API

BLOGGER CONFERENCE CALL

MODERATOR:
Jane Van Ryan, API

SPEAKERS:
Howard Feldman, Director, Regulatory and Scientific Affairs, API
Misty McGowen, Director, Federal Regulations, API
Khary Cauthen, Director, Federal Relations, API

Tuesday, March 29, 2011

Transcript by
Federal News Service
Washington, D.C.
Bloggers on the call included “The Bear” from The Absurd Report, Brian Westenhaus from New
Energy and Fuel, Bruce McQuain from The Q and O Blog, Dave Banks from The Missouri Mule,
Gail Tverberg from The Oil Drum and Our Finite World, James Shott from Observations, Jazz
Shaw from Hot Air, Joy McCann from Little Miss Attila, Lee Doren from OpenMarket.org,
Pejman Yousefzadeh from A Chequer-Board of Nights and Days, Rory Cooper from Heritage:
The Foundry.

(Music intro.)

OPERATOR: You’re listening to Energy Conversations with API, brought to you by the
people of America’s oil and natural gas industry.

00:13 JANE VAN RYAN: The bloggers know what we’re looking at here today are
EPA’s overreach in a couple of regulatory areas, particularly ozone and then also with the
greenhouse gas emissions that are to be regulated under the Clean Air Act. And these would be
emissions coming from stationary sources. We’ve got a couple more that just joined us. Who,
may I ask, has called in?

00:43 PEJMAN YOUSEFZADEH: Pejman Yousefzadeh.

00:44 MS. VAN RYAN: I’m sorry, say again?

00:46 MR. YOUSEFZADEH: Pejman Yousefzadeh.

00:49 MS. VAN RYAN: Ah, good, Pejman, glad you could join us, okay.

00:52 MR. YOUSEFZADEH: Likewise, likewise.

00:53 MS. VAN RYAN: And who else do we have?

00:55 GAIL TVERBERG: This is Gail.

00:56 MS. VAN RYAN: Hi, Gail. Terrific, okay. And we have several more that have
indicated they intend to join us. So I think what we’ll do is, we’ll go ahead and start and then
they’ll join us in progress, because it is 2 o’clock, a little after 2:00, according to my clock here
on the computer.

So Howard, I was asking you whether or not you wanted to start with an opening
statement, or shall we just move forward?

01:23 HOWARD FELDMAN: I think we can pretty much move forward after your
statement, Jane. I think it’s – we’re facing a lot of things going on from EPA right now. They
are affecting our industry as well as industries across the country right now. And we’re here to
discuss those.
 01:39 MS. VAN RYAN: Very good. All right, then does someone want to start with the
questions or – I think you have seen a lot of the materials that we’ve sent to you about the ozone
regulation and the greenhouse-gas emissions regulations.

01:54 “THE BEAR”: Jane?

01:55 MS. VAN RYAN: Yes?

01:56 THE BEAR: This is the Bear. How are you doing this morning?

01:57 MS. VAN RYAN: Hey, Bear. Thanks so much for joining us.

02:00 THE BEAR: OK. You know, I’d like Howard to expand on – I believe there’s
regulations that – anything that a government agency like the EPA regulates, and the cost to the
American people in excess of $100 million – they must get approval from Congress. Can
Howard expand on that?

02:27 MR. FELDMAN: Sure. What you’ve touched on actually raises an important
thing. Recently, President Obama went ahead and said all agencies should go back and look at
the costs and implications of their regulations. And we think there are a lot of candidate
regulations here within EPA that need to be looked at.

The $100 million threshold right now is something that they need – they consider major
rules that they need to look at the cost of, but they – but on top of that, it doesn’t mean that it’s
something that they need to stop. And Congress doesn’t necessarily get to overrule that. Only
once has Congress actually taken a hard look at a regulation and stopped it. So it’s pretty much –
Congress does not, the way the current systems are set up, stop regulations from going forward.

03:16 THE BEAR: It seems like, to me, this is quite an overreach of our rules and
regulations.

03:24 MR. FELDMAN: Well, we think right now it is – they’re at a tipping point,
certainly, on greenhouse gases, and there’s a groundswell. And right now, there are amendments
being considered right now, tomorrow, as soon as tomorrow, the McConnell amendment. I’ll let
Misty address that in particular, where that is going right now. So Misty, you want to say
anything about the McConnell amendment for tomorrow?

03:46 MISTY MCGOWEN: Sure. This is Misty McGowen, in federal relations here at
API. That’s a great segue into a little bit of what I was going to talk about. Howard’s right,
there’s sort of a groundswell of activity on greenhouse gas regulations right now in the United
States Senate and also the United States House of Representatives.

It seems that the Senate tomorrow is going to be voting on three different amendments
that would address EPA regulation of greenhouse gases. Those three amendments to watch for
are the McConnell amendment – these are all pending to the Small Business Bill, which
Congress – which the Senate is going to be working on this week.
 The first is the McConnell amendment, and this particular amendment would stop EPA
regulation of greenhouse gases. It is identical to the Upton-Inhofe legislation that you have
probably seen in some of the materials that you’ve been given. The Rockefeller amendment has
also been filed to the Small Business Bill. The Rockefeller amendment would delay EPA
regulation of greenhouse gases for two years. And it’s also the same as the – Senator
Rockefeller has an independent bill as well in the Senate right now which would do the same
thing.

And the last amendment that deals with EPA regulation of greenhouse gases is an
amendment by Senator Baucus, and this particular amendment would codify the tailoring rule. It
would exempt sources under 75,000 tons and also specifically exempt agricultural sources.

05:36 MR. FELDMAN: And let’s just say that we here at API strongly support the
McConnell amendment. We think that what it does is holds off EPA from regulating an area that
they were never authorized to do by Congress. The Clean Air Act never actually gets into
greenhouse gases, and therefore we think that it should be up to Congress to come up with the
solution for how to address greenhouse gases, and that’s what the McConnell amendment would
do, whereas the other two amendments do not do that. So we are not supporting those.

06:11 MS. VAN RYAN: Bear, do you have a follow-up question? OK, apparently not.
Perhaps we should – Misty, if you don’t mind, let’s talk a bit about the Baucus proposal again.
You mentioned that it would codify the tailoring rule. Perhaps we should explain what that is
and why the Baucus amendment could be a bit of a problem.

06:40 MS. MCGOWEN: Well, the Baucus amendment is problematic because

ultimately, it places in statute bad policy. It basically codifies a rule that EPA has put out that
would exempt certain sources. We tend to think that that is not legal – (chuckles) – and so this
would be Congress sort of, like, validating bad policy that EPA has created to exempt certain
sources.

As for us, it doesn’t do a whole lot for the refining industry because many refineries
would still not be exempt. And so therefore, it would be problematic for us. And we also think
– I mean, ultimately, many groups also oppose this due to the potentially increased cost of fuel
that they would incur based on the fact that refineries are not excluded. And so we just really
don’t think this is a real solution for either our industry or for the American consumer.

07:44 MR. FELDMAN: So even if farmers or smaller sources are let out of the
amendment in and of itself, they’re going to end up paying higher costs for energy because of
EPA’s greenhouse gas regulation.

08:03 MS. VAN RYAN: All right, do we have additional questions about either the
greenhouse gas emission regulations or the ozone regulations? Don’t be bashful.

08:17 BRUCE MCQUAIN: Yeah, Bruce McQuain. Who are your natural allies on this?
Who else is aligning with you to go forward and push, for instance, the McConnell amendment?
 08:30 MS. MCGOWEN: We have a, you know, broad swath of industry trade
associations who have been supportive of our position, or share our position in this effort. We
recently sent up a letter to each United States senator in support of the McConnell amendment,
and we had 18 other trade associations on that letter. And there are a number of other trade
associations that also share that position as well.

You have – OK.

09:09 MS. VAN RYAN: A follow-up to that one McQ?

09:11 MR. MCQUAIN: OK, you’ve got trade associations. I mean, who else is – who
else do you see – maybe not that you’re in contact with, but who else do you see out there
pushing on the McConnell amendment as well?

09:28 MS. MCGOWEN: Well, those trade associations, you know, represent a very
large universe of companies as well, and consumers, so therefore –

09:35 MR. MCQUAIN: Can you give me some examples of who you’re talking about?

09:38 MS. MCGOWEN: I’m sorry, one more time?

09:39 MR. FELDMAN: Examples.

09:40 MS. MCGOWEN: Oh, examples. Sure. So examples of trade associations – you
know, the U.S. Chamber of Commerce, the National Association of Manufacturers, the Farm
Bureau, other groups associated with petroleum consumption like the Petroleum Marketers
Association of America and a variety of others – American Steel Association.

10:10 MR. MCQUAIN: And have you got any feeling, or any feel at all about where
other members of Congress, or what the vote looks like? I mean, in the Senate, what the vote
looks like or possible vote outcome could be on a vote on the McConnell amendment?

10:30 MS. MCGOWEN: We feel like there will be a bipartisan support for the
McConnell amendment and we think and hope that there will be a majority of senators in support
of this approach.

10:43 MR. FELDMAN: Right now, there are 43 cosponsors, is that right?

10:46 MR. MCQUAIN: Forty-three?

10:47 MR. FELDMAN: Is that right?

10:48 MS. MCGOWEN: To the McConnell amendment itself?

 10:49 MR. FELDMAN: Yeah, do I have that right or what? No? No, I’m wrong.
Cancel that. (Chuckles.)

10:56 MR. MCQUAIN: I’m sorry?

10:57 MR. FELDMAN: That number was wrong.

10:59 MR. MCQUAIN: Oh, okay.

11:00 MR. FELDMAN: Sorry.

11:01 MS. MCGOWEN: Yeah, but let me – I do just want to emphasize, we do believe
there will be bipartisan support for it and we do believe that we’ll have a majority of U.S.
senators in support. I think that if we had a vote on both the McConnell and Rockefeller together
we would have almost 60 senators, or potentially more than 60 senators, in support of, you know,
therefore sending a message that Congress feels that EPA should do something about greenhouse
gas regulations – in support of trying to address this issue.

11:38 MR. MCQUAIN: Do you see this as an issue – I mean, I guess a better way to ask
is, are you pushing this as an issue that this is a threat to congressional power or are you pushing
it as just regulatory overreach? I mean, I guess they’re on in the same, but how are you
approaching it?

11:57 MS. MCGOWEN: Could you clarify what you mean by – could you clarify what
you mean, a threat to congressional power?

12:06 MR. MCQUAIN: Well, the fact that this is something – that this is a power that
Congress should retain to decide, you know, how this regulation is implemented, not some
agency out there interpreting it as they wish.

12:22 MS. MCGOWEN: We do believe that Congress is best suited to address this issue.

12:32 JOY MCCANN: Aren’t there any consumer groups involved?

12:36 MS. VAN RYAN: May I ask who’s asking the question?

12:39 MS. MCCANN: Oh, I’m sorry, this is Joy.

12:30 MS. VAN RYAN: Hi, Joy, I wasn’t certain. Please go ahead.

12:44 MS. MCCANN: Are there – it seems to me that the other natural constituency for
a question like this would be consumer groups, but it would be – that this would be a real natural
– that people who want choice, they don’t want to pay too much for products, you know, regular
old people who aren’t involved in manufacturing should have a huge interest in this.
 13:08 MS. MCGOWEN: Well, I think a good example of that is the Farm Bureau
because, you know, they represent farmers who have to – who have to be concerned about input
costs, they have to be concerned about, you know, the price of diesel, they have to be concerned
about the price of fertilizer. And so when they speak, they are representing consumers. So that’s
one example.

13:36 MS. MCCANN: It’s too bad there isn’t an equivalent of the people who do
consumer reports without their particular set of blinders, because this would be perfect for a
really – an honest consumer group. This would be an ideal issue.

13:53 MS. VAN RYAN: Something more grassroots-based, is that what you’re thinking,
Joy?

13:56 MS. MCCANN: Yes, yes. They have become very politicized and very
mainstream in a media-influenced direction. But this is the kind of thing that would be very,
very, I don’t know. But then again, I think more consumers need to be aware of what this kind
of thing is going to be doing to their prices.

14:24 MS. VAN RYAN: Well, it – I think you make an excellent point, by the way, and
there are, as you know, plenty of bloggers that have been writing about this. I think the issues
are somewhat complicated, though, because – maybe because it’s being done by a regulatory
agency, as opposed to being done by Congress in the same way that the Waxman-Markey bill
was introduced a couple of years ago and tried to move through Congress. And as you know,
that was unsuccessful.

But there are plenty of bloggers who basically have asserted that this is a regulatory way
to impose a tax – rather, a cap-and-trade kind of a regime on portions of the economy. But it is a
little harder, I think, for people to grasp, to understand, perhaps. And I’m not sure there’s been a
lot of media attention towards it.
‘
15:20 MS. MCCANN: Okay, so it’s on us – (chuckles) – it’s on us.

15:25 MS. VAN RYAN: Maybe so, maybe so.

15:29 MS. TVERBERG: This is Gail Tverberg. I’m afraid I’m probably like a lot of
other people. I really haven’t been following this very closely. Is this – this is a short-term kind
of an issue of the McConnell amendment and some of these coming up, or is this going to be
over a longer period, that there’s going to be other amendments on other bills? Or, how is this
all working out?

15:55 MS. VAN RYAN: Perhaps we ought to back up and just provide some
background, then, on the greenhouse-gas emissions, because this has been under discussion for
quite some time. Howard, Misty, Khary, Michele, I wonder if you all could –

16:06 MR. FELDMAN: Yeah, let me –

 16:07 MS. VAN RYAN: – kind of explain the importance of what’s going on and what
the importance of the McConnell vote could mean.

16:14 MR. FELDMAN: Let me back up a little bit. Last year – well, coming back, the
Supreme Court said that EPA could consider whether they needed to regulate greenhouse gases
from cars. And EPA went ahead and decided that they were going to do that. The indirect
impact of that was, they also moved forward with regulating greenhouse gases from stationary
sources, even though they never did the analysis and looked at the cost impacts. They just sort of
backed that into place.

So all of a sudden, effective January 2nd of this year, EPA became the regulator of
greenhouse gases. They’re starting with larger sources, but their plan goes all the way down
over the years to get to smaller and smaller sources. So that’s the issue that EPA has in front of
us that they are imposing.

They’ve separately now proposed additional controls on electric utilities and refineries
for greenhouse gases. So we’re also dealing with that effort of EPA’s. So that’s the backdrop,
and that kicked in this year on January 2nd. So there are – the legality of that is still in the courts
and will probably be in the courts until some time in 2012. Just the way courts go through things
right now, that is the case. There are a handful of cases that are going in different directions,
different parties involved.

So that’s all playing through. But in the meantime, Congress is saying, wait a second, we
don’t think you should be proceeding. And the first draft of discussion that we saw as a
complete item on it was the Upton-Inhofe, or Inhofe-Upton, draft legislative language which
would say, EPA, you are fine to proceed with regulating air pollutants that affect the public
health, but in terms of greenhouse gases, you are not authorized to proceed with that and please
stop that.

So it does nothing to affect the parts of the Clean Air Act that protect public health, but
what it does do is it holds off on EPA’s ability from January 2nd and forward to regulate
greenhouse gases. So that was the Upton-Inhofe draft. And that is now working its way through
into Congress. And I’ll –

18:34 KHARY CAUTHEN: For stationary sources.

18:34 MR. FELDMAN: For stationary sources only. It does not affect EPA’s ability to
improve the mileage requirements in cars, which is how they’re addressing – primarily
addressing the greenhouse gases from mobile sources.

18:49 MS. VAN RYAN: And Gail, perhaps we should add a couple of other points that
might help draw a picture for you. The greenhouse gases in question include carbon dioxide. It
has been estimated that as many as 6.1 million stationary forces could come under – and I have
to emphasize the word “could” – could come under these regulations, depending on what
happens.
 That could include big-box stores, that could include farms, it could include, you know,
small establishments as well as large establishments. And there are several states who say that
they don’t even know how they would be able to handle the permits that would be required,
because various companies, various of these stationary sources, would have to have permits to
emit greenhouse gases to either continue operating or to expand their businesses.

And it’s believed that the impact on the economy could be quite severe. Is that a fair way
to put it, Howard, everybody else in the room?

19:59 MR. FELDMAN: Yes.

20:01 MS. VAN RYAN: So it is – the impact – it’s difficult to overstate the potential
impact of the regulations on the economy and on jobs. And that makes the McConnell vote
exceedingly important. And it gets back to a question that McQ asked, which was, you know,
what is it that API is saying? And what we’re saying is that it’s more suitable for Congress to
determine whether or not actions of this nature are appropriate than a regulatory agency which is
appointed and not elected. Does that make sense?

20:43 MS. TVERBERG: I guess.

20:44 MS. VAN RYAN: Okay, good. It has – this has been coming for a long time, so I
understand why it is probably helpful to kind of go back and just look at the issues at hand. So I
hope that helps a little.

20:57 MS. TVERBERG: Yeah. You mentioned, too, on the ozone situation. How is
that different here? Now, that’s a separate issue or –

21:06 MR. FELDMAN: Yeah, let me address ozone a little bit too. Let’s give it its fair
time. EPA right now is in the middle of – as we know – let me back up one step more. There
are ambient air-quality standards set to protect the public health with an adequate margin of
safety. That is EPA’s responsibility.

We should – three years ago, EPA finalized the ozone standard, the most stringent ozone
standard we’ve ever had, at 75 parts per billion. That was the level that the administrator set. It
was the most stringent standard we ever had, and once the new EPA came into place, they said,
you know what, we’d like to go back and look at that standard – it’s never been done before,
unprecedented – and to go back and re-examine that standard. And they have now been re-
examining that standard for a couple of years.

Now, EPA is supposed to look at the standard separately every five years based on new
data, but meanwhile, they’re looking at the previous standard with old data and now that three
years later, they’ve already started looking – with new data, started their five-year review that
they normally do. So they’re three years into the five-year review, but they still may go back and
revise the standard that was already set with the previous data and make it more stringent.
 Now, the range that they’re looking at is a range that goes – is from 60 to 70 parts per
billion. So it’s a more stringent range. And one of the big concerns is that moving down into
these levels, you’re moving levels that are close to background. So as you’re getting close to
background, it means that if you set a standard close to background, the air has to be pristine.

Yellowstone National Park has – its highest levels are 67 parts per billion. If you start
setting standards in that range, it means that communities will not be able to reach the standard.
There are a lot of implications for the communities, the level of controls that need to be put on,
the way new sources can be sited, and it will preclude business expansion in the United States.
And it has severe impacts on business and on jobs, on fuel requirements, people may be required
to use in more places more expensive fuel formulations to try to reach the standard. So there are
a lot of implications across the country of tightening the standard.

So we think that the health data do not justify the need to tighten the standard. And the
administrator reached his decision before based on the previous health data. And right now,
there’s a situation where EPA is still looking around and seeing whether they’re going to go back
and just tighten what was done before. And that’s what we’re facing right now.

Our position is that EPA should hold off on doing anything right now, wait until they
review all the new data in the proper cycle and then proceed in the normal way, rather than do an
arbitrary look back at levels.

24:20 MS. TVERBERG: Thank you.

24:23 MS. VAN RYAN: All right, do we have any other questions on these greenhouse
gas emission regulations or the ozone standard?

24:29 MR. YOUSEFZADEH: I have a – this is Pejman Yousefzadeh. I have a general

question on the delegation of authority. Did, by chance, the administration’s position on
delegation of authority happen to change in the aftermath of the midterm elections?

24:49 MR. CAUTHEN: Well, this is Khary speaking, and where I think your question is
going – we have seen and have been encouraged in some of EPA’s decisions post-the election.
As an example, for the ozone NAAQS re-proposal, EPA had said they were going to complete
this re-proposal last year but instead said they wanted to go back and ask the science advisors
some – the science advisors from the decision three years ago to – some more questions about
the science of that time.

And they did not complete this rule last year. And there are a couple other rules where
they, for lack of a more elegant phrase, punted. And so I’ve seen – I wouldn’t call that
delegation as much as pressure to be a little more deliberative as they move forward with these.

26:16 MR. FELDMAN: I would say, a little bit more responsive to the public.

26:29 MR. CAUTHEN: Right. And probably more than the elections, the focus of
everyone on jobs and anything that negatively would impact job growth is also before them.
 And the president’s own executive order to look over regulations that would hurt
manufacturing or hurt job growth seems also in line with where some of the agencies and
departments are looking at their rules and regulations. And again, ozone NAAQS to us, seems a
– this re-proposal seems a perfect candidate for review under the President’s executive order as a
rule that EPA is undertaking that they shouldn’t be undertaking right now.

As Howard said, the normal five-year review – we’re in year number three and they are –
they, EPA, are looking at science as old as 2006 and older from the 2008 decision, when
currently the science advisors want to be looking at the current and new science on these
pollutants. And so this really should be folded into the regular five-year cycle.

27:50 MR. FELDMAN: And one thing we didn’t mention is the impacts of this kind of
rule-making. And if EPA went down to the lowest standard of 60 parts per billion, we’re talking
about 7 million jobs in the U.S. could be lost in 2020 and cost of a trillion dollars a year in order
for people to be coming up with controls and attainment strategies and so forth that would be
imposed because of this. So this is a very significant rule that we think, really, EPA needs to
reconsider where it’s headed.

28:25 MS. VAN RYAN: Howard, you said something else a couple of minutes ago, too,
that I think is of interest to the bloggers. You said that they’re approaching regular background
levels of ozone. And what is the impact on national parks if they go to the 60 parts per billion
standard?

28:45 MR. FELDMAN: Well, if they go to levels that you would find in pristine areas, it
just means that you – no place would be able to reach attainment and they would need to buy
these costly offsets. It’s called – very technical thing where they have to buy other controls and
they need to not increase emissions so they need to do other control programs. So that’s what
raises the costs significantly.

And what it does when you’re a business – I just spoke to a couple of businesses recently
not in our industry and they said one of the things that they look at when they’re going to locate a
factory someplace else – this happened to be in the steel industry – is they look to see whether
the area is non-attainment or not. And if it’s a non-attainment area, it’s a nonstarter. They don’t
even consider locating there. So that’s the kind of – how it affects business decisions.

And when we’re talking about businesses that compete worldwide, you know, you have
two things. One is people may outsource jobs out of the U.S. altogether. Or people may do their
expansions – subsequent expansions overseas. So we have to be very mindful. And that’s how
that affects U.S. jobs.

29:53 MS. VAN RYAN: And I have seen that Yellowstone would be out of attainment?
Is that correct?

29:58 MR. FELDMAN: That’s correct.

 30:00 MR. MCQUAIN: Jane, you said – is it parts per billion or parts per million?

20:06 MR. FELDMAN: These are parts per billion.

30:08 MR. MCQUAIN: Billion. OK.

30:14 MS. VAN RYAN: More questions? I know this is a – kind of a complicated issue.
But it’s one that really is incredibly important and could have major impacts on the economy and
job growth.

30:27 MR. MCQUAIN: OK. Bruce McQuain again. I have questions.

30:30 MS. VAN RYAN: Uh-huh?

30:31 MR. MCQUAIN: If we’re talking about – if this new standard is set, putting most
of the country in non-attainment, I guess –

30:38 MR. FELDMAN: Correct.

30:40 MR. MCQUAIN: What is the – what then becomes the procedure – you
mentioned offsets have to be bought and that’s how things – could you describe that procedure a
little more? How would someone who is in non-attainment buy their way, I guess it is, into
attainment?

30:59 MR. CAUTHEN: Right. And so states would have to put together state
implementation plans – SIPs – and as this standard goes into – near background levels, where
states and counties would be able to find offsets becomes exacerbated.

And as Howard was saying, one of the things that businesses look at when they come into
an area to make an investment is whether or not that county or the surrounding counties are in
non-compliance and non-attainment with a suite of various pollutants, as part of the Clean Air
Act.

And as you move to – as you aptly said it, a large swath of the country being in non-
attainment, including national parks, there are no offsets because as EPA looks at it, they look at
these metro statistical areas and so where one county that is in non-attainment could kind of find
offsets in neighboring counties – well, now those neighboring counties are being pulled
underwater as well into non-attainment. And so you, as an industry, can’t find local sources as
offsets, can’t find a means through expanding. And again, that’s how the jobs loss number
becomes so great.

And just wanted to kind of buffer that thought with the fact that these large job losses are
on the heels of where industry has made huge investments. And EPA themselves, in their clean
air report – clean air trends report – they just celebrated the 40th anniversary of the Clean Air
Act. And emissions and the air today is cleaner than it was 40 years ago. All the Clean Air Act
pollutants emissions are lower than they were or historically have been.
 And that is because of investments that industry has made over the years. And so I just
want it to be clear that it’s not a matter of –[it’s] not the desire of industry to not do anything.
But it’s that the EPA has taken these unprecedented steps outside of the process to drive industry
into uncertainty, which – the tragic part of that is that jobs get caught in the melee there. Job
losses get caught in the melee.

33:59 MS. VAN RYAN: You know, that’s a – that’s a really good point, Khary, because
there’s no doubt about it: The air is significantly cleaner today than it was, say, two or three
decades ago because of industry investments. And that’s a point that rarely is made.

34:18 MR. CAUTHEN: Slash never. (Chuckles.)

34:22 MS. VAN RYAN: (Chuckles.) Any additional questions? And there are
documents, by the way. If any of you want to check that out, I can – I’ll try to get the link for
you. There is a document that comes out every year that talks about the improvements in air
quality. And they’re quite significant, quite substantial. And it’s due to industry investments
and, of course, the Clean Air Act of 1970.

What we’ll have to do is get that link for you and send it out to you. Would that be
helpful?

34:50 MR. MCQUAIN: Yeah.

34:50 MS. VAN RYAN: Okay.

34:53 JAMES SHOTT: One more. Jane, this is James Shott. This is kind of a curiosity
question, but 75 parts per billion is a number that has a decimal place, seven zeroes and a seven-
five, five. When you divide it out, that’s an infinitesimally small amount. I’m just curious to
know if there’s any substance on Earth that could be harmful at that level.

35:19 MS. MCANN: (Chuckles.)

35:20 MR. FELDMAN: Well, I think we would agree that there are concerns for higher
levels than where the current – where the standard was, you know, and let’s say, at some number
– at 200 parts per billion, there’d be no question that there’s some kinds of effects that you can
see. So the answer is, yes. It’s a small effect but it can be seen at those higher levels.

As you get a lower and lower standard – as you get lower and lower, the science advisors
to EPA say, we don’t really see a threshold any place. It just means that fewer and fewer people
will have an effect. So that’s how the science advisors see it.

But down where we’re talking about the standard that’s 75 parts per billion, we don’t
really think that the effect is significant enough. And everyone acknowledges that it’s actually a
policy judgment where you set the standard.
 36:19 MR. MCQUAIN: I question – again, Bruce McQuain – was what – just to give
this some context, what levels would begin to affect health?

36:29 MR. FELDMAN: I think it’s generally recognized that levels of 100 parts per
billion or more would be something that would affect health.

36:38 MR. MCQUAIN: OK.

36: 40 MR. FELDMAN: We do not – you know, we’d be comfortable if the standard
were back at 85 parts per billion, something in that range. We would be comfortable with that as
a standard. We’ve made a lot of progress towards that goal of society reaching that kind of a
level.

And what’s happening now is as we’re making further progress, EPA is moving the
goalposts. And now they say, oh, you got close to the previous standard, which was – before,
that was 84 parts per billion; you were getting close – now we’re going to make it 75. And now,
as we’re getting closer to 75, EPA is moving it again.

But what happens is the cost of it reaching those standards – all the low-hanging fruit has
been picked. All the easy controls have been put in place. So the control costs go up
exponentially because we don’t know what to do next. Even when EPA had to come up with its
costs to determine what it would cost to meet the standard – and they estimated $100 billion that
it would cost, roughly speaking – they couldn’t even come up with all the controls that they
thought it would take to meet the standard.

So they were way underestimating when they did it. So it’s, you know, hundreds of
billions of dollars. And we estimate that it’s going to be a trillion dollars a year – that was an
independent analysis. So there’s a lot of cost involved here on this.

38:06 MS. VAN RYAN: Additional questions?

38:07 MS. MCCANN: Yeah. This is Joy. I’m just still a little bit staggered that, number
one, we’re talking about greenhouse gases, with respect to cars, that aren’t even necessarily
harmful. I mean, I assume that they’re kind of focused on carbon – you know, CO2 and possibly
water vapor, you know. And then to also extend that into stationary industries is just to
confound the craziness.

I don’t see why we should be tackling that – those nontoxic materials, either on
automobiles or on stationary industries. This sounds, actually, kind of crazy to me.

38:53 MR. FELDMAN: Yeah. Certainly, we know that there are no health impacts and
no one’s alleged any health impacts from what I’ll call hot spots of CO2 – of carbon dioxide. If
you have high local emissions of carbon dioxide near a factory, near a refinery, near a power
plant, there’s no impact on – there’s no impact on health. So there’s really no need to worry
about those kinds of concentrations.
 39:19 MS. MCCANN: I mean, this is – the plants actually breathe in this stuff. Am I
wrong?

39:25 MR. FELDMAN: Plants breathe it in and we breathe it out. So.

39:30 MS. MCCANN: (Chuckles.) So how did this – I’m just – I guess I’m just blown
away. And I would hate to see us saying, yes, well, it’s okay to regulate it with respect to
automobiles. When it comes to nontoxic substances, I don’t see that they should be doing that at
all.

39:50 MR. FELDMAN: Yeah. We’re leaving that one to the car industry.

39:55 MS. MCCANN: (Chuckles.) Okay. But this is just a crazy idea.

40:02 THE BEAR: Ah, Jane?

40:03 MS. VAN RYAN: Yes?

40:04 THE BEAR: Got another Bear comment. I didn’t catch the young lady’s name.
It’s not a health issue and it’s not a – it’s a power grab. It is a political power grab and that’s
what this whole thing is all about. It has nothing to do with CO2 or anything else. That’s just
smoke and mirrors to cover up what’s going on. And that’s my comment.

40:28 MS. VAN RYAN: Thank you, Bear. And Brian, I thought you chipped in there?
Have you got a comment or a question?

40:34 BRIAN WESTENHAUS: I’ve got a question. Like, you know, we’re talking
about the federal government and the regulatory agencies have a huge amount of power and
swing. What’s plan B? When this thing goes through, is there a plan B?

40:47 MS. VAN RYAN: Good question.

40:49 MS. MCGOWEN: Well, if – you know, with respect to the greenhouse gas
regulations, you know, we’re going to continue – part of plan B – I mean, as you know, these
regulations have already gone into effect. And so plan B is really what we’re doing. You know,
we’re trying to get a legislative fix to the solution – I mean, to this problem.

41:12 MR. WESTENHAUS: Do we need a C? (Chuckles.) Something’s got to give.

There’s an awful lot of money at stake.

41:23 MS. VAN RYAN: Yes. Additional comments or questions?

41:27 MS. MCCANN: Jane, just one more thing. This is Joy again.

41:28 MS. VAN RYAN: Sure.

 41:29 MS. MCCANN: Can we go over what the timetable is for the next few days? I’m
just wondering what – because I heard something was going through yesterday but I joined the
call two minutes late so I didn’t catch all of that.

41:43 MS. MCGOWEN: Right.

41:42 MS. MCCANN: Is there anything over the next 48 hours we need to be talking
about?

41:49 MS. VAN RYAN : Yes. Yes. Please explain that, Misty.

41:52 MS. MCGOWEN: Sure. So over the next 48 hours in the immediate future here,
we are probably going to see a vote on three different amendments in the United States Senate.
At least three amendments are to the small business bill that’s on the floor of the U.S. Senate
right now.

I’m not sure how much of it you might have caught.

42:17 MS. MCCANN: Okay. Those would be all three that you discussed? The
McConnell, Rockefeller and Baucus?

42:21 MS. MCGOWEN: Correct. Correct. Yeah. So we’re probably going to see a
vote on one or maybe all three of those amendments tomorrow. And another thing that you
might want to be watching for is, you know – not over the next 48 hours but next week – we
expect to see a vote on H.R. 910, which is the Energy Tax Prevention Act. That’s the Upton bill
you’ve probably heard so much about.

42:51 MS. MCCANN: Okay.

42:52 MS. MCGOWEN: It’s exactly the same as the McConnell amendment. It would
stop EPA regulation of greenhouse gases. So we expect a vote on the floor of the U.S. House
next week.

43:03 MS. MCCANN: Okay. Thanks.

43:04 MR. FELDMAN: And what will be interesting to watch for is the total number of
senators who vote for some kind of greenhouse gas controls, whether they’re Republicans or
Democrats, on one of these vehicles. You know, it’s tough that the Republicans and Democrats
will agree on something – on one of these – but you’ll see that there will be a groundswell of
support across the Senate for some sort of pushback on EPA’s control.

43:38 MS. MCGOWEN: Yeah. And as I mentioned earlier – again, for the person who
wasn’t – or who had missed the first part of the call: You know, we are hoping and our hope is
that, you know, and we were thinking that we will get close to 60 votes in the U.S. Senate if not
more than 60 votes through the combined voting on all three of these amendments, to show that,
you know, the U.S. Senate is serious about doing something to address EPA regulation of
greenhouse gases.

44:18 MS. MCCANN: And then what comes – what becomes the next step, if one of
these passes?

44:24 MR. FELDMAN: Well, if McConnell passes, then it’s – then it’s past the Senate
and then we’ll be looking for the House vehicle to come along too.

44:32 MS. MCGOWEN: Right.

44:34 MS. MCCANN: Okay.

Oh, by the way, if anybody ever tells you that the air is just as dirty as it always was,
have them watch old “Starsky and Hutch” reruns. (Laughter.)

44:47 MS. VAN RYAN: Now, that’s an interesting observation.

44:50 MS. MCCANN: Tell them to watch crime shows from the 1970s – (laughter) –
and that’ll knock that idea right out of their heads.

44:57 MS. VAN RYAN: The air is very different in L.A. today than it was then, isn’t it?

45:02 MS. MCCANN: Absolutely. I am very allergic and I was very allergic to the
smog. And it’s just not present here the way it was 20, 30 years ago.

45:15 MS. VAN RYAN: All right. Other questions? Other comments?

One thing, Howard, that continues to come to my mind about the ozone standard has to
do with the testing – the human health testing that was done to form the basis for this stricter
standard. I wonder if you could address that a little bit.

45:36 MR. FELDMAN: Sure. Some of the testing that was done and used in – when
they set the standard at 75 was based on work that Professor Adams had done. And EPA then
went and reanalyzed his study to reach different conclusions which Professor Adams then
protested.

But EPA went ahead and used the reanalysis of his research, which had been published,
as helping to support them in their case for setting the standard at the level they chose. So we
thought it was rather disingenuous of EPA to twist and reanalyze published work by an
investigator.

46:23 MS. VAN RYAN: This is one of the reasons why on the Energy Tomorrow Blog
that I’ve written numerous times about EPA overreach and have asked questions, whether or not
EPA is genuinely looking out for human health in the United States or why – or asked also
whether or not this may be more political – they have a political motivation rather than a health
motivation.

It’s a legitimate question. I think it will be up to you all to determine that, based on your
reading of the facts, based on what you’re hearing here today.

Additional questions? Have we completely boggled your minds? (Chuckles.) Yes, so

like I say, these are kind of difficult issues to kind of get your mind wrapped around in 45
minutes to an hour. But we’re happy to ask – or answer, rather, any questions that you might
have.

47:20 MS. MCCANN: Do you think it would be fair to say that – this is Joy again – do
you think it would be fair to say that, essentially in terms of the real work of removing actual
particulate matter from the air, that, early on in the game – at least a decade ago – the EPA kind
of worked itself out of a job? And that that’s one of the reasons it’s looking to some of these
exotic, nontoxic substances to regulate?

47:53 MR. FELDMAN: We’re not really sure what’s driving EPA to want to regulate
CO2. We don’t want to impugn their motives as to what’s making them want to do that. We
understand that under the Clean Air Act, they’re responsible for protecting the public health. But
this CO2-type controls: We think EPA easily could have passed on trying – undertaking that
regulation and they – instead, they took power that wasn’t explicitly given to them.

48:25 MS. MCCANN: Fair enough.

48:29 MS. VAN RYAN: Questions have been asked, Joy, as to whether or not EPA’s
own metrics give them the opportunity to announce that they’ve succeeded.

48:42 MS. MCCANN: Mm-hmm. Okay.

48:44 MS. VAN RYAN: Okay? So maybe the problem is, there’s no way to define
success.

48:48 MS. MCCANN: Oh.

Yeah, it seems to me – you know, and again, I can see why, you know, you need to stick
to the facts in all of this. But what is being done is not just outside the normal legal and political
procedures but also just so exotic that it’s very difficult not to – you know, not to see this as a
continuation – as a set of measures to make sure that they all still have jobs for the next few
decades.

49:27 MS. VAN RYAN: That sounds like a theme for a blog post, if you ask me.
(Chuckles.)

Additional questions? Oh, you’re all much too quiet today. I hope we haven’t given you
almost too much information and that it’s difficult to kind of absorb all of this. One last chance.
 Anybody? OK. Well, on that note, here’s what we’re going to do. We’ll close out this
blogger conference call. We will indeed put the audio file of this call and the transcript online as
soon as we can. It may be Thursday before all that gets done. But we’re going to try to get it
online at EnergyTomorrow.org, so you’ll have access to the complete transcript and the audio
file.

Also, if any of you have any questions about this, please let me know. We’ll be happy to
provide answers to any questions you might have. And any observations, please feel free to
share them with us. We would appreciate that. And keep an eye on the Senate. That’s where
the action is going to be this week.

So thank you all for joining us and please keep in touch.

(Music.)

51:11 OPERATOR: Thank you for listening to this installment of “Energy

Conversations with API.” For more information or to join the conversation, visit
EnergyTomorrow.org. That’s www.EnergyTomorrow.org

(END)