H. Rept. 112-519 - 112th Congress (2011-2012)
June 06, 2012, As Reported by the Energy and Commerce Committee

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House Report 112-519 - GASOLINE REGULATIONS ACT OF 2012




[House Report 112-519]
[From the U.S. Government Printing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-519

======================================================================



 
                    GASOLINE REGULATIONS ACT OF 2012

                                _______
                                

  June 6, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4471]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4471) to require analyses of the cumulative 
impacts of certain rules and actions of the Environmental 
Protection Agency that impact gasoline, diesel fuel, and 
natural gas prices, jobs, and the economy, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     7
Committee Oversight Findings.....................................    14
Statement of General Performance, Goals and Objectives...........    14
New Budget Authority, Entitlement Authority, and Tax Expenditures    14
Earmark..........................................................    14
Committee Cost Estimate..........................................    14
Congressional Budget Office Estimate.............................    14
Federal Mandates Statement.......................................    16
Advisory Committee Statement.....................................    16
Applicability to Legislative Branch..............................    16
Section-by-Section Analysis of Legislation.......................    16
Changes in Existing Law Made by the Bill, as Reported............    17
Dissenting Views.................................................    18

                          PURPOSE AND SUMMARY

    H.R. 4471, the ``Gasoline Regulations Act of 2012,'' was 
introduced by Representative Ed Whitfield with Representative 
John Barrow on April 23, 2012. The legislation would establish 
an interagency committee for the cumulative analysis of certain 
significant Environmental Protection Agency (EPA) regulations 
that impact gasoline and other motor fuels in the United 
States. Key provisions of this bill would:
    
 Create an interagency committee chaired by the 
Secretary of Energy to analyze the cumulative impacts of 
certain EPA rules and regulatory actions on gasoline prices, 
jobs, and the economy.
    
 Require the committee to issue a preliminary study 
within 90 days of enactment, provide 60 days for public 
comment, and issue a final study within 60 days.
    
 Defer finalization of new Tier 3 motor vehicle 
emissions and fuel standards, petroleum refinery new source 
performance standards, and ozone standards until at least 6 
months after the final report is submitted to Congress.
    
 Require that EPA consider cost and feasibility in 
setting any new ozone standards.

                  BACKGROUND AND NEED FOR LEGISLATION

Introduction

    The American people face the economic burden of high 
gasoline prices in the midst of a weak economic recovery. 
Several factors contribute to the price of gasoline and other 
motor fuels, including the underlying cost of crude oil as well 
as the cost of refining oil into gasoline. Refining costs are 
substantially affected by a wide range of Federal rules, 
including those issued by the EPA under authority of the 
Federal Clean Air Act (CAA).
    EPA has promulgated a number of rules and actions that both 
specify the composition of fuels and control emissions from the 
Nation's refineries. EPA also has announced it plans to issue 
the following new regulations pursuant to the CAA that affect 
gasoline and other motor fuels:
    
 Tier 3 Standards: Under the CAA, EPA has authority 
to revise motor vehicle emissions and fuel standards. EPA 
promulgated Tier 2 motor vehicle emissions standards and 
gasoline sulfur control requirements in 2000 that reduced 
sulfur in gasoline by 90%. EPA initiated another rulemaking on 
February 18, 2011, to establish Tier 3 standards, and cost 
estimates range from a low of less than 1 cent per gallon to a 
high of up to 9 cents per gallon.
    
 Refinery New Source Performance Standards: Under 
the CAA, refineries have been subject to new source performance 
standards (NSPS) since 1974. EPA has amended them several 
times, including in June 2008. In December 2010, EPA announced 
it had entered into a settlement agreement requiring the Agency 
to propose NSPS to address greenhouse gas (GHG) and other 
emissions from petroleum refineries and announced a schedule to 
issue standards in November 2012.
    
 Ozone Standards: Under the CAA, EPA has 
established National Ambient Air Quality Standards (NAAQS) for 
ground-level ozone. EPA last revised these standards in 2008 
and is currently scheduled to propose a rule reviewing those 
standards in 2013.

The need for cumulative assessment of EPA's fuel-related regulations

    To date, there has been no cumulative analysis of the 
impact of EPA's rules and actions on gas prices, employment, 
consumers, or international competitiveness. The prices of 
petroleum and refined product are projected by the Energy 
Information Administration (EIA) to remain well above their 
historic averages in the years ahead. Furthermore, the list of 
refineries that have ceased to operate continues to grow, 
including several recently-announced closures or sales of 
refineries serving the East Coast. The underlying stresses on 
fuel markets and prices are unlikely to be relieved in the near 
term, indicating that an assessment of the cumulative impacts 
of additional Federal measures would be prudent.
    Analysis completed for some previous individual rules 
demonstrates that, individually, the rules are expected to 
increase gas prices, but the rules have not been analyzed 
cumulatively. For example, the Agency's Regulatory Impact 
Analysis (RIA) of its 2000 Tier 2 rule for gasoline, which 
required a 90 percent reduction in sulfur levels from 300 parts 
per million (ppm) to 30 ppm, was projected by the Agency to 
cost up to 2 cents per gallon. Estimates of gas price increases 
that would result from new Tier 3 standards range from 1 to 9 
cents per gallon.
    Previous analyses and witness testimony demonstrate the 
potential for the Agency's individual rules to contribute to 
refinery closings, jobs losses, and other employment impacts. A 
March 2011 Department of Energy report, ``Small Refinery 
Exemption Study: An Investigation into Disproportionate 
Economic Hardship,'' concludes that compliance with 
environmental regulations ``contributed to economic stresses 
that resulted in the shutdown of 66 refineries from 1990 
through 2010.'' At the March 28, 2012 hearing, Matthew L. 
Smorch, Vice President of Strategy for CountryMark Cooperative, 
testified that for CountryMark and other small refiners, 
``compliance costs are disproportionately higher because we 
lack economies of scale.'' Noting that small refiners have been 
among those that have closed and that others are still at risk, 
he added that ``if domestic refining capacity is reduced, EPA 
regulations will actually increase the U.S. demand for imported 
fuels and consumer prices will increase.'' Mr. Smorch also 
added that ``EPA reviews each regulation separately to 
determine the impacts on the industry,'' and that there is a 
need to ``take a time out and let the experts review the 
cumulative aspects of all EPA rulemakings and their effect on 
the consumer, the industry, and the American worker.''
    Consumers may be adversely impacted by increased gas prices 
through both increased transportation costs and through 
potentially higher prices for services, or food and consumer 
goods that are transported from the point of production or 
manufacture to the point of sale. There has been no cumulative 
analysis of the impact of rules on consumers. At a March 28, 
2012, hearing on ``The American Energy Initiative: A Focus on 
Legislative Responses to Rising Gasoline Prices,'' Niger Innis, 
Co-Chairman of the Affordable Power Alliance, testified about 
the disproportionate impacts of high energy costs on low income 
households. He said that ``what high energy costs represent to 
poor people in particular and working class Americans is the 
most vicious regressive tax,'' and that ``it takes away income 
that could be made available for other things, including 
healthcare.'' Similarly, Robert Meyers, a former acting 
administrator for the Office of Air and Radiation at EPA, 
concluded that ``[w]hile current regulatory analysis is in many 
cases informative, it is limited by the scope of the analysis 
to the effect of the specific rulemaking under consideration.'' 
He also testified that ``[a] broader analysis of the entire 
sector could provide vital insights into the interactions of 
various rulemakings.''
    The international competitiveness of U.S. refineries 
relative to overseas facilities facing lower regulatory costs 
has not yet been analyzed. At a March 7, 2012, hearing on ``The 
American Energy Initiative: A Focus on Rising Gas Prices,'' 
Charles Drevna, President of the American Fuel & Petrochemical 
Manufacturers, testified that ``the size, scope, and cumulative 
burden of current and impending regulatory activity is creating 
both significant regulatory uncertainty and a slew of 
conflicting regulations that will impose significant burdens on 
domestic fuel manufacturers and eventually consumers.'' He 
further testified that ``India, China and other growing 
economies are not imposing the type of carbon restrictions on 
themselves that EPA is imposing on the American economy.'' He 
added that such U.S.-only regulatory costs ``strengthen foreign 
competitors eager to replace American manufacturers and replace 
American workers, weaken the U.S. economy, make America more 
reliant on nations in unstable parts of the world for vital 
fuels and petrochemicals, and endanger our national security.'' 
H.R. 4471 would require agencies with relevant expertise to 
undertake a more complete assessment of the impact of with 
respect to certain existing and pending EPA regulations 
international competitiveness.
    The objective of H.R. 4471 is feasible and consistent with 
current regulatory policies. The rulemaking process is lengthy 
and iterative. Months, often years, of work precede publication 
of a notice of proposed rulemaking. EPA's own Action 
Development Process guidance, published in March 2011, requires 
submission of the completed analyses to the Office of 
Management and Budget for interagency review up to 7 months 
prior to publication of a notice of proposed rulemaking in the 
Federal Register.
    Moreover, such regulatory analyses are already required by 
Executive Order 12866 ``Regulatory Planning and Review,'' 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory 
Review,'' as well as section 201 of the Unfunded Mandates 
Reform Act of 1995, and other executive orders and statutes. At 
the March 28, 2012, hearing on ``The American Energy 
Initiative: A Focus on Legislative Responses to Rising Gasoline 
Prices,'' Robert Meyers testified that ``it is clear that 
current regulatory policies express a similar objective to 
bring rational analysis to rulemakings that have a major impact 
on our nation's economy.'' He also stated that ``[i]f the 
schedule provided in the legislation is achieved, any delay in 
EPA's rulemaking activity should be either non-existent or 
minimal.''

H.R. 4471, ``The Gasoline Regulations Act''

    Under H.R. 4471, the President would establish a 
Transportation Fuels Regulatory Committee to analyze and report 
on the cumulative impacts of major EPA rules and actions 
affecting gasoline and other motor fuels. The Committee would 
be chaired by the Secretary of Energy, and include as members 
the Secretaries of Transportation (through the Administrator of 
the National Highway Traffic Safety Administration), Commerce 
(through the Chief Economist and the Under Secretary for 
International Trade), Labor (through the Commissioner of the 
Bureau of Labor Statistics), Treasury (through Deputy Assistant 
Secretary for Environment and Energy) and Agriculture (through 
the Chief Economist), the Administrator of EPA, the Chairman of 
the U.S. International Trade Commission, and the Administrator 
of the Energy Information Administration.
    The Committee would be required to study the impacts of 
planned Tier 3 motor vehicle emission standards, new source 
performance standards for petroleum refineries, renewable fuel 
standards, ozone standards, and GHG Prevention of Significant 
Deterioration and Title V permitting actions. The Committee 
would be directed to analyze the cumulative impacts of these 
planned rules or actions on:
          -- National or regional gasoline, diesel fuel and 
        natural gas prices;
          -- Global economic competitiveness;
          -- Required investment and projected costs;
          -- National, state and regional employment; and
          -- Impacts on consumers, small businesses, low-income 
        communities, regional economies, state and local 
        governments, and public health.
The Committee would be required to issue a preliminary study 
within 90 days of enactment, provide 60 days for public 
comment, and issue a final study not later than 60 days 
thereafter.
    Under H.R. 4471, EPA would be directed not to finalize new 
Tier 3, refinery new source performance standards or ozone 
standards until at least 6 months after the Committee's final 
report is submitted to Congress. This would ensure that 
regulators understand the potential impacts of these rules on 
gasoline prices before the rules are finalized rather than 
afterwards. EPA has not announced its schedule for finalizing 
any of these rules so the bill may not delay the finalizing of 
any of the rulemakings.
    Finally, H.R. 4471 would direct that the Administrator take 
into consideration feasibility and cost among other statutory 
factors in revising or supplementing any national primary or 
secondary ambient air quality standards for ozone under section 
109 of the CAA. In Whitman v. American Trucking Associations, 
531 U.S. 457 (2001), the U.S. Supreme Court recognized that 
under the CAA, Congress explicitly required the Administrator 
to take costs into account in the context of setting many CAA 
standards. H.R. 4471 is consistent with other parts of the CAA 
where Congress has expressly directed the EPA Administrator to 
consider cost and feasibility in addition to other statutory 
factors when making policy decisions relating to CAA standards, 
including those parts of the CAA authorizing the Administrator 
to set new source performance standards, automobile emissions 
standards, aircraft emissions standards, and standards for fuel 
additives and reformulated gasoline.
    This consideration of costs and feasibility, together with 
other statutory factors, is necessary because, as the standards 
have become more stringent, it has become clear that areas 
designated to be in nonattainment become subject to regulatory 
burdens with resulting adverse social welfare and economic 
consequences. While EPA set stringent new ozone standards as 
recently as 2008, the Administrator in 2010 proposed alternate 
revised standards that EPA itself projected could not be met by 
77% to 96% of the counties in the U.S. that currently have 
ozone monitors. EPA further projected that the annual 
compliance costs for the new standards would be $19 to $90 
billion per year by 2020, while other entities believed the 
costs could be even higher, and that the standards may not be 
achievable at all given the lack of available technology. H.R. 
4471 would ensure that the Administrator consider costs and 
feasibility before mandating changes to existing ozone 
standards or promulgation of any new ozone standards that would 
impose social cost and economic hardship for many areas of the 
country.

                                HEARINGS

    On March 28, 2012, the Subcommittee on Energy and Power 
held a legislative hearing on ``The American Energy Initiative: 
A Focus on Legislative Responses to Rising Gasoline Prices'' 
including discussion drafts of the ``Gasoline Regulations Act 
of 2012'' and the ``Strategic Energy Production Act of 2012,'' 
and received testimony from:
          
 Gina McCarthy, Assistant Administrator for 
        Air and Radiation, U.S. Environmental Protection 
        Agency;
          
 Robert Abbey, Director, Bureau of Land 
        Management, U.S. Department of the Interior;
          
 Chistopher A. Smith, Deputy Assistant 
        Secretary of Oil and Natural Gas, Office of Fossil 
        Energy, U.S. Department of Energy;
          
 James Burkhard, Managing Director-Global Oil 
        Group, IHS Cambridge Energy Research Associates;
          
 Jackson Coleman, Managing Partner and 
        General Counsel, EnergyNorthAmerica, LLC;
          
 Matthew L. Smorch, Vice President-Strategy, 
        CountryMark Cooperative, LLC;
          
 George Schink, Managing Director and 
        Principal, Navigant Economics;
          
 Robert Meyers, Senior Counsel, Crowell & 
        Moring;
          
 Niger Innis, Co-Chairman, Affordable Power 
        Alliance; and
          
 Joseph Romm, Senior Fellow, Center for 
        American Progress.

                        COMMITTEE CONSIDERATION

    On April 17, 2012, the Subcommittee on Energy and Power 
forwarded a committee print entitled the ``Gasoline Regulations 
Act of 2012,'' as amended, to the full Committee by a roll call 
vote of 15 yeas and 8 nays. During the markup, an amendment in 
the nature of a substitute was offered and adopted by voice 
vote. The committee print was subsequently introduced on April 
23, 2012, by Representative Ed Whitfield (together with Rep. 
John Barrow) as H.R. 4471. On May 16 and 17, 2012, the 
Committee on Energy and Commerce met in open markup session and 
ordered H.R. 4471 reported to the House by a roll call vote of 
28 yeas and 13 nays.

                            COMMITTEE VOTES

    Clause 3(b) of rule XII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Upton to order H.R. 4471, reported to the House, 
as amended, was agreed to by a record vote of 28 yeas and 13 
nays. The following reflects the recorded votes taken during 
the Committee consideration, including the names of those 
Members voting for and against.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

         STATEMENT OF GENERAL PERFORMANCE, GOALS AND OBJECTIVES

    H.R. 4471, requires an interagency committee to conduct an 
analysis of certain rules and actions of the EPA that impact 
gasoline and diesel fuel prices, and for other purposes. It 
specifies the rules and actions the committee will analyze, the 
scope and content of that analysis, and the procedures for 
finalizing and submitting the report. It defers the 
finalization of certain rules until at least 6 months after the 
final report is submitted, and it explicitly requires 
consideration of cost and feasibility in revising or 
supplementing national ambient air quality standards for ozone.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4471, the ``Gasoline Regulations Act of 2012,'' would result in 
no new or increased budget authority, entitlement authority, or 
tax expenditures or revenues.

                                EARMARK

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI, 
the Committee finds that H.R. 4471, the ``Gasoline Regulations 
Act of 2011,'' contains no earmarks, limited tax benefits, or 
limited tariff benefits.

                        COMMITTEE COST ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

                                                      May 29, 2012.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4471, the Gasoline 
Regulations Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

H.R. 4471--Gasoline Regulations Act of 2012

    H.R. 4471 would establish an interagency committee--the 
Transportation Fuels Regulatory Committee--to analyze and 
report to the Congress in 2013 on the impact a variety of rules 
and actions taken by the Environmental Protection Agency (EPA) 
would have on gasoline and diesel fuel prices. The Secretary of 
Energy would chair the committee, which would consist of 
representatives from various agencies, including EPA, the 
Department of Labor, and the Department of Transportation. The 
committee would analyze the potential economic impact of 
specific EPA rules and actions that are scheduled to become 
final in 2016 and 2020. The bill also would delay the 
implementation of several EPA rules until six months after the 
release of the committee's report. Finally, the bill would 
require that revisions to any national standards regarding 
ozone and ambient air quality take into account feasibility and 
cost.
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing H.R. 4471 would cost $3 million 
over the 2013-2017 period. Enacting this legislation would not 
affect direct spending or revenues; therefore, pay-as-you-go 
procedures do not apply.
    H.R. 4471 would require the Transportation Fuels Regulatory 
Committee to conduct a variety of analyses of certain EPA rules 
and actions, including the Tier 3 Motor Vehicle Emission and 
Fuel Standards, new or revised standards under section 111 or 
112 of the Clean Air Act applicable to petroleum refineries, 
and new Renewable Fuels Program rules. Such analyses would 
include estimates of the cumulative impact of the covered rules 
and actions in relation to changes in prices of gasoline and 
diesel fuel, costs for capital investments, and employment. The 
committee also would analyze the cumulative impact of the 
covered rules and actions on consumers; small businesses; 
regional economies; public health; state, local, and tribal 
governments; and other areas. According to the Energy 
Information Administration, completing a thorough analysis of 
such issues could require a significant increase in funding to 
gather new data and expand the agency's analytical capacity. 
However, the bill requires that the analyses be completed 
during the year following enactment and rely on readily 
available, existing data. Given those specifications and based 
on information about the cost of similar work by EPA and the 
Energy Information Administration, CBO estimates that this work 
would cost $3 million in 2013.
    The bill also would delay the implementation of several EPA 
rules related to fuel consumption and emissions, but CBO 
estimates that delay would not have a significant impact on the 
federal budget. Additionally, the bill would require EPA to 
consider feasibility and cost when revising any ambient-air-
quality standards for ozone. Based on information from EPA, CBO 
estimates that such considerations would require some 
additional work by EPA, but costs to carry out that work would 
total less than $500,000 annually.
    H.R. 4471 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Susanne S. 
Mehlman. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               SECTION-BY-SECTION ANALYSIS OF LEGISLATION

Section 1--Short title

    Section 1 provides the short title of ``Gasoline 
Regulations Act of 2012.''

Section 2--Transportation fuels regulatory committee

    Section 2 establishes an interagency committee (the 
``Committee'') for the cumulative analysis of rules that impact 
gasoline, diesel fuel, and natural gas prices. Section 2(b) 
provides that the Committee will be chaired by the Secretary of 
Energy, and will include the Departments of Transportation, 
Commerce, Labor, Treasury, and Agriculture, the Administrator 
of the Environmental Protection Agency, the Chairman of the 
United States International Trade Commission, and the 
Administrator of the Energy Information Administration. The 
Committee will terminate 60 days after submitting a final 
report.

Section 3--Analyses

    Section 3 describes the analyses that the Committee will 
conduct for the years 2016 and 2020, including estimates of 
changes in gasoline, diesel fuel, and natural gas prices; 
capital investments; global economic competitiveness; other 
cumulative cost and cumulative benefit impacts; and jobs. The 
Committee also will provide a discussion of the cumulative 
impact of the covered rules and actions on consumers, small 
businesses, regional economies, State, local, and tribal 
governments, low-income communities, public health, and local 
and industry-specific labor markets.
    Section 3 also identifies the covered rules and actions 
that are to be analyzed. These covered rules and actions 
include EPA's Tier 3 Motor Vehicle Emission and Fuel Standards, 
new or revised standards of performance or emission standards 
under section 111 or 112 of the CAA applicable to petroleum 
refineries, new Renewable Fuels Program rules, the 2008 
National Ambient Air Quality Standards for Ozone and any 
subsequent rule revising or supplementing those standards, and 
Greenhouse Gas permitting under the Prevention of Significant 
Deterioration and Title V programs.

Section 4--Reports; public comment

    Section 4 requires a preliminary report be made public and 
submitted to Congress within 90 days of enactment. Public 
comments are to be accepted on the preliminary report for 60 
days. The final report is then due by 60 days after the close 
of the public comment period.

Section 5--No final action on certain rules

    Section 5 defers until at least 6 months after submission 
of the final report the following new rules: EPA's Tier 3 Motor 
Vehicle Emission and Fuel Standards, new or revised standards 
of performance or emission standards under section 111 or 112 
of the CAA applicable to petroleum refineries, and any new rule 
revising or supplementing the National Ambient Air Quality 
Standards for Ozone issued in 2008.

Section 6--Consideration of feasibility and cost in revising or 
        supplementing national ambient air quality standards for ozone

    Section 6 requires that revisions to any National Ambient 
Air Quality Standards for Ozone shall take into account 
feasibility and cost.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                            DISSENTING VIEWS

                     I. PURPOSE OF THE LEGISLATION

    The bill would create a new government bureaucracy to 
compile an impossible analysis of EPA rules that have not been 
proposed using data that does not exist. In the meantime, under 
the guise of lowering gasoline prices, the bill would block EPA 
from finalizing several important air quality rules. The bill 
also would gut EPA's proven scientific process for setting 
national ambient air quality standards for ozone pollution.
    The bill would do nothing to protect consumers from 
gasoline price spikes. At the legislative hearing on the 
discussion draft of H.R. 4471, Gina McCarthy, Assistant 
Administrator for EPA's Office of Air and Radiation, testified 
that the bill ``does not address the reasons for the recent 
increase in the price of gasoline, while rolling back core 
aspects of the Clean Air Act--which was passed on a bipartisan 
basis and signed by a Republican President.''\1\ During the 
markup of H.R. 4471 in the Subcommittee on Energy and Power, 
Chairman Whitfield himself stated, ``there is nothing in our 
legislation, nor have we ever indicated there is anything in 
this legislation, that would, in and of itself, reduce gasoline 
prices.''\2\
---------------------------------------------------------------------------
    \1\Committee on Energy and Commerce, Testimony of Gina McCarthy, 
Assistant Administrator, Office of Air and Radiation, U.S. 
Environmental Protection Agency, The American Energy Initiative: A 
Focus on Legislative Responses to Rising Gasoline Prices, 112th Cong. 
(Mar. 28, 2012) (hereinafter ``McCarthy testimony'').
    \2\Committee on Energy and Commerce, Subcommittee on Energy and 
Power, Statement of Chairman Ed Whitfield, Markup of H.R. ___, The 
Gasoline Regulations Act of 2012, and H.R. ___, The Strategic Energy 
Production Act of 2012, 112th Cong. (Apr. 17, 2012).
---------------------------------------------------------------------------

        II. H.R. 4471 GUTS A KEY PROVISION OF THE CLEAN AIR ACT

    The Clean Air Act requires EPA to set national ambient air 
quality standards (NAAQS) for pollutants that endanger public 
health or welfare.\3\ In essence, the NAAQS identify the levels 
of pollution that may remain in the air without making it 
harmful to breathe. Based upon the best medical and scientific 
evidence, EPA sets permissible levels of pollution that are 
requisite to protect public health with an adequate margin of 
safety.\4\ The Clean Air Act requires EPA to review and, as 
appropriate, update each NAAQS at minimum every five years.\5\
---------------------------------------------------------------------------
    \3\Clean Air Act Sec. 108.
    \4\Clean Air Act Sec. 109(b)(1).
    \5\Id. at (d)(1).
---------------------------------------------------------------------------
    In 2001, the U.S. Supreme Court unanimously affirmed that 
the Clean Air Act requires EPA to set NAAQS based on the 
scientific and technical information about health effects, and 
without considering the economic costs of implementing the 
standards.\6\
---------------------------------------------------------------------------
    \6\Whitman v. American Trucking Associations, 531 U.S. 457, 121 S. 
Ct. 903 (2001).
---------------------------------------------------------------------------
    Section 6 of H.R. 4471 would override 40 years of clean air 
policy and principles, as well as the unanimous ruling of the 
Supreme Court, by requiring EPA to consider ``feasibility and 
cost'' when ``revising or supplementing'' the health-based 
ambient air quality standard for ozone. EPA Assistant 
Administrator Gina McCarthy testified that this provision would 
``fundamentally change the cornerstone of the Clean Air Act--
the requirement that EPA set air quality standards for smog at 
the level that is necessary to protect public health based on a 
vigorous review of the science and without consideration of 
costs.''\7\
---------------------------------------------------------------------------
    \7\McCarthy testimony.
---------------------------------------------------------------------------
    During full Committee consideration of H.R. 4471, 
Subcommittee Chairman Ed Whitfield argued in favor of section 6 
of the bill by saying ``the only reason costs are not being 
considered there today is because the Supreme Court said the 
language [in the Clean Air Act] was ambiguous.''\8\ This is not 
the case. In writing for a unanimous court, Justice Antonin 
Scalia stated: ``The text of Sec. 109(b), interpreted in its 
statutory and historical context and with appreciation for its 
importance to the CAA as a whole, unambiguously bars cost 
considerations from the NAAQS-setting process, and thus ends 
the matter for us as well as the EPA.''\9\
---------------------------------------------------------------------------
    \8\Committee on Energy and Commerce, Statement of Chairman Ed 
Whitfield, Markup of H.R. 4471, The Gasoline Regulations Act of 2012, 
and H.R. 4480, The Strategic Energy Production Act of 2012, 112th Cong. 
(May 17, 2012).
    \9\Whitman v. American Trucking Associations, 531 U.S. 457, 121 S. 
Ct. 903 (2001).
---------------------------------------------------------------------------
    Notably, the Clean Air Act already emphasizes cost 
considerations to ensure only the most cost-effective air 
pollution controls are adopted to achieve the air quality 
standards. After EPA sets a NAAQS for a pollutant, the agency 
and states work together to identify nonattainment areas that 
exceed that health-based standard, based on monitored pollution 
levels. State and local governments then have up to three years 
to determine how to best reduce pollution in those areas and 
produce state implementation plans that outline the measures 
they will implement to attain the standard.\10\ During this 
stage, EPA and states identify the primary pollution sources 
and opportunities to control that pollution. The cost of 
controlling the pollution is considered before any controls are 
required, as state and local governments examine the cost-
effectiveness of controls for various pollution sources and the 
feasibility of requiring such controls when developing 
strategies for achieving attainment with the NAAQS.
---------------------------------------------------------------------------
    \10\Id. at 110(a).
---------------------------------------------------------------------------
    During consideration of H.R. 4471 by the full Committee, 
Rep. Gene Green introduced an amendment to strip section 6 of 
the bill. Rep. Green stated that ``[f]undamentally changing the 
Clean Air Act is not going to bring down gas prices and we are 
setting a dangerous precedent in the Committee by saying that 
unhealthy levels of pollution become healthy when costs of 
cleaning up are too high.''\11\ This amendment was defeated 18-
28.
---------------------------------------------------------------------------
    \11\Committee on Energy and Commerce, Statement of Rep. Gene Green, 
Markup of H.R. 4471, The Gasoline Regulations Act of 2012, and H.R. 
4480, The Strategic Energy Production Act of 2012, 112th Cong. (May 17, 
2012).
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              III. H.R. 4471 BLOCKS EPA AIR QUALITY RULES

    The bill blocks EPA from finalizing several rules until 
after a new interagency committee submits a final report on the 
cumulative impacts of numerous EPA programs. The future rules 
blocked by this bill would reduce tailpipe pollution from motor 
vehicles and toxic air pollution from oil refineries; provide 
states guidance needed to implement the 2008 ambient air 
quality standards for ozone; and update the 2008 ozone standard 
based on developments in the peer-reviewed health research over 
the past five years.
    Section 4 of the bill gives the new committee seven months 
to draft this complicated analysis, solicit public comment, and 
finalize the report; section 5 prevents EPA from finalizing 
these rules for at least six months after the report is 
complete. This means that these rules will be blocked for at 
least 13 months. As a practical matter, however, it is 
substantially more difficult for EPA to issue rules that do not 
have statutory deadlines. Thus, the elimination of any 
statutory deadlines for several of these rules could 
indefinitely delay the rules.
    Specifically, section 5 of the bill would block the 
following rules:

          A. TIER 3 MOTOR VEHICLE EMISSION AND FUEL STANDARDS

    EPA is working to develop a ``Tier 3'' program for motor 
vehicle tailpipe emissions and fuels but has not yet proposed 
new regulations. In a letter to Subcommittee Chairman Ed 
Whitfield, EPA stated that the agency is developing the Tier 3 
standards to improve air quality and help states and localities 
meet the ``health-based air quality standards in a cost-
effective and timely way.''\12\ The program also will help 
automakers by enabling a harmonized national vehicle emissions 
control program and facilitating the development of lower cost 
technologies to improve fuel economy.\13\
---------------------------------------------------------------------------
    \12\Letter from Gina McCarthy, Assistant Administrator, U.S. 
Environmental Protection Agency, to Rep. Ed Whitfield, Chairman, 
Subcommittee on Energy and Power, Committee on Energy and Commerce 
(Feb. 27, 2012).
    \13\Id.
---------------------------------------------------------------------------
    EPA told Subcommittee Chairman Whitfield that the ``the 
only fuel requirement we are considering for Tier 3 is one that 
would lower the amount of sulfur in gasoline.''\14\ EPA 
estimates that such a requirement will cost approximately one 
penny per gallon in 2017, based on modeling conducted by 
MathPro, an energy economics firm.\15\ According to the 
National Association of Clean Air Agencies, a Tier 3 program 
with low-sulfur gasoline would be a highly cost-effective 
measure for meeting the ambient air quality standards, and 
absent this program, states and localities would be forced ``to 
turn to other, more expensive, less cost-effective measures'' 
to meet air quality standards.\16\
---------------------------------------------------------------------------
    \14\Id.
    \15\Id.
    \16\National Association of Clean Air Agencies, Cleaner Cars, 
Cleaner Fuel, Cleaner Air: The Need for and Benefits of Tier 3 Vehicle 
and Fuel Regulations, 15 (Oct. 31, 2011).
---------------------------------------------------------------------------

              B. AIR EMISSION STANDARDS FOR OIL REFINERIES

    Section 5 of the bill would block EPA from issuing rules to 
reduce toxic air pollution from refineries, which can cause 
cancer, birth defects, and other serious health problems, as 
well as rules to reduce carbon pollution from new refineries, 
which contributes to climate change.
    Section 112 of the Clean Air Act requires EPA to set 
specific emission limits for toxic air pollutants from 
categories of industrial sources (e.g., refineries) based on 
the emission levels already being achieved by similar 
facilities. These regulations are known as Maximum Achievable 
Control Technology--or MACT--standards. Within eight years of 
setting a MACT standard for a source category, EPA must conduct 
a risk assessment and determine if any changes are needed to 
reduce the residual risks to human health.\17\ Because control 
technologies improve over time, the Clean Air Act also requires 
EPA to review the MACT standards every eight years and revise 
them as appropriate to reflect developments in practices, 
processes, and control technologies.\18\ Section 5 of the bill 
would block EPA from finalizing the residual risk and 
technology review of existing standards for refineries and 
would indefinitely delay the final rules by eliminating all 
statutory deadlines for their issuance.
---------------------------------------------------------------------------
    \17\Clean Air Act Sec. 112(f)(2).
    \18\Id. at (d)(6).
---------------------------------------------------------------------------
    In addition, section 111 of the Clean Air Act requires EPA 
to establish new source performance standards (NSPS) for new 
facilities (and modified facilities that significantly increase 
emissions) reflecting the application of the best system of 
emissions reductions using demonstrated control technology. 
Section 5 of the bill would block EPA from setting NSPS for 
greenhouse gas emissions from oil refineries and indefinitely 
delay the rules by eliminating all statutory deadlines for 
their issuance.

           C. NATIONAL AMBIENT AIR QUALITY STANDARD FOR OZONE

    Section 5 would prevent EPA from finalizing ``any rule 
revising or supplementing the national ambient air quality 
standards for ozone.'' This would block EPA from updating the 
2008 ozone standard to reflect the best available science. The 
provision eliminates the current statutory deadline for 
updating the ozone standard, allowing at least an additional 
five-year delay in updating the standard (i.e., it appears that 
EPA would have no operative statutory deadline for updating the 
ozone standard prior to 2018, at minimum). In addition, because 
the bill blocks any rules that ``supplement'' the standard and 
does not define ``supplement,'' this provision could have the 
effect of blocking the rules necessary to implement even the 
2008 ozone standard. As a result, this would leave only the 
1997 ozone standard in effect, which the Clean Air Science 
Advisory Board and two EPA Administrators have found to be 
insufficient to protect public health.
    During consideration of H.R. 4471 by the full Committee, 
Ranking Member Henry Waxman introduced an amendment that would 
allow EPA to finalize the rules blocked by section 5 of the 
bill if the rules would control pollution linked to asthma 
attacks, heart attacks, cancer, birth defects, neurological 
damage, premature death, and other serious harm to human 
health. This amendment was defeated 9-29. Rep. Bobby Rush 
introduced an amendment requiring the Energy Information 
Administration (EIA) to determine whether implementation of the 
Gasoline Regulations Act is projected to lower gasoline prices 
in the United States within 10 years. If EIA determines that 
the bill is not projected to lower gasoline prices, then 
section 5 (delaying final action on several EPA rules) and 
section 6 (re-writing the health-based standard-setting process 
for ozone) would have no effect. This amendment was defeated by 
voice vote.

                    IV. SECTION-BY-SECTION ANALYSIS


        A. SECTION 2. TRANSPORTATION FUELS REGULATORY COMMITTEE

    This section establishes a new interagency committee to 
analyze the cumulative impacts of certain EPA rules and 
actions, as described in section 3. The Secretary of Energy is 
tasked to serve as the committee's chair. Chris Smith, Deputy 
Assistant Secretary for Oil and Natural Gas in the Office of 
Fossil Energy at the Department of Energy (DOE), raised 
concerns about this new interagency committee and the bill's 
requirement that DOE serve as chair. He noted that ``much of 
the expertise in conducting such analyses of regulatory actions 
lies outside DOE.''\19\
---------------------------------------------------------------------------
    \19\Committee on Energy and Commerce, Testimony of Chris Smith, 
Assistant Secretary for Oil and Natural Gas in the Office of Fossil 
Energy, Department of Energy, The American Energy Initiative: A Focus 
on Legislative Responses to Rising Gasoline Prices, 112th Cong. (Mar. 
28, 2012).
---------------------------------------------------------------------------

                         B. SECTION 3. ANALYSES

    This section requires the interagency committee to conduct 
an analysis of the cumulative impact of ``covered rules'' and 
``covered actions.''
    Section 3 defines ``covered rule'' to include rules that 
have not yet been proposed and rules that have not even been 
contemplated. The definition includes the following rules, as 
well as ``any successor or substantially similar rules:''
          
 The Tier 3 motor vehicle emission and fuel 
        standards (not yet proposed);
          
 Any new source performance standard or air 
        toxics standard for refineries proposed after March 15, 
        2012;
          
 Any rule proposed after March 15, 2012, to 
        implement the Renewable Fuels Program; and
          
 The 2008 rule establishing the NAAQS for 
        ozone; EPA's potential reconsideration of the ozone 
        standard, currently slated for 2013; and ``any 
        subsequent rule revising or supplementing'' the ozone 
        NAAQS.
    Section 3 defines ``covered action'' to mean any action 
taken since January 1, 2009, by EPA, a state agency, a local 
government, or a permitting agency to issue a permit for 
greenhouse gas emissions from facilities involved in the 
production, transportation, or distribution of gasoline or 
diesel fuel, under titles I or V of the Clean Air Act.
    Section 3 outlines the parameters of the interagency 
committee's analysis. The committee must estimate the 
cumulative impacts of the covered rules and actions on several 
end points, including gasoline prices, capital investments and 
projected maintenance and operation of new equipment, refinery 
capacity, employment, other cumulative costs and benefits, and 
even the global economic competitiveness of the United States.
    Since most of the ``covered rules'' have yet to be 
proposed, it is unclear how the interagency committee could 
estimate the levels of pollution control that may be required, 
predict compliance options, and assess the specified effects. 
Given all of the uncertainties and guesswork inherent in such 
an analysis, it is unclear how the committee could produce an 
economic analysis of the rules with any measure of credibility. 
EPA Assistant Administrator Gina McCarthy testified ``it is 
unclear how the new committee would analyze rules that have not 
yet been proposed, or how the public could comment on that 
analysis in an informed way.''\20\ She also noted that such an 
analysis would be redundant and a waste of government 
resources, given the extensive analysis EPA already completes 
as part of the rulemaking process and the interagency review 
conducted by OMB.\21\
---------------------------------------------------------------------------
    \20\McCarthy testimony.
    \21\Id.
---------------------------------------------------------------------------
    Furthermore, while section 3 states that the Committee is 
not required to create or use data that is not readily 
accessible, it appears that much of the necessary data does not 
currently exist. EIA, which is better positioned than any other 
government agency to tackle this analysis, told Democratic 
Committee staff it currently does not have the analytic 
capability to conduct the state or regional level breakdowns 
required by section 3 and would have to collect or purchase new 
data. Even if EIA just conducted a national-level analysis, 
``there could be some considerable additional costs for EIA, as 
contractor expertise and manpower would likely be needed to 
supplement EIA's staffing.''\22\ EIA also concluded that the 
scope of the study covers a ``wide area of activity that would 
be difficult to track much less analyze,'' such as actions by 
any state, local government, or permitting agency.\23\
---------------------------------------------------------------------------
    \22\E-mail from Energy Information Administration to Energy and 
Commerce Committee Democratic staff (May 15, 2012).
    \23\Id.
---------------------------------------------------------------------------
    During consideration of H.R. 4471 by the full Committee, 
Rep. Lois Capps offered an amendment that would nullify section 
4 (requiring the interagency committee to produce a report) and 
section 5 (delaying certain EPA rules) if the Secretary of 
Energy determined that the analyses required under section 3 
are infeasible to conduct, require data that does not exist, or 
would generate results subject to such large estimates of 
uncertainty that the results would be neither reliable nor 
useful. This amendment was defeated 14-31.

                 C. SECTION 4. REPORTS; PUBLIC COMMENT

    Even if it were possible to conduct a credible analysis of 
proposed rules that do not yet exist, it could prove impossible 
to do so by the statutory deadline. Section 4 requires the 
interagency committee to finish a preliminary report within 90 
days of enactment; accept public comment for 60 days; and 
complete a final report within 60 days of closing the comment 
period. That allows just seven months for completion of this 
complex economic analysis. The more limited economic analysis 
of a single proposed regulation commonly takes almost as long 
as is provided here for the entire cumulative analysis.

             D. SECTION 5. NO FINAL ACTION ON CERTAIN RULES

    Section 5 blocks EPA from finalizing three rules for at 
least six months after the day on which the interagency 
committee submits its final report. This section also allows 
the rules to be indefinitely delayed by overriding existing 
statutory deadlines for the rules and by failing to establish 
any new deadlines (except for the Tier 3 standards, which do 
not currently have a deadline). The blocked rules include:
          
 The Tier 3 motor vehicle emission and fuel 
        standards, which have not yet been proposed;
          
 Any new source performance standard or air 
        toxics standard for refineries proposed after March 15, 
        2012; and
          
 Any rule ``revising or supplementing'' the 
        NAAQS for ozone.
    See section III above for a description of the rules 
blocked by H.R. 4471.

  E. SECTION 6. CONSIDERATION OF FEASIBILITY AND COST IN REVISING OR 
                     SUPPLEMENTING NAAQS FOR OZONE

    Section 6 of H.R. 4471 would override 40 years of clean air 
policy and principles, as well as a unanimous ruling of the 
Supreme Court, by requiring EPA to consider ``feasibility and 
cost'' when ``revising or supplementing'' the health-based 
ambient air quality standard for ozone. See section II above 
for a more detailed discussion of the implications of this 
provision.

                V. AMENDMENTS OFFERED IN FULL COMMITTEE

    During consideration of H.R. 4471 by the full Committee, 
Ranking Member Henry Waxman introduced an amendment that would 
allow EPA to finalize the rules blocked by section 5 of the 
bill if the rules would control pollution linked to asthma 
attacks, heart attacks, cancer, birth defects, neurological 
damage, premature death, and other serious harm to human 
health. This amendment was defeated 9-29.
    Rep. Bobby Rush introduced an amendment requiring EIA to 
determine whether implementation of the Gasoline Regulations 
Act is projected to lower gasoline prices in the United States 
within 10 years. If EIA determines that the bill is not 
projected to lower gasoline prices, then section 5 (delaying 
final action on several EPA rules) and section 6 (re-writing 
the health-based standard-setting process for ozone) would have 
no effect. This amendment was defeated by voice vote.
    Rep. Gene Green introduced an amendment to strip section 6 
of the bill, which would gut the Clean Air Act requirement to 
set air quality standards for ozone based on the best available 
science. This amendment was defeated 18-28.
    Rep. Lois Capps offered an amendment that would nullify 
section 4 (requiring the interagency committee to produce a 
report) and section 5 (delaying certain EPA rules) if the 
Secretary of Energy determined that the analyses required under 
section 3 are infeasible to conduct, require data that does not 
exist, or would generate results subject to such large 
estimates of uncertainty that the results would be neither 
reliable nor useful. This amendment was defeated 14-31.
    Rep. Jan Schakowsky offered an amendment saying that the 
Gasoline Regulations Act would not take effect until a fee is 
assessed on and collected from the oil industry to pay for the 
cost of implementing the legislation. The legislation otherwise 
does not authorize appropriations for the new interagency 
committee to complete the mandated study. This amendment was 
defeated 9-29.
    Rep. Donna Christensen offered an amendment to add findings 
to the bill about the root causes of a spate of East Coast 
refinery closures and sales in late 2011 and early 2012. These 
findings stated that market forces, not environmental 
regulations, were the primary factors driving companies to 
close or sell their refineries in Pennsylvania and the U.S. 
Virgin Islands. This amendment was defeated 16-30.

                             VI. CONCLUSION

    Because H.R. 4471 poses a significant threat to the public 
health by blocking important regulations to reduce air 
pollution, and provides no benefits, we dissent from the 
decision to favorably report the legislation.
                                   Henry A. Waxman.
                                   Bobby L. Rush.