing up under that. My little sister, the fifth one, came along one much later in my mom and dad's life. But I want you to think about that. They didn't have any idea about punching a clock because, as far as they were concerned, the day was done when the work was done. It wasn't based on the number of hours you worked. It was based on the amount of work you got done. Now, I bought that store from my dad in 1997. I get a letter in 2009. I get a call from General Motors. A young man says to me, "Mike, where are you?" And so I'm sitting at my desk. He says, "Did you get the letter we sent you?" I said, "I did." He goes, "Well, I need you to sign that letter and send it back." I said, "I'm not signing anything." Now, what was in the letter was the termination of our Cadillac franchise. Not because we weren't hitting the right numbers. Not because we weren't reaching all the metrics that we had to reach. But once General Motors took the handout from the government, they also turned over the operation of General Motors to the government. The decision was made that certain people would no longer handle their product. Their product being, in our case, Cadillac. I had Chevrolet safe there with that franchise. The Cadillac franchise was going to go away. My question was, "Why?" Well, because we've determined that we no longer need you and you become an expense. I said, "That's odd because everything that I get from you, I pay for. You don't give me anything. You don't give me an envelope. You don't pay for the stamps. You don't pay for anything. I buy everything. And at the price, by the way, that you've established, I don't negotiate it with you. How could I possibly be a burden?" I said, "You know what? Just shut up and sign the papers. Send them back. Give up the franchise." I said, "You know what I'm gonna do? I'm gonna take it to arbitration." Because I don't believe that a business that took my parents so long to build. So many hours, but more than the hours of devotion. Not just to themselves, but to their kids and to future generations. We have 110 people that every two weeks get a check from us. We get it together. They're our associates. I don't call them employees. I call them associates because we work together for a common goal and that's to make sure that we're successful. Their success is a dealership success. So I went into arbitration. End up winning the arbitration. Now this is where the arrogance of it really comes up. It cost me $60,000 to fight to keep a franchise that I already had. And then the conversation with the general from General Motors, he said, "I'm sitting in Detroit. I'm taping our conversation and I have a lawyer sitting beside me." And I said, "Well, give me about 15 minutes. I'll go get my lawyer and I'll get a tape recorder." And he said, "Listen, this isn't funny." I said, "I'm not laughing." So we went to arbitration. Now he told me on the phone, "Are you out of your mind? You, Mike Kelly, in Little Butler, Pennsylvania, think you can beat General Motors in the US government? I said, "I have no idea if I can beat you, but I'm sure as hell not walking away from the battle." We won. We won. And I get a call from a General Motors employee who says, "Hey, Mike, I just want to let you know that you're going to get to keep the dealership." I said, "Okay." And she said, "Well, wait a minute. Okay. That's it? Just okay? There's no thank you?" I said, "If you think that I'm going to thank you for returning something you stole, you're talking to the wrong guy." Now until that moment, and this is where it comes into why are we here today? And why am I here today? And what was it that drove me from a blacktop lot in Butler, Pennsylvania to Washington, DC? Until it happens to you, you have no idea the overreach that these folks have, how deep they can get into what you do and who you are. They can change your complete plan of life. They can change everything that you've worked for all your life with an envelope and a letter. Are you kidding me? And then to think that, "Well, you guys are just going to have to live with that." Really? Really? Then you don't know much about America because America wasn't built that way. It's not built by people who said, "You know what? I guess we'll just take what they give us." I mean, think about what I said earlier. You got to know where you came from to know where you're going. Think about the people who first came here. Why did they leave where they were and why did they come here? They didn't want to have their lives governed and every decision made by a monarch or an emperor or a king is why don't we do it ourselves? Don't you think we know how to handle our own life? Don't you think we know how to make decisions? Don't you think we know how to live life the right way and be responsible? Now, the one thing the founders really established very early on, who they didn't trust the most, was the executive branch. And that's why they put so many things into place to try to counterbalance it. Now, I know we need an executive branch and I know we need agencies, but we sure as heck don't need rogue agencies that continue to do things and change policy that has not been approved by the public. It was supposed to be the public approving the policy. That's what the House of Representatives was. It was the people's house. That's where the heavy debate was to take place. That's where all the deliberation was taken. That's where the real anger was supposed to come out. They were supposed to say, "We're going to come up with the best solutions for the people." And then walk it down. Let the Senate, the graybeards look at it. They were a little more thoughtful, a little more calm. It's okay. You guys are all stirred up. Just settle down, settle down. We'll get it figured out. And then after that, you know, debate it, amend it, and we'll take a vote on it. And then if it passes, then we'll get it down to the White House and let the executive sign it. Well, the problem today is that we have a logjam. You know it yourselves. I keep hearing about a do-nothing Congress. I said I would agree with that, with the exception of one thing. Please tell people there's actually two chambers. I think most of America has forgot that. We can get things done in the House of Representatives. In fact, there's over 300 pieces sitting on Mr. Reid's desk, and that's where they're going to stay. Or more, I guess, more accurately, on a table. They're not going to debate them. They're not going to amend them. There's not going to be a public discussion about them. And why wouldn't there be? Because then they'd have to be on record as to what they've done. So if you never go to bat in the major leagues, you never have to worry about striking on it. Just leave it sitting aside. Don't even touch about it. We'll just get through the next election, and we'll worry about it. I'm so sick and tired of hearing about getting through the next election while the rest of the country waits for something to happen in this time period. So, having said that, so you know a little bit of where I came from. And again, if I'm in any way look aggressive on this or like I'm mad, that's exactly what I am. I don't think any single American should be sitting at home right now and think, you know what? This is great. Let's just play patty cake and they'll leave us alone. No, they won't. No, they won't. What they really rely on? Us not being engaged. What they really rely on is creating a little diversion off the one side, so you'll look away from what's going on. So those are coming in the front of your house to steal everything. There's somebody in the backyard rattling pans, so you go back to see what's going on. By the time you get back in the house, everything's gone. Regulations are that way. Now, I come from an area of the country where, for generations, generations, they've been going underground to get coal. This substance that the, the president, in fact, you think it was kryptonite and he's Superman. He just can't even look at coal. My goodness, no, no, don't, whoa, whoa, please, don't show me that product. Really, Mr. President? Really? Really? Well, I said before, if you don't know where you came from, it's pretty impossible to tell where you're going. Coal, right now, we have a piece called the Coal Country Protection Act. Why are we so intent on getting that done? Because the regulation process is in place right now, and you know as well as I do the the number of regulations that have come out, there's 17,500 new pages of regulation just with the Obama administration. Not all presidents, the Obama administration. The president, in the last campaign, didn't even talk about his war on coal. Now, as a candidate, the first time through, he said, you know what, here's the deal. You want to continue to make electricity using coal? You can do that, but we'll bankrupt you. We'll bankrupt you. So go ahead. Have a go at it. See, you guys aren't smart enough. I've got more degrees in the thermometer, and I'm the guy that can tell you how things get done. Let me just tell you what we're going to do. We will bankrupt coal. You want to make electricity that way. Say, okay, Mr. President, but you realize that 40% of the electricity this country lies on comes from coal. Really? You want to bankrupt them? Think about that for a minute. The arrogance of not knowing what you're doing and then pushing a policy. So the president then, we go through that first round, those first four years, and please tell me, anything the president wanted? What couldn't he get? You want to get the Affordable Care Act through? How many Republican votes do you need to get anything done? You want to get Dodd-Frank? How many Republican votes did he need to get? How far did he have to reach across the aisle to get help to get any of that stuff taken care of? Not very far. In fact, he didn't need one Republican to do anything. And I would just submit to you, for the Republicans back then, that was their easiest day in Congress because all they had to do was say no. They couldn't win any issues, but they could say no. The metrics just didn't fall in place the right way. Everything except one thing. Cap and trade. Cap and trade couldn't go through. At a time when the president didn't need one vote for anything. And knowing that this president's agenda, his first two years in office, was the most successful agenda any president had ever had. And why? The deck was stacked. He had everybody he needed. He didn't need to reach across the aisle. In fact, he didn't even take a glance across the aisle. He had everything he wanted right there. Every way and every day. But he couldn't get cap and trade. Why couldn't he get cap and trade? Because the people got involved in it. And they said, whoa, whoa, whoa, whoa, whoa, whoa, wait a minute. This is bad policy. In fact, this is horrible policy. In fact, you're going to drive the cost of everything in our lives higher. And the president says, well, that's exactly right. There is a consequence for us doing what we want to do with that agenda. Energy costs are going to skyrocket. But that's okay. You can afford it. Now he could sell that. Maybe that's a plan he could sell to the man in the mirror. But he couldn't sell it to the people on the ground. So I want you to think about that. All the wonderful things that he wanted to get done on his agenda, everything got passed except for cap and trade. Why? Because the American people woke up and they started talking to people who rely on votes to stay here. And so all of a sudden, that wasn't an easy vote to take. And all of a sudden, these folks that were really so convinced that this was the way to go all of a sudden became neutral on it. In fact, it got so neutral that even the president of the United States, the last time he ran, was a coal guy. And Mitt Romney was the anti-coal person. Think about that. Think about that. What a Janice. What a two-faced character that was to be able to swivel the head and all of a sudden go from being one thing to being another thing, except for one thing. After he wins the second election, then what happens? Katie barred the door. Here it comes. And they're off and running. Now, we start to talk about what's going on. The clean coal plant, okay? The clean power plant. This is going to take elements of the, you know what this is. You remember Waxman Markey? Waxman Markey, okay? That piece had the cap and trade and had all these other pieces in it. That was in there. So now we figure, you know what, we couldn't get them to buy it the first time. In fact, I have nine grandchildren, number 10s on the way. And one thing I know, when you give a child medicine, especially medicine that tastes bad, what you got to do is put it in a real pretty package and maybe give it a little cherry flavoring, a little orange flavoring. It's the old Mary Poppins routine. A spoonful of sugar helps the medicine go down. So if I can dress it, put it in a little different wrapper, and make it taste a little sweeter, maybe I can slip it in before anybody knows it. So now they're back on their same message again. We've got to clean this up. We can't let these people continue to do what they're doing. My goodness, this global warming thing is off the charts. By their own admission, they said it's not going to have any effect. In fact, I think the numbers are changes. By two-tenths of one degree, the global temperature over, I think it's the next hundred years, not ten years, not twenty years, I think it's hundred years, at a cost of a trillion some dollars. So that's not a very good return on investment for hard-working American taxpayers. At least I don't think that. I could never sell that car in a lot. Just couldn't do it. So listen, this car is going to cost you a lot more. You're going to have to take things out of your budget that you would have spent for food, maybe the kids' education, maybe fixing up the home. But you know what? It's the car I think you should own. People say, "Well, you know what, Kelly, thanks. I think if there's another store down the street that I'll go shop." Well, unfortunately, that's not what happens here, because you know what we've got to do? Whether we like the taste of the medicine or don't like the taste of the medicine, we've got to take it. And these are people that have decided that, look, you poor, poor, uneducated people, you just don't get it. You just don't get it. And it's time for us and for Heritage. And that's why I'm so thankful to be with you all today. You're the ones that get the message out. You're the ones that get through to America. You're the ones on an everyday basis that sound that alarm. You're the ones that people look to for the truth. That's the key to it. And that's where we have to make our stand. I said earlier about where we're going with this, and if you're the President of the United States, and you're talking about getting people back to work, wouldn't it be a lot better to actually get people back to work than to say, "Because of this new policy, there's up to 600,000 Americans will lose their jobs. Because of this, your electric rates will go very high. Because of this, we'll have a drop in our GDP. And because of this, that once reliable source that you thought was going to be uninterrupted is now gone. Because we get a better plan." And you know, a lot of people, when you talk to them, you say, "You know where electricity comes from, right?" Now I'm going to say this to be at all disrespectful. Most of my friends, when I ask them, they do know because they come from coal country. But a lot of folks say, "Yeah, that outlet, that's where it comes from." I said, "Yeah, but in order to get the outlet, you know where it started." I said, "Oh yeah, yeah, that's right. A plant that generates electricity." I said, "Actually a little bit farther down the line." They'll say, "Well, what do you mean by that?" I said, "Well, actually, if you watch train cars, they're filled with this black substance. But that doesn't start with them either. It actually starts in a mine." Generations of Americans. I want you to get this. In your mind's eye, picture this. These folks that came here from all over the world, they came here again for one reason, freedom and liberty. They were tired of a monarch or an emperor or a king telling them the way their life was going to be, how they were going to raise their children, where they could worship, where they could live, what they could eat. They were tired of that, so they came here. And they went underground because we had this source of energy that was absolutely incredible. Coal. Coal forever has been the workhorse that's powered American energy. And when we talk about what's made America great, it's our ability to take what God has given us and to make it into something else, something that all people can use. You have to go there and you have to see it. You have to walk those little towns. You have to go to those little churches and more important, go to those little graveyards and see the names on those tablets that are there. Look at the last names and find out who they are and where they came from and what they did. Now, in some cases in Pittsburgh, the console mine is the Pittsburgh mine. Bailey's number seven mine. Now, it's a pretty big mine. In fact, area-wise, it's the size of Manhattan. But it's underground. It's underground. 700 feet underground, as a matter of fact. So, you've got to go there and you've got to meet with those men and women to understand what it is that they do. I mean, it's easy to talk the talk, but you better walk the walk. Or you can go up to the long-run mine up in Catanning, Pennsylvania. You can meet some of those guys and see what they do. You can talk to those folks about what they've done to put a roof over the head of their family and food on the table, clothes on the backs of their children, what they do in those communities to build communities and keep communities together. So, you look at all that and you can look at Ameri-Cole and Butler. My buddy John Stilley runs a mine there. The twin brothers that I grew up with, one, by the way, who played for the Washington Redskins, his name was Ron Saul. He's one of the original hogs. Well, that hog actually started in a mine, mine and coal, as a young child because his family had something called Eagle Coal Company. Now, why do I reference that? And I told you, because we're all people and you have to know how we got to be who we are today. It just didn't happen. We just didn't rake the earth a little bit and throw some seeds there and wait for it to grow. These people worked and they worked hard and they worked long and it wasn't for selfish reasons. It's because they wanted their families to prosper. They wanted a better life for their children and their grandchildren than they had. So they made all those sacrifices to come here. And then you get here and you look to what have we become today? People who've never been in a mine, people who know nothing about coal, people who know a little bit about fossil fuels but continue to be deniers and promote an altogether different agenda are the ones saying, no, no, no, no, no, can't do that. Can't do that. See, again, you poor, poor, uneducated people. You just don't get it. But we're going to make sure you do get it and you're going to get it in more ways than you could possibly imagine. So we stand today. Now, I'm here today because of overregulations. And I want to tell you, there's not one person in this room that somehow isn't affected this way. You know the cost of regulations, complying with regulations a year? Just take a wild stab. If you'd come up with like $1.8 trillion a year, that would be pretty close. $1.8 trillion to comply with the regulations. People say, oh my gosh, that can't possibly be true. Of course not. Of course not, because we don't read the small print. We hear the big message, but we don't see the little results. You know what happens to all that $1.8 trillion? You know who pays for it? You. Every single American consumer pays for it. You know, it's not just the raw materials. It's not just the labor. It's just not the cost of energy that go into making a product or a service. It's all of them together. So when one thing gets ratcheted up, another thing gets ratcheted up. So when the government comes in and says, these are the new regulations and you must comply, you say, well, my goodness, what's it going to do? I don't really know, but you must comply. And so this term, the unintended consequences, keeps rising up all the time, rising up all the time. You say, oh my God, if we know that, why do we keep doing it? There's an old saying, you know, it's people that shoot themselves in the foot and wonder why they're limping. That's what we've become. We sit back and say, I can't understand this. Why aren't we competitive in the world anymore? Well, maybe take a look. Is it the competition that's killing us or something internally? Are we taxing people too high? Are we regulating people to a point where they can no longer compete in the world stage? Yeah, maybe, maybe. And who pays the price for it? Every single American consumer. And I don't care if you're the person that heads the board or that guy or gal that goes in there every day and punches a clock. It affects every one of us. So the question becomes, why do we continue to do it? Why do we let them push us down? Why do we let them change us into something we don't want? Why do they force a policy down our throat when we elected people to go and make sure that didn't happen? Our piece, 4808, says one thing. It says four things, actually. You can't institute this plan if it's going to affect rates. It's going to cause rates to rise? No, can't do it. If it's going to cause us to lose jobs? Can't do it. If it's going to affect our GDP, and my goodness does it, only by 2.23 trillion dollars. Those are your numbers, so you know better than I what they are. And then the other thing is the interruption of service. In where I live, a lot of people do small manufacturing. This is something you may not think about. Now, we do know about it when we have power surges, and sometimes our electronics go down, then we have to reboot them and do things to get them back up. These people that do the fine manufacturing, the little tiny things, they have to recalibrate. If they have a surge or a drop in the service electricity, they have to recalibrate. What does that mean? Well, it's no big deal. All you do is shut down the production line. Why not do that? Just get everything back up, recalibrate it, get it up and running. Time is money, right? I mean, everybody knows that. At the end of the day, what happened that day? You become less efficient, less effective. The cost of your product just went up. Your cost of your product goes up. It's on the same shelf as someplace else that can provide at a lesser price. If being just obviously consumer oriented, what part do you buy? If it's the same part, same quality, everything else, but the price is lower. Which one are you going to buy? You're going to buy the lower priced article. That's where we come with this regulation. We've got to get this under control. We can't game ourselves out of a global economy because we refuse to believe that there's competition out there. We can't regulate our people to the point that they're no longer competitive and then sit back and say the problem is these people aren't putting enough money in the system. Doggone it if they're not patriotic. They need to wake up. They need to understand that they're going to have to do more than they did before and they're going to have to do it under harder conditions and they're going to have to bite their tongue when we come in and tell them this is the way it's going to be done. Well, the folks that came in with me in 2010 came in here on a different calling and they really think that a smaller government that takes less from you and regulates wisely but with a little bit of thought going forward is probably better than one that just runs roughshod over our nation and especially rogue agencies that have been so emboldened now under this administration that they can do and do anything. I mean when a person from the EPA tells you here's the theory we go into a place like the Romans used to do. We go into a little town we grab five or six people and we crucify them. That sends a message to the whole group. You talk about terrorism. You can do it in a lot of different ways. When you terrorize the people who supply everything this country needs to be great and you keep them on the sidelines, my goodness, what have we become? We have some really good people with us today and I know that you're going to have a chance to answer questions and talk to people about things. But I'm going to take this opportunity. Nicholas, I hope you don't mind coming out of the Heritage Auditorium. I want to make a public invitation to the President of the United States. I want him to come to western Pennsylvania. I want to come to this little horrible town. He is going to find people who actually still do carry a Bible and they're in their guns. They really do. They hang on to that stuff because it's the one thing they know they can rely on. I know he finds that is not the right way to go. But I want him to come and I want him because he can talk the talk, but I want him to walk the walk. I want him to go through coal towns with me. I want him to face not only those miners, but their wives and their kids. And I want him to tell them what your daddy has been doing and what your grandpa has been doing and what your great grandpa has been doing is horrible. They should never been allowed to do that. And I'm the new sheriff in town and I'm going to get it taken care of. And then I want this one to raise your hand and say, Mr. President, you know how we got to who we are, right? I'm from Pittsburgh. It's the steel city. The steel city could never have been the steel city without coal. This country could never have been the great country it is without coal. We have an advantage now that is incredible. It's just incredible. Why would we turn our back on that which made us great and diminish it in some way to make it sound like it's bad, bad, bad stuff? Stay away from it. You know what? It's time for him to take off the blinders. So I'm inviting him to come with me. I want him to come and see what Consol does. I want him to go in in that Bailey 7 mine. I want him to go to Greene County, Pennsylvania and walk in those streets. I want him to look those people in the eyes. I want to see if he's as comfortable down there as he's in Hollywood. And he wants to roll up his sleeves and take off his tie. Fine. He's going to have to do that because he's going to have to put other equipment on. I want him to go 700 feet underground with me. He's not going to have to pay for it, by the way. We'll get him there. We'll get him underground. I want him to go underground with me. I want him to look those folks in the eye and tell them there's no longer a place in America for them. I want him to tell them, you know, your communities have got to die in order for me to succeed. And we're going to change the entire face of this country because it's time for us to stand up and lead in the world, even though it's not going to make one iota of difference. We're going to do it on your backs. We're going to do it with your paychecks and we're going to do it with your future. Because I want him to have to stand and see the same people that I go to church with. I want to see him to see the same people that go to Sam's Clubs and go to Walmarts and go to Kmarts and watch every single penny. When I stand in line to buy food, the people who stand in front of me, you know what they have? They have a handful of coupons. Because they're trying to get a gallon of milk to be a little bit less than a gallon of gas. They're trying to be able to buy bread that they can put on the table for their kids to eat. They're trying to do things every day. Now, they're not political activists, by the way. They're just darn good Americans who know what the price was to get there and know the price that was paid by generations before. So easy to talk the talk. I want him to walk the walk. I want him to see these folks. I want to be down in that mine and see what it is that they do and see this horrible, horrible product because he is going to be shocked at the technology. He is going to be shocked at how clean this process is. He is going to be shocked that so many people raise their children by going underground and mining this product. And hopefully, that will start to sink in a little bit and all of a sudden think, well, maybe not just the EPA, but maybe we should be looking at some of these other agencies that are running roughshod over the American people, that are increasing their cost of living every day in every way, that are forcing people to drop what they've done all their lives to make us uncompetitive in the world. Maybe it's time to wake up and smell the regulations, Mr. President. Maybe it's time to get that smell in your nose. Maybe it's time for you to smell what it's like to be in a steel mill, smell what it likes to be underground, and smell what it likes to go out there every single day and work so hard to take care of your families and your community. And at that point, hopefully, he'll get another degree that he wasn't looking for. It's incredibly important. I will tell you this. People tell me, in fact, I had a conversation with a friend of mine before I came in this morning. He said, "I heard you got this piece called Cold Country Protection." I said, "Yeah, Tom, I do." And he goes, "Well, you know, cold country is really important." I said, "Tommy, this isn't just about cold country. This is about the whole country." If we think that only cold country gets affected, then we've lost our way. It powers all of America. All of America. The mine that I'm inviting the President to, he's been to Manhattan many times. This place underground, the area, is the size of Manhattan. Imagine that. In your mind's eye, drift into that. 700 feet beneath the surface of the earth is this mine. The Pittsburgh vein, one of the richest veins ever. He said, "You know, take a walk with me." Take a walk. We don't have to stop any traffic down there. They'll still do what they want to do. But you can go there. We'll dress you up. We'll make sure you don't get hurt. In fact, you're going to be surprised because the room that really that they do the coal in is about the size of this one. The miners don't have a pick and shovel. It's actually a piece of equipment that goes up and shaves the face. And there's a water mist that goes there and there's exhaust. There's nothing. We could see it in there and breathe the air just like this. I just want them to see it. I want them to feel it. I want them to know what it's like to be a coal miner. And I want them to come back here and say, "These folks aren't the folks that I thought they were. They're great Americans." Now, you know, the price of liberty, of course, is vigilance. And we know this. I got to tell you, if we ever think that, you know what, we won that battle yesterday. We can put our feet up and take a day off. No, we can't. No, we can't. It's every day and every play. We do that. We pay attention. We keep our eye on the ball. We look at it as to where we need to go and look back over our shoulders and realize where we came from. A lot of people have paid a great price to put us in the position we're in today. Life is truly a relay race. And I know my mother and dad that came out of the Great Depression, came out of World War II and sacrificed when they handed the baton off to me and my brothers and sisters. We were in the lead. I don't know that we can say the same thing when we pass it on to the next generation. So I would just say this generation, it falls on your shoulders. This is not an option. This is not one of those things that you can blow your head in the pillow and say, you know what, I think probably things will be better in the morning. The storm will pass and everything will be fine. One thing I guarantee you, you do nothing, you lose. You fight. And you fight every single day on every single play. And you say, we're not losing any more of this great country. These people have different ideas. And I respect the fact they have different ideas. I don't understand how they came to those ideas. I understand they have different ideas, but it's not based on fact. A lot of it is based on fantasy. And I know if there are panelists today, you're going to get to hear the real science behind it. You're going to get to hear the real message. But I just want the president to hear today. Mr. President, if you can find time, maybe take some time off from fundraising and instead of maybe playing 36 holes, play just 18 over the weekend. And I'll take you to Pittsburgh and I'll take you underground and I'll show you how it's done. So, but I know with you folks, with Heritage, it's every day for you. It's every day. It's every day. There's no time off. This is a fight we can win. As I said, my friend back home said, I don't know why you're bothering to fight it. I said, because we can't not fight it. If we don't, we lose. So thank you. Nick, thanks so much for having me here. I really appreciate it. Thanks for all of you for being here. And I'm sure there's going to be some questions. [00:39:08] Speaker 2: Well, let's open it up to questions. If you can just wait for the microphone so the folks online and capturing it on TV can hear you. Open it up. I'll let you dictate. [00:39:23] Speaker 3: I'm just going to be on the car lot. So the first one that shows up, how can we help you today? [00:39:29] Speaker 4: Yes, sir. Hey, Congressman Patrick Terps for WPXI. Yes, sir. Good to see you. Pretty strong statement there. Sounds like comparing the EPA to terrorists. I wanted you to elaborate on that. Do you really mean that? No, here's what I mean. [00:39:43] Speaker 3: Here's what I mean. Here's what I mean. And I know that sometimes we have to be so careful how we how we word things down here. I know people like to record you and they like to video because they hope you're going to stutter or stumble. And then that defines who you are. Here's what I mean. The effect of this is it keeps people from even trying to get there. It keeps people on the sidelines because they say, you know, what's the use in doing it anymore? You know, there's an old saying back home about, you know, it's just don't worry about the mule, just load the wagon. Well, I got to tell you right now, you know what the mule's doing? He's unhooking himself. They say the load's too heavy. What I mean by that is when a government can level on you taxes and regulations that makes it impossible for you to compete, then you're going to stay in the sidelines. What is the effect of everything that we see going on in the world today? These are little groups doing horrible things, but it affects the entire world. And it keeps people at home. One of the things that President Bush said after 9/11 is we cannot allow these people to make us to retreat and go back into our homes. What I'm telling people in business, and I'm telling people in their communities, do not let this happen on your watch and say, my goodness, there was nothing I could do about it. I was just scared. I sit on Ways and Means. You know, I have people come up to me all the time and tell me about horrible things that are happening to them that the IRS has done to them. I said, "Can I use your story?" They said, "You can use my story." I said, "Can I use your name?" Oh my gosh, no. Please. Please. I don't want them in here. So when I use that term, I use the term very broadly and I talk about the desired effect. If you can get somebody to disengage, if you can get somebody to stay on the sidelines that says it's not even worth going to fight today because I can't win, then you have effectively won and you will change the course of whatever it is that you want done. So I'm just saying, let's just be on the America we've always been. We've never shied away from any, any battle. And I just say right now, the internal battle is the one that affects us the most. We've got to get our economy back up on its feet. It has got to be robust and dynamic. What's holding us back right now? There's absolutely no leadership in this. None. For us, the United States of America, just let me just answer. I don't want you to think about this. You know where I'm from? Because you're from Pittsburgh too. Do you know that one-fifth of the world's fresh water sits in our Great Lakes? Now, not one-fifth of Pennsylvania's fresh water, not one-fifth of America's fresh water, but one-fifth of the world's fresh water. We are producing more per acre now than we ever have agriculturally. And when you talk about the assets we have for energy, we can be energy self-sufficient. In fact, we can be the biggest exporter of energy. So if you have water to drink, food to eat, and your self-sufficient energy, what's the one thing lacking right now? If you can tell me why there's less people in the labor market today competing than ever before, if you can tell me why our economy is not growing, if you can tell me it's something that has to do with anything other than over-regulation and over-taxation, I'll say, "You know what? We're on the wrong page, brother." You're looking at a guy that works a lot. Not total hours, yes, but works on a lot every day. I know what makes people able to buy cars. They have to have confidence in the future. Nobody enters into a contract for 48 or 60 months thinking that I may or may not have a job. In fact, maybe my wages will even stay the same. This legislation, this agenda is driving people's income down. The middle-class America, middle-income America has lost more under this president than anybody before. What a large number they've lost. I think it's almost $5,000 a year in income. These prices are going to drive up their cost of living. That's going to eliminate what they have left to spend. You can't get whipsawed like that and think the economy is going to recover. That's why I say it it terrorizes people to even try to get done. [00:43:21] Speaker 2: Anyone else? Great. Well, we'll bring our panelists up. Let's thank the congressman again for his time. [00:43:27] Speaker 3: Nick, thank you. Thank you. [00:43:33] Speaker 2: We've got two panelists right now. In the interest of time, I'm going to get going on their bios as they make their way up here. Speaking first will be my colleague, Dr. David Kreutzer, who's the research fellow in energy and climate economics at the Heritage Foundation's Center for Data Analysis. In this position, Kreutzer researches how energy and climate legislation will affect economic activity at the national, local, and industry levels. Before joining Heritage in February of 2008, Kreutzer was an economist at Berman & Company, a Washington-based public affairs firm, and from 1984 to 2007, he taught economics at James Madison University in Harrisonburg, Virginia. William Yateman, to my immediate left, is the Competitive Enterprise Institute's senior fellow specializing in energy policy and global warming. His commentary has appeared widely, featured in newspapers from coast to coast, and also on nationwide television and radio. Yateman has twice testified before Congress and numerous times before state legislatures. Prior to joining CEI, he was a Peace Corps volunteer in the Kurd Republic where he taught entrepreneurship and small business management to rural women, and before that he ran a homeless shelter in Denver, Colorado. Will does a lot of tremendous work on energy issues, and his most recent report, which is available outside, he's done the EPA's war on the states, is both highly recommended and the reason we asked him to be here today. So David, we'll start with you and then move to Will. [00:44:53] Speaker 5: Yeah, I'm going to start off addressing some of those fine print regulations that people don't pay much attention to, but when you get thousands and thousands of pages of those per year, really do add up to a fairly significant cost to the economy. The EPA put together or coordinated what's called an interagency working group to come up with an estimate of something they call the social cost of carbon. And the social cost of carbon is a dollar measure of the impact of an emission of one ton of CO2 and carbon dioxide. Now carbon dioxide, as many of you may know, but some of you may not know, is not soot. It's not the steam that we so often see coming out of the smokestacks in pictures. It's colorless, odorless, and non-toxic. The social cost of carbon looks at how much does the world warm from an additional ton of CO2 emitted today, today, next year, the year after that, the year after that, the year after that, the year after that. That is the ton you emit this year. How much impact will it have not just this year, but every year from now until the year 2300, all right? Almost 300 years from now. Now there's a bit of hubris to think that you can do a reasonable and believable estimate of the economic damage 300 years from now that is done by a ton of CO2 emitted today. One of my former colleagues pointed out that in the year 2300, Captain James T. Kirk would be 77 years old. Now I don't want anybody to think that I believe that Star Trek is reality, but I do think it's amazing that people, millions of people are willing to imagine spaceships going faster than the speed of light powered by dilithium crystals, but they can't imagine that we will be able to handle an additional ton of CO2 in the air or the moderate warming that we're likely to get from it. There are three models that the interagency working group used to estimate these damages. One of them is the PAGE model by Chris Hope and it looks at estimates of the temperature impact of CO2, which are very uncertain in spite of all sorts of appeals to settled science. Even the international panel on climate change, the intergovernmental panel on climate change, the IPCC, uses dozens of models and multiple iterations of each of those models to try to estimate what the temperature will be. So that's how settled the science is. The supposed gold standard can't choose from among dozens of models. And in any event, those models have been terrible at predicting the degree of warming we've had in the past 30 years. And in fact, for the past 15, we've had very little. Well, let me just tell you, here is a piece from a paper on which the creator of the PAGE model, Chris Hope, was a co-author. And he says, here's how the damage is. And this is a little wonky, the math. It's a times the temperature increase raised to the nth power. The most critical variable there is n. Here's what he says about it. There's essentially no evidence bearing directly on the value of this exponent. All right? So if you don't know what that value should be, and that value can change it a little bit, you get dramatically different results. Then let's do that to it. All right? It's not worth anything. The EPA is apparently immune to such criticism because people -- oh, that's all right. I was going to stomp on it later. People more famous than I am have said, look, you know, fundamentally, these three models you use are not ready for application to real world regulations. All right? What's called the damage function is arbitrary. All right. Well, let's just leave that alone. What did they do? In 2009, they came up with a technical support document, which actually they put together by 2010 to tell us what that number was. And the number they came up with then, and it changes for each year. They said in 2020, the social cost of carbon would be $26. Now we need to start regulating. So what did they regulate? All right? That $26. What's the first thing that they regulated? The first thing they regulated was the efficiency of soda pop vending machines. And I'm not kidding you. All right. So they go through. Here's that double printed on both sides. This is 55 pages from the Federal Register of August 31st, 2009. Nobody got scared by that, apparently. So in 2013, a year ago, they decided, well, we need to re-estimate. The social cost of carbon. In this interagency working group document from 2013, and here they said, in 2020, we think the social cost of carbon will actually be $43. What was the first thing they thought should be regulated with this new, virtually doubled, still entirely fraudulent in the sense that there's really nothing at the core of these models that we can count on? This new doubled social cost of carbon. All right? This will give you an idea of how deeply the EPA wants to get into your business. Now it was actually, they took the EPA's numbers, the Department of Energy that's doing this particular regulation. What would you think? You have this new number. You're really worried about it. What's the first thing you want to regulate? Where are you going to get the biggest bang for the buck? Microwave ovens. Now, you're not laughing hard enough. Let me tell you why. It's not regulating the efficiency of microwave ovens when you use them. This is a document 53 pages from the Federal Register in June 17th of 2013. 53 pages to regulate how much energy microwave ovens use when you don't use them. Now, I actually thought that was worth a bigger laugh as well, but I'll have to provide that myself. What energy do microwave ovens use when you don't use them? The digital display. Those energy hogs. You can imagine the sea level rise from that. On average, they use four watts. Some of you may remember the old style Christmas tree bulbs that we used as night lights. Those were seven watts. So this is less than a night light. But it gets better. Now, if you believed the EPA's social cost of carbon number, which I do not believe, and you dig through these 53 pages, you find out how much damage they're going to be saving with this regulation by making us use more efficient displays in our microwave ovens so when we're not using them they don't use more than four, actually more than two watts of electricity. It works out to 50 cents per year per oven. That's how much of an inefficiency they think they can correct. Okay, keep that 50 cents in mind. They say, "Oh, but that's not it. Consumers are so stupid. They don't know when to buy energy saving stuff, so we're going to make them." And in fact, by forcing them to buy something they don't want to buy, we're going to save them a whole bunch of money. How much did that work out? You add up all the number of ovens, it's a lot. But if you look at it per oven, it's $1.20 per year. Okay, 50 cents supposed damage from the CO2, $1.20 cost savings because consumers are stupid. All right, so we're still talking, you know, less than $2 a year per microwave oven. Now, what I like is if you look through this regulation, all right, here's a page that's interesting. Look at it, it's like eight-point font, on and on and on. You need thicker glasses, what you usually need. Here they talk about here these regulations, then you get around here and they say, "Well, the people from industry said that the technology you're pushing us to is not robust enough and not durable enough to be used over top of the stove because there'd be too much heat and humidity." All right, they said, "Well, let's test that." So, using the government paycheck, excuse me, the government checkbook, they went and bought a set of $500 microwave ovens. Now, there are three display technologies. All right, one is just the light emitting diode, LED, pretty cheap. The next is a liquid crystal display, also pretty cheap, but you have to have it backlit. And the liquid crystal display can give you the nice fancy pictures of a chicken leg and so on. So, you get a cool looking display in multiple colors, not just the little segments you would get from the LED. The trouble with the backlit liquid crystal display, according to the people who put the ovens together, was that they don't hold up in heat and humidity. So, they had been using something called a vacuum fluorescent display. Are you with me? We have three technologies: LED, backlit liquid crystal, and the vacuum fluorescent, the VFD. Well, the Department of Energy does not trust them, so they bought two copies each of two models each of all three technologies. Twelve microwave ovens: four microwave ovens using the LED, four microwave ovens using the backlit liquid crystal display, four microwave ovens using the vacuum fluorescent display that the industry had chosen as the one they wanted to use. They put them in an environment chamber, this temperature and that temperature, and this heat and that heat, and ran them for 10 days straight at those temperatures. The display at 10 days, not the microwave oven. And they said afterwards, we looked at them, and it seems like all of them deteriorated some, but all three seem to deteriorate about the same amount. So, we think it's reasonable to ask the industry to forego the robust vacuum fluorescent display and go to the equivalent backlit liquid crystal, because both of those can have the neat pictures and so on. All right, you see all these pages? I've highlighted one sentence out of 55 pages of teeny tiny type three columns across. What does it say? DOE, Department of Energy, notes that the test units for one of the models, so that's two ovens out of the four for that technology, one of the models with the backlit liquid crystal display failed after 20 hours at 82.5 degrees C and after 60 hours at 67.5 degrees C. Other backlit LCD model had similar luminance level as the two VFD vacuum fluorescent display and showed little to no degradation. Half of the models that they want you to use failed, but they said, hey, the ones that didn't seem to do all right. $500 microwave ovens gone, all right? After 10 days of testing. Yeah, sure, the other two probably would have gone a month. I mean, this is ridiculous. All right, this is why we don't want the federal government regulating CO2 according to their social cost of carbon estimate. The social cost of carbon estimate is bogus, and once you put this thing in the hands of the people that are working in the bowels of the Department of Energy and the EPA and wherever else they will apply it, they will come up with these ridiculous impacts justified by nonsensical assumptions, all right? Driving up costs. You can only imagine what the return rate will be on the microwave ovens that have to use the backlit liquid crystal that fail 50% of the time in the DOE's own test after 10 days of testing. All right. That, I think, is what the congressman was talking about. Now, what happens to the economy overall? Well, we've run what happens if you get rid of coal, and you find that employment in 2030. This would just be the first step. This is the action plan. We were very clear they have a war on coal. That's not the end of the war. That's the start. Employment by 2030 would fall by 500,000 jobs, 280,000 of those in manufacturing, a family of four income. As we take the GDP per capita, multiply it times four, $1,000 per year would be lost, which is $16,500 over the period between now and 2030. So it adds up to trillions of dollars of loss. So these are very costly regulations that aren't going to have a measurable impact on the world temperature in 100 years. And the social cost of carbon does not get them out of that. Well, I'll be happy to answer questions on this after William gets a chance to talk. Just super briefly, where on earth are $500 [00:57:58] Speaker 6: microwaves? I've only seen ones like $60. Next to the $700 hammers. Wonderful. My name is William Yateman. I work at the Competitive Enterprise Institute. Just a couple words about CEI. We're a free market think tank. We work exclusively on economic regulations. We don't touch the social stuff. And to give you an example of what we do, earlier Representative Kelly referenced the regulatory cost, the annual regulatory cost of $1.8 trillion. That was tabulated by my colleague, Clyde Wayne Cruz, in his annual report, 10,000 commandments. So I do beg you to check that out. That's what we do. I'm going to paint some broad strokes regarding EPA's Clean Power Plan. That's the recently proposed regulations for greenhouse gases from existing power plants. I'm going to talk about how it relates to federalism and the legitimacy of the rule. I'll note, as Nick pointed out at the very beginning, I wrote a paper that was actually published today that's based upon my remarks. So if you don't get anything, please grab a copy of the paper. It's right outside. Please contact me. It's full of all the citations and links. We can discuss this further if you're confused. Before I get to the Clean Power Plan, I'd just like to set the table with regard to extremism, the subject of this panel. EPA's most important enabling statute is the Clean Air Act. That's whence the preponderance of its regulations. Under the Clean Air Act, it's a cooperative federalism regime. The Congress wanted states and EPA to work together in order to solve the nation's environmental problems. Pursuant to the Clean Air Act, the most aggressive regulatory action EPA can take vis-a-vis the states is known as a federal implementation plan. This is, in essence, a regulatory takeover. It involves the seizure of the state's regulatory prerogatives. This is a big deal. It's nothing to sneeze at, a federal implementation plan by EPA pursuant to the Clean Air Act. The previous three presidential administrations, George W. Bush, William Clinton, and George H. W. Bush, their EPA's promulgated a total of five Clean Air Act federal implementation plans, five, in three administrations. President Barack Obama, through his administration thus far, so that's about six years, has promulgated 51. Okay, so that's the total of the previous three administrations. You add them all up, you multiply them times 10, and you add one, and that's what the current administration has done. And we still have two years of a lamed-up president to go. So hopefully that lends, or it is hoped, that lends a wee bit of context to what I'm talking about today. To get on to EPA's Clean Power Plan, I've described it using the modifier, unprecedented. It is indeed an unprecedented expansion of federal power. That is not hyperbolic, and allow me just to briefly explain why. Oversight of electricity markets has been the exclusive preserve of state governments since the New Deal. It was, in fact, a New Deal principle, as codified by the 1935 Federal Power Act and the 1934 Public Utilities Holding Company Act. EPA's Clean Power Plan would overturn, would fundamentally overhaul, indeed, this regulatory regime, as it's been practiced for 90-odd years. To date, all 50 electricity markets are subject to state regulators. Usually it's a group of regulators and a commission known as the Public Utilities Commission. It goes by other names in Texas, the Railroad Commission. But in essence, they oversee state electricity markets, uh, comporting with goals as established by state officials, state legislatures, state governors. EPA's plan would change this such that states would no longer have this discretion. They would instead have to reorient their oversight of electricity markets in order to advance EPA's climate goals. Um, I'm not going to get into the details about the, the building blocks that go into the EPA's climate goals. They're described in detail with citations in the report I mentioned earlier. The important point is that this Clean Power Plan would give to EPA the authority to impose climate federal implementation plans. So that's a big, big deal. That's a huge expansion of federal power. It is, it is not overstating the case. Um, although there is, this is somewhat fuzzy because the agency has been so opaque with regard to information, but it's not to overstate the case that this rule as proposed, if finalized, would empower EPA to impose a cap and trade on a state. So that's, you know, that's normally something a state legislature would have to pass and a governor would have to, um, sign into law. We're, we're not even precisely sure how a federal implementation plan would work under the broad powers claimed by EPA under this rule, these novel unprecedented powers. So it's a big deal. It's a big expansion of power. So it bears asking, did Congress intend for this? Um, and I would say all the evidence suggests no. Uh, to begin with, there's the aforementioned regulatory regime, um, created by the New Deal, these two new deal statutes, the PUCA and the federal power act. The Congress was very careful to deny federal energy regulators, the very powers that are now being sought by federal environmental regulators. Okay. That's a, that's a trip in your mind. This is over the electricity industry, systemic, um, uh, statewide electricity market. So that's a big deal. If, why would Congress have denied this power explicitly to FERC, but some EPA's led to seize it? Um, the second factor that would militate against any notion that the Congress intended for EPA to have this power is the nature of 111D itself. Now, 111D, section 111D of the Clean Air Act is a whence EPA's authority for this rule. It is the enabling provision, if you will, of the Clean Air Act. Two media outlets have used the modifier obscure to describe Clean Air Act section 111, and that's Politico and New York Times. And I think that's a very apt descriptor. It's 291 words inside a mountain of a statute. It's a small provision. Congress, with regards to environmental regulation, has demonstrated amply, um, that when it wants to take on a, a big measure, when it wants to impose big time regulations, that it'll, it'll give them, um, I'd say the time of the day to use, I guess, a cliche, um, or an American idiom. Um, and that is to say that the Clean Air Act contains provisions of broad regulatory scope, but they're given entire sections of sections of the chapter. The notion that a 291-word provision, um, within a subchapter somehow empowers the EPA to overhaul electricity regulation as practiced for 90 years is frankly inconceivable. Um, it's the Supreme Court that said, um, and I'm paraphrasing, that Congress doesn't hide elephants in mouse holes. And by that they meant it's, it's rare is the case when some teeny tiny obscure provision, and this, again, obscures is apt for 111-D. It's been used in five previous, I'm sorry, four previous occasions for five pollutants. Uh, the source categories were landfills, sulfuric acid production plants, phosphate fertilizer plants, and craft pulp mills. So four, bless you, four sectors of the economy in 40 years five pollutants. So it just simply, it's never been controversial. EPA approved most state plans pursuant to its section 111-D regimes in direct final rules. These are the, the most uncontroversial of EPA actions vis-a-vis the states, sort of the opposite of a federal implementation plan. Uh, so all of this is to say it's an obscure provision. There's no way that Congress intended, um, for this provision to empower EPA along the lines of what EPA is claiming. The third and final reason why we have good cause to, to suspect that Congress in no way intended this is that the 111th and 112th Congress, um, addressed climate policy. There are a number of bills, three between those two Congresses came up, um, for action. And each time they died in the Senate by a bipartisan fashion. Um, to this end, I'll simply note one, one example to make this clear. In 2009, there was a cap and trade, um, bill. I believe it was the, the Warner Lieberman, or maybe it was McCain, Warner Lieberman. It was one of those iterations. The important point is that 20% of the Democrat caucus in the Senate sent the bill's sponsor, Barbara Boxer, a letter saying we can't support this. Okay, so 20% of Democrats in the Senate. If the Congress hasn't enacted climate policy, so our nation's representatives, then why the heck is EPA doing it? Um, so I'd argue that this bill, for those three reasons, doesn't have a congressional mandate. Um, I'd also argue it doesn't have any electoral mandate whatsoever. And Representative Kelly got to this. Um, the way things are supposed to work, we've got this, you know, this expanding regulatory state that, that is sort of quasi-legislative. Um, the reason we allow the executive, the presidency to, in effect, implement policy that has not been enacted by the nation's representatives in Congress, um, is because of a political aspect, is because of the, the belief, the notion, the principle that the executive branch, at least, has been vetted by voters, that these ideas have been vetted by voters. As noted by Representative Kelly, President Barack Obama ran to the right of Mitt Romney on energy and environment in 2012. He didn't mention once, in any of the presidential debates, global warming, or climate change. As Representative Kelly noted, he called Romney anti-coal. It was all about, in the second debates, I don't know if you recall. Um, it was crazy. He was, he was, he was, he was calling Romney anti-coal. He was saying there's been more fossil fuel production under my watch than anyone else. We're above Bush. That's a playing with facts and numbers, but that's an aside. Um, the upshot, who was this man? So when it, when it comes before the, the national electorate, he's not talking about climate change. He's talking about all the oil and gas that, that has been engendered by his administration. And he's talking about how the other guys anti-coal. It was only after he was elected that in June, I think it was of 2013 of last year, that he rolled out his climate plan at, uh, Georgetown University. So this wasn't even vetted. It's, it's one thing. So it doesn't have congressional, it doesn't have a congressional, clear congressional mandate. If anything, I'd say that Congress, all the evidence militates, suggests the exact opposite, that Congress would no way have intended this. It has no electoral mandate. Um, this is not to say that EPA closed its ears, um, to all input. It was reported on July 6th. Um, and this is just to wrap things up. July 6th, I'm sure you're all aware if you've been following this rule, the New York Times reported that the NRDC, the three lawyers at the NRDC wrote the blueprint for the Clean Power Plan. I want you with this notion of how consequential this rule is, um, to, to perhaps think how outrageous it is that a special interest, um, that maintains a C4, one of these political advocacy groups, that's colloquial term. I assume you all know what that means. That means they can give money to candidates, they can lobby. Since 2003, they've been actively lobbying. Um, all their lobbying money goes one way. Um, they, they were actively campaigning for the president, get out the vote, all that jazz. And now they're writing the most consequential, um, climate rule. One which, as, as David noted, won't actually impact the climate. One whose purpose seems to be to target an industry that is very much in disfavor of the special interest that wrote it. Um, so I would just suggest to you that's, that's a manifestation of a phenomenon known as regulatory capture. Um, and that is, that's really what we fight at CI. It's this notion of special interest, co-opting state power in order to persecute their political enemies. And I would say that's what we've got here with this rule. Uh, we've got the good people at NRDC, and Sierra Club and whatnot. Um, they're going after dirty fossil fuels and they're using state power to do so. And the tool, the primary tool is this regulation. So that's my two cents. [01:11:10] Speaker 2: I know we're a little out of time, but if we have time, uh, we can throw out some questions. Does anybody have any? Somebody's got to have a question. Down here on the left. [01:11:26] Speaker 7: Um, good afternoon. My name is Scott Cameron. Um, earlier in my career, I worked at the office of management and budget and, uh, a wire up there was usually a small island of, of, of sanity in, in terms of environment, of economic and environmental policy. And, uh, I'm, I'm wondering, has OIRA weighted on any of these regulations? And if so, was it been ineffective or what's your, what's your sense of [01:11:50] Speaker 5: what's going on? I don't think it's been effective. Um, I'm glad you brought that up because the, for instance, in, in running regulatory analysis, doing cost benefit analysis, uh, the OMB, which OIRA is part of, um, stipulates that you use a discount rate, which is pretty wonky, but it's what you need to, to compare future costs and benefits to present costs and benefits. They should bracket them with 3% and 7%. Those are discount rates. Um, they say that in extreme cases, you can make an argument for something outside of that, but you need to do those too. They didn't do the 7% when they ran their social cost of carbon estimates. Um, we have the models here, Kevin Dyerotna, my colleague, he couldn't make it to the audience today because he's all, he's so busy running other models as well. Um, so we ran two of the three, uh, integrated assessment models that generate the social cost of carbon. The third one is the page model that I mentioned. The, uh, the proprietor of which will not allow anybody to run it without making him a coauthor. So I, for some reason, I don't think that should be a lot of use, but the other two were very nice and they let us run it. Um, when you plug in 7% instead of the 3%, which is the one that the EPA settled on, the, the social cost of carbon drops by 85%. And in fact, if one of the models, the fund model is the only one that recognizes that in some moderate amount of warming can be good with a 7% discount rate, um, and with the more up to date estimates of how much temperature will be affected by CO2, that number goes negative for the first 40, 50 years. That is, if, if, if you believe these models, and again, I don't believe them, but if the EPA had done what they should have done, one of, of their three models they run says we should actually be subsidizing CO2 emissions. So that, that's how, one of the reasons why we think they should not be used for this and that the social cost of carbon is just a fictitious number at this point. But, so the, uh, getting back to your question, OMB has, has very clear guidance. Three percent, seven percent is simply ignored. So I'm afraid they have been shunted. [01:14:05] Speaker 6: Uh, this is actually the rare instance whereby I agree with the environmental special interest with whom I, I guess I do intellectual battle. Um, OIRA, the process he's speaking about is sort of this, it's, it's, it's, it's, the office of information and regulatory affair. Is that wonderful? So it's this office within OMB that has sort of a, a post rule vetting responsibility pursuant to an executive [01:14:30] Speaker 7: order. I believe it's not pursuant to legislation, is it? It's an executive order. Actually, they clear draft [01:14:36] Speaker 6: rules and final rules. Okay, wonderful. So they're sort of how, the final vetting of a rule before it's promulgated. And I support this. I support presidential control of regulatory agencies. Even if it's not based upon legislation, I love this idea of OIRA. A big problem I have with OIRA, and one that this is a problem that I share with the good people at NRDC and Sierra Club, um, is that it's entirely opaque. So there is no, unless the, unless it's accidentally leaked, we never have any idea what OIRA is. And correct me if I'm wrong, please. We, we never have any real idea of what their input is. Um, so as a pro transparency guy, somebody who wants to peel back the curtain of the regulatory state, it's disconcerting to me, although I support in principle the president having a last look, you know, at a regulation before it comes out from EPA, um, with the president's, you know, president's team, OIRA, I would much prefer it if it was on the record. If, if what, if their alterations, if their input was redlined and then posted at regulations.gov in the docket, I'd be much more comfortable, um, with OIRA's role, which again, I support. I want presidential control of these regulations. I don't want agencies, rogue agencies run amok, but I just wish it was, um, you know, open, transparent. [01:15:53] Speaker 7: The, the theory behind the opaqueness is that an agency should not promulgate a rule even in draft unless it's consistent with presidential policy. So if, if, if a OIRA wasn't opaque, then an agency could essentially say, well, this is what we were going to do before it went to the White House. And you don't want agencies freelancing as a theory. [01:16:15] Speaker 6: To me, that wouldn't, that didn't sound too terrible. I mean, to be able to be like, oh, that's what the agency originally wanted. Oh, the grownups in the room said this. I mean, [01:16:23] Speaker 5: I would just like to, to see that. But anyway, it seems like they're not even doing that. [01:16:32] Speaker 7: Over here down the left. If they're supposed to be, um, if they're supposed to be implementing the president's policy, that's exactly what they're doing. Here, here, I support it again. The call is, it's just the opacity. Yeah. I mean, they're, they are doing what the president wants. Oh, [01:16:53] Speaker 5: hiding the numbers back, right? You talked about the heritage analysis. There's been a lot of [01:17:01] Speaker 8: controversy over what the ultimate targets were. Obama said he wants to get to 80% below 2005 by 2050. Now, if you look at your analysis, tell me what your numbers look like versus the trajectory for the [01:17:17] Speaker 5: president's plan. Uh, yeah, we, we, first of all, we didn't take it out to 2050 as a, economist. I'm embarrassed to go to 2030 thinking that we could actually make reasonable predictions there. Um, but the, the, the current plan is well below the trajectory you would need to be on to get to an 80% cut by 2050. And as is mentioned that the, the, the two degrees C that Congressman, uh, Kelly mentioned, that is, that's how much global warming would be moderated at the high end. If you believe the intergovernmental panel on climate change is most dramatic estimates of sensitivity of carbon and temperature to carbon. That two degrees C is if the U S cut its CO2 by 80% by 2050 and flatlined it from there on out. Okay. So it's none of the plans people are offering, uh, you are going to do anything measurable. If we did the 80% one, you might be able to parse out two degrees C out of the noise, but I'm not sure. Um, but yeah, so we're, it's a, it's a non solution to what is probably a non problem, but it's pretty expensive. [01:18:25] Speaker 9: So last one right here. Cooper, she, I'm a student at the university of Texas, and you kind of started your, your speech saying that it's, um, it's unwise to look, uh, 300 years in advance. And you kind of just followed up on that. And I was wondering, um, what do you think some of the changes are going to be in the next 300 years that are going to allow us to deal with carbon dioxide, um, in a, in a more [01:18:49] Speaker 5: efficient way? Yeah. That's exactly what I don't want to do. Try to become the, uh, you know, science fiction writer. If we look at 300 years ago and the sorts of changes we've had, and there's been constant progress, even though some of the things man has done, have done cause damage. The aggregate impact is dramatically good. And there's no trend line that you can point to in terms of overall human progress that says we're heading to a negative and in so far, maybe something terrible will happen. Uh, you know, I think it's well within our ability to destroy ourselves, but the trend line on temperature change is not accelerating as the dire predictions of the climate models need to have. That is the temperature, matter of fact, it's not increasing at all in the last 15 years. It may go back to its moderate rate of about a degree per century, which is not the catastrophe that people have. Um, the standards of living, the GDP per capita rising, food production per capita rising, uh, those aren't going. Sea level is rise is not accelerating. It's going at a fairly constant rate. So, you know, you want to get your ruler and put it on those lines and plug it out 300 years. Uh, we really don't need to do much to combat CO2. [01:20:14] Speaker 2: Thanks guys. Uh, please join me in thanking David and Will for their time. I think there's lunch outside and, um, thanks again. [01:20:28] Speaker ?: Thank you.