Hill Heat

In 2009, the Administration launched a process to determine how best to quantify the net benefits from reducing carbon dioxide emissions. The purpose of this process was to ensure that agencies were using the best available information and to provide consistency in economic analysis associated with the rulemaking process across agencies. During the previous Administration and at the beginning of this Administration, agencies used a range of social cost of carbon values when evaluating the costs and benefits of rules.

To determine how best to quantify the net benefits from reducing carbon dioxide emissions, the Administration first conducted a preliminary assessment of existing literature in order to set interim social cost of carbon values while it worked on a more comprehensive analysis. Agencies began using these interim values in rulemakings and solicited public comments on the proposed rules in which the values were used. Informed by public comments received on the interim values, the Administration developed and released improved SCC estimates in February 2010 in conjunction with a Department of Energy (DOE) appliance efficiency-standard rulemaking for small electric motors. Other agencies subsequently used these SCC estimates in their rulemakings.

Since the release of the SCC values in February 2010, numerous rulemakings have used those values for the social cost of carbon. Agencies using the SCC values in rulemakings received extensive public comments, many of which focused on the discount rates chosen and the three peer-reviewed academic models used to develop the SCC estimates. As explained in the February 2010 Technical Support Document, the SCC methodology rests on three integrated climate change assessment models: the FUND, DICE, and PAGE models.These models combine climate processes, economic growth, and interactions between the climate and the global economy into a single modeling framework. These are by far the most widely cited models that link physical impacts to economic damages for the purposes of estimating the SCC. The SCC estimates rely on a common set of inputs to each model and equally weigh the outputs of the three models, as described in detail in the 2010 technical document.

Recognizing that the underlying climate change impact models would evolve and improve over time as scientific and economic understanding increased, the 2010 SCC documentation committed to regular updates, and set a goal of updating the SCC estimates within two years or after updated versions of the underlying models became available. Since the February 2010 estimates were released, the three models that underpin the interagency social cost of carbon estimates have been all significantly updated and subsequently used in peer-reviewed studies. Many public comments urged the agencies to update the estimates based on the latest models. It is important to note that the only changes made in May 2013 to the SCC estimates reflect the refinements made to the underlying models. In other words, all of the changes to the social cost of carbon values were the result of updates to the FUND, DICE, and PAGE models that were made by the model developers themselves. The Federal Government inputs, such as the discounts rate, population growth, climate sensitivity distribution, and socioeconomic trajectories used to develop the 2010 estimates remain unchanged. As explained in the 2013 Technical Support Document, the updates to FUND, DICE, and PAGE reflect, among other things, improvements in the way economic damages from climate change are modeled. The net result of these updates to the three peer-reviewed models was to increase the SCC estimates. These net changes reflect many specific changes within the three models, some of which increased the estimates and some of which decreased them. For example, for 2015 emissions and using a 3 percent real discount rate, the social cost of carbon value rose from $24 per metric to $38 per metric ton (in 2007 dollars). The technical support document provides a range of estimates using different discount rates.

Entities outside of the Federal government are using estimates that are similar to the updated SCC values. For example, these updated estimates are consistent with the SCC values used by other governments, such as the United Kingdom and Germany. Major corporations, such as ExxonMobil and Shell, have also used similar estimates to evaluate capital investments. The Administration will continue to investigate ways to improve the social cost of carbon estimates. The current estimates will be used in the economic analysis ofrulemakings, and we fully expect comments on the SCC values in the context of future rules. We will consider those comments to ensure that we use the best available information to evaluate the costs and benefits of our regulation.

Thank you for your time. I would be happy to answer any questions.

Download the testimony (PDF).

1:50 Waxman We have seen White House interference with federal agencies in the run-up to the Iraq War, torture, and US Attorneys. The record is overwhelming that EPA’s experts all supported grating the waiver petition.

EPA’s expert advisory committee unanimously recommended a new standard for protecting the environment. Johnson supported the new seasonal standard. He said there was ‘no evidence’ for a different standard.

Our investigation has not been able to find any evidence President Bush based his decision on the science or the law. I support the broad powers the Constitution vests with the President, but he does not have unlimited powers and he is not above the law.

1:55 Issa We’re all entitled to our opinions, not our facts. The appropriate role of the President was established by the Constitution. President Clinton offered a prime example of an executive involved in regulatory actions. We know that on March 12, Susan Dudley sent a memo to the EPA indicating President Bush’s decision on the ozone standard. It does not reflect any unusual or improper action. The Clinton executive order makes it clear that the President will decide disputes between OIRA and the EPA. The President agreed with OIRA’s conclusions.

Claiming that science dictates a certain outcome is contrary to science and law.

2:05 Waxman It’s the policy to swear in the witnesses. Your prepared statements have been submitted. Please keep your oral opening statements within five minutes.

Johnson I’m pleased to discuss EPA’s decision to significantly increase ozone standards. Since 1980, ozone levels have been cut by 20 percent. I concluded the 1997 no longer protected public health with an adequate level of safety. I chose 0.075 ppm as the 8-hour standard. I proposed a three-month standard to address plants’ cumulative exposure to ozone. As required by Executive Order 12866, I coordinated with other agencies. I believe it is time to modernize the Clean Air Act. Congress has adopted these principles in the Safe Drinking Water Act. The Clean Air Act is not a relic, but a living document.

2:10 Dudley Pursuant to Executive Order 12866, OIRA coordinates interagency review. Both OMB and EPA have been forthright on the ozone standards. No changes were made to the level or form of the health-based standard. Discussions of the secondary standard were exclusively on the form.

2:15 Henderson I’m testifying as the current chair of EPA’s CASAC. Dudley’s first memo was clearly disputed by Marcus Peacock. So the next memo she wrote said Bush made the decision. CASAC has been accused from wandering from scientific issues into policy. In this case policymakers have wandered into science. If the Administrator sets a standard outside the range outside the CASAC’s recommendations, one should ask whose advice he based his decision on. I would like to quote from Dr. Paul Gilman, “Setting the standards by fiat, behind closed doors, is not in our best interest.”

2:23 Waxman You’re the chair of the Clean Air Scientific Advisory Committee. Are the standards EPA Administrator Johnson set consistent with the science?

Henderson It is not consistent with the CASAC recommendations, which are based on the science.

Henderson We always recommend a range.

Waxman Did he select a number within the range?

Henderson No.

Johnson I would respectfully disagree with the characterization. I did agree with CASAC that the current standard was insufficient.

Waxman You think that you set the standard within the science. Your professional views may be scientific and legally correct. You recommended the secondary standard be set on cumulative exposure?

Johnson More correctly there were two options. Other agencies preferred a different option. The President provided input. Ultimately I made the decision.

Waxman As the head of the EPA you recommended a proposal. OMB didn’t like that proposal. You ultimately agreed with their proposal.

Johnson More accurately, I agreed with CASAC that a cumulative standard is most biologically accurate.

Waxman I want a direct answer.

Johnson I don’t believe it’s a yes or no question. There was one preferred by EPA, and one preferred by OMB. I think it’s good government.

Waxman Your staff said it was pure politics. And this isn’t the only time you were reversed by the White House. Jason Burnett said you recommended that you grant the California waiver. After talking to the White House, you changed your mind.

Johnson If you look through the 1000s of pages, it shows a very deliberative process where I considered all options.

Waxman Burnett told us under oath that you recommended a partial grant. Your staff also told us you recommended emissions standards.

Johnson It’s true there was a draft endangerment finding before the Energy Independence and Security Act was passed.

Waxman We interviewed 7 senior career EPA officials and they told us the same thing. The recommendation was submitted in the first week of December, and then all work stopped. You’ve become a figurehead. Three times you recommended to deal with climate change and protect the environment, three times you back down. Congress passes the law, the Executive Branch is supposed to faithfully execute them. The President seems to think he can do what he pleases. Let’s go to this ozone decision.

Johnson There were many uncertainties. That’s why I chose the primary form. It’s a very transparent process. I think that’s good government.

2:36 Issa You’re a career professional.

Johnson I came to EPA in 1980.

Issa You’re not a political appointee.

Johnson I’m a career professional and a political appointee.

Issa Today we’re talking about a reduction and trying to go through what good deed goes unpunished. Is Mr. Waxman’s district in compliance with the ozone standard? Has it ever been?

Johnson No. The law prohibits me from considering costs. I believe there’s an opportunity to improve the Clean Air Act. I think it’s unconscionable to have communities not in compliance with the standard for twenty years.

Issa For CO2, it’s time for Congress to act.

Johnson I wholeheartedly agree. Dealing with a global air pollutant, my experience is that a legislative fix is correct. I believe global climate change, greenhouse emissions need to be addressed. I’m issuing an advanced notice of a rulemaking process this spring.

Issa Today we appear to be having a hearing about whether a 11% reduction is worse than a 16% reduction.

Johnson That’s certainly a view. I wholeheartedly agreed with CASAC that it needs to be reduced.

Issa Basically, if 2,3,4 years from now we’ve achieved a portion of this reduction, there’s nothing to stop this from happening at any time.

Johnson We’re required every five years to review each and every one of these standards. The Agency has never met the five-year requirement. We’re required to make these evaluations.

2:44 Bilbray I don’t come from a business background. I come from a regulatory background. Sheer population has been ignored from the environmental impact. Doctor, you serve on one of the most critical bodies. Back in the 90s, when California petitioned for a waiver for MTBE, were you involved?

Henderson My chairmanship began in 2004.

Bilbray What was the Clinton justification for requiring us to put MTBE and ethanol in our fuel?

Johnson It was before my time.

Bilbray Mr. Chairman, I was outraged at the time that the Clinton administration was bowing to political pressure. For us to point fingers at one administration when we waited for a decade is wrong.

2:45 Tierney What did you mean by “willful ignorance”?

Henderson I don’t believe OMB actually read our documents. It bothers me that when all the hard work went in for a secondary standard, someone can just say, “Nope, can’t do that.”

Tierney You want to respond?

Johnson The record clearly indicates it was a difficult decision.

Tierney An EPA lawyer wrote, “We could be exposed to a contempt proceeding.” Mr. Johnson, I think what’s happening is pretty unacceptable. By your own words, it was “necessary” and “compelling” to set this secondary standards. Nearly 1000 scientists said they experienced at least one instance of political interference.

Johnson I’d like to quote to you, if I may, Dr. Paul Gilman, “EPA has become too politicized in its actions.” That was the Clinton administration.

Tierney Are you proud of what’s going on now?

Johnson I’m proud. My role as Administrator is to evaluate the science.

Bilbray UCS Survey?

Johnson I am aware the survey was received by political appointees and non-scientists.

Bilbray For this to be used as some kind of scientific document. No pollster would accept this. Doctor, in your analysis, was their a consideration of economic impact?

Henderson We are not allowed to consider costs. We did consider what was biologically relevant. I have a concern for the affect of ozone on vegetation as well as people. We are neglecting the rural areas.

Bilbray How long have you been chairman?

Henderson Four years.

Bilbray You didn’t talk about economic value of crops that could have been destroyed.

3:00 Johnson I’m not allowed to consider costs or whether it can be implemented or not. With all science there are uncertainties. Judgment needs to be exercised.

Henderson Welfare includes but is not limited to … economic well-being.

3:02 Higgins I’d like to focus on the primary standard and health impacts. Did you find the primary standard to be sufficient?

Henderson No.

Johnson I disagree.

Higgins EPA estimated 350 more deaths, 10,000 asthma attacks, 750 emergency hospital visits, at your standard.

Johnson The Clean Air Act does not require zero risk. It is the most health-protective standard of our nation’s history. I’m very proud of that.

Higgins I have a letter from the American Lung Association strongly critiquing this decision. Your decision seems to be inconsistent with mainstream thinking. It’s just not credible to argue your decision is based on science.

Johnson I disagree. It is the most health-protective standard of our nation’s history. Ultimately, I need to make the tough decision.

3:08 Platts I yield to Issa.

Issa Could we put the map up on the board. My understanding that everywhere that’s dark – which unfortunately includes most of California – there’s no effective difference between primary and secondary standard.

3:18 Hodes With all due respect I’m asking the questions. Do you recall or not recall discussing costs with the White House?

Johnson Even if I recall, I don’t want to answer the question.

Hodes Are you asserting privilege?

Johnson I’m not asserting privilege.

Hodes Do you or don’t you recall?

Johnson Even if I recall, I don’t believe if it is appropriate to answer the question.

3:20 Sarbanes Explain your memo.

Dudley The air quality based on the secondary standard is the same. What we care about is air quality. The two standards would have the same effect.

Sarbanes I’m incredulous. The administrator said he found “compelling” evidence that a cumulative index is the best way to measure effects on vegetation. I could see you asserting inadequate evidence, but that there was no evidence doesn’t seem to jive with all the other testimony and documentation.

Dudley There are two different issues here. The form of the standard won’t affect the air quality of those counties.

Sarbanes What you’re saying strikes me as doubletalk. Did the President or the White House indicate to you that there would be times when the science would be overriden by political purposes?

Johnson My charge and oath of office was to carry out the laws. The President said he wanted me to accelerate the environmental protection. I carried this out to the best of my ability, based on sound science. Science isn’t pure.

Sarbanes I can’t think of a clearer example of where your charge came into conflict with the Presidential edict.

3:26 Welch Jason Burnett is a senior member of the EPA. He’s been deposed. He testified you favored granting this waiver in full in August and September.

Johnson Over time…

Welch Let’s keep it simple. Is he correct in his recollection?

Johnson I don’t recall the August and September timeline. I was considering all options.

Welch Mr. Burnett said that in August and September you were favoring granting a waiver in full.

Johnson As I said, I considered all the options.

Welch It’s obvious you did. Is he right that you considered a partial grant?

Johnson Yes.

Welch Did you have a meeting with the President about this?

Johnson I have routine meetings with the President and the executive branch.

Welch Did you have a meeting with the President about this?

Johnson When and where…

Welch Does “transparent” mean we can’t know whether you met with the President?

Johnson I believe as Administrator I need to have private meetings with the President.

Welch Did I ask the content of the meeting? Did your staff present you a slide stating that the most legally defensible option was granting the waiver?

Johnson I don’t recall that particular slide.

Welch Did the EPA staff make it clear the statutory

Johnson There were a wide range of options.

Welch It’s a little frustrating.

Johnson It shouldn’t be frustrating.

Waxman You admitted you have a conversation with the President on the California waiver.

Johnson I have routine conversations.

Waxman You are being awfully evasive.

Johnson I have routine conversations.

Waxman Did you have any conversation with the President on any of these three rules?

Issa Regular order! I want a copy of the rules!

Waxman I will have the gentleman physically removed if he does not desist.

Waxman Did you have any conversation with the President on any of these three rules?

Johnson I have routine conversations, I don’t believe it is appropriate for me to discuss the content of these conversations.

Waxman Are you asserting privilege?

Johnson Not at this time.

3:36 Watson Was the Vice President’s office involved the California waiver?

Johnson Not to my knowledge.

Watson According to press accounts, the CEO of Ford and GM met with the Vice President’s office.

Johnson It’s not a problem unique to California.

Watson Was there any input from the White House that influenced your final decision?

Johnson My decision was based on the science and the law.

Watson Was there any input from the White House that influenced your final decision?

Johnson I have routine conversations…

Watson Yes or no.

Johnson The answer is, no, they did not make the decision.

Watson That was not my question. Maybe my English was not clear. In your routine conversations, was there any input from the Vice President?

Johnson I don’t recall any.

3:43 Issa Our deliberations are protected from discovery by the executive branch. It’s no surprise that you might wish the same privilege. You serve at the pleasure of the president, but he does not have authority over your actions. Is that correct?

Johnson Yes.

Issa Chairman Dingell declared regulation of CO2 a “glorious mess.”

Johnson I believe there are many intricacies with the Clean Air Act. My personal opinion is that given the years and years of litigation is to prefer a legislative approach.

3:46 Cummings This stuff is personal for me, because I have asthma. In my district in Baltimore my constituents have a high rate of asthma. We’re curious as to how our administrator, our man in the EPA makes his decisions. You’ve said “it’s not a popularity contest.” Do you remember saying that?

Johnson I do, and I agree with it.

Cummings All too frequently the courts have decided your decisions do not conform to the law. Did you know your decisions before the DC Circuit Court have been overturned over two thirds of the time?

Johnson Yes.

3:59 Waxman You were required to produce documents by April 19. Has the President asserted executive privilege with regards to these documents?

Johnson I’m not making an assertion of executive privilege, instead I’m making my staff available to you.

Dudley Our lawyers are discussing the documents. I have a letter from OMB General Counsel.

Waxman We’ve made reasonable accomodations to Executive Branch interests. You’re trying to shield the White House from oversight. Unless there’s a valid claim of executive privilege, you have to turn over the documents. There’s been no assertion of executive privilege. This is a serious issue, and your defiance of the subpoena is a serious matter.

4:02 Waxman The record shows this committee spared no effort in oversight of the Clinton administration.

Issa We have a long tradition of looking into it and recognizing the President has a role to play.

Johnson The challenge we have as a nation is to move forward. 50% of our electricity comes from coal. France is much less.

Issa You have a responsibility as a federal officer to all Americans. My understanding is protecting our commerce against arbitrary standards.

Johnson Again, I have three criteria. Acceleration of temperatures, other parts of the country make it worse. In my judgment, it did not meet the “compelling and extraordinary” standard.

4:09 Bilbray The standard that we’re complaining with the ozone standard. The science panel recommended a max of .07.

Henderson It was a range from .06 to .07.

Cannon

4:15 Johnson I have to say for the record those are not the criteria.

4:16 Waxman You’re willing to make a mockery of the rulemaking process. The record tells us what happened. Your testimony pretends none of this happened. I can’t adequate how deeply this saddens me and how poorly it reflects on the EPA.