Build Back Better Act

Floor Speech

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Mr. PALLONE. Madam Speaker, I rise to offer some additional thoughts in support of our historic legislation, the Inflation Reduction Act of 2022 (IRA or the Act).

The electric power sector presents unique issues because it is evolving rapidly. Renewable and other low-emitting electricity generation are rapidly replacing coal-fired generation. The costs of the former continue to fall, leaving many of the coal-fired plants that remain in operation with thin profit margins.

The IRA includes numerous provisions and substantial funding designed to accelerate this transition to clean energy. Of particular relevance, Section 13204 of the IRA creates a new federal tax credit (at Internal Revenue Code Section 45V) for production of clean hydrogen, and Section 13104 extends and increases the federal tax credit (at Internal Revenue Code Section 45Q) for carbon oxide capture, also referred to as carbon capture, utilization, and storage (CCUS). Congress anticipates that while this tax credit will make CCUS more affordable for coal-fired electricity generating plants and will allow some to continue to operate while reducing their GHG emissions, power companies will also continue to choose to retire such plants in favor of cleaner forms of generation.

The IRA also includes provisions that support EPA rulemaking to reduce GHG emissions from the electric power sector. Congress understands that this rulemaking will have the incidental effect of expediting the transition to clean energy because by requiring fossil fuel-fired power plants to reduce emissions, it will require additional investments by these plants that will not be needed for plants using cleaner forms of generation. In particular, Section 60107 establishes new CAA Section 135 that requires EPA to account for this transition to clean energy in promulgating regulations to reduce GHG emissions. Section 60107(a)(1) through (4) provide EPA $68 million to support actions--such as consumer-related education and technical assistance to State, Tribal, and local governments--to reduce GHG emissions that result from domestic electricity generation and use, and Section 60107(a)(5) provides $1 million for EPA to conduct an assessment of the reductions in GHG emissions that will result from changes in domestic electricity generation and use anticipated to occur on an annual basis through fiscal year 2031. Section 60107(a)(6), as previously noted, provides $18 million for EPA to promulgate additional requirements under its CAA authorities to ensure reductions in GHG emissions, incorporating the assessment under paragraph (5).

Congress has full confidence that EPA has sufficient expertise to make the assessment under Section 60107(a)(5) and conduct the rulemakings contemplated under Section 60107 through the authority of CAA Section 111 and other CAA provisions. EPA has a long history of action in this sector. In fact, EPA initiated rulemaking to control air pollutants from the electric power industry shortly after enactment of the 1970 CAA Amendments and, in the five decades since, has promulgated numerous regulations affecting the industry, under several CAA provisions, that are among the most significant in EPA's history. Congress considers these activities as clear evidence of EPA's robust understanding of the electric power industry, its underlying economics, its sources of electricity generation, its infrastructure, its mechanisms to maintain reliability, its rate structure, and other components. Congress believes the U.S. Supreme Court correctly recognized EPA's expertise in the electric power sector in 2011 in American Electric Power v. Connecticut and notes the Supreme Court's recent opinion in West Virginia v. EPA does not call EPA's expertise into question. (American Electric Power v. Connecticut, 564 U.S. 410, 426, 427, 428 (2011); West Virginia v. EPA, No. 20-1530, Slip Op. at 25 (2022)).

The IRA authorizes EPA to make use of the additional funding that Section 60107 provides to promulgate regulations for GHGs under Sections 111(b) and 111(d) for new and existing industrial sources. Section 111 is the single most important tool in EPA's toolkit for regulating new and existing industrial sources of GHGs, and Congress expects EPA to make increasing use of it. Section 111 authorizes EPA to base regulatory requirements on the ``best system of emission reduction . . . adequately demonstrated'' (BSER) for controlling air pollutants, taking into account, among other things, cost. As previously noted, Congress expects that EPA will interpret Section 111 broadly, consistent with its meaning since it was enacted in the 1970 CAA Amendments, so that EPA will be able to promulgate impactful regulations for these sources, including ones that may be innovative, as appropriate.

Congress intends for all of the technologies funded under this Act (such as the tax credits for CCUS and clean hydrogen production) to be available to EPA to tackle the climate crisis, along with any other technologies or systems that EPA finds meet statutory criteria, such as those identified in its April 2022 draft White Paper. (Available and Emerging Technologies for Reducing Greenhouse Gas Emissions from Combustion Turbine Electric Generating Units (Apr. 21, 2022)). While the draft White Paper identified methods EPA or States could use to reduce GHGs from combustion turbines (which are generally natural-gas fired), many of these methods could also apply to steam boiler units (which are generally coal-fired) and to other industrial sources. Section 111, as enacted, clearly authorizes EPA to adopt any of these measures as the BSER--if EPA determines that they meet the applicable requirements concerning, for example, cost--and therefore as the basis for regulatory requirements for new and existing sources. The Supreme Court's decision in West Virginia v. EPA does not preclude those types of controls as BSER or as a component of the best system and, in fact, recognizes many of them as traditional air pollution control measures. The IRA recognizes this extraordinary time of transition in the energy sector and the rapid pace of technological change, and we urge EPA, where feasible, to base its emissions requirement on both technologies that are available now and those that will be available in the near term, including because of incentives contained within this Act. This approach may allow EPA flexibility to address more fully GHG emissions from particular source categories in its rulemaking.

The tax credits for CCUS and clean hydrogen production included in this Act may also figure into CAA Section 111 GHG regulations for new and existing industrial sources as well as other CAA requirements, such as permitting under Section 165. As noted above, Congress anticipates that EPA may consider CCUS or clean hydrogen as candidates for BSER for electric generating plants as well as for other fossil fuel-fired industrial sources. Further, Congress anticipates that EPA may consider the impact of the CCUS and hydrogen production tax credits in lowering the costs of those measures. As I noted above, Congress anticipates that regulatory requirements to reduce emissions imposed on coal-fired electricity generating plants will require additional investments by these plants--investments that non-emitting plants will not have to make. Such a rulemaking would be clearly authorized under Section 111, consistent with its meaning since enactment.

Congress intends that, for purposes of rules under Section 111 and other CAA requirements based on CCUS or clean hydrogen, the cost of CCUS or clean hydrogen may be calculated on the assumption that the amount of the tax credit is the increased amount available under Internal Revenue Code Sections 45Q(h)(1) or 45V(e)(1), respectively, as added by this Act.

Section 60105(g) provides EPA $5 million to provide grants to states to adopt and implement GHG and zero-emission standards for mobile sources pursuant to Section 177 of the CAA. Congress supports states taking actions to address their air pollution and climate needs. An important tool that many states have available is the ability to adopt California's GHG, zero-emissions vehicle, and criteria pollutant emissions standards for mobile sources under Section 177, which they may submit to EPA afterwards as part of their state measures. Funding available in Section 60105(g) is intended to support states wishing to use this tool.

A necessary predicate for states adopting California's standards under Section 177 is that EPA issue a waiver of preemption pursuant to CAA Section 209. By making these funds available specifically for states to adopt and implement California's GHG and zero emission mobile source standards, Congress indicates its approval of EPA's decision to grant a waiver to California for such standards where the statutory criteria have been met. EPA has done this several times in the past including, but not limited to, in 2009 for California's GHG standards for new motor vehicles; in 2013 for California's advanced clean car standards, including its zero-emission vehicle sales mandate; and in 2014 and 2016 for California's heavy-duty GHG emission standards. California may continue to need such standards to address compelling and extraordinary conditions.

Congress recognizes the reductions in GHG emissions from motor vehicles and engines owing to increased engine efficiency, improved vehicle design, and the transition to low- and zero-emission vehicles, including fuel-cell and battery-powered electric vehicles. EPA's recent light-duty vehicle regulations establishing standards for motor vehicles and engines for 2023 and later model years identify and incentivize these technological developments. (86 Fed. Reg. 74434 (Dec. 30, 2021)). Congress recognizes EPA's longstanding authority under CAA Section 202 to adopt standards that rely on zero emission technologies, and Congress expects that future EPA regulations will increasingly rely on and incentivize zero-emission vehicles as appropriate. Other provisions in the IRA will further support the transition to zero- emission vehicles including, but not limited to, Section 60101, funds to support clean heavy-duty vehicles; Section 60102, funds to reduce air pollution and support zero-emissions technology at ports; Section 60104, funds to support diesel emissions reductions; and Sections 13401 through 134003, tax credits for clean vehicles.

The IRA provides additional funding for EPA to carry out provisions of the American Innovation and Manufacturing (AIM) Act, which Congress expects EPA will use to adopt robust measures to address hydrofluorocarbons, which are potent GHGs, and where appropriate, their substitutes. Specifically, Section 60109(a)(1) provides $20 million to carry out subsections (a) through (i) and subsection (k) of the AIM Act. Section 60109(a)(2) provides $3.5 million to deploy new implementation and compliance tools to carry out those same subsections of the AIM Act, and Section 60109(a)(3) provides $15 million for competitive grants for reclaim and innovative destruction technologies under those same subsections of the AIM Act. EPA's rulemaking under the AIM Act to address hydrofluorocarbons is vital to limiting the climate impacts from these potent GHGs and an important tool in helping to address the climate crisis. Congress recognizes that addressing hydrofluorocarbons, and where appropriate their substitutes, under the recently enacted AIM Act may present novel and complex issues that may require innovative regulatory approaches, including robust measures to ensure compliance with regulatory and statutory requirements. In providing this additional funding under Section 60109, Congress intends that EPA construe its authority under the AIM Act broadly, consistent with the meaning of AIM since its enactment, to help ensure compliance so requirements are fully achieved. Promulgating and implementing these regulations may be resource-intensive, and this additional funding will allow EPA to prioritize those efforts and devote the necessary resources to them, including adopting innovative and impactful requirements and successfully implementing those regulations to ensure that Congressional goals of addressing climate-damaging hydrofluorocarbons are achieved. Congress further recognizes that the Agency has developed a robust set of tools and worked closely with industry to meet these ambitious goals. Previous EPA actions include protecting our borders from illegal trade and facilitating transitions to innovative alternatives and technologies, many of which have been developed and deployed by American companies. This additional funding provides further support for the Agency to continue with this important work.

By passing the IRA, Congress is making a critical and historic down payment toward a stable climate and shared economic opportunity powered by American-made clean energy. The IRA gives us an opportunity to meet our science-based climate goals and be a global clean energy leader through American innovation, manufacturing, and job creation while bolstering policy action and partnerships by federal agencies, states, and local governments to reduce GHGs and create a clean future for all.

The CAA is one of the most powerful and enduring tools available to achieve our climate and clean energy goals. Congress recognizes EPA's longstanding authority and responsibility to regulate GHGs as air pollutants under the CAA, and with the IRA clearly and deliberately instructs EPA to use it. As discussed, the IRA combines economic incentives to reduce climate pollution with regulatory drivers to spur greater reductions under EPA's CAA authorities.

The IRA also builds on EPA's time-tested responsibility and authority under the CAA by making critical amendments to provide EPA with important new tools and new funding to protect the public. These changes to our nation's clean air law, and the many other historic provisions of the IRA, will ensure the promise of the CAA to promote the public health, welfare, and the productive capacity of the American people is strengthened and continues for years to come.

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