<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:32206.wais]
S. Hrg. 109-867
S. 131, ``THE CLEAR SKIES ACT OF 2005''
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
FEBRUARY 2, 2005
__________
Printed for the use of the Committee on Environment and Public Works
Available via the World Wide Web: http://www.access.gpo.gov/
congress.senate
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island BARBARA BOXER, California
LISA MURKOWSKI, Alaska THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
Andrew Wheeler, Majority Staff Director
Ken Connolly, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
FEBRUARY 2, 2005
OPENING STATEMENTS
Baucus, Hon. Max, U.S. Senator from the State of Montana,
prepared statement............................................. 79
Bond, Hon. Christopher S., U.S. Senator from the State of
Missouri....................................................... 26
Boxer, Hon. Barbara, U.S. Senator from the State of California,
prepared statement............................................. 80
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 8
Chafee, Hon. Lincoln, U.S. Senator from the State of Rhode Island 29
Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New
York........................................................... 29
DeMint, Hon. Jim, U.S. Senator from the State of South Carolina.. 39
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 1
Isakson, Hon. Johnny, U.S. Senator from the State of Georgia..... 7
Jeffords, Hon. James M., U.S. Senator from the State of Vermont.. 4
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 20
Lieberman, Hon. Joseph I., U.S. Senator from the State of
Connecticut.................................................... 24
Murkowski, Hon. Lisa, U.S. Senator from the State of Alaska...... 21
Obama, Hon. Barack, U.S. Senator from the State of Illinois...... 28
Vitter, Hon. David, U.S. Senator from the State of Louisiana..... 19
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 31
WITNESSES
Breehey, Abraham, legislative representative, Government Affairs
Department, International Brotherhood of Boilermakers.......... 72
Prepared statement........................................... 260
Responses to additional questions from:
Senator Voinovich........................................ 262
Senator Lautenberg....................................... 262
Connaughton, James L., chairman, Council on Environmental Quality 40
Prepared statement........................................... 81
Responses to additional questions from:
Senator Baucus........................................... 87
Senator Inhofe........................................... 82
Senator Jeffords......................................... 91
Senator Lautenberg....................................... 86
Senator Murkowski........................................ 97
Senator Obama............................................ 90
Senator Vitter........................................... 99
Senator Voinovich........................................ 87
Houseal, Brian, executive director, Adirondack Council........... 68
Prepared statement........................................... 100
Responses to additional questions from:
Senator Inhofe........................................... 102
Senator Jeffords......................................... 103
Senator Lautenberg....................................... 103
Walke, John, Clean Air director, Natural Resources Defense
Council........................................................ 70
Prepared statement........................................... 105
Responses to additional questions from:
Senator Inhofe........................................... 148
Senator Jeffords......................................... 158
Senator Lautenberg....................................... 160
ADDITIONAL MATERIAL
Article, Associated Press, Warmer world shrinking glaciers,
January 31, 2005............................................... 66-67
Charts:
Delivering Extensive Health Benefits and Widespread
Attainment................................................. 36
EPA Projections of Coal-Fired Power Plants that will not have
applied modern NOx and SOx controls under Clear Skies by
2020....................................................... 270
Industrial Price of Natural Gas.............................. 35
Timeline for the Ozone NAAQS................................. 37
Fact sheets, state-level snapshots of the number of facilities
that could be eligible for opt-in MACT provisions, Earthjustic168-211
Letters:
Hubbard, James W., delegate, Maryland General Assembly and
chair, National Conference of State Legislatures'
Environment and Natural Resources Committee................ 10-17
Marshall, David, senior counsel, Clean Air Task Force.......212-253
Religious leaders in opposition to S. 131.................... 44
Tubbesing, Carl, deputy executive director, National
Conference of State Legislatures........................... 18
Presentation, Quin Shea, senior director for Environmental
Activities, Edison Electric Institute.......................... 254
Statements:
Cook, John, vice president and managing director, Eastern
U.S. Conservation Region, The Nature Conservancy........... 263
Edison Electric Institute.................................... 60
Holmstead, Jeffrey, Assistant Administrator, Environmental
Protection Agency, July 8, 2003............................ 287
Large Public Power Council................................... 267
McSlarrow, Hon. Kyle E., Deputy Secretary, Department of
Energy, May 8, 2003........................................ 281
Whitman, Hon. Christine Todd, Administrator, Environmental
Protection Agency, April 8, 2003........................... 274
S. 131, ``THE CLEAR SKIES ACT OF 2005''
----------
WEDNESDAY, FEBRUARY 2, 2005
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The committee met, pursuant to notice, at 9:15 a.m. in room
406, Senate Dirksen Building, Hon. James M. Inhofe (chairman of
the committee) presiding.
Present: Senators Inhofe, Bond, Voinovich, Chafee,
Murkowski, Thune, DeMint, Isakson, Vitter, Jeffords, Lieberman,
Carper, Clinton, Lautenberg, and Obama.
OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM
THE STATE OF OKLAHOMA
Senator Inhofe. The committee will come to order. We have a
policy of starting on time, and we will do that. I see our
witness is here on time, as he always is. Thank you.
The committee has had more than 20 hearings examining
issues related to motor pollutant legislation. Today's hearing
is the final hearing I plan to hold as chairman of this
committee on this issue. I intend to mark up this bill 2 weeks
from today. We have talked to our committee members. I think we
have had enough meetings on this. We had eight of these when I
was chairman of the Clean Air Subcommittee, and there is not
much more to talk about.
The Clear Skies legislation is the largest reduction in
utility emissions ever called for in the history of this
Country or by any President, a 70 percent reduction by 2018 in
SO<INF>2</INF>, NO<INF>X</INF>, and mercury. Although the air
is much cleaner today than it used to be, with major pollutants
being cut in half even as the population and economic activity
increased substantially, when it comes to reducing utility
emissions, the Clean Air Act is outdated and must be reformed.
Every attempt to set a standard by regulation has resulted
in endless litigation. The NOx SIP Call took over 7 years. The
NAAQS process took over 10 years when you consider the 1997
proposal was required by the court order. The residual risk
program is in worse shape, and the agency's efforts to date to
deal with the residual risk have been criticized by the
National Academy of Sciences. Regardless of what you think
about the NSR program, it has resulted in almost no emissions
reductions, and its use in the courtroom will only delay the
reductions. The only virtually litigation-free program to
reduce utility emissions has been the Acid Rain Program.
The success of the Acid Rain Program is the reason
President Bush proposed the Clean Skies Initiative, and the
reason Senator Voinovich and myself support it. This program
has been practically litigation-free, whether it was in the
implementing of regulations or the enforcement. It has been
almost completely violation free.
The Clear Skies legislation, S. 131, will cleanup the air
by reducing utility emissions faster, cheaper, and more
efficiently than the Clean Air Act. Anyone who doubts this
either does not understand the legislation or has not paid
attention to the endless litigation over the past 15 years. We
will hear testimony today from a variety of witnesses in
addition to the Administration witness. We will hear from: A
well-respected environmental official who is dedicated to
solving the Acid Rain problem in New York and New England, the
area of the Country where its effects are the most devastating;
an analyst for the labor union who is concerned that the
alternatives to Clear Skies will cost jobs; and a lawyer for
the national group which has brought numerous lawsuits under
the current law. Why is it that only the lawyer supports the
endless litigation that is in the current act? I think we
understand that.
What we are trying to accomplish with this act is to expand
the Acid Rain Program in order to achieve the emissions
reductions without the endless lawsuits. Maybe that is why so
many large environmental organizations, who employ more lawyers
than scientists, oppose this bill.
They have thrown a number of unsubstantiated claims at this
bill. They say this bill infringes on the States' rights. It
does not, it reaffirms them. They claim it rolls back emission
reductions the current act will achieve. It does not. It will
make new reductions possible. They say the law requires, and we
can achieve, a 90 percent reduction in mercury by 2008. It does
not, and we cannot given the lack of technology. It just
couldn't happen. Most ludicrous of all, they say it will
engender lawsuits despite the fact that this bill is based on
the litigation-free Acid Rain Program precisely to end
litigation and ensure clean air progress.
Last week, the Energy Information Administration released a
report examining the economic impacts of mercury regulation. It
found that the proposal favored by the national environmental
groups, such as the NRDC, to regulate mercury by 90 percent by
2008 would lead to a 26 percent increase in natural gas prices
and a 22 percent increase in electricity prices by 2010 if
technologies cannot achieve the mandate. EPA says they will
not. The result: wholesale exports of American manufacturing
jobs overseas, and we have already seen this started.
Given the environmental benefits and predictability of this
bill, I would question those who say that we are standing on
ideology not to include carbon mandates. Who is standing on
ideology? Carbon mandates cannot pass the Senate. We know that,
we have had it up several times. To insist that that be a part
of this bill would merely put us in a position where we would
not be able to have a three pollutant bill.
Finally, I am reminded in this debate of the debate that
took place in this committee a few years ago about moving
brownfields without Superfund liability reform. Everyone agreed
we needed brownfields reform. Most of the Republicans on the
committee wanted liability reform. We were cautioned by the
other side that if we were to link both of them together and
not let the perfect be the enemy of the good, we all listened
and we, the Republicans, said, all right, fine, we won't do
that, we will go ahead and do the brownfields without doing the
liability reform.
So, I think we have the same situation today, just the
tables are turned, and I think that we need to consider this;
we need to pass it, we need to get it to the floor, get it to
conference, and start cleaning up the air.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe, U.S. Senator from
the State of Oklahoma
This Committee has had more than 20 hearing examining issues
related to multi-pollutant legislation. Today's hearing is the final
hearing I plan to hold as Chairman of this Committee on the issue. I
intend to mark up this bill 2 weeks from today because it is past time
for Congress to act.
The Clear Skies legislation, is the largest reduction in utility
emissions ever called for by an American President, 70 percent
reductions is NO<INF>X</INF>, SO<INF>2</INF>, and mercury by 2018, with
major reductions taking place in the first phase over the next 5 years.
Although the air is much cleaner today than it used to be, with
major pollutants being cut by half even as the population and economic
activity increased substantially, when it comes to reducing utility
emissions the Clean Air Act is outdated and must be reformed.
Every attempt to set a standard by regulation has resulted in
endless litigation. The NO<INF>X</INF> SIP Call took over 7 years. The
NAAQS Process took over 10 years when you consider the 1997 proposal
was required by court order. The residual risk program is in worse
shape, and the agency's efforts to date to deal with residual risk have
been criticized by the National Academy of Sciences. And regardless of
what you think of the NSR program, it has resulted in almost no
emissions reductions, and its use in the courtroom will only delay
reductions. The only virtually litigation-free program to reduce
utility emissions has been the acid rain program.
The success of the acid rain program is the reason President Bush
proposed the Clean Skies Initiative, and the reason Senator Voinovich
and myself support it. This program has been practically litigation-
free, whether it was in the implementing of regulations or the
enforcement. And it has been almost completely violation free.
The Clear Skies legislation, S. 131, will clean up the air by
reducing utility emissions faster, cheaper, and more efficiently than
the Clean Air Act. Anyone who doubts this either does not understand
the legislation or has not paid attention to the endless litigation
over the last fifteen years.
We will hear testimony today from a variety of witnesses in
addition to the Administration witness. We will hear from: a well-
respected environmental official that is dedicated to solving the Acid
Rain problem in New York and New England, the area of the country where
its effects are most devastating; an analyst for a labor union who is
concerned that the alternatives to Clear Skies will cost jobs; and a
lawyer for a national group which has brought numerous lawsuits under
the current act. Why is it that only the lawyer supports the endless
litigation that is the current act?
What we are trying to accomplish with this Act, is to expand the
Acid Rain program in order to achieve the emissions reductions without
the endless lawsuits. Maybe that is why so many large environmental
organizations, who employ more lawyers than scientists, oppose this
bill.
They have thrown a number of unsubstantiated claims at this bill.
They say this bill infringes on state's rights. It does not, it
reaffirms them. They claim it rolls back emission reductions the
current act will achieve. It does not. It will make new reductions
possible. They say the law requires, and we can achieve, a 90 percent
reduction in mercury by 2008. It does not and we cannot given the lack
of technology. And, most ludicrous of all, they say it will engender
lawsuits despite the fact that this bill is based on the litigation-
free Acid Rain program precisely to end litigation and ensure clean air
progress.
Last week, the Energy Information Administration released a report
examining the economic impacts of mercury regulation. It found that the
proposal favored by national environmental groups such as the NRDC to
regulate mercury by 90 percent by 2008 would lead to a 26 percent
increase in natural gas prices and a 22 percent increase in electricity
prices by 2010 if technologies cannot achieve the mandate. And EPA says
they will not. The result: wholesale exports of American manufacturing
jobs overseas.
Given the environmental benefits and predictability of this bill, I
would question those who say we are standing on ideology not to include
carbon mandates. Who is standing on ideology? Carbon mandates cannot
pass the Senate. That is the simple truth of the matter. Those who
would sacrifice the tangible benefits in cleaner air and improved
health achieved in a ``3-P'' bill simply to make a political statement
are the ones clinging to the worst parts of the Clean Air Act, the
litigation, not the emissions reductions of the acid rain program.
Thank you.
Senator Inhofe. Senator Jeffords.
OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM
THE STATE OF VERMONT
Senator Jeffords. Thank you, Mr. Chairman, for holding this
important hearing.
A decade and a half ago I worked with many of the current
members of the committee in crafting the Clean Air Amendment of
1990. We and some of the legends of this committee and this
institution--John Chafee, Pat Moynihan, George Mitchell, and
others--banded together to write a law that has resulted in
great health and environmental benefits. Today, in great
contrast, we will debate the merits of S. 131.
I am not putting it mildly when I state that S. 131
eviscerates the Clean Air Act. S. 131, as introduced,
represents the biggest rollback of the Act ever presented to
this committee. I believe most laws can be improved. Once
again, I repeat my willingness to negotiate and to compromise
to make improvements in the existing Clean Air Act to increase
guaranteed public health and environmental benefits, but S. 131
is not a net improvement.
The Clean Air Act is working, despite the continuing
efforts of the Bush administration to undermine it and to
protect industry at the expense of public health. I understand
that power plant owners want a new law to escape vigorous
enforcement of the Clean Air Act, particularly New Source
Review. The power plant companies want further delay of legal
deadlines to achieve the health-based standards of poor ozone
and fine particulate matter. Utilities want to be shielded from
reducing toxic air pollutants like mercury and other heavy
metals, and from achieving modern emission standards, and most
fuel plants want to put off dealing with the global warming
forever, but now is not the time to fulfill the polluters' wish
list.
Since 1990, more than 70 million tons of pollution have
been reduced, and the law is still working, accruing more than
$110 million in net benefits every year. Amazingly, those
reductions occurred while GDP rose considerably and electricity
prices increased by less than 1 percent per kilowatt hour, an
incredible success.
S. 131 radically slows that progress and reverses course.
S. 131 rewrites major portions of the Clean Air Act to delay
attainment of the health-based standards, leaving millions of
Americans to breathe dirty air longer. The bill never achieves
the emissions reductions claimed by the proponents. The caps
are not really caps and the bill is rife with loopholes for
polluters and litigation.
This bill takes the efficient market-based system set up in
1990 and dismantles it. The States' ability to rely on Federal
action to prevent interstate transport of air pollution is
crippled by S. 131. The current Act's drive for continual
improvement of pollution control technology, and for new and
modified sources would be stifled. S. 131 actually increases
greenhouse gas emissions by 13 percent or more in 2020.
S. 150, the Clean Power Act, my bipartisan bill with 18 co-
sponsors, achieves greater pollution reduction faster, and with
greater benefits for society, as does Senator Carper's.
Unfortunately, S. 131 and the Administration's proposed
interstate rule is much less about obtaining the maximum
benefits than it is about providing maximum protection to the
utility industry from the requirements of the present Clean Air
Act.
S. 131 is really quite a sweetheart deal: All of the
permits or allowances to pollute are handed over to industry
sources for free. Yes, for free. Under S. 131, the public, who
really owns the rights to the air, would see higher medical and
insurance costs due to the pollution that lingers longer than
the law allows.
Let me leave you with some sobering thoughts. Everyday
power plant pollution contributes or causes 68 Americans to die
prematurely, 1,000 to have non-fatal heart attacks, and
thousands of adults and children to have asthma attacks so
severe that they will go to the hospital, and 6.6 million tons
of carbon dioxide will add to the already serious dangerous
interference with the earth's climate system.
Today, we spend about $1 billion or more of taxpayers'
money on homeland security to protect against a certainly
dangerous, but uncertain threat. How much will we spend to save
lives and protect the quality of lives hurt by pollution? The
Clean Air Act sets out air quality and the emissions
performance standards aimed at constantly reducing the known
threat of certain damage from dangerous manmade emissions.
Our energy sector must do more to meet those standards.
They and the Federal Government must invest more seriously and
rapidly in cleaner, more efficient technologies to protect
health and the environment. S. 131 does nothing to meet those
challenges, and allows more pollution than current law.
[The prepared statement of Senator Jeffords follows:]
Statement of Hon. James M. Jeffords, U.S. Senator from
the State of Vermont
A decade and a half ago I worked with many of the current members
of this Committee in crafting the Clean Air Act Amendments of 1990.
We and some of the legends of this Committee and this institution,
John Chafee, Pat Moynihan, George Mitchell and others banded together
to write a law that has resulted in great health and environmental
benefits.
Today, in great contrast, we will debate the merits of S. 131. I am
not putting it mildly when I state that S. 131 eviscerates the Clean
Air Act. S. 131, as introduced, represents the biggest rollback of the
Act ever presented to this Committee.
I believe most laws can be improved. Once again, I repeat my
willingness to negotiate and to compromise to make improvements in the
existing Clean Air Act to increase guaranteed public health and
environmental benefits. But, S. 131 is not a net improvement.
The Clean Air Act is working, despite the continued efforts of the
Bush Administration to undermine it and to protect industry at the
expense of the public health. I understand that power plant owners want
a new law to escape vigorous enforcement of the Clean Air Act,
particularly New Source Review. The power plant companies want further
delay of legal deadlines to achieve the health-based standards for
ozone and fine particulate matter.
Utilities want to be shielded from reducing toxic air pollutants,
like mercury and other heavy metals, and from achieving modern emission
standards. And most fossil fuel plants want to put off dealing with
global warming forever.
But now is not the time to fulfill the polluters wish list. Since
1990, more than 70 million tons of pollution have been reduced and the
law is still working, accruing more than $110 billion in net benefits
every year.
Amazingly, those reductions occurred while GDP rose considerably
and electricity prices increased by less than one cent per kilowatt-
hour. An incredible success.
S. 131 radically slows that progress and reverses course. S. 131
rewrites major portions of the Clean Air Act to delay attainment of the
health-based standards--leaving millions of Americans to breath dirty
air longer.
The bill never achieves the emissions reductions claimed by the
proponents. The caps are not really caps and the bill is rife with
loopholes for polluters and litigation.
This bill takes the efficient market-based system set up in 1990
and dismantles it. The states' ability to rely on Federal action to
prevent interstate transport of air pollution is crippled by S. 131.
The current Act's drive for continual improvement of pollution
control technology from new and modified sources would be stifled. S.
131 actually increases greenhouse gas emissions by 13 percent or more
in 2020.
S. 150, the Clean Power Act, my tri-partisan bill with 18
cosponsors, achieves greater pollution reduction, faster and with
greater benefits for society. As does Senator Carper's.
Unfortunately, the S. 131 and the Administration's proposed
interstate rule is much less about obtaining the maximum benefits than
it is about providing maximum protection to the utility industry from
the requirements of the current Clean Air Act. S. 131 is really quite a
sweetheart deal. All of the permits or allowances to pollute are handed
out to industry sources for free.
Under S. 131, the public, who really own the rights to the air,
would see higher medical and insurance costs due to pollution that
lingers longer than the law allows.
Let me leave you with some sobering thoughts. Everyday, on average,
power plant pollution will contribute to or cause 68 Americans to die
prematurely, 1000 to have a non-fatal heart attack, and thousands of
adults and children to have asthma attacks so severe they will go the
hospital. And 6.6 million tons of carbon dioxide will add to the
already serious risk of dangerous interference with the earth's climate
system.
Today, we will spend about $1 billion or more of taxpayer's money
on homeland security to protect against a certainly dangerous but
uncertain threat. How much will we spend to save lives and protect the
quality of lives hurt by pollution?
The Clean Air Act sets out air quality and emissions performance
standards aimed at constantly reducing the known threat of certain
damage from dangerous manmade emissions.
Our energy sector must do more to meet those standards. They and
the Federal Government must invest more seriously and rapidly in
cleaner, more efficient technologies to protect health and the
environment. S. 131 does nothing to meet these challenges and allows
more pollution than current law. It won't make a better tomorrow.
Thank you.
Senator Inhofe. Thank you, Senator Jeffords.
We are going to adhere to the 5 minute rule on opening
statements, because we have a long hearing here. So if you all
would cooperate I would appreciate it. Don't feel compelled to
spend a full 5 minutes if you don't want to.
Senator Isakson, I believe.
Senator Isakson. Thank you very much.
Senator Inhofe. By the way, after we are completed with our
opening statements, we will conclude opening statements and not
go back to them if others come in.
Yes, Senator Isakson.
Senator Isakson. Thank you very much, Mr. Chairman. I ask
unanimous consent my entire statement be submitted for the
record.
Senator Inhofe. All statements will be made a part of the
record.
OPENING STATEMENT OF HON. JOHNNY ISAKSON,
U.S. SENATOR FROM THE STATE OF GEORGIA
Senator Isakson. I am delighted to be here, although this
is my second participation as a member of this committee. I
understand this is the 24th hearing the committee has held
since 1998 on this issue, and I commend the Chairman for his
dedication to bring the issue to the floor for us to have a
full debate.
It is a critical issue. In the State of Georgia it is a
very critical issue. In my State, 28 of 159 counties, including
Walker and Catoosa Counties in the mountains, through the
metropolitan Atlanta area, down the Chattahoochee River to
Muskogee County and the greater Columbus area, are non-
attainment for particulate matter; and 22 of those 150 counties
in the same area are non-attainment for ozone. The fact is
about 60 percent of Georgia's population lives in non-
attainment areas. I think the goals of Clear Skies and the
goals of this bill are appropriate and will be good for
Georgians.
I am especially interested in the benefits for Georgia
regarding the transition areas. Under Clear Skies, areas that
are projected to meet ozone and fine particulate standards by
2015 as a result of Clear Skies would have a legal deadline to
do so. These areas would be designated transitional, rather
than non-attainment, and would not have to adopt local
measures, except as necessary, to quality for transitional
status. Clear Skies will allow many of Georgia's counties to be
designated transitional and ultimately in attainment. I believe
that, with some minor change protecting States from the threat
of lawsuit as a result of these designations, this provision
will dramatically benefit not just Georgia, but the Nation.
Clear Skies will help to solve the clean air crisis by
responsibly synchronizing the Nation's environmental, energy,
and economic policies. By reducing emissions to historic lows
and helping to ensure continued access to reliable low-cost
electricity, we are implementing a formula that is critical to
job creation and to Georgia and to America's global
competitiveness, and to the quality of life of the citizens of
the State that I represent.
I yield back.
[The prepared statement of Senator Isakson follows:]
Statement of Hon. Johnny Isakson, U.S. Senator from the State of
Georgia
Thank you, Chairman Inhofe, for holding this hearing. I hope that
this hearing, the 24th hearing on this issue by my count since 1998,
will underscore the need for Clear Skies. I know that I certainly am
hopeful that we can report this legislation out of Committee, and to
the floor for a vote where the entire Senate can debate the merits of
the bill.
In my state of Georgia 28 of 159 Counties, including Walker and
Catoosa Counties in the mountains, through Metro Atlanta, and down to
Muscogee County and the Metro Columbus area, are in non-attainment for
particulate matter. 22 of 159 counties over the same geographic area
are in non-attainment for ozone. In fact, about 60 percent of Georgia's
population lives in a non-attainment area. We have impaired waters from
high mercury levels and, in a state where we celebrate the outdoors,
over half of Georgia's lakes and rivers have mercury-based fish
consumption advisories. Coal fired power plants are a large source of
these mercury levels. In light of the troubled history of Clean Air Act
regulations and the delays that have prevented their full and timely
implementation, Clear Skies is the best solution for reducing toxic
power plant emissions by meaningful levels, and for making sure those
reductions actually become reality.
As I mentioned in last week's subcommittee hearing, I am especially
interested in the benefits for Georgia in the section regarding
``Transitional Areas''. Under Clear Skies, areas that are projected to
meet the ozone and fine particles standards by 2015 as a result of
Clear Skies would have legal deadline of 2015 for meeting these
standards (i.e., will have an attainment date of 2015). These areas
would be designated ``transitional'' areas, instead of ``non-
attainment'' or ``attainment,'' and would not have to adopt local
measures except as necessary to qualify for transitional status). They
would have reduced air quality planning obligations and would not have
to administer more complex programs. Clear Skies will allow many of
Georgia's counties to be designated ``transitional'', and ultimately in
attainment. I believe that, with some minor changes protecting states
from the threat of lawsuit as a result of these designations, this
provision will dramatically benefit not just Georgia but the nation.
America has made much progress since 1970 and the passage of the
Clean Air Act, however we still face major air quality challenges in
many parts of the country. Clear Skies is the most important step we
can take to address these challenges. Clear Skies will help solve the
current clean air crisis by responsibly synchronizing the nation's
environmental, energy, and economic policies. By reducing emissions to
historic lows and helping to ensure continued access to reliable, low-
cost electricity, we are implementing a formula that is critical to job
creation and to Georgia and America's global competitiveness.
Congress needs to act now so that we may begin achieving emissions
reductions and their related health benefits sooner rather then later.
I look forward to working with you Mr. Chairman to pass Clear Skies,
and improve our nation's air quality. Thank you.
Senator Inhofe. Thank you, Senator Isakson.
Senator Carper.
OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR FROM
THE STATE OF DELAWARE
Senator Carper. Thank you, Mr. Chairman, and thanks for
holding this hearing.
Mr. Connaughton, welcome. I look forward to getting to know
you better and having a chance to talk about some of these
issues with you further, beyond our meeting today.
Mr. Chairman, I have two unanimous consent requests, if I
could. One, on my way to Washington earlier this week, I was
looking through our local paper, the News Journal, and I came
across an Associated Press story written by Charles Hanley. It
may have appeared in your papers at home. But the headline is,
``Warmer World, Shrinking Glaciers;'' the sub-headline: ``From
Alaska to Patagonia, Climate Change is Taking a Toll.''
Some of you have heard me say this: I am a Johnny-come-
lately on global warming, but I have become convinced over time
that something is going on in our world. And to the extent that
we begin taking some corrective actions now, not just us in
this Country, but nations all over the world, we will be happy
that we did, rather than taking some far more Draconian steps
later on.
Senator Jeffords has alluded to this. I have been here for
4 years, but the history of this committee, this is a committee
that works well across the aisle, Democrats and Republicans. To
the extent we get anything done, whether it is brownfields or
the earlier Clean Air Act, it is because we work together. If
we don't do that in this case as well, we are not going to get
much done. In fact, we will end up with the kind of gridlock
that has characterized too much of what goes on in Washington
in recent years.
Later today I am going to be involved in a meeting with
Republican and Democratic Senators on class action reform.
Tomorrow there will be a markup in the Judiciary Committee on
class action reform. It is a product of literally years of
bipartisan effort to hammer out a compromise to bring to the
Senate floor, I hope next week, legislation that will provide
for, I think, a more level playing field in our legal climate
in this Country.
That is a contentious issue and, frankly, so are the issues
that are before us today. The only way we have gotten to the
point where we are in class action is we decided that the
Republicans are not going to do this on their own, or Democrats
either. It is going to be a genuine effort to reach across the
aisle to work within the committees of jurisdiction and,
frankly, to work outside those committees of jurisdiction; for
the Administration to play a constructive role and to get us to
a point where we are about to take up that legislation and, I
think, pass it with a large bipartisan majority.
That example and an earlier example that I cited last week,
with the passage of 9/11 legislation, we had Senators Collins
and Lieberman really providing what I call the gold standard
for Democrats and Republicans working together and working
through tough issues. We did that in those instances and,
frankly, we need to do it here. I was privileged to spend an
hour or so with my dear friend, Senator Voinovich, yesterday in
his office to talk through some of these issues to see where we
can begin to find common ground, and we are going to make every
effort to do that.
Mr. Chairman, I would just urge you to reach out to folks
on our side in the same way that George and I have reached out
to one another. It may be too late to do that, I hope not, and
I would urge you to do that. I would urge my friend, Senator
Jeffords, if that hand is extended, that we take it and see how
we can move forward.
The issues here are difficult: Should we include carbon?
Should we address the issue of global warming or not? I think
you have a proposal from Senator Jeffords which is the Kyoto
standard and you have a proposal from the Administration that
says we are not going to do anything at all. There has to be
something in between those two polar positions. There is. I
think it is the legislation that Senator Chafee and Senator
Gregg and Senator Alexander introduced in the last Congress and
will probably reintroduce shortly.
But there has to be a middle ground. There has to be a
middle ground between a position that says we are not going to
change New Source Review at all and we are going to get rid of
it entirely. There has to be some middle ground there where we
cannot necessarily get rid of it, but we can improve it.
I would ask unanimous consent for the record to submit this
letter that we got today. It is from a legislator in Maryland
who is the chairman of the National Conference of State
Legislators Environmental and Natural Resources Committee, and
it is basically a letter calling on us to not hamstring the
States in their efforts to clean up their own air, and asking
that we not doctor New Source Review. It doesn't say we
shouldn't change it at all, but asks that we not doctor it.
Senator Inhofe. Without objection, it will be a part of the
record.
[The referenced document follows:]
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Senator Carper. The last thing I want to say is this. My
time is almost up. I am just going to stop right here.
Again, I urge a bipartisan effort. I will be happy to
engage with the Chairman and others, Democrats and Republicans,
on this committee. But if we don't do that, we are not going to
get much done.
Senator Inhofe. Thank you very much, Senator Carper.
Senator Vitter.
OPENING STATEMENT OF HON. DAVID VITTER, U.S. SENATOR FROM THE
STATE OF LOUISIANA
Senator Vitter. Thank you, Mr. Chairman. I want to thank
you and Senator Jeffords for holding the hearings.
Thanks to all of the witnesses for their upcoming
testimony.
I am very interested in this issue. It certainly affects
Louisiana and communities across Louisiana, as it does
communities across the Country, so I look forward to being very
involved, proactive and constructive, on this issue. In terms
of passing new legislation, I am eager to pass legislation more
flexible and which actually allows us to make improvements in
air quality in a more efficient and cost effective manner.
Unfortunately, under existing law, I think you have a lot of
examples contrary to that, including in places like Louisiana.
I will give you an example for instance, which is a big case in
Louisiana.
In Baton Rouge, as we move from a 1-hour ozone standard to
a more stringent 8-hour ozone standard, Baton Rouge's
classification could go from severe to marginal. Yet, under
existing law, even as that happens, Baton Rouge would be held
to the existing severe restrictions under the old 1-hour
standard. That seems to be inconsistent and almost nonsensical.
The other thing it produces is litigation, which is ongoing and
which just adds cost and delay into the whole notion of moving
forward and actually producing cleaner air.
So I think from that example and other similar examples
across the country, there is a huge amount of room for
improvement for increased flexibility, for increased
opportunity, for efficiency and cost effectiveness in cleaning
up the air and meeting much more stringent standards. I look
forward to working toward that goal.
I have a formal opening statement which I will submit to
the Record. I will apologize ahead of time, I will have to
leave soon to perform my freshman duties of presiding on the
Senate floor, but that is no statement contrary to my great
interest in this issue.
[The prepared statement of Senator Vitter follows:]
Statement of Hon. David Vitter, U.S. Senator from the State of
Louisiana
Thank you, Mr. Chairman for scheduling today's hearing on the Clear
Skies Act of 2005. I also want to thank our witnesses for coming today
to testify about this legislation, which is based on one of the more
successful programs established by the Clean Air Act.
We have made major strides in the fight for cleaner air since
Congress first passed the Clean Air Act in 1970. But we continue to
face air quality challenges in different parts of the United States,
and Americans still suffer adverse impacts from air pollution. An
important next step would be for Congress to enact sensible legislation
that will achieve additional health benefits and reductions in air
pollution without triggering endless lawsuits.
In cities across the nation, our current approach to regulating air
quality has generated ambiguities that have triggered such lawsuits. In
Baton Rouge, Louisiana, for example, a lawsuit has been filed over
Federal environmental officials' approach to regulating ozone levels
there.
Until 2004, the Environmental Protection Agency applied a so-called
``one hour'' ozone implementation standard to the city of Baton Rouge.
In 2004, however, the EPA replaced its ``one hour'' standard with a
new, more stringent and protective ``eight-hour'' ozone implementation
standard. Baton Rouge, which was classified as a ``severe'' non-
attainment area under the EPA's old ozone implementation standard, is
now considered a ``marginal'' area under the agency's new standard.
To re-classify Baton Rouge as ``marginal'' under EPA's more
stringent standard and yet continue to insist that the city meet the
requirements for areas that are designated as ``severe'' seems to me to
be inconsistent--especially when Baton Rouge has not even implemented
any of the ``severe'' requirements. But my constituents in Baton Rouge
tell me that this is exactly what the government is requiring of them
under the EPA rule implementing the 8-hour standard. Not surprisingly,
this situation has resulted in the filing of a lawsuit.
I look forward to hearing from our witnesses on this and other
important issues. Once again, thank you, Mr. Chairman for your efforts
to organize this hearing.
Senator Inhofe. Thank you, Senator Vitter.
I think by agreement, Senator Obama, that Senator
Lautenberg will go next. Is that correct?
OPENING STATEMENT OF HON. FRANK LAUTENBERG, U.S. SENATOR FROM
THE STATE OF NEW JERSEY
Senator Lautenberg. Thank you, Mr. Chairman. I thank my
colleague for deferring. I have a hearing on the soon to be,
Secretary of Homeland Defense, so I appreciate it.
The Clean Air Act has been called the most effective
environmental law ever written, so I am not sure that it needs
fixing. It may need extending, but I don't think it needs the
kind of fixing that we are looking at presently. We heard last
Wednesday, despite double and triple digit growth in our GDP,
energy consumption and population, that clean air programs have
succeeded in reducing pollution by 51 percent. We have made
significant progress over the years, but we still haven't
finished the job.
Last year, Americans in over 450 counties had to breathe
unhealthy air that failed to meet the Environmental Protection
Agency's health standards for ozone. I have seen the tragic
effects of air pollution first-hand. Asthma took my sister's
life, and I have watched my 10-year-old grandson, who also has
asthma, struggle at times just to breathe. As a father and
grandfather, I don't want other members of my family poisoned
by the air they breathe, and I don't want anybody else's family
to have to breathe that air. That is why I have looked at this
new Clear Skies bill and have become more concerned as I
examine it.
According to EPA, under the bill before us, about 200 of
the dirtiest power plants wouldn't have to cut their emissions
at all. In New Jersey, one-third of the ozone and over one-
third of the mercury emissions come from other States. But
under this bill, we couldn't do anything about that upwind
pollution, except hold our breath. Moreover, this bill doesn't
require power plants to reduce any of their emissions of 66
deadly toxic pollutants.
Mr. Chairman, I appreciate the hard work that you and
Senator Voinovich have put into developing the Clear Skies
bill, but on reflection, I think that we are better off
sticking with the Clean Air Act and do a better job of
enforcing its provisions, and I thank you, Mr. Chairman.
[The prepared statement of Senator Lautenberg follows:]
Statement of Hon. Frank Lautenberg, U.S. Senator from the State of
New Jersey
The Clean Air Act has been called the ``most effective
environmental law'' ever written. So I'm not sure that the Clean Air
Act needs to be ``fixed.'' As we heard last Wednesday, despite double-
and triple-digit growth in our GDP, energy consumption and population,
Clean Air Act programs have succeeded in reducing pollution by 51
percent.
So we have made significant progress over the years, but we haven't
finished the job by any stretch. Last year, Americans in over 450
counties had to breathe unhealthy air that failed to meet the
Environmental Protection Agency's health standards for ozone.
I've seen the tragic effects air pollution can have first-hand.
Asthma took my sister's life, and I've watched my 10-year old grandson,
who also has asthma, struggle just to breathe. As a father and
grandfather, I don't want my family to be poisoned by the air they
breathe. That's why, the more I've looked at this new ``Clear Skies''
bill, the more concerned I've become.
According to EPA, under the bill before us, about 200 of the
dirtiest power plants wouldn't have to cut their emissions at all. In
New Jersey, one-third of the ozone and over one-third of the mercury
emissions come from other States. But under this bill, we couldn't do
anything about that upwind pollution except hold our breath.
About 10 percent of New Jersey's school kids have asthma, and about
150,000 of them are hospitalized each year, yet the analysis shows that
``Clear Skies'' would let industry off the hook for meeting vital
health standards for three major pollutants until 2025 or even later.
Any possible public health reason for such a bill completely escapes
me. Moreover, this bill doesn't require power plants to reduce any of
their emissions of 66 deadly toxic pollutants.
Mr. Chairman, I appreciate the hard work that you and Senator
Voinovich have put into developing the ``Clear Skies'' bill. But, on
reflection, I think we're better off sticking with the Clean Air Act
and do a better job of enforcing its provisions.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Lautenberg.
Senator Murkowski.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM THE
STATE OF ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
the opportunity this morning.
Welcome to Mr. Connaughton and those other witnesses that
we will hear this morning.
This is a very important hearing, I think, to all of us. I
think it is clear, as you listen to the discussion already,
there is not agreement as to what it is that we do next, but I
think it is important to take the step, I believe, with the
legislation that we have before us, in recognizing that we must
begin somewhere.
The Clean Air Act, as Senator Lautenberg has mentioned,
together with the amendments that were passed in 1990, has been
remarkably successful in improving the Nation's air quality,
and one of the most significant chapters in the clean air
success story has been the reduction of emissions that
contribute to acid rain through the cap and trade policies,
which free the industry from the most onerous restraints of a
command and control regime.
I am pleased to note that the legislation before us does
recognize the success of the Acid Rain Program and carries on
that good work by taking the next steps toward further
reduction in two key acid rain precursor chemicals,
specifically the NOx and the SOx. It will also add a new and
equally strict ceiling for mercury and, in the process, will
achieve significant additional reductions in fine particulates
and ozone.
At the same time, it will provide a measure of certainty
for the companies that it affects. It will neither cause
massive power cost increases or open the door to excessive
delays. If the goal is to reduce pollution, this is the most
practical step that can be taken.
Of course, one thing that we do not have in Clear Skies is
regulation of carbon dioxide as a pollutant.
Now, many people, many scientists believe very fervently
that human-produced CO<INF>2</INF> may cause or aggravate
global climate warming, and many point to warming in my State
of Alaska or situations up in the Arctic as evidence. But
despite what we may see up North, the science on manmade
CO<INF>2</INF> as an agent of climate change, including in the
Arctic, is anything but undisputed, is anything but conclusive.
Now, we have had rising temperatures. We are seeing changes
in the Arctic. That much we know. But the question is what is
causing the changes. We have seen periods of higher
temperatures and higher CO<INF>2</INF> which have occurred
multiple times in the past, raising questions about whether
today's experience is truly unique or whether it is part of a
cycle.
Temperatures in the Arctic also seem to respond to a
several-decade-long cycle which may be tied to an ocean
phenomenon called the Pacific Decadal Oscillation. In other
words, the warming that we may be seeing in the Arctic may be
driven by regular predictable changes in the ocean, instead of
by CO<INF>2</INF> stimulated increases in the air temperature.
But all of this together just kind of leads us to the place
where we are--is there conclusive evidence, is there
demonstrable evidence that says that CO<INF>2</INF> is an agent
of climate change?
We do know that if we add CO<INF>2</INF> regulation to this
bill it will seriously delay action on NOx, SOx, mercury,
ozone, and particulates, and that it would impose extraordinary
costs by forcing a rapid, large shift toward natural gas. As
you know, I have been pushing to get more of Alaska's natural
gas to market here in the lower 48 States, but I believe it is
better to let gas usage and gas supply grow in unison, rather
than cause hardship through steps that create large, unplanned
increases in energy costs.
Balancing the need for improved air quality, while avoiding
unrealistic demands that would damage our economy and social
fabric, is not an easy task. This is a good start this morning,
and I appreciate the work, Mr. Chairman, that you and so many
others have made on this issue. Thank you.
[The prepared statement of Senator Murkowski follows:]
Statement of Hon. Lisa Murkowski, U.S. Senator from the State of Alaska
Thank you, Mr. Chairman. I too would like to welcome and thank our
witnesses for taking time to explore the ramifications of this
important legislation. I hope we can all agree on the importance of
moving forward with this key part of the President's agenda.
The Clean Air Act, together with amendments passed in 1990, has
been remarkably successful in improving the nation's air quality. The
2004 EPA annual report notes that since 1970, air pollution overall has
been reduced almost 50 percent while economic growth in the U.S. has
increased by 160 percent. This is one of the great success stories of
the century.
One of the most significant chapters in the Clean Air success story
has been the reduction of emissions that contribute to acid rain
through ``cap and trade'' policies that set solid upper limits, but
allowed trading in allowances for certain pollutants, freeing industry
from the most onerous restraints of a command and control regime and
allowing it to develop more workable methods of reducing pollution.
I'm pleased to note that this bill does recognize the success of
the acid rain program and carries on that good work by taking the next
steps toward further reductions in two key Acid Rain precursor
chemicals emitted by many large electricity generation facilities,
especially those using coal. These chemicals are nitrogen oxides
(NO<INF>X</INF>) and sulphur dioxide (SO<INF>2</INF>). It will also add
a new and equally strict ceiling for mercury (Hg), an emission which
may have a variety of adverse health effects, especially on pregnant
women and infants. In the process, it will achieve significant
additional reductions in fine particulates and ozone.
At the same time, it will provide a measure of certainty for the
companies it affects. Unlike some proposals, and unlike the purely
administrative approach which can be stymied by repeated litigation, it
will neither cause massive power-cost increases or open the door to
excessive delays. If the goal is to reduce pollution, this is the most
practical step that can be taken.
Clear Skies is consistent with the recommendations of the National
Research Council, which encouraged air quality efforts that are ``less
bureaucratic,'' with ``more emphasis on results than process.'' That is
precisely what we have in Clear Skies.
One thing we do not have in Clear Skies is regulation of carbon
dioxide (CO<INF>2</INF>) as a pollutant. As someone said the other day,
it is the proverbial ``elephant in the room.''
CO<INF>2</INF> is recognized as a ``greenhouse gas.'' Many people,
including many scientists, believe fervently that human-produced
CO<INF>2</INF> may cause--or aggravate--global climate warming. Many
point to Arctic areas including much of my State of Alaska and say that
physical changes are occurring that prove the case. That being the
case, they say, we should treat CO<INF>2</INF> as a pollutant and bring
it under the same system we are using for chemicals on which the
scientific evidence is undisputed.
However, the science on man-made CO<INF>2</INF> as an agent of
climate change including in the Arctic--is anything but undisputed.
CO<INF>2</INF> accounts for .04 percent of the atmosphere. Less
than 5 percent of that is attributed to human emissions. The concern is
that the earth's ability to scrub CO<INF>2</INF> from the air through
the growth of plants and other natural methods of sequestering carbon
may be exceeded by the addition of human emissions to natural sources.
Much of the debate over CO<INF>2</INF> goes back to the so-called
``hockey stick''--a temperature graph developed for the U.N.'s
Intergovernmental Panel on Climate Change, which appeared to show
relatively stable temperatures for hundreds of years, then a
temperature spike during the 20th Century presumably due to increased
CO<INF>2</INF> emissions from internal combustion engines, electrical
generation plants, and so on. However, recent published papers indicate
it has serious problems, including adjustments that made past
temperatures seem cooler than they were, reliance on overly narrow data
sets, and worst, mathematical faults in the basic formula, which may be
so flawed that it would have produced the same ``hockey stick'' even if
one used it to graph random numbers instead of temperature estimates.
Other research shows that in the Arctic, periods of higher
temperatures and higher CO<INF>2</INF> have occurred multiple times in
the past, raising questions about whether today's experience is truly
unique or just part of a natural cycle.
Temperatures in my part of the Arctic also seem to respond to a
several-decade long cycle, which may be tied to an ocean phenomenon
called the Pacific Decadal Oscillation. In other words, warming Arctic
temperatures and effects such as changes in the ice pack and permafrost
structures may be driven by regular, predictable changes in the ocean,
instead of by CO<INF>2</INF>-stimulated increases in air temperatures.
All these questions about CO<INF>2</INF> as an agent of climate
change are still unresolved. Because of that, it is less than wise to
rely on claims that there is a scientific ``consensus'' in which all
the questions are answered and all the skeptics hushed.
It does appear clear, however, that adding CO<INF>2</INF>
regulation to this bill would seriously delay action on NOx,
SO<INF>2</INF>, mercury, ozone and particulates, and that it would
impose extraordinary costs by forcing a rapid, large shift toward
natural gas. While I would very much like to see Alaska's abundant
natural gas being utilized in the Lower 48 States, and intend to do
everything I can to make that happen, I believe it is better to let gas
usage and gas supply grow in unison, rather than cause hardship through
steps that create large, unplanned increases in energy costs.
Finally, Mr. Chairman, I want to congratulate both you and Senator
Voinovich, the chair of the Clean Air Subcommittee, your very able
staffs, and those in the Administration who helped develop the option
before us today. Balancing the need for improved air quality while
avoiding unrealistic demands that would damage our economy and social
fabric is not an easy task. I believe this is a good start and look
forward to a stimulating and informed discussion by our witnesses.
Senator Inhofe. Thank you, Senator Murkowski.
Senator Obama.
Senator Obama. My understanding is that my distinguished
senior colleague from Connecticut has to chair a committee, so
I will defer to him.
Senator Inhofe. Senator Lieberman.
OPENING STATEMENT OF HON. JOSEPH I. LIEBERMAN, U.S. SENATOR
FROM THE STATE OF CONNECTICUT
Senator Lieberman. Thanks, Mr. Chairman.
Thanks, Senator Obama. You are building up a lot of credits
with the rest of us this morning.
Thanks, Mr. Chairman, for convening this hearing. I know
that we all agree on the need for clean and unambiguous clean
air legislation to protect the quality of the air we breathe.
It obviously makes sense because it protects the health of our
people, it makes sense because it gives business a clear set of
rules to live by, and it makes sense because, if we do this in
a way that allows us to achieve the greatest gains at the
lowest possible cost, it will help our businesses compete in
the global marketplace.
Unfortunately, in too many ways, my conclusion is that the
Clear Skies Act does not make sense and does not achieve the
goals that we wanted to achieve. It damages the existing tools
of the Clean Air Act that have worked very successfully and
effectively to protect individual States; it drops requirements
that EPA update its standards on a regular basis; it ends
requirements that best pollution control technology be employed
in new facilities; it permits some industries to opt in to
Clear Skies provisions that may well be weaker than current
Clean Air Act protections; it enacts SO<INF>2</INF> and NOx
provisions that are not strong enough; it does virtually
nothing to reduce mercury pollution for more than a decade. Of
course, as we all know, it does not deal with carbon dioxide
emission and, therefore, the problem that to me is real, which
is the warming of the globe.
All this has an effect on my constituents in Connecticut,
both individuals who suffer from air-induced diseases, such as
asthma, and from businesses that are affected by the inadequacy
of what exists now and what is being proposed in this
legislation.
I know that some have said that we should be realistic and
that the choice here in this session is between the Clear Skies
Act or nothing. I regret to say that if that is the choice, I
would recommend that we do nothing. But there are better
choices, and we can achieve them together. Naturally, I believe
that the Clean Power Act, which Senator Jeffords and Senator
Collins and I and many others have co-sponsored, is a better
choice, but I understand that some parts of that are not
acceptable to others.
I hope we can find a way to do more than emit a lot of
sound and fury that leads to nothing ultimately done in
response to a very real and dangerous problem, which is the
pollution from various sources of our air. Bottom line, I am
convinced we can do better than the Clear Skies Act, and I know
that we must in the public's interest, and I hope together that
we can find a way to do that.
Senator Obama, thank you very much.
Mr. Chairman, thank you. I look forward to working with you
to find some common ground on an urgent problem.
[The prepared statement of Senator Lieberman follows:]
Statement of Hon. Joseph I. Lieberman, U.S. Senator from
the State of Connecticut
Thank you Mr. Chairman, for convening this hearing to discuss
multi-pollutant legislation, which is so important to the health and
well-being of the American people.
I know we all agree there is certainly a need for clear and
unambiguous Clean Air legislation to protect the quality of the air we
breathe. It makes sense because it protects the health of our citizens.
It makes sense because it gives business a clear set of rules to live
by. And it makes sense to do this in a manner that achieves the
greatest gains at the lowest possible cost, to help our businesses
compete in the global marketplace.
Unfortunately, in too many ways S. 131, the so-called ``Clear
Skies'' legislation, doesn't make sense.
It damages the tools of the Clean Air Act that have worked so
effectively to protect individual states. It drops the requirements
that EPA update its standards on a regular basis. It ends requirements
that best pollution control technology be employed in new facilities.
It permits some industries to ``opt-in'' to Clear Skies provisions that
may be weaker than current Clean Air Act protections.
It enacts SO<INF>2</INF> and NOx provisions that are too weak. It
does virtually nothing to reduce mercury pollution for more than a
decade. And Clear Skies does nothing to address carbon dioxide
emissions and global warming, wasting an opportunity to deal with all
pollutants at once--and give industry the certainty they need now to
tackle pollutants in a clear and cost-effective manner.
The Administration has been telling us that Clear Skies gives
states the ``tools they need'' to combat air pollution. They say that
it protects states rights by permitting them to set stricter standards
within their own borders. But what they don't mention is that what
Clear Skies takes away are the useful tools that states already have
under current law to fight pollution that comes from outside their
borders, from another state upwind.
In Connecticut, we often suffer from ozone smog caused by NOx
emissions. Asthmatic children and adults in our state have attacks
triggered by ozone and by the fine particles formed from
SO<INF>2</INF>. Parents who have children come to them in the middle of
the night and say three simple words--``I can't breathe''--know just
how frightening asthma can be. We can reduce the number of times this
happens to children throughout our nation by implementing rigorous and
fair pollution standards that can be met with today's technology at an
affordable cost. To think that we won't because of Clear Skies should
be reason enough to go back to the drawing board and get it right.
The health effects of air pollution go beyond asthma. Each year,
nationwide, these particles are also responsible for some 15,000
premature deaths. These are preventable deaths. Does Clear Skies help
reduce this number? Probably. What they won't tell you is that
protections provided by the Clean Air Act--our current law--do a better
job of reducing this number farther and faster.
Throughout the country, many of our fish are tainted by high levels
of mercury, which in the northeast is caused mostly by mercury emitted
by U.S.-based power plants. There should be no debate that mercury,
SO<INF>2</INF>, and NOx must be reduced decisively and quickly.
What about carbon dioxide? The legislation before us does nothing,
absolutely nothing, to begin to address CO<INF>2</INF> emissions. Why?
Many in industry have told us that it would be far more cost effective
to factor CO<INF>2</INF> requirements into their planning at the same
time that they are making changes to control for SO<INF>2</INF>, NOx,
and mercury.
CO<INF>2</INF> concentrations have been rising due to emissions
from power plants, cars and other manmade sources. We have now reached
the point where further study without action is both dangerous and
costly. There is scientific consensus that global warming is a real and
potentially disastrous phenomenon. The rest of the developed world is
already taking steps, opening up market opportunities through
development of new technologies and new trading markets while the U.S.
stands behind and does nothing. Our businesses that compete in an
international marketplace are facing carbon regulation overseas as we
speak.
Shame on us if 100 or 200 years from now our grandchildren and
great-grandchildren are living on a planet that has been irreparably
damaged by global warming, and they ask, ``How could those who came
before us, who saw this coming, have let this happen?''
Clear Skies falls far short of what is needed, what is achievable,
what is cost-effective, and what makes good common sense. Some say be
realistic. The choice is between the Administration's Clear Skies or
nothing. If that is the choice, I choose nothing. But there are better
choices, including the Clean Power Act that Senator Jeffords, Senator
Collins and I and many others have introduced. Or there may be some,
third alternative. The fact is we can do better than Clear Skies and we
must.
Senator Inhofe. Thank you, Senator Lieberman.
Senator Bond.
OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, U.S. SENATOR
FROM THE STATE OF MISSOURI
Senator Bond. Thank you, Mr. Chairman, for holding this
hearing.
Last week, one of our colleagues defined the Clear Skies
debate as jobs versus the environment, and I know that both of
them are very important. Jobs and job creation played a major
role in the Presidential election. I would say it played a role
in my election, too, because I was able to save 5,000 Missouri
manufacturing jobs and 20,000 jobs across the Midwest and
Southeast.
Jobs are vital to our families. Without a job, families
can't survive; heating bills are not paid, food is not put on
the table. Without a job, medical insurance is not affordable,
medical bills are not paid. A community without jobs cannot
afford enough police, cannot afford fire stations and
libraries. A community without jobs is a community without a
future.
I would say also, without jobs and economic growth, the
environment suffers. The environment suffers mightily. I
visited East Germany, Poland, and Czechoslovakia before the
wall came down, and I saw the economic stagnation under the
communist system and the absolutely appalling pollution, the
rivers running brown and smelling worse from chemical
companies, the haze from power plants that was unregulated. It
was appalling. I have seen the same thing in other areas of the
world that are not developed. So we have to have economic
development along with environmental improvement.
But environmental debates don't have to be solely about
jobs versus the environment. I would say that the Missouri
example I cited is an example where we protected jobs, the
environment, and public safety, to boot. Now, my colleague on
this committee from California won't like the example, but I
understand where she comes from, literally. Two years ago we
stopped a State regulation that would have killed 5,000 jobs in
Missouri and 20,000 jobs elsewhere in the Country. That
proposal would have cut emissions in lawnmowers, weed whackers,
chainsaws by requiring the use of catalytic converters.
Now, such a change would have put manufacturing companies
in Missouri and Kentucky and Alabama out of business.
Manufacturers would have closed their plants, laid off workers,
most likely moved the jobs to China. Fire chiefs and consumer
safety advocates were also deathly afraid of the proposal,
these catalytic converters, operating at 1100 degrees only
inches from hands or legs. A chainsaw scares me bad enough with
a blade, not to worry about being fused into my leg. But
firefighters feared a new round of forest and brush fires from
operating these superheated engines.
A long story short, we produced a win-win solution.
California was allowed to keep its State rule, but we limited
the ability to move the rule to other States. We protected the
environment by requiring EPA to conduct a new round of national
pollution cuts from small engines, and we will have pollution
reduction from small engines across the Nation. Consumer safety
is protected because the California rule and the EPA rule will
be reviewed under the safety requirements of the Clean Air Act.
I think we have a similar opportunity for a win-win with
Clear Skies, which offers a balanced approach: it will protect
jobs and the environment. It will be the largest ever pollution
cut from electric power plants, reducing acid rain causing
SO<INF>2</INF> by 70 percent. Clear Skies will reduce smog
causing NOx by 70 percent and, for the first time ever, mercury
emissions will be reduced by 70 percent.
Clear Skies is not without cost: It will impose a $50
billion mandate on power companies to install new pollution
control technologies. But it will prevent costly litigation
from delaying environmental improvements and running up costs
in the courtroom rather than in cutting pollution. Clear Skies
omits a carbon mandate that would drive jobs out of this
Country. If you were worried about air pollution and
environmental pollution, just drive those jobs to China and
India.
Of course, they aren't covered by Kyoto; they will continue
to grow in their pollution. The more jobs they steal, the more
pollution will blow across to Alaska. If there is manmade
CO<INF>2</INF> and environmental changes, Alaska can look to
its neighbors south and west. That is where the pollution will
come from. But that isn't going to pass, because it would rob
our families of jobs, threaten to drive up the heating bills of
elderly people, who would have to choose between heating and
eating; it would force farmers, putting tremendous burden on
them and on other producers.
But I think Clear Skies protects family budgets from steep
electric increases, protects jobs, protects manufacturing by
attaining clean air standards in almost every local area
through power plant regulation alone, and protects
transportation by attaining clean air standards in almost every
local area through power plant regulation alone. It keeps coal
flowing, it avoids a hyper-dependence on extremely expensive
and short supply natural gas. It will protect our environment,
our workers, and our families, and I urge my colleagues to
support the Clear Skies bill.
Senator Inhofe. Thank you, Senator Bond.
Senator Obama, do you want to continue to yield to your
colleagues?
Senator Obama. If Senator Clinton needed to, I would yield
to her happily. But I think she is going to be here for a
second.
Senator Inhofe. Fine. You are recognized.
OPENING STATEMENT OF HON. BARACK OBAMA, U.S. SENATOR FROM THE
STATE OF ILLINOIS
Senator Obama. Thank you, Mr. Chairman, other members of
the committee.
I had the occasion of listening to some of the testimony
during the subcommittee, and I think that Senator Bond is right
to point out that there are economic costs to environmental
regulation. I represent a State that depends heavily on the
coal industry, particularly in southern Illinois. We have a
large chemical industry that has been hurt by high natural gas
prices. I think that there is no doubt that when we think about
the environment, we have to balance costs and benefits.
There also is a cost when our environment is degraded. As
some of you may be aware, my daughter is one of the 230,000
children in Illinois with asthma. Chicago is the second
hardest-hit city in the Country from power plant pollution.
Every single river and lake in Illinois has an advisory for
fish consumption due to the risk of mercury consumption. As I
mentioned in the subcommittee, when you have had a daughter who
comes into your bedroom in the middle of the night and says she
can't breathe, then you are mindful of the fact that even if
there are some costs that go along with controlling pollution,
those costs may well be worth it.
Now, I recognize that many members of this committee have
been frustrated because this issue has been debated for several
years. There are no perfect answers to this issue. But there
are a few things I think we should all be clear about. The
option, at least as I understand it, is not between the Clear
Skies Act and doing nothing at all. The question is, is the
Clear Skies Act an improvement over the status quo, which is
the Clean Air Act? It strikes me that one of the first tasks of
our committee should be to take the physicians' axiom to heart,
first do no harm.
So, when I am weighing the benefits of Clear Skies, I am
not weighing it against no environmental regulation whatsoever,
I am weighing it against what would happen if we simply
maintain the status quo. It seems to me, at least, that I have
not heard any dispute that although Clear Skies would
significantly reduce emissions compared to doing nothing
whatsoever, that, in fact, it also represents a diminishing
level of protection compared to what exists currently. I think
that is something that we probably should acknowledge.
The second point that has been raised several times is the
issue of attainment, and Chicago is an area that is having
difficulty achieving attainment. I am happy to discuss whether
or not the mechanisms that we have set up for local communities
to attainment are too onerous or too strict or there is too
much command and control. While there is some flexibility in
terms of how to do this, simply saying that since these
communities are having trouble reaching attainment, we
shouldn't even try, strikes me as a self defeating attitude. At
the very least we should acknowledge that if we are lowering
the standards, then there is going to be more air pollution in
these communities than there otherwise would be.
A final point I guess I would make is with respect to the
issue of litigation, which has come up frequently. I think one
of the things that I heard during the subcommittee was the
complaint that the existing rules were consistently tied up in
litigation and, as a consequence, we weren't getting sufficient
environmental protection, period.
This reminds me a little bit of the kid who murders his
parents and then complains about being an orphan. I mean, if
companies are initiating litigation because they don't want to
be regulated at all, and then they come and complain about the
fact that there is too much litigation, that doesn't seem to me
a good reason for this committee to make changes on existing
law.
I know my time is up, Mr. Chairman, but I guess I would
suggest that if we are going to have a debate about this issue,
then it should be an honest debate. The fact that there is
litigation out there is not, in and of itself, a justification
for changing the law. If we are going to change the law, it
should be because we are going to strike a better balance
between the environment and economic issues than we are
currently doing.
Senator Inhofe. Thank you, Senator Obama.
Senator Chafee.
OPENING STATEMENT OF HON. LINCOLN CHAFEE, U.S. SENATOR FROM THE
STATE OF RHODE ISLAND
Senator Chafee. Thank you, Mr. Chairman, for holding this
hearing. As you can tell by many of the opening statements,
there is a lot of difference of opinion here, particularly
between the Chairman and the ranking member. We are going to
hear from Mr. Connaughton the benefits of the legislation
before us, and then we will hear in the next panel from John
Walke, who will testify the bill is far dirtier than simply
implementing the Clean Air Act; that the bill is far dirtier
than competing legislative proposals; that the bill is far more
costly than competing legislative proposals; that global
warming is urgent and real; and that delay increases both the
danger and the cost.
At the same time, our constituents are saying to us all we
want is clean air; we send you to Washington to look after our
health. From industry, at the many hearings we have had, all
they are saying is give us some certainty. So I think the path
that might be best taken is with Senator Carper and somewhere
in the middle of some of the differences here so we can give
both our constituents their healthy air and industry some
certainty.
So thank you, Mr. Chairman, for holding this hearing.
Senator Inhofe. Thank you, Senator Chafee.
Senator Clinton.
OPENING STATEMENT OF HON. HILLARY RODHAM CLINTON, U.S. SENATOR
FROM THE STATE OF NEW YORK
Senator Clinton. Thank you, Mr. Chairman. I think the last
two statements really sum up my feelings. On the one hand, do
no harm. There is significant evidence based on the analysis of
this legislation that from many perspectives it would do harm.
But, second, that there ought to be an opportunity for some
kind of bipartisan effort that recognizes the costs and also
the benefits of perhaps improving on the Clean Air Act.
We have held numerous hearings in this committee on this
issue, and one thing that has been established beyond any doubt
is that the human health and environmental consequences of
power plant emissions are real and substantial. I think we
should just start with that, as opposed to dismissing it or
diminishing it. A recent study estimates that current soot and
smog from power plant emissions cause more than 24,000
premature deaths, 38,200 non-fatal heart attacks, hundreds of
thousands of asthma attacks, and millions of days of lost work
each year. That goes right to the heart of our economic
productivity.
Now, in New York these effects are felt throughout our
State, and we have perhaps borne the brunt of a lot of the
environmental damage over the last decades. One of the other
witnesses on the next panel will be the executive director of
the Adirondack Council, Brian Houseal, and Dr. Houseal will
represent a group that is perhaps one of the most effective
advocates for clean air in our Country, and they are here to
testify against this legislation, despite their longstanding
belief that we could and should do better when it comes to NOx
and SOx and mercury.
Mercury pollution is an incredible problem throughout New
York and the Country, and we have a lot of work that we could
do together, and I am very proud that in New York our
Republican Governor, our Democratic attorney general, and our
leading utilities came together and reached an agreement about
how to cut emissions from coal-fired plants in New York State.
It seems to me that is the kind of model that we should be
looking to follow here in the Senate.
But Clear Skies does nothing to address the climate change
effects of power plant emissions of carbon dioxide; it does not
meet the test on any of the pollutants we are concerned about;
it includes a weak mercury cap that requires no mercury-
specific pollution controls to be added until 2018. In
addition, the bill allows unlimited mercury trading, something
that I don't think should be permitted. Why should we be in the
business of permitting the trading of poison? It ignores the
significant evidence of local mercury deposition around power
plants.
Clear Skies effectively eliminates Clean Air Act tools such
as New Source Review and section 126, tools that States such as
New York have relied on to reduce pollution in a bipartisan
fashion. Clear Skies weakens pollution control technology
standards that apply to new power plants and other industrial
sources, reduces protections for national parks. What do we get
in return for these changes to the Clean Air Act? Well, we get
promised reductions in NOx and SOx that are too small and too
slow to enable States and localities to meet the ozone and fine
particulate matter standards by the current deadlines.
Realizing that caps would be inadequate to reach the ozone
standards by the current Clean Air Act deadlines, this
legislation simply delays these deadlines by up to 11 years.
So there is just so much in this that sends us backwards.
As a Senator from New York, the question for me is simple: Why
would I support a bill that delays achievement of clean air
goals in my State, while eliminating significant tools that my
State has used in the past?
I also want to point out that the cost estimates are very
difficult to actually get a handle on, but it is important to
recognize that when the Clean Air Act Acid Rain Program was
debated in 1990, there were lots of rather high estimates. The
Edison Electric Institute estimated compliance with SOx caps
would cost utilities $7.4 billion by 2010; the EPA's estimate
was $4.6 billion. In fact, the actual cost was considerably
less, between $1.1 and $1.5 billion.
So I think that we can do better. I don't believe this
legislation puts us on the right path. I think that if there is
an opportunity for legitimate compromise, I want to be part of
that. But, if not, I certainly, on behalf of my State, cannot
support legislation that turns the clock back instead of
forward.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Clinton.
We have two more. Senator Voinovich.
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR
FROM THE STATE OF OHIO
Senator Voinovich. Thank you, Mr. Chairman, for holding
this hearing. I am pleased to be here today for our second
meeting this year and our 24th hearing since 1998 on multi-
emissions issues.
Today, we are here to discuss the Clear Skies Act, and I am
sure that Mr. Connaughton will do a good job of outlining the
fact that this will reduce power emissions by 70 percent. The
beauty of Clear Skies is that the reduction levels and
timelines are placed in statute and cannot be delayed. The bill
expands the Acid Rain Program, our Nation's most successful
clean air initiative, which has had virtually no litigation,
100 percent compliance, and reduced sulfur dioxide emissions by
38 percent below 1990 levels at less than the projected costs.
As I discussed at our last hearing, it is important we put
multi-emission legislation in context. We live in a global
marketplace. Let us not fool ourselves, environmental and
energy policies have a direct impact on our ability to keep and
maintain jobs in this Country. Just ask the thousands of
Ohioans who are in manufacturing who are no longer working. We
simply cannot continue to rely on natural gas for power
generation. Our clean air policies have played a major role in
the fact that nearly 88 percent of the new power plants built
since 1992 have been natural gas fired. We have a chart here
that shows how natural gas costs have increased dramatically
during the last several years. [See chart on page 35.]
The chemical industry, which is very big in the State of
Ohio, at one time was an exporter of products. Today, we have a
9.6 billion deficit. That means that we have gone from a
Country that exports chemical products to now that has changed
and now we are importing those products.
Annual funding for the Lehigh Program, a program for low-
income families, has increased 73 percent since 1999 because of
higher heating prices.
This legislation is also needed now because 509 counties
were recently designated as non-attainment for the new National
Ambient Air Quality Standards for ozone and particulate matter.
This is a very serious problem in terms of job growth and
capital investment.
Chart 2 will show that under Clear Skies and EPA's new
diesel fuel and engine regulations to reduce sulfur, 90 percent
of the counties would come into attainment without any local
effort. So we have the counties that are not in attainment.
With Clear Skies and the new diesel, you see from that chart
that most of them are going to come into compliance because of
Clear Skies and the new diesel requirements. These designations
are based on stricter standards, not dirtier air. [See chart on
page 36.]
I think a lot of people are under the impression that the
air is dirtier today. It is much cleaner than it was. Since
1970, while our Nation and economy have grown substantially,
emissions of the six main pollutants have decreased by 50
percent. We need Clear Skies to continue at a higher rate this
Country's commitment to cleaning up the environment and
protecting public health. You can just see our economy has
grown, number of miles traveled, more people in this Country,
and even during that period we have reduced the six worse
toxins by over 50 percent.
The Clean Air Act's highly litigated and cumbersome
provisions make it unclear what or when reductions will be
achieved. Critics of Clear Skies point to the section 126
petition, NAAQS, and New Source Review program as affected, but
history tells a different story. For example, chart 4. This
chart shows the timeline for when EPA began considering a new
standard for ozone and when State implementation plans are due.
Folks, it took 15 years, 15 years to get the new ozone
standards that are now for ozone and particulate matter. [See
chart on page 37.]
The New Source Review program is far worse. I will quickly
run through some of it. Twenty pages of regulations in 1980
defining NCRs turned into 4,000 pages of guidance documents. A
1990 lawsuit and court decision resulted in EPA rulemaking. In
1992 working groups were formed to reform New Source Review,
with contradictory proposed changes in 1996 and 1998. EPA filed
enforcement actions in 1999, of which several are still being
litigated and different courts have reached different opinions
in two of these cases.
On top of this, critics have taken out of context two
sections of a 208 National Academy of Science interim report to
claim that New Source Review, if unchanged, will result in more
reductions than Clear Skies. This is absolutely ridiculous.
Clear Skies cap all power pollution immediately, while NSR is
applied on a case-by-case basis under a standard that now has
two different and litigated interpretations.
With all this lengthy litigation, no one really can tell us
when the NSR program is going to really take effect. It won't
be until 2007 before you have oral arguments on two different
cases on NSR. One says that the rule is OK, it complies with
the law; the other one says it doesn't comply with the law. So
that is what we get from NSR: More lawyers, more litigation.
Until we get passed this rhetoric of the false charges that
Clear Skies is less than existing law, we are going to go
nowhere. Time is of the essence. If we continue the way we are,
folks, we are going to have a stalemate of losses, uncertainty
for jobs and our competitive position in the global
marketplace, and, more importantly, more importantly, for those
of us who are concerned about the environment, uncertainty for
our environment and for public health in this Country.
[The prepared statement of Senator Voinovich follows:]
Statement of Hon. George V. Voinovich, U.S. Senator from
the State of Ohio
Good morning. I am pleased to be here today for our second meeting
this year and our 24th hearing since 1998 on multi-emissions issues.
Today we are here to discuss the Clear Skies Act, which would be
the most aggressive clean air proposal ever enacted a 70 percent
reduction of power plant emissions. In just 3 years, nitrogen oxides
would be capped at a reduction level of 59 percent and in 5 years, at a
59 percent reduction level for sulfur dioxide and 29 percent for
mercury. As former EPA Administrator Leavitt stated before my
Subcommittee on April 1 of last year, the sulfur dioxide and nitrogen
oxides reductions ``will result in some $50 billion'' investment by
power plants.
The beauty of Clear Skies is that the reduction levels and
timelines are placed in statute and cannot be delayed. The bill expands
the Acid Rain Program our nation's most successful clean air
initiative, which has had virtually no litigation, 100 percent
compliance, and reduced sulfur dioxide emissions by 38 percent below
1990 levels at less than the projected cost.
As I discussed at our hearing last week, it is important that we
put multi-emissions legislation in context. We live in a global
marketplace. Let us not fool ourselves environmental and energy
policies have a direct impact on our ability to keep and maintain jobs
in this country.
We simply cannot continue to rely on natural gas for power
generation. Our clean air policies have played a major role in the fact
that nearly 88 percent of the new power plants built since 1992 have
been natural gas fired. [CHART 1] As a result of this increased demand,
natural gas prices have doubled their historical price and we now have
the highest prices in the developed world. As the second largest
consumer of natural gas (quote): ``The chemical industry's eight-decade
run as a major exporter (ended in 2003) with a $19 billion trade
surplus in 1997 becoming a $9.6 billion deficit'' (March 17, 2004
Washington Post article).
Tom Mullen from Cleveland Catholic Charities testified in 2002 that
we must also consider the devastating impact of increased electricity
and home heating costs on the poor and elderly. Annual funding for the
LIHEAP program to help low income families with their home heating
bills has increased by 73 percent since 1999 due to higher prices.
Clear Skies will keep jobs in America and energy prices stable, by
allowing us to keep using coal our most abundant and cheapest energy
source. This legislation is needed now because 509 counties were
recently designated as in nonattainment for the new National Ambient
Air Quality Standards for ozone and particulate matter. As Cincinnati
Chamber of Commerce President Michael Fisher stated in testimony on
April 1, 2004, ``job growth and capital investment are hindered by the
nonattainment designation.'' [CHART 2] Under Clear Skies and EPA's new
diesel fuel and engine regulations to reduce sulfur, 90 percent of the
counties would come into attainment without any local effort.
These designations are based on stricter standards, not dirtier
air. [CHART 3] Since 1970, while our nation and economy have grown
substantially, emissions of the six main pollutants have decreased by
51 percent. We need Clear Skies to continue at a higher rate this
country's commitment to cleaning up the environment and protecting
public health.
We all want cleaner air the important question is how we achieve
it. Instead of having this debate, false claims are being made that
existing programs are better than Clear Skies. Conrad Schneider from
Clean Air Task Force testified last week that: (quote) ``. . . existing
provisions of the Clean Air Act could potentially require future
emission reductions beyond . . . '' Clear Skies.
Could potentially require'? This is exactly the point. We need to
stop talking about the ideal world and focus on the real world. The
Clean Air Act's highly litigated and cumbersome provisions make it
unclear what or when reductions will be achieved. Critics of Clear
Skies point to the Section 126 petitions, NAAQS, and New Source Review
programs as effective, but history tells us a different story:
<bullet> In 1997, eight Northeastern states petitioned EPA to force
Midwestern states to reduce nitrogen oxides. After four Federal court
decisions and EPA retooling, this culminated in the NOx SIP call, which
went into effect not in May 1998 but in May 2004 7 years after the
process began.
<bullet> [CHART 4] This chart shows the timeline for when EPA began
considering a new standard for ozone and when State Implementation
Plans are due. It took 15 years!
<bullet> The New Source Review program is far worse. I will quickly
run through some of it:
<bullet> 20-pages of regulations in 1980 defining NSR has
turned into 4,000 pages of guidance documents;
<bullet> A 1990 lawsuit and court decision resulted in an EPA
rulemaking in 1992;
<bullet> Working groups were formed in the 1990's to reform
NSR with contradictory proposed changes in 1996 and 1998;
<bullet> EPA filed enforcement actions in 1999 of which
several are still being litigated and different courts have
reached different opinions in two of the cases.
<bullet> In 2003, EPA issued two rules to reform the program,
both of which have spurred lawsuits. Oral arguments on one of
these rules are not expected to occur until at least 2006.
<bullet> On top of all this, critics have taken out of
context two sentences of a 208 page National Academy of
Sciences interim report to claim that the NSR program if
unchanged will result in more reductions than Clear Skies. This
is ridiculous. Clear Skies caps all power plant pollution
immediately while NSR is applied on a case-by-case basis under
a standard that now has two different--and litigated--
interpretations. With all this lengthy litigation, no one can
really tell us what the NSR program will get us--except more
lawyers!
Until we get past this rhetoric and the false charges that Clear
Skies does less than existing law, we are going to go nowhere. In my
opinion, these arguments are just a facade for the real motive of
holding up this legislation for the political issue of capping carbon
dioxide emissions which cannot pass the Senate and definitely not the
House. This will leave us in this stalemate of lawsuits and uncertainty
for businesses and more importantly uncertainty for our environment and
public health.
Time is of the essence. It is either now or never. I met with
several of my colleagues on the other side and plan to keep working
with them and every member on this Committee to get something done to
reduce sulfur dioxide, nitrogen oxides, and mercury emissions
substantially.
I look forward to hearing from the witnesses. Thank you.
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Senator Inhofe. Thank you, Senator Voinovich.
Senator DeMint.
OPENING STATEMENT OF HON. JIM DeMINT, U.S. SENATOR FROM THE
STATE OF SOUTH CAROLINA
Senator DeMint. Thank you, Mr. Chairman. I want to thank
you and Senator Voinovich for your leadership on this issue.
I am convinced that the Clear Skies Act will continue to
improve air quality without making it prohibitively expensive
to do business in the United States. The Commerce Department is
already estimating that it is 22 percent more expensive to do
business in this Country than our leading trading partners, and
our good intentions when it comes to regulations are clearly
hurting people. We must agree on this committee how to balance
the quality of air, the quality of our life, with the quality
of our jobs.
I don't think anyone on this side is pretending that this
bill will solve all the environmental problems that we have, or
address all the concerns related to global climate change. But
I think if we really look at the legislation, we can agree that
this is a big step forward. We do now have a quagmire of
antiquated regulations that are open to subjective and
arbitrary interpretation. This is not just something we are
coming up with here. The power companies and industries that
have to deal with this are telling us that the regulations are
clearly doing as much, if not more, to promote lawsuits than
they are doing to really help us cleanup our air.
I believe the Clear Skies Act does replace piecemeal
regulations with a single set of requirements for our three
major air pollutants and guarantees that specific emission caps
are achieved by deadlines that have been enacted into law. We
must translate our good intentions into good regulatory system,
and I do believe that the Clear Skies Act is a major step
toward not only cleaning up our air, but clearing out our
courtrooms and helping to protect the jobs. I encourage all of
my colleagues to take a look at the legislation itself, the
deadlines, and see that this is a big step forward.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator.
Senator Jeffords, did you want to make a statement for
another member?
Senator Jeffords. Senator Baucus contacted me earlier this
morning and wanted me to mention that he had hoped to be here,
but business in the Finance Committee--and if you have seen the
load that he has, you will understand that--has kept him
otherwise occupied.
Senator Inhofe. All right. That is fine.
All right, Mr. Connaughton, you have survived that. We will
recognize you for a 5-minute opening statement. Can you hold it
to that?
Mr. Connaughton. I am going to do my best, Mr. Chairman.
Senator Inhofe. All right.
STATEMENT OF JAMES L. CONNAUGHTON, CHAIRMAN, COUNCIL ON
ENVIRONMENTAL QUALITY
Mr. Connaughton. Good morning, Senator Jeffords, members of
the committee. I think it is fitting that we are here on
Groundhog Day. Those of you who know the Bill Murray movie know
that we went around and around and around and around, but it
did have a happy ending. It had a happy ending with a lot more
information, a lot of accommodation, a lot of understanding of
each side's views, and I am hopeful that that is where we are
going to come out 24-plus hearings later on this issue that we
were actually debating since, really, Senator Moynihan led the
charge back in the mid-1990s on this idea of a multi-pollution
strategy.
I am here before you today to strongly urge the passage of
this initiative. The time is now, and if it is not now, the
States won't get the assistance they need.
President Bush is dedicated to providing our families and
our children with a healthier, more economically vibrant and
secure future. Now, important to achieving that future is
bringing proven innovative tools to the task, and Clear Skies
legislation is just such a tool. It means healthier citizens--
and that is paramount--stronger communities--and I will talk
about that in a minute--more affordable, reliable, and secure
energy; and improved wildlife habitat across America.
First, Clear Skies will significantly expand the Clear Air
Act's most innovative and successful program. We are working
within the Clear Air Act here--we are not changing it--in order
to cut power plant pollution of sulfur dioxide, nitrogen
oxides, and, for the first time, mercury by an unprecedented 70
percent in two phases. These cuts in pollution will provide
substantial health benefits; they will prolong the lives of
thousands of Americans annually; and they will improve the
conditions of life for hundreds of thousands of people with
asthma, other respiratory illnesses, and heart disease.
Now, I am the son of a pediatrician who worked with inner-
city Baltimore populations, and my father is also a chronic
asthmatic who, through my entire lifetime, every month I would
take him to the emergency room. I have a deep personal reason
for being involved in this policy discussion.
Clear Skies will produce these health benefits, though,
with greater certainty by imposing a mandatory, permanent
multi-pollutant cap on emissions for more than 1300 power
plants nationwide. That will reduce pollution by as much as 9
million tons annually at full implementation. Utilities will
achieve this by spending more than $52 billion, the single most
costly Clear Air Act program in the history of the Clean Air
Act, to install, operate, and maintain new, primarily clean
coal pollution abatement technology on both old plants and all
the new ones. Clear Skies will require only a few dozen
government officials to operate it, and will assure compliance
through a system that is both easy to monitor and extremely
easy to enforce.
Accordingly, the Clear Skies cap and trade approach will
give our States the most powerful tool that we can provide to
them for meeting our new tough health-based air quality
standards for fine particles and for ozone. At the end of last
year, EPA completed the process of informing over 500
counties--and these are major manufacturing counties--that they
either do not meet or that they contribute to another county
not meeting these standards.
That relatively straightforward act has now triggered a
very complex process that will lead later this year to a frenzy
of intrastate negotiation and conflict, interstate negotiation
and conflict, Federal-State negotiation and conflict, with
State and citizen petitions, with lawsuits, and heightened
uncertainty in energy markets, producing an avoidable and
negative impact on local investment, jobs, and consumer energy
bills. Now, that is not a pretty picture. We can get there that
way; we did it in the 1990s. But we have a better way.
As a former Governor, the President personally experienced
and understands the complexities of developing and implementing
State plans to meet air quality standards. That is why he wants
a common sense solution. Clear Skies, in conjunction with the
cuts we just did on diesel pollution across the entire fleet of
diesel engines, is going to provide that solution.
Most counties, as Senator Voinovich indicated, are going to
be able to meet these standards without having to do anything
more at the local level. For the relative few that remain, for
the first time in the history of the Clean Air Act, they will
have less work to do. They will have an easier burden at the
local level to design the strategies that they need to meet
these standards.
This simple approach could save our governments and our
communities and the private sector, including environmental
groups, literally tens of millions of dollars in negotiating
costs alone. Now, that alone is something to be happy about.
But more importantly, Clear Skies is about keeping
communities together. The up-front assurance of meeting air
standards will give communities the certainty they need not
just to keep the manufacturing jobs they have got, but to
actually attract new ones back into the places where
generations of their families currently live, where they
currently live, where they currently play together, and where
they currently pray together. This is about keeping communities
in our manufacturing centers. The absence of such certainty is
what is driving an exodus of jobs out of these communities.
They go either to greenfields locations in the United States
or, more importantly, they go overseas. We can do better.
We have talked about the affordability issues. I won't go
into that further. But I also want to end with let us not
forget the huge wildlife habitat benefits of this policy. These
are guaranteed emission reductions of sulfur dioxide, nitrogen
oxide, and mercury. That is great for our lakes, it is great
for our streams, it is great for the Adirondacks.
I just urge this committee to take the moment. Let us live
the promise of Groundhog Day, that movie, and let us find that
common ground, because it exists. We can find a path forward.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Mr. Connaughton.
I noticed that you have charts here. Do you have a
presentation that you are going to be making that would be
beneficial to this hearing?
Mr. Connaughton. Well, my chart here is similar to the one
Senator Voinovich just put up. I have a second chart, if we get
into Q&A, on sort of the relative proportion.
Senator Inhofe. Oh, OK. Well, what I am going to do is I am
going to give you some of my time. But I think first Senator
Obama asked the question what will happen if we just maintain
the status quo. Do you want to answer that question?
Mr. Connaughton. Yes, I do.
Actually, Senator Obama, I am a Chicago boy of 5 years and
did a lot of work in my prior capacity doing environmental
management work downstate. I have been in a lot of your
manufacturing facilities.
What the status quo means, especially for manufacturing
communities, is it means they do not have the reliance that
they are going to depend on for affordable and secure energy.
We are already experiencing, especially in the manufacturing
States, this volatility in natural gas prices that Senator
Voinovich has pointed to. That is a direct result of the
increase in the use of natural gas to generate energy. They are
big hogs of natural gas.
That creates a competition in a constrained market for
natural gas that is much better as a feedstock, especially in
chemical plants. Like auto parts manufacturers use natural gas
as a direct energy source. That is the highest best use for
natural gas in manufacturing. By the way, natural gas is the
best thing to use, from an efficiency perspective, in people's
homes. But every time you push natural gas into electricity
generation, you are driving up the costs for these other--and,
by the way, farmers, farmers in particular, they like low
natural gas prices because that goes right into fertilizer.
What the status quo is about, because we have just seen it
in the last 4 or 5 years, is about shifting from coal fire
generation to natural gas fire generation. What Clear Skies
does is it creates the future for clean coal generation, and
not just by putting massive controls on up to 86 percent of
existing coal fire generation, but also by making sure that new
coal fire generation is the next technology. Now, that is a
great tradeoff.
So you get a lot of clean coal and then you get a lot more
stability in natural gas. That goes back to my community point.
Then if you are in Decatur, Illinois and you are the mayor, you
can actually invite manufacturers back in. I have reliable
energy, I have clean air; the amenities of my community are
what you would want them to be; you have efficiency by doing
business here.
That is really what is at stake in this whole discussion,
and, again, I look forward to more questions on this point.
This question is about meeting clean air standards. We all
agree the standards are there, they are solid. We have
deadlines. The States have to do it. This is a question of the
method by which we get to meeting those air quality standards.
Senator Inhofe. Very good.
Now, Mr. Connaughton, now would be the time if you want to
make any kind of reference to your charts and have someone
assist you in doing that.
Mr. Connaughton. Let me quickly have the first one go up.
I just want to note this is for illustrative purposes.
These are the 350-plus monitored counties that have to meet the
new air quality standards. That is manufacturing America.
Below is a chart that shows you with Clear Skies and the
new diesel cuts. Based on EPA modeling, we expect the vast
majority of those to meet the standard without having to do
additional local controls. Now, those that are left, and there
will be some left, they still have to take local action and
they still have to meet the standards on time, it is just their
burden will be easier. So we are not talking about putting off
the date that they have to act, we are just talking about
making their burden easier.
And then the second one, if you would. This will actually
be the first time in the history of the Clean Air Act that the
utilities are going to end up doing more than their share of
pollution cuts. Historically, for the last 35 years under the
Clean Air Act, when the States have had the lead in cutting
pollution, they always go to the utilities last, for all the
obvious reasons. Under this scenario, utilities are currently
responsible for nearly 69 percent of sulfur dioxide. Well,
their share is going to get diminished to 44 percent. What that
means is more flexibility for our manufacturers as they want to
bring in new high tech facilities. That is what that means.
Now, the same is true--we did the diesel cuts, and the
diesel cuts are a massive reduction from the transportation
sector for the first time. You all know how hard it is to
control transportation at the local level.
With these two programs we are getting the two hardest
sectors to control to do more than their share for the first
time. That is what we are talking about. So as we look at other
legislative proposals, it is really a question of do you want
to even go further in doing that. That is what the debate is
about. And then we have to figure out the balance, the balance
and how that affects these other strategies.
Senator Inhofe. That is very good. Thank you, Mr.
Connaughton.
You will recall, I guess it was last year that we had the
Catholic Charities man, Tom Mullins, I believe it was, from
Ohio came in to talk about the devastating ability that the
Jeffords bill--he was referring to your bill at that time,
Senator Jeffords--would have on the impact to the elderly and
the low-income families, and he described how over half of
those residents in Ohio over the age of 65 have annual incomes
under 15,000, and these people have a hard time just paying for
bare necessities.
A recent book called, ``Heat Wave, A Social Autopsy of
Disaster in Chicago,'' chronicled the problems of elderly, low-
income Chicago residents in predominantly minority
neighborhoods during the heat wave of 1995. Actually, over 700
people died at that time. These are the same types of people
that Mr. Mullins was referring to as having problems paying
their electricity bills and would be the first harmed by the
legislation.
Have you taken all this into consideration? It is something
nobody seems to ever want to talk about, but the economic
impact that this would have on people.
Mr. Connaughton. I think the best way to look at this in
its most logical and politically understandable terms is what
probable explains why we haven't done as much on power plants
in the last 35 years is because the costs of these pollution
controls get passed through directly to the consumers that you
mentioned, especially the folks on low and fixed incomes.
So especially in our big urban areas the mayors
understandably have to make that tradeoff: Do I go after
manufacturing sources? Do I go after other sources rather than
go after my utilities to get these cuts. I believe, and
certainly with my personal talks with a lot of mayors and
county officials, that is what drives the fact that the
localities haven't acted as much as they could.
Now, we are in a great situation where, if we pursue the 70
percent approach that gets us all the transport issues
resolved, the solution is going to be controls on coal. So our
projections show that we will continue to see electricity
prices stay stable and continue to decline. That is great for
people who have--was it Senator Voinovich? No, Senator Bond--to
make a choice between heating and eating. And that is very real
for a lot of people.
So we can, through this approach, minimize the impact on
the pass-through to our consumers, and we can maximize the
cost-effectiveness of getting the pollution reductions. I think
that is what we should all be after here.
Senator Inhofe. Thank you very much.
Senator Jeffords.
Senator Jeffords. Mr. Chairman, before I start my
questions, I ask consent that a letter from several religious
groups opposing this bill be made a part of the record.
Senator Inhofe. Without objection, so ordered.
[The referenced document follows:]
Testimony of Religious Leaders in Opposition to S. 131--
The Clear Skies Act of 2005
As representatives of Christian denominations, we are called to
express our grave moral concerns with the proposed changes to the Clean
Air Act. After careful review of S. 131, the Clear Skies Act of 2005,
we believe the legislation delays the critical action necessary to
clean up our nation's air and fails altogether to address the real and
present threat of global warming. We urge this committee to adopt
amendments that would strengthen standards, speed up implementation,
and control emissions of carbon dioxide.
We believe clean air is a basic right and necessity for all life.
Our faith teaches that human beings are stewards of God's creation.
Unfortunately, we have too often abandoned this sacred responsibility
at the altar of human consumption, arrogance and greed, leaving a
legacy of pollution that threatens the health of communities and the
very future of our planet. Today, we call on our elected leaders to
reverse this legacy and enact bold legislation to reduce dramatically
the emissions from power plants--the single largest stationary source
of air pollution in the United States.
We believe the costs associated with delay and inaction are
unacceptable. The tragic toll of premature deaths, asthma attacks, lost
days of school and work, polluted waterways and rising global
temperatures is the result of an energy policy that is neither just nor
moral. The heaviest toll is paid by the most vulnerable in our society
including the poor, the elderly, children and pregnant women. Our faith
calls us to speak out on their behalf and oppose legislation that would
delay efforts to alleviate their suffering.
We have embarked on a campaign within the religious community to
educate and mobilize people of faith on the issue of air pollution. In
the last year, we have encouraged our 100,000 congregations across the
country to reflect on God's sacred gift of air by providing them with
theological statements, worship materials, study guides and prayers. In
addition, many of our denominations have adopted policy principles on
power plant pollution and remain committed to supporting legislation
that fulfills our biblically mandated responsibilities of stewardship
and justice.
In the Bible, the epistle James teaches us that faith without works
is dead. It is not enough to simply proclaim respect and love for God's
created world, we must live out that faith through our actions. Today,
we call on our elected leaders to join us in defending God's creation
by enacting strict emissions controls that will clean the air sooner
rather than later and address the impending climate crisis.
We appreciate the opportunity to share our concerns and we look
forward to working with the committee to enact meaningful legislation
this year.
Sincerely,
Rev. Brenda Girton-Mitchell,
Associate General Secretary for Justice and Advocacy,
National Council of the Churches of Christ in the USA
Rev. Elenora Giddings Ivory,
Director, Presbyterian Church (U.S.A.) Washington Office
Maureen Shea, Director,
The Episcopal Church Office of Government Relations
Rev. Ron Stief,
Minister and Team Leader, Washington Office,
United Church of Christ Justice and Witness Ministries
Karen S. Vagley,
Director--Washington Office, Evangelical
Lutheran Church in America (ELCA)
Jim Winkler,
General Secretary, General Board of Church and Society,
The United Methodist Church.
Senator Jeffords. Mr. Connaughton, does the President
endorse S. 131?
Mr. Connaughton. We don't take an Administration position
until the bills are well evolved and on their way to a vote on
the floor, Senator. But we think a lot of very good work has
been done by the committee. I think it has incorporated a lot
of input from outside groups, mayors, environmental groups, as
well as the industry. So, we see very significant progress
having been made to sharpen up the elements of this and, in
fact, to address a number of the concerns that I have heard
from this side of the dais.
Senator Jeffords. Could you give us an idea of what changes
would be necessary for the President to endorse it?
Mr. Connaughton. We are still in the negotiation process,
Senator, so I don't want to make specific points at this time.
Our central concern has been that we attain a 70 percent cap in
two phases, and that is in the bill; and the dates of the two
phases are consistent with what we are after. Our central
concern is this is designed in a way that we don't create an
opt-in situation that will dilute the cap.
That has been important to us and some good work has been
done there. We want this designed in a way where, if this is
producing the result that a current clean air program would
otherwise produce, or do better, that that program would be
replaced, but then it also retains the essential programs as it
applies to the utilities--and this is something we cared
about--it also retains the essential components.
For example, the 126 process is kept, but is put in
abeyance because we are effectively granting it up front in
this first round, but we still have it come back again. That
was important to us. It is also important to us to be sure that
the bill clarifies that the States retain their full authority
to act at the local level to get this remaining increment of
pollution reductions that they will need. We did not want to
impede their authority to do so. I think the bill has cleaned
that up as well.
So when you ask me, in broad measure, this bill, especially
as it has evolved over the last couple of months, is now
hitting the core points that we are most interested and
concerned about.
Senator Jeffords. That means, as I understand it, that you
are not endorsing it at this time.
Mr. Connaughton. Again, we do not take an endorsement of a
bill until it is on the floor, but we are very pleased with the
progress that has been made under the leadership of Senator
Inhofe and Senator Voinovich.
Senator Jeffords. Once upon a time in my office you told me
that a three-pollutant bill would encourage power companies to
invest in less carbon, more energy efficient generation. That
is an odd and counterintuitive position, since there would be
no carbon pricing or regulatory driver. But if you were
accurate, then why does Clear Skies increase greenhouse gas
emissions from the power sector by 13 percent, or 425 million
tons in 2020?
Mr. Connaughton. I do not recall that particular quote,
but, if you will, I will talk about the carbon implications of
Clear Skies. If you put a carbon cap into the utility sector
process right now, the rational economic choice for those
utility CEOs is to fuel switch to natural gas or to get out of
natural gas. That is the rational economic choice. That is
because the capital costs of getting the reductions that you
would need are a lot cheaper. The up-front capital costs are a
lot cheaper through natural gas or through getting other
sources, like nuclear, for example.
Coal, we don't have a technology today by which you can
capture carbon from coal; it doesn't exist. In fact, the way
you know that it is off in the future is the only thing we have
going right now is a 2 billion plus investment of Federal
taxpayer dollars that the Bush administration is moving forward
with to try to find that opportunity for capturing carbon from
coal. So that is the other issue, you can't meet a carbon cap
by complying through coal.
If, however, we sequence this process and we do a three-
pollutant strategy that is based on growing our reliance on
clean coal, we can bring forward in the second phase the kind
of technology that holds the promise of carbon capture. One of
the most notable examples is the integrated gasification
combined cycle process. That process, just by starting it up to
cut air pollution, has a net efficiency--it is a huge net
efficiency. I forget exactly the range, but I think it is 10 to
25 percent. So that alone is a carbon offset in terms of coal
fire generation. But it also holds the greater promise, because
it is a much smaller engineered unit, it holds the greater
promise of cost effectively removing carbon.
Now, to get from here to there you have to have a pathway
for a lot of investment in clean coal; otherwise, it will still
be stuck in government laboratories, because there is no open
market. So the way I see the issue, it is a matter of
sequencing. If we can get $52 billion primarily oriented toward
bringing online the next generation of clean coal, then we can
spend that $2 billion in Federal subsidized research and put it
on those units and do our best to find the most cost-effective
ways to reduce coal. That is a much more powerful and more
sustainable long-term strategy for dealing with carbon, and it
is going to get us to our shared objective. And on this one we
do have a shared objective: can we find a path of reducing
carbon from coal that makes sense.
Senator Jeffords. You stated that the U.S. Conference of
Mayors endorsed the cap levels in S. 131. However, the mayors'
position is still that until any new programs have been proven
over time to be as protective as current Clean Air Act
programs, they encourage EPA and the Congress to keep these
programs in place, with multi-pollutant legislation as an
addition to current clean air law. Why would you imply that
they have endorsed this bill to gut the Clean Air Act?
Mr. Connaughton. Actually, I don't imply that, Senator. My
testimony indicated that the mayors specifically endorsed a 70
percent cut in the three pollutants by 2020. They have then
come forward and raised some of the same questions I am hearing
about changes in other Clean Air Act programs. Now, I have
heard many different concepts of what people are getting at
with respect to that, and I think a lot of that has been raised
with Senator Inhofe and Senator Voinovich. What I am seeing is
adjustment of the bill to accommodate those concerns, because
we share them. We want to be sure that the States do retain
their authorities, the State-based authorities that are given
to them under the Clean Air Act to do more.
We also want to be sure we have a 126 process that does not
go away. In fact, the NSR process, we have refined the NSR
process, but that does not go away either, because we do want
to be sure, if new plants come online, that they do go through
a review process. In fact, what I have seen in the
legislation--and we are negotiating the details of it right
now--is the legislation will update the New Source performance
standards for coal fire generation for the first time in a long
time, which has been something that didn't happen under the
prior Administration and we hadn't gotten to it yet. This
legislation will do that.
So I think the conversation, Senator, is moving in exactly
the direction it should be moving to find that there is balance
of tweaks to get the benefits of the Federal top-down mandate,
but still reserve the flexibility the States need to implement
their local programs.
Senator Inhofe. Thank you, Senator Jeffords.
Senator Isakson.
Senator Isakson. Thank you, Mr. Chairman.
Good morning. I apologize for having to be at another
meeting during your testimony, but I have been reading it very
quickly. Could you put the chart back up for just a second?
Mr. Connaughton. Sure. The map?
Senator Isakson. The map, I am sorry. I want to make sure I
understand. At the top of those current 350-plus counties, the
bottom, the reduction in the number of counties mean those that
are no longer shown have gone into the transition category, is
that correct?
Mr. Connaughton. It means these counties meet the new
standard. Now, some of them, I think a small subset of them--I
think the transition discussion is about a small subset that,
for example, if they have a 2013 date that they are supposed to
meet the standard, that our models show that they will meet it
in 2014 by reducing transported air pollution regionally. I
think the transition process has tried to get at the point that
some places--in fact, I think Georgia has one of them--they
need the transported reductions to meet attainment. You
couldn't do something locally to meet the standard.
I think that is what they are trying to accommodate. But
that is a small subset. Most of the counties that you see are
counties that meet the attainment standards on time through the
first phase cap, the 2010 cap; and then there is a much smaller
set that have to work through meeting the standard with Clear
Skies plus some local measures on time; and then this small
category of counties that we are talking about in the context
of this transitional strategy.
But I want to underscore, from what I understand, the
transition provisions will only apply to areas that can
demonstrate that they cannot do local controls reasonably to
meet the standard, that the transported pollution is what their
solution is. That seems to me to be equitable. It is an
equitable way--by the way, it is a much better process than
what happens under the current structure, because under the
current structure there is three, four, five different ways
that EPA can and does grant extensions of time.
But as you know, in Georgia, when they grant that extension
of time, they exact an even steeper price. I think those are
the equities that are being discussed and, again, I think they
are to a rational policy outcome that can be achieved and get
us to these air quality standards.
Senator Isakson. You are correct, one of those areas is in
Georgia, and I appreciate your mentioning that.
In the earlier opening statements a statement was made with
regard to Clear Skies either exempting or putting off or
somehow lowering the requirements on some 200 power plants
versus what would be true under the Clean Air Act. In your
statement, you said that it would impose mandatory, permanent
multi-pollutant caps on emissions for more than 1300 power
plants nationwide, reducing pollution by as much as 9 million
tons annually at full implementation. Based on everything I
have heard and what I have seen, I concur with that statement.
I am wondering is there, in going to the Clear Skies bill, any
exemption or any lessening of standards on specific plants that
you know of?
Mr. Connaughton. I am not aware of any. We have a number of
plants as a result of Federal action or State action that have
controls. The entire generation sector that this bill applies
to is 1300, and it would place a permanent cap on all of them.
Senator Isakson. Collectively.
Mr. Connaughton. Collectively. Now, to get there, this
approach will actually create an incentive for the biggest
power plants, with the biggest emissions, to reduce first. The
current approach actually creates the opposite incentive.
Because it is so expensive and you don't get any credit for
doing it, usually you get to those ones last. So, one, it flips
that around, so you will see the biggest one--and EPA's
modeling bears this out; you can check out their Web site. We
expect the biggest ones finally to go first.
Now, it is the case with the trading system that the
biggest ones go first and they over-control, they go beyond
what they are allowed, because there is a smaller unit for whom
it would be much more expensive, potentially technically
infeasible to control. What happens is that smaller unit has to
pay a price. If they can't put the control on, they have to pay
this other unit for the privilege of controlling much further
below what they are allowed. That is why the trading system
works; it cuts the overall costs, but delivers the same or
better performance.
We know that is proven because that is what the Acid Rain
Trading Program did, which is again--I have to be careful when
you say current law versus this approach. This approach is an
expansion of current law. The other is a different set of
components under current law. We are talking about whether we
move more of our effort to the better tool or keep our effort
in the less effective tool.
Senator Isakson. Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Isakson.
Senator Carper.
Senator Carper. Thanks, Mr. Chairman.
Mr. Connaughton, again, welcome. We are delighted that you
are here, and thank you for your testimony. Senator Jeffords
mentioned earlier that you had visited with him and met with
him and presumably with his staff. Have you done that before
today with any of the rest of us on our side of the aisle?
Mr. Connaughton. I have not. This issue has been primarily
led by EPA, but Mike Leavitt has gone over to HHS, so I am
filling in the role that he would otherwise have played. I am
aware that Mike Leavitt, and before that Governor Whitman, had
had many conversations with folks on your side of the aisle. As
you know, Senator, I look forward to that. I have put in a
request to meet with you and I look forward to a longer
conversation with you, I think, next week.
I am filling in that role now, and I do look forward to
that, and it is important. This is not a partisan issue. In
fact, this is really a regional issue. You have the great
advantage of being in Delaware and you meet the standards
already, so you actually sit in a great site of objectivity.
But what we are really trying to work with is the heartland,
the manufacturing heartland, as they are really balancing their
coal issues, their natural gas issues, and figuring out how to
meet those air quality standards.
Senator Carper. Thank you. I mentioned earlier while
driving around Delaware, I think it was Monday, and reading the
paper--we only have one statewide newspaper--I read the article
that I alluded to earlier, an Associated Press story,``Warmer
World, Shrinking Glaciers--From Alaska to Patagonia, Climate
Change Is Taking a Toll.''
You heard me say earlier today I am a Johnny-come-lately on
global warming; I, frankly, didn't give much credence to it for
a number of years. I have changed my mind, given what I believe
is a growing body of evidence that something is happening here,
and we need to take steps sooner rather than later, because if
we take them sooner, they can be more measured; if we take them
later, they may have to be more Draconian.
Just to ask your own personal opinion, do you share my
concern that something is going on with respect to the climate
in the world that we are living in? All this stuff about
glaciers going away. I have some seen with my own eyes. Is this
fiction? What do you make of it yourself?
Mr. Connaughton. I do share the concern, as does the
President, that this is an issue that we must take very
seriously. The National Academy has given us enough advice to
warrant that seriousness and the seriousness of the investment
that we are making as a Nation and internationally on this
effort. There is still a lot of items that the National Academy
outlined to us to understand further on the science. I think
Senator Murkowski averred to that.
I would also put it in this context: The question is to
what extent is man part of this warming? The warming is
happening, so we still, as policymakers, have to address that
in any event. So we have a combination of understanding the
fossil fuel contribution to this issue or not, as well as
understanding to the extent we are experiencing these changes,
much like what occurred back in the early part of this century.
We had some pretty dramatic climate changes in this Country
that we had to manage out West. We have to carry the collective
set of policy measures forward.
Now, if I may, we are moving forward seriously, and we are
actually building on the work that the Clinton administration
started in getting the research budgets up to where they needed
to be, as well as we have dramatically gone beyond in terms of
the technology budgets, as well as the mitigation strategies
that we are employing. I would be happy to talk about those now
or when we meet next week.
Senator Carper. Well, let me stay with the issue of carbon.
In an earlier exchange you had with one of my colleagues, you
talked a little bit about coal gasification. The technology has
been around for a long time. We don't have a whole lot of coal
gasification plants that have been built. Common sense would
seem to suggest, at least to me, that a country that has as
much coal in the ground--we have more coal than Saudi Arabia
has oil, and yet we are not using it. We have had the
technology for years to be able to use the coal in a way that
is environmentally safe and friendly, we reduce CO<INF>2</INF>
emissions and enable us to reduce our dependence on foreign
oil. What do we need to do as a Nation in order to take
advantage of that natural resource and the technology that has
been here for some time?
Mr. Connaughton. First, I agree with all the points you
just made. So let us talk about a common strategy.
Senator Carper. My wife rarely does that. It is nice to
know that someone does.
Mr. Connaughton. We have this great opportunity finally in
America to deal with the coal issue by making it clean. That is
what this is all about. Can we get more coal and rely on it and
make it clean? Gasification technology, as you have said, is
proven on a small scale in the petrochemical industry, but we
are talking about taking it from there and ramping it up to 750
megawatt, 1,000 megawatt generation.
Now, the scale of that engineering and the performance of
that engineering is something that we have invested a lot of
money in terms of we, the Federal taxpayer. There are two great
plants, one in Florida, the Teka Plant. I don't know if you
have been there yet. There is another one in Indiana that is
producing hydrogen.
But they are extremely expensive. The cost, just to give
you an example, for a 750 megawatt sized power plant, a natural
gas plant is $406 million to build it. Pulverized coal is $862
million to build it. Nuclear is $900 million. This is the
current technology of nuclear. Integrated gasification is $1.05
billion; it is more expensive than a nuclear plant. And then
the only thing more expensive than that is a next generation
nuclear plant. So when you are talking about how do you get a
utility in either a regulated market or, even harder, in a non-
regulated market to make a capital investment that is the
second most expensive one, we have to come up with a
combination of strategies to do that. This is before you figure
out the added technologies you might need to capture and store
carbon. This is a cost before you get to the carbon equation.
That is why I am suggesting to you that if we can create
this $52 billion private market that is oriented toward coal,
that is going to create a very different dynamic for the
venture capitalists and the technology innovators of the world
to prove up on a big scale this--by the way, there are some
other ones too, but gasification is the leading one right now--
to prove up on a big scale the availability of this just for
the purposes of cutting pollution, harmful air pollution.
And then, when you have several of these built, which we
think--EIA suggested we might see 10 to 15 percent of new
builds in gasification with the three pollutant approach--we
can do that research to capture carbon off of it. That is a lot
better than what would otherwise be a 15-year government
demonstration project. We can actually apply it to commercially
usable, reliable investment. That is what we are trying to get
at, but it is a very complicated financing picture, and I am
happy to talk to you about it further.
Senator Carper. Thank you.
Senator Inhofe. Thank you, Senator Carper.
Senator Carper. Mr. Chairman, I want to yield back the
balance of my time.
Senator Inhofe. You did, 2 minutes ago. I hasten to say it
is not your fault.
Senator Carper. Thank you for your generosity there.
Senator Inhofe. All right, let us see. I think it is
Senator Murkowski.
Senator Murkowski. Thank you.
Mr. Connaughton, you had the opportunity to come and visit
us in Alaska a couple years ago, so I know you have had a
chance to come and see the clean skies and breathe the clean
air and appreciate what we have to offer up there. We are in a
very unique situation, almost a laboratory in the sense that we
don't put out a lot of pollutants; and we like it that way.
But where we are geographically, and with the winds and the
ocean currents and all that happens in the Arctic, we are
subjected to levels of pollution that come across from other
countries. We have been talking here about how we can deal with
it State to State, but Alaska's problem is more State to
country. How do we deal with that?
Mr. Connaughton. Thank you for the question, and I will
start with that it is Alaska that is the benchmark for clean
air when we set our standards for the rest of the Country.
There is an area in Alaska that is the perfectly clean area of
America.
Senator Murkowski. Which one is that?
Mr. Connaughton. I will let you know.
Senator Murkowski. I need to know which town to brag on.
Mr. Connaughton. It is near Denali.
The transported air pollution problem, the Asian brown
cloud, the way we address that is by us being able to advance
new, more affordable clean coal technologies, because it is a
given that Asia is going to continue to grow their economy on
coal. You can't have a serious discussion about combating air
pollution and the Asian brown cloud, and you can't have a
serious discussion about climate change and the effects of
carbon unless you tackle the issue of how we help Asia get on a
technology path that is much more consistent with ours, and at
a speed that is faster than the one we have worked our way
through since Pittsburgh in the early 1990s.
So it is our belief that if we can get ourselves on a
pollution reduction path based on these new advance clean coal
technologies that are also more efficient in their delivery of
energy, and we can get the price down, we can work much more
effectively with our counterparts in Asia, who are less
concerned about carbon right now and much more concerned about
choking smog and the health effects of that, we can get them to
begin to design strategies where it is worth their investment
to use good clean coal technology. And that will reduce sulfur,
it will reduce nitrogen coming across, it will reduce mercury,
and, importantly, it will put them on the same path of, again,
creating an investment structure by which we hope, and it looks
pretty promising, that we can capture carbon, as well, and put
it to good use, rather than vent it to the atmosphere.
We are talking about decadal time scales, but the question
is are we doing it in 25 years or are we, on the current path,
doing it in 60 or 70 years. And we would prefer to speed that
up.
Senator Murkowski. Let me ask you about the conversation a
little bit around this table, but certainly in scientific
journals. Alaska is being pointed to as the kind of poster
child, if you will, for the effects of climate change, the
effects of global warming. We are seeing treelines migrating
southward; we are seeing erosion the likes of which we haven't
seen in decades; we are seeing warmer temperatures. As a skier,
we are really annoyed that the rain has come instead of the
snow. But we are actually seeing some changes.
We don't dispute, up North, that there is climate change
taking place right now. In my opening I made mention to the
fact that we don't know whether it is a natural cycle or how
much man contributes to the change in temperature that we are
seeing. Some are citing to Alaska as proof positive that
CO<INF>2</INF> pollutants are causing the climate change that
we are seeing. What is your response to that?
Mr. Connaughton. My response on the science side--I am not
a scientist--is to revert back to the National Academy report
of 2001 that really has guided our efforts in designing a
climate change research strategy that can help us better answer
the very questions that you have raised. The United States
currently now invests more in advancing the science of climate
change than the rest of the nations of the world combined, and
importantly, what the NAS did for us, which was extremely
valuable, is they zeroed in on the specific areas where we
should be increasing our effort.
One of them is global observation. And we are actually
investing a lot more into the observational issues up in your
part of the world, because that is a critical region to give us
an indicator of what is happening. And then they have given us
five or six other research items around which we have formed a
10-year plan that the National Academy fully endorsed. They
said this is exactly what we need. In fact, other countries are
not teeing off of our research strategy.
So we have to take what we know. We have calibrated our
policies with what we know in terms of the range of reasonable
actions we can take, both here and with developing country
partners, even, that we are doing more of, and then we have to
feed more information into it. But it will be much more
observation-based and ground-based than it had been in the
past. We need to evolve past our projections and into real data
base models, and that is where we are going.
Senator Murkowski. We want to work on that collaborative
research, though.
Thank you.
Senator Inhofe. Thank you.
Senator Clinton.
Senator Clinton. Thank you, Mr. Chairman.
Mr. Chairman, I want to publicly thank Mr. Connaughton for
his cooperative and collaborative efforts. He and I have worked
together on a matter of great concern to New York, and I am
delighted to see him here.
I also appreciate the fact that the Administration has not
yet endorsed this bill, because I think there are a number of
issues that need to be addressed. And let me just briefly refer
to several of them and then ask for your response.
First, as I tried to follow the questioning with Senator
Isakson, I think that the bottom line with respect to utilities
was that you said to Senator Isakson not all plants would
install controls, but that the big ones would. Yet I have a
list from the EPA which projects that there would be 198 power
plants, with an average age of 48 years and an average
generating capacity of 280 megawatts, who will not have
installed modern pollution control for NOx or SOx before 2020.
Now, that obviously means that 70-year-old power plants
with 56,000 megawatts of generating capacity will still be
operating with 1950s pollution control in 2020. And I would ask
that the Administration consider seriously whether we want to
allow 70-year-old plants to operate without controls. And, as I
say, this is an EPA projection of coal fire power plants that
will not have applied modern NOx and SOx controls under Clear
Skies by 2020. I would be happy to provide that to you. I am
sure that you can find that for yourself.
Mr. Connaughton. Would you like me to speak to that issue?
Senator Clinton. Let me just finish real quickly, because
there is another major concern that I have.
As I understand the President's Clear Skies initiative, it
started out as a new way to reduce power plant emissions of
SOx, NOx, and mercury. Although I might not have agreed with
the route that the Administration was taking, it seemed to be a
clear statement of purpose.
Yet, S. 131 allows other major industries to opt in to the
power plants allowance program and thereby escape major
requirements of the Clean Air Act, reducing hazardous air
pollution. And we need to know, does the Bush administration
now support repeal of existing regulations that reduce cancer-
causing and other hazardous pollutants beginning in 2007? The
regulations that this would apply to under section
407(j)(1)(b), which permits the opting out provision, would
include formaldehyde, acetaldehyde, hydrogen chloride, benzine,
other chemicals that have been traditionally regulated.
Again, this seems to be in stark contrast with what the
President's initial description of Clear Skies was. And has the
EPA provided the Administration with any estimate of how many
facilities would qualify for these exemptions and the potential
health impact that would flow from those exemptions?
Mr. Connaughton. Let me take the first question. The design
of the cap and trade is such that we will, when all is said and
done, I think, capture and control up to 86 percent of the
generation. There will be plants left, but, as I indicated,
those plants will have paid the price of not putting on control
by paying someone else to control even further than they are
allowed. That is the way the cap and trade system works. That
is what makes it effective.
To the extent there are a few remaining plants out of this
1300, we would expect them to be the smaller ones, not the
bigger ones. But I will have EPA do some technical follow-up
with you there. And, Senator, if they are in a region where
either they are transported pollution or actually in an area
that is out of attainment with the standard, the State will
still remain free, today, as I understand it under the bill, as
a matter of their local strategy, to directly regulate that
plant if it is actually impacting their ability to meet the air
quality standard.
Senator Clinton. But, Mr. Connaughton, that means, though,
that in New York, for example, we would have to rely on a State
in, say, the Ohio Valley to regulate that utility, even though
it is clear that there is transported pollution from that
unregulated, out of compliance, in light of the larger mission
of the bill.
Mr. Connaughton. You raise a very important point, Senator,
however, the cuts are big enough in the first phase that we
believe will address nearly all of the transported pollution
issue. If not, we have a second phase that will deal with it
further. And during that second phase period the State of New
York will be able to petition EPA, under the 126 petition----
Senator Clinton. But, no, we lose the option of 126 and
NSR.
Mr. Connaughton. No, the way they have designed the bill,
Senator, is in the first round it goes away, but largely
because, the way I look at it, is we have granted it up front.
We expect in the next 4 years that most of the major transport
States will petition EPA. We expect that. What Clear Skies does
is it says you don't need to petition us, we agree, you win; we
are going to, up front, grant you the transport reductions that
you otherwise would seek to get through this 4 year process.
Now, after you get through that process, then there is a
re-up. We will come back in the second round, after we see what
in fact occurs and can get the data we need. So if New York--
and this is a legitimate issue that you are raising. So if New
York sees in the second round that they still have a transport
issue from across the border, they will be able to come back to
EPA and petition them for assistance.
Senator Clinton. I would just respectfully request that you
look at the actual language of this bill, because the changes
to the 126 test seem very difficult to meet, if not impossible,
and it would be very helpful to have a dialog about that,
because certainly reading this makes it less than the obvious
presumption that you have just described.
Senator Inhofe. Senator Clinton, your time has expired, but
you asked two questions. Would you like to have him respond to
the second question?
Senator Clinton. Yes, Mr. Chairman.
Senator Inhofe. We will give him some of our time, then.
Mr. Connaughton. Uncharacteristically, Senator, it popped
out of my head.
Senator Clinton. Well, it is with respect to the opt-out
provisions.
Mr. Connaughton. I am sorry.
Senator Clinton. That non-power plant sources of pollution
and hazardous chemicals can basically opt in to the new
regulatory structure, thereby, in my view, avoiding the
regulations that are already in existence.
Mr. Connaughton. First, I need to begin with we would
strongly support the opt-in concept as long as it doesn't
dilute the caps. So the goal of this is if we can even more
effectively get the pollution reductions under the cap by
having other sources opt in, that is great; otherwise, they
still have to be subject to current requirements.
With respect to the specific technical issue you have
raised, that is not one that I have delved into, but is one
that I would be very pleased to look at. We want an opt-in, we
want SOx, NOx, mercury. If it has some unintended consequences
with respect to these other programs, that is something we
should be examining, and I am confident that we can have that
in the conversation.
Senator Clinton. Thank you very much.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you. Thank you, Mr. Connaughton.
Let us see, I think Senator Chafee.
Senator Chafee. Thank you, Mr. Chairman.
Thank you again, Mr. Connaughton, for your time and your
passion on this issue. The Clear Skies legislation allows for a
cap and trade system for mercury, but does not place a cap on
per facility emissions. How would this legislation prevent
mercury hot spots from occurring in communities near power
plants?
Mr. Connaughton. A couple areas to go through there. This
was a significant concern that was raised first with respect to
the Acid Rain Trading Program, that there might be hot spots.
And locally heavy concentrations of SO<INF>2</INF> and NOx are
an immediate health issue because they are immediately
ingested. So it was a real concern then.
Very soon after the early implementation of the Acid Rain
Program, it was well established that it reduced hot spots, it
reduced the number of areas that had locally heavy
concentrations of SO<INF>2</INF>. EPA modeling suggests that we
would see the same result with respect to mercury, because a
chunk of it is a regional issue, and that is what we are going
after with Clear Skies, it is addressing the regional disbursal
that could buildup locally someplace else.
So to the extent there remains locally heavy
concentrations, we would expect, as a general matter, that
those locally heavy concentrations would be much lower than
they are today. I mean, today there are big hot spots, and in
the future we would expect them to be significantly softened.
The final piece, which is very important to us, is to the
extent there is a locally heavy concentration that provides
some residual risk, we would want to be sure that the States
retain the authority, just as they would for SO<INF>2</INF> and
NOx, to address that locally remaining risk directly, as need
be. So we have tried to layer this to address that concern
because it is a shared one.
I would note that we are hopeful that--mercury is new; we
have never regulated it before from power plants. So we are
hopeful that the cuts are massive enough here that, with the
study work that will occur at the Federal and State level, that
we will find that we have largely addressed the power plant
contribution to that kind of an issue. But we will be steadfast
in doing that work to be sure that we aren't getting the
outcome that you described.
Senator Chafee. Thank you. A lot has been made about the
President's pledge in his campaign of 2000, as Governor Bush,
to regulate carbon dioxide. Were you part of the discussion to
change that position? Certainly, the President has a reputation
for taking a position and sticking to it through all of the
flack. Were you part of that discussion to reverse course on
that?
Mr. Connaughton. I was not. I had the great privilege of
being unanimously confirmed by the Senate in June 2001, and
walked in the first day of the job and was informed that I
would have the clean air policy, the climate change policy, and
the energy project policy all at once. So I was brand new to
that whole set of discussions, and I took the political lay of
the land as I got it and worked very hard to maximize the
constructive outcomes as a result of that.
Senator Chafee. Can you shed any light on some of the
internal discussions that might have gone one?
Mr. Connaughton. I think the President, as I recall, wrote
a letter to Senator Hagel where he clearly articulated the
basic rationale. I think, in sum, it was the concern about the
huge economic dislocation in the face of an energy crisis that
was driving up especially natural gas prices. It was
particularly foreshadowing or particularly insightful when you
look at Senator Voinovich's chart that he just put up today.
I don't think anybody thought even then, when gas prices
were spiking up to $4, that we would find ourselves at $6.5 or
$7 natural gas. So the importance of a well-constructed carbon
policy is even more paramount today than it was then, and that
is why, again, I think we have go after the strategy of finding
a way to create the transition to cleaner coal technology and
find the ways to cut carbon from coal. And as I indicated,
Senator, you don't do that with a carbon cap today. Carbon cap
today still makes it more economically rational to build a
cheaper natural gas plant than go for the more expensive coal
plant.
Senator Chafee. The Vice President received a fair amount
of criticism for the energy task force and who was part of it,
and I believe it is still in the court system, who was part of
that energy task force, were environmentalists there. You
entreated us at the end of your statement to find common
ground, and you said that environmental organizations, some of
them were supportive of this legislation. Which ones are
supportive, and were they part of putting together this bill?
Mr. Connaughton. A couple things. In terms of the bill that
we constructed, we had a lot of input from groups, and EPA has
a whole calendar; it was largely produced and created by EPA,
so we can share with you the docket of outreach that they have
had on this whole policy. One of our most regular interlocutors
from the environmental community has been the Adirondack
Council, who is here today, so I think I will let them speak
for themselves in terms of their views on this. We have had a
very constructive and productive set of conversations with them
because they were the champions of this approach to begin with,
and really saw it through and really produced the great result
that we are getting from Acid Rain Trading Program.
I would further note, just in conclusion, we have had so
much interface on the Clean Air interstate rule, which is sort
of the regulatory side of this same issue, with all the
environmental groups as well. So we have had endless
discussions docketed on the public record with everybody, and I
don't want to leave out the mayors and county officials. They
are as critical to this discussion as the non-governmental
officials have been. And the unions, the unions, for that
matter, they have been through a lot as well.
Senator Inhofe. Thank you very much.
Senator Voinovich.
Senator Voinovich. I would like to put this into a big
picture context. I come from a State that is in bad shape
economically because of loss of manufacturing jobs. Would you
agree that our energy costs are globally the highest that we
have got in terms of nations that compete with us?
Mr. Connaughton. They are among the highest, and currently
they are among the more volatile, which makes it hard for
businesses to do big capital planning.
Senator Voinovich. And what we are striving to do here, and
I attribute that to the fact that--this is, what, the 7th year
that I have been involved with this; before I was a Governor
involved in it--that we really haven't harmonized our energy
and our environmental and our economic needs to put it on a
kind of way of looking at cleaning up the environment, dealing
with public health, and also dealing with the economic needs,
energy needs that we have in our Country.
And there are some who argue that we need more draconian
cuts in emissions for NOx, SOx, mercury, and some want carbon
involved. The issue is, the one that you made, is at what place
does that force our utilities to go to natural gas. And I would
argue that if we don't come up with some kind of compromise
here, that we are going to continue to see the loss of jobs
overseas. And particularly when you deal with the issue of
carbon, everyone says carbon has got to be capped, that if that
is the straw that breaks the camel's back, then we continue to
have these high energy costs and our businesses go to China or
India or some other place.
Those that are concerned about global warming have got to
understand that they are going to countries that don't have the
environmental regulation that we have here in the United States
of America. And I think the global competition has accelerated
dramatically in the last several years, which makes this issue
so much more important today then ever before.
I would like your comments on that.
Mr. Connaughton. A State like Ohio needs the air pollution
reductions, and we have set the standard. So we know the mark
that we want to hit; it has already been set and everybody
agrees with it, bipartisan, across all spectrums. There are
lawsuits on it. It took 4 years and your long list to get
there, but now everyone accepts it.
So what we need is the strategy to hit it right, and that
is why 70 percent cut in these two phases addresses the
transported air pollution issue. That is the one that is the
hardest for the States to deal with. It does it. It just so
happens that by picking those marks, you can do it in a way
where most of your future is built on clean coal rather than
switching to natural gas. That helps with the natural gas
dynamic you discussed.
I spent a lot of time in your State, Senator, in fact, once
with you, and you have a lot of energy-intensive manufacturing
and you have a lot of manufacturing that depends on natural gas
as a feedstock. We saw, with last year's price spikes in
natural gas, a lot of that production go overseas.
Now, it is one thing for an existing plant to just move it
overseas to another plant and shut down temporarily. What is
worse, and this is what we are experiencing especially in the
big heavy-duty States like Ohio or down in the Gulf, in
Louisiana, is when they shut down the plant and they move the
whole operation overseas. Those jobs are gone for three
generations, and they don't come back again.
And then we have this odd situation where we are buying the
product and shipping it back here, which makes no sense from an
efficiency perspective. So we have to calibrate how much we get
from the power plants as part of this issue of meeting air
quality standards against the concern about driving especially,
again, the energy-intensive manufacturing elsewhere.
And I do share the concern that you raised about any policy
that merely moves our air pollution and greenhouse gases
someplace else, because I care about the global issue here, and
we don't solve the problem if we are moving greenhouse gases
somewhere else, because then they accumulate back in the
atmosphere. So we have just shifted it rather than--and we
shouldn't claim credit for it here.
Senator Voinovich. One last question. Some of my colleagues
keep saying that you don't support the bill. Can you clarify
this? For example, the Administration supported the No Child
Left Behind in committee. Did you support Healthy Forest when
it was in committee?
Mr. Connaughton. The Administration does not take a
position on bills when they are in committee. We take positions
on bills when they are on the floor. However, I also made very
clear that the Administration likes this bill; we want to see
it get out of committee. We think it is making the
accommodations that are moving toward meeting all of our
concerns, and you have made a lot, which we really thank you
for. And we understand you are incorporating a lot of the
concerns from folks from the outside. That is exactly what the
legislative process is about.
We are strong proponents that this bill move as quickly as
possible. And let me underscore that. If we don't get this
legislation this year, the States will not have this very
powerful tool, and we will go down the path of litigation and
conflict that we experienced in the 1990s. We can get there,
but getting there is ugly.
This is a lot cleaner. Getting there is like going down a
lumbering--18-wheeler truck on the highway in the middle of
rush hour. That is what the standard path is. This is like
getting into a sleek roadster that is hydrogen powered. We just
get to that destination a lot more cleanly.
Senator Inhofe. Thank you very much, Senator.
We have been joined by Senator Thune.
Senator Thune, as you know, we have a rule that we can't
have opening statements after the first round is concluded, but
you are recognized now for 5 minutes to ask questions of Mr.
Connaughton, unless you would rather use that for an opening
statement.
Senator Thune. Well, Mr. Chairman, I would simply say thank
you for your leadership on this issue. This is a priority for
this committee and something that is of great interest to, I
think, everybody in this Country. Those of us out in the upper
Midwest also care a lot about finding ways and technologies
that will make energy more affordable and more usable, and to
take advantage of the great resources that we have in our part
of the world to meet the energy needs of this Country, and that
we base those solutions upon science; that we use science-based
approaches to these issues. I very much look forward to being a
part of this process as it moves forward.
I don't have, at the moment, any questions for our witness,
but appreciate the testimony and am anxious to see the
legislation move and the many other priorities that we have
before this committee. I think it says a lot that you have
chosen to move this legislation quickly.
Senator Inhofe. We commented several times before you were
here that this is the 24th such hearing that we have had, and
this is it.
Thank you, Mr. Connaughton. You are an excellent witness
and we appreciate your being straightforward, and we will
dismiss you at this time.
Mr. Connaughton. Thank you for your steadfast leadership,
Mr. Chairman.
Senator Inhofe. Thank you.
While the other panel is being seated, we have a number of
requested UCs. One is to be made a part of the record, and I
ask unanimous consent that the Edison Electric Institute
statement, the American Highway Users, USA Next--that is a
grassroots network representing 1.5 million seniors--and a
letter from the attorney general of North Dakota supporting
Clear Skies. Without objection, so ordered.
[The referenced documents are not available at time of
print.]
Statement of the Edison Electric Institute
The Edison Electric Institute (EEI) appreciates the opportunity to
submit this statement for the hearing record. EEI has testified before
this committee on several occasions in recent years regarding its
commitment to passage of comprehensive multi-emission legislation, and
that commitment remains strong.
EEI is the association of U.S. shareholder-owned electric
companies, international affiliates and industry associates worldwide.
Our U.S. members serve more than 90 percent of the ultimate customers
in the shareholder-owned segment of the industry, and nearly 70 percent
of all electric utility customers in the nation. They generate almost
70 percent of the electricity generated by U.S. electric companies.
In summary, it is EEI's view that sensible multi-emission
legislation along the lines of the Clear Skies Act will ensure
significant additional improvements in air quality nationwide. The
electric power industry will be required to reduce emissions of sulfur
dioxide (SO<INF>2</INF>), nitrogen oxides (NOx) and mercury by 70
percent from 2002 levels, with substantial cuts required by 2010.
Immediately upon passage of legislation, many companies will be
spurred on by the emissions trading program that rewards early
reductions and the need to meet the strict SO<INF>2</INF> and NOx
emission cuts in Phase 1, which account for three-quarters of Clear
Skies' emission reduction requirements, and they will move quickly to
design and install emissions control equipment. This is contrary to
misleading claims by some stakeholders that Clear Skies' benefits will
not accrue until full implementation of Phase 2 in 2018. In fact,
legislation will produce earlier, verifiable reductions of
SO<INF>2</INF> and NOx than the combination of the Environmental
Protection Agency's (EPA) proposed Clean Air Interstate Rule (CAIR)--
which will apply to only 29 states and likely take many years to move
beyond litigation and state-specific implementation decisions--and
reasonably predictable regulations in the future.
Regulation under the Clean Air Act (CAA or Act) is fraught with
uncertainty and delay. Power companies are subject to roughly a dozen
major air quality programs, often with overlapping or conflicting
requirements. In addition, EPA regulations typically are subject to
litigation, adding additional uncertainty and delaying air quality
improvements. Because of anticipated litigation, and because it will
take several years for states and EPA to complete decisionmaking on
implementation, the precise requirements of EPA's CAIR and mercury
proposals may not be known for a long time.
In contrast, sensible multi-emission legislation will harmonize CAA
provisions, immediately establish mandatory emissions requirements, and
break the cycle of perpetual litigation, allowing power companies to
start implementing new requirements sooner than under continued
piecemeal regulation.
THE PROGRESS WE HAVE MADE
The electric power industry has reduced its air emissions
significantly in recent years, even as demand for electricity has
increased. Attached is a chart highlighting SO<INF>2</INF> and NOx
reductions since 1980.
Electric generators have cut SO<INF>2</INF> by 40 percent, with
significant reductions over past 10 years due primarily to
implementation of the Act's Acid Rain Program (through flue gas
desulfurization, or scrubbers, and switching to low-sulfur coal).
Reductions will grow to almost 50 percent. The annual cost of the
program exceeds one billion dollars.
Electric generators also have reduced NOx emissions by about 40
percent since 1980, with significant reductions over the past 10 years
attributable to installation of low NOx burners and/or overfire air to
meet the Act's Acid Rain Program requirements, and selective catalytic
reduction (SCR) in the eastern U.S. for ``NOx SIP Call'' and other
programs in the Northeast to address ozone. When completed, our
industry will have committed approximately $10 billion to install SCR
and will expend hundreds of millions in annual operation costs. As a
result, we will reduce NOx by 80-90 percent throughout most of the
eastern U.S. during the 2005 summer ozone season.
In addition, controls to reduce SO<INF>2</INF>, NOx and particulate
matter currently are reducing mercury emissions by about 40 percent.
We have done all of this despite a steady climb in electricity
demand, and without sacrificing the reliability and affordability of
the electricity that we produce. For example, between 1980-2003
electricity from coal-fueled generation increased 67 percent.
According to EPA, air quality has dramatically improved as a result
of these and other industry successes. For example, national average
SO<INF>2</INF> ambient concentrations have been cut approximately 54
percent from 1983-2002 (U.S. EPA, Latest Findings on National Air
Quality: 2002 Status and Trends Report). Since 1976, the average
national ambient NO<INF>2</INF> concentration has fallen 41 percent
(Pacific Research Institute's Index of Leading Environmental
Indicators, April 2004). While monitoring for fine particles began only
recently, average PM<INF>2.5</INF> levels were reduced 10 percent from
1999 to 2003 (U.S. EPA, The Particle Pollution Report, December 2004).
And, a recent EPA report finds that ozone levels in 2003 were at their
lowest level nationwide since 1980. (U.S. EPA, The Ozone Report--
Measuring Progress Through 2003, April 2004).
Today, we are poised to make dramatic additional reductions through
new rules or multi-emission legislation consistent with the scope and
framework of Clear Skies. Sensible multi-emission legislation will
ensure significant additional improvements in air quality nationwide by
requiring the electric power industry to reduce emissions of
SO<INF>2</INF>, NOx and mercury by 70 percent from 2002 levels, with
substantial cuts required by the Phase I deadline of 2010. With such
additional reductions, we will have cut by almost 90 percent the
emissions of SO<INF>2</INF>, NOx and mercury per ton of coal used or
kW-hour of electricity generated.
THE CURRENT CLEAN AIR ACT
Coal-fueled electric generators face CAA emission control
requirements that are duplicative, contradictory, costly and complex--
which creates enormous uncertainty for future investment. The net
result of the current regulatory system is a planning nightmare that
makes it virtually impossible for electric generators to clearly
understand what requirements will be in place for their plants at any
point in the future. In addition, there are long construction cycles
and large capital expenditures that prohibit us from accurately
assessing which plants should be retrofitted with controls, which
plants should be switched to different coals or to natural gas, which
plants should be retired, and when any of this should take place. The
result is a system that threatens the reliability and affordability of
our nation's electric supply.
This regulatory morass also puts more pressure on the natural gas
supply and delivery systems that already are yielding gas prices of
great concern to the nation's industrial, commercial and residential
gas, as well as electric customers.
Ironically, the present system also does not advantage those
seeking further emission reductions from coal-fueled power plants. The
piecemeal approach inherent in the CAA necessarily involves many
sequential scientific and technical decisions by EPA and the States.
Often, these decisions are challenged by environmental groups and their
allies, but may not necessarily be resolved in their favor. Regardless
of the substantive outcome of individual rulemakings, prolonged
regulatory development inevitably is followed by litigation involving
environmental, industry and other stakeholders, causing decisionmaking
delays of five or more years for each major rule. This regulatory soup
eventually may deliver cleaner air, but the accompanying chaos makes
the timing of that environmental progress speculative. Unfortunately,
the unpredictability of these rulemakings leads to the far more certain
consequences of significantly higher electricity prices and further
delays in environmental benefits.
BENEFITS OF MULTI-EMISSION LEGISLATION
In contrast to the current piecemeal approach to regulation
inherent in the existing Act, a well-designed multi-emission approach
is the best roadmap for further reducing power plant emissions. Such
legislation would address SO<INF>2</INF>, NOx and mercury, and benefit
the environment, states and electric generator customers, employees and
shareholders by:
<bullet> Providing certainty for the environment through low caps
and emissions monitoring.
<bullet> Reducing litigation and locking in major emission
reductions today, so that control strategies can begin immediately--
resulting in cleaner air sooner.
<bullet> Substantially reducing the number of ozone and particulate
matter non-attainment areas.
<bullet> Providing certainty for power companies due to a clear and
simplified Clean Air Act, including coordinating reductions so that
utilities are able to develop and use innovative multi-pollutant
control technology.
<bullet> Addressing transported emissions and minimizing interstate
conflicts.
<bullet> Allowing flexibility through emissions trading.
<bullet> Minimizing costs for consumers and cost impacts on
shareholders.
<bullet> Maintaining coal as a generation fuel and avoiding major
new pressures on natural gas supplies.
<bullet> Not disrupting reliable power generation.
<bullet> Avoiding a patchwork quilt of programs in different states
and confusion and competitive issues for regulated sources.
<bullet> Providing the time necessary to attract capital for the
multi-billion dollar investments needed to meet new requirements.
<bullet> Saving jobs at existing coal-fueled power plants and in
the mining and rail industries, and creating jobs to construct massive
pollution control projects.
Multi-emission legislation that is directionally consistent with
the Clear Skies Act has also garnered tremendous support from a diverse
group of stakeholders, including the U.S. Conference of Mayors,
National Association of Counties, National Conference of Black Mayors,
the Alliance for Rural America, several state departments of
environmental protection, the National Association of Manufacturers,
the U.S. Chamber of Commerce, and a wide range of individual
industries.
LEGISLATION IS SUPERIOR TO REGULATION
EPA's CAIR and mercury proposals would reduce SO<INF>2</INF> and
NOx by about 70 percent from 2002 levels for 29 states, and would
reduce mercury by 30 percent (through MACT) or 70 percent (through cap-
and-trade). The CAIR proposal also would contribute significantly
toward attainment of the new air quality standards for 8-hour ozone and
PM<INF>2.5</INF>. EEI estimates that the combination of the two
proposed rules would yield the largest industry investment in emission
reductions in CAA history, i.e., $20-$28 billion (NPV 2004-2020,
1999$).
Among EEI's recommendations to EPA are that the new regulations
should integrate and streamline existing programs to the maximum extent
possible, provide flexibility through unlimited emissions trading, and
provide adequate time for implementation. Regarding mercury
specifically, sufficient time is needed to implement any program
because mercury control technologies are not yet ``commercially
available.'' While there continues to be impressive research progress,
there also exists minimal operational experience and limited vendor
guarantees.
However, there are many reasons why sensible multi-emission
legislation would be superior to EPA's proposed regulations, and for a
wide range of stakeholders. Compared to the conventional regulatory
process, legislation would:
<bullet> Yield faster and greater air quality benefits.
<bullet> Require the largest single capital investment in air
pollution controls in the nation's history.
<bullet> Reduce the uncertainty, delays and costs of litigation.
<bullet> Provide greater flexibility and cost-effectiveness due to
trading, which also would attract other industry participants.
<bullet> Provide business planning certainty for power companies
since targets and timeframes would be locked in and clearly defined.
<bullet> Provide consistency and predictability for states that
share responsibility for implementing the CAA, and help reduce
interstate conflicts.
<bullet> Promote continued use of the nation's abundant and low-
cost coal resources and alleviate pressure on the U.S. natural gas
supply.
CLEAR SKIES
The Clear Skies Act will require the most ambitious emission
reductions ever from power plants. As noted above, it will deliver
additional dramatic reductions of power plant emissions in the most
cost-effective manner and provide greater business certainty. The
emission reductions will be predictable and verifiable due to
continuous emissions monitoring and large penalties for non-compliance.
Clear Skies will preserve air quality protections. While it will
replace some individual Clean Air Act programs with specific,
aggressive caps on emissions of SO<INF>2</INF>, NOx and mercury, it
will leave the Act's other key provisions in place. For example,
legislation will maintain the National Ambient Air Quality Standards
for SO<INF>2</INF>, ozone, particulate matter and other substances.
These health-based standards comprise the cornerstone of CAA provisions
that protect and improve local air quality. In fact, multi-emission
legislation will bring the vast majority of non-attainment areas into
compliance with new air quality standards. It also will preserve
stringent, technology-based standards for new sources of electric
generation; retain special requirements for sources located near
national parks and wilderness areas; and maintain the rights of state
and local governments to adopt more stringent controls on power plants
within their borders.
While Clear Skies precludes affected sources from regulating
mercury using maximum available control technology standards (instead
instituting tight emission caps for the entire industry), it preserves
EPA's authority to regulate hazardous air pollutants. Clear Skies
allows mercury trading, which will protect human health while also
saving electricity customers billions of dollars. For the following
reasons, it also will not produce mercury ``hot spots'':
<bullet> Power generation sources now make up about 10 percent of
total man-made and natural sources in an area comprising the U.S. and
bordering parts of Mexico and Canada. In fact, a 50 percent emission
reduction would yield much less than a 5-percent reduction in
deposition since a significant portion of U.S. deposition is released
by foreign, particularly Asian, sources.
<bullet> Basic economics dictate that the largest sources will be
controlled first.
<bullet> A significant percentage of power plant mercury emissions
are elemental mercury, which tends not to deposit nearby and may remain
in the atmosphere for months or years before it is deposited to the
Earth.
<bullet> Notwithstanding predictions to the contrary, no ``hot
spots'' occurred due to SO<INF>2</INF> trading under the Acid Rain
Program--the only relevant precedent.
<bullet> Modeling by the Energy Information Administration and
Brookhaven National Laboratory predict no mercury ``hot spots'' due to
emissions trading.
A deliberate approach to meeting emission reduction goals is
essential for continued reliable electric generation and cost-
effectiveness. Retrofits of additional SCR systems for NOx, scrubbers
for SO<INF>2</INF>, and activated carbon and fabric filters for mercury
will be needed on over 100 GW of power plants, which is the equivalent
of 250 medium sized generation units. Each such installation will
require capital expenditures of $60 million to more than $200 million.
A deliberate approach also will provide sufficient time to go
beyond mercury ``co-benefit'' reductions due to installation of
SO<INF>2</INF> and NOx controls. Reliable, cost-effective control
technologies designed specifically for capturing mercury have not yet
been fully developed or tested. It is critical that these technologies
are ``commercially available'' and guaranteed by their vendors.
Clear Skies represents one of the largest construction projects
this nation will see, bigger even than the now famous ``Big Dig'' ($15
billion over 14 years). Equipment installations must be spread over
time to ensure reliability and stable prices that will not occur if too
many large units are off-line for retrofits at once. A smooth timeline
also will provide a steady construction program over the next 15 years.
As we found with the NOx SIP Call rule, if controls are pushed within
too narrow a time window, aside from increased pressure to switch to
natural gas there will be labor and materials shortages and
bottlenecks, which will greatly (and unnecessarily) increase costs.
EEI supports the phased approach in Clear Skies. In passing the
Clean Air Act Amendments of 1990, Congress afforded the industry a
decade to comply with 50 percent reductions of SO<INF>2</INF> and NOx
emissions. At the time, Congress understood that defined emission
targets set over a reasonable timeframe would result in real
environmental improvements. Fast forwarding to the present, 70 percent
emission reductions for three different pollutants will be more costly,
resource intensive and time consuming. Providing two phases of
reductions is consistent with the precedent established in 1990.
OTHER MULTI-EMISSION PROPOSALS
EEI does not support other existing multi-emission legislative
proposals. For example, the Clean Air Planning Act would require
earlier emission reductions for SO<INF>2</INF>, NOx and mercury than
Clear Skies, and includes significant carbon dioxide (CO<INF>2</INF>)
emission reduction requirements. The issue of timing is crucial and
these deadlines would be very difficult to meet without sacrificing
cost-effectiveness and reliability of electric generation. The bill
also would undermine emissions trading by imposing unit-by-unit limits
in 2020 for SO<INF>2</INF> and NOx for plants on which construction
commenced before August 17, 1971, and establishing unit-by-unit
limitations for mercury. The Clean Air Planning Act is modeled to cost
$15-30 billion more ($1999, NPV 2004-2020) than Clear Skies. Finally,
the Clean Air Planning Act could reduce electric generator coal use by
about 25 percent and increase natural gas use about 25 percent (in year
2020) while Clear Skies would impact fuel use minimally.
A second legislative proposal, the Clean Power Act, would cause
even greater economic hardship for the industry and the nation. All of
the bill's requirements--including very stringent CO<INF>2</INF>
limitations--would be placed on top of the existing Clean Air Act,
thereby exacerbating the complexity of the Act. More importantly, the
bill would dramatically impact electricity prices, natural gas prices
and coal consumption. Finally, the ``Outdated Power Plants'' provision
almost immediately would cancel out the bill's cap-and-trade program.
COAL AND NATURAL GAS
Low-cost, reliable electricity results, in part, from our ability
to utilize a variety of readily available energy resources--coal,
nuclear energy, natural gas, hydropower, and new renewable energy
resources, such as wind, biomass and solar. Fuel diversity is key to
affordable and reliable electricity. A diverse fuel mix helps protect
consumers and national security from contingencies such as fuel
shortages or disruptions, price fluctuations and changes in regulatory
practices. A diverse fuel mix takes advantage of regional differences
in fuel availability that have evolved over many decades.
While coal fuels slightly more than 50 percent of the generation
produced in the U.S., it fuels upwards of 80 percent of the electrical
generation in many specific states. These coal-fueled plants help to
keep the price of electricity down for consumers and businesses, an
extremely important issue in states whose economies are already
financially strapped.
Due in part to the complexity and uncertainty of existing clean air
regulation, over 90 percent of new power plants built over the past
decade have relied on natural gas to produce electricity. Limits on
U.S. natural gas supply have contributed to high natural gas prices. As
a result, the U.S. industrial sector, which relies heavily on natural
gas, has seen an erosion of U.S.-based manufacturing jobs. The
regulatory certainty provided by multi-emission legislation will
promote continued use of the nation's abundant and low-cost coal
resources and alleviate pressure on the natural gas supply.
CONCLUSION
Sensible multi-emission legislation can reduce power plant
emissions and improve air quality faster, with greater environmental
certainty, and more cost-effectively than continued regulation under
current law. EEI supports the Committee's efforts to craft multi-
emission legislation that meets environmental goals and provides states
and industry with a workable roadmap.
With the economy in the early stages of recovery at the national
and state levels, Federal clean air policy must not force increases in
the use of natural gas for electric generation. Environmental goals can
and must be met, but fuel switching and consumer price increases must
be kept to a minimum. That is why EEI supports multi-emission
legislation along the lines of Clear Skies. It delivers clean air with
certainty, while protecting workers, consumers and industry. A sensible
multi-emission bill addressing SO<INF>2</INF>, NOx and mercury benefits
the environment, states, and electric generators and their customers.
The time to act is now. EEI respectfully requests members of this
Committee to take advantage of this unique opportunity to create a new
chapter of air quality progress for the American people. EEI pledges
its full support, and looks forward to continuing to work with the
Committee, the Administration and other stakeholders to help make
multi-emission legislation a reality.
Senator Inhofe. Senator Carper had two UCs. One was an
article that was in, I believe, yesterday's paper, the
Associated Press article having to do with glaciers.
Well, we have lost our Senator from Alaska here, but it is
kind of interesting, and I want to have this appear in the
record responding to his comments or brought after his article
is in.
There have been 160,000--this is kind of fascinating--
160,000 glaciers right now. Of the 160,000, only 42 glaciers
have been studied for 10 years or more.
The glacier with the longest mass balance record of all is
located in Northern Sweden, it has a 50 year record. For the
first 15 years of that it was shrinking, but for the last 35
years it has actually been getting bigger. And I think this is
what science is showing us now, that in areas glaciers are
receding, in other areas they are actually building.
So I would ask unanimous consent this be made part of the
record right after the AP article. Without objection, so
ordered.
[The referenced document follows:]
[GRAPHIC] [TIFF OMITTED] T2206.013
[GRAPHIC] [TIFF OMITTED] T2206.014
Senator Inhofe. Well, we have a very distinguished panel.
We have--thank you for your patience, I might add.
Brian, is it called Houseal?
Mr. Houseal. Houseal.
Senator Inhofe. Houseal. I am sorry. My staff is wrong for
the first time this year. The executive director of Adirondack
Council; John Walke, the Clean Air Director, Natural Resources
Defense Council; and Abraham Breehey, legislative
representative, Government Affairs, International Brotherhood
of Boilermakers.
We will go ahead and start with your opening statements. We
will start with you, Mr. Houseal.
STATEMENT OF BRIAN HOUSEAL, EXECUTIVE DIRECTOR, ADIRONDACK
COUNCIL
Mr. Houseal. Good morning. Thank you, Mr. Chairman and
committee members, for the opportunity to testify today. I am
Brian Houseal, the executive director of the Adirondack
Council.
The Adirondack Council is a privately funded, not-for-
profit organization, with 18,000 members dedicated to ensuring
the ecological integrity and wild character of the Adirondack
Park, a 6-million-acre mix of public and private land, equal in
size to the State of Vermont.
Adirondack Park has suffered some of the greatest damage in
the Country from acid rain due to its geography and geology.
Prevailing winds bring power plant emissions from outside New
York, where they are deposited as rain, snow, and fog. The acid
deposition then leaches nutrients from the soil, affecting tree
growth and often killing our spruce, fir, and sugar maples.
Acid rain has reduced the pH of many of our lakes to the
same level as vinegar. Approximately one-quarter of the park's
2800 lakes and ponds are biologically dead; they don't sustain
their native plant and animal life. The Adirondacks are not
alone. Acid deposition affects every State along the
Appalachian Mountain chain and the eastern seaboard.
Although the 1990 Clean Air Act amendments began to lessen
the impacts of acid rain, the problem has not been solved.
Early data have shown a slight improvement in the acid
neutralizing capacity of a handful of our lakes. This evidence,
along with reports from government agencies and nonprofit
research organizations, indicate that the 1990 amendments
targeted the right pollutants to combat acid rain but did not
sufficiently reduce the pollution levels.
Today we are here to make three requests of your committee.
First, action to stop acid rain must be taken this year.
Second, any legislation must be as good as or better than as
the Environmental Protection Agency's Clean Air interstate
rule. Third, no individual State's current enforcement
mechanism should be eroded.
Action is long overdue to help the forests, water, and
wildlife of places like the Adirondacks to recover. Studies
have also shown that approximately 25,000 U.S. citizens die
annually because of power plant pollution. We need progress
this year.
In the late 1990s, New York Senator Moynihan proposed
legislation with significant emissions reductions that was
considered neither politically nor economically feasible.
However, we now know that this level of reductions is possible
on both counts. The Moynihan bill became the floor that other
proposals would have to exceed. Numerous members of this
committee have introduced legislation that goes beyond what
Senator Moynihan first suggested.
Today we have a new floor, in the form of EPA's Clean Air
Interstate Rule. CAIR represents reductions of 65 percent of
nitrogen emissions and 70 percent of sulfur emissions, and is
scheduled to be finalized in March. Any legislation that is
passed must buildupon the floor established by CAIR.
Lower emission caps and earlier compliance dates would
obviously serve to speed up the environment's recovery.
Lowering the cap on sulfur dioxide would also have a
significant co-benefit by reducing mercury emissions. We would
like to see deeper cuts in caps on mercury; however, we do not
agree with the proposed trading regime due to the demonstrated
neurotoxicity of mercury in both animal and human populations.
This bill does not include reductions in carbon dioxide,
one of the major ingredients of global climate change. While we
are very concerned about the serious environmental impacts that
are already underway, we do not think that this incremental
legislative step of ending acid rain should be delayed while
carbon is further debated.
We support New York Governor's Pataki's 12-State greenhouse
gas initiative, and we are very hopeful that the U.S. Senate
will act soon upon the McCain-Lieberman bill. It was very
interesting today to hear Senator Clinton portray our position
as opposed to acid rain legislation and Mr. Connaughton say
that we are for acid rain legislation. The energy industry
holds one extreme; the environmentalists have another extreme.
We have staked out the radical middle, sir.
We urge the committee members to carefully consider if it
is necessary to make other changes to the existing Clean Air
Act that could have a negative impact on the very successful
and effective Acid Rain Program started by the EPA Clean Market
Division 15 years ago. We would also encourage you to consider
strengthening provisions and continue funding that expand the
mandates for rigorous chemical monitoring at the smokestacks
and expand it to ecological monitoring on the ground.
Enforcement tools currently used by the States to clean up
their air should not be diminished in any way. These tools are
crucial to a successful cap and trade program. A prime example
came last month, when New York Governor Pataki and Attorney
General Spitzer announced an agreement with some of New York's
largest and dirtiest coal-fired power plants to settle
potential violations of New Source Review requirements. This
action will result in the largest reductions in air pollution
ever attained in New York.
In closing, the Adirondack Council first testified before
this committee about acid rain in October 1999, on the same day
Governor Pataki announced that he would enact the toughest acid
rain regulations in the Country. After court challenges, those
rules went into effect in 2004 with year-round nitrogen
controls and further sulfur reductions. New York has taken
exhaustive measures to clean up its own plants. We are now
asking the rest of the Country to do the same.
Thank you for the opportunity to testify.
Senator Inhofe. Thank you, Mr. Houseal.
Mr. Walke.
STATEMENT OF JOHN WALKE, CLEAN AIR DIRECTOR, NATURAL RESOURCES
DEFENSE COUNCIL
Mr. Walke. Mr. Chairman and members of this committee, I
appreciate this opportunity to appear before you.
In April 2001, the utility industry's top air pollution
lobbyist addressed a coal industry group telling them, in a
speech later published on the Internet and attached to my
written testimony, that EPA was planning to require air
pollution reductions from coal-burning power plants. But the
lobbyist assured his colleagues that he and his friends in the
White House had a plan. The Administration would introduce
legislation creating a weaker, slower program, one that would
allow coal plants to emit more pollution for much longer.
The lobbyist promised that the weaker, slower cleanup
requirements would be something that we could all live with and
that someone else can't undo. He noted the Administration's
voluntary global warming policies and said, ``The President
needs a fig leaf.''
The so-called Clear Skies bill before this committee is the
legacy of the plan that the power lobbyists proudly described
in 2001. S. 131 would harm public health and worsen global
warming, and should not become law. To put it simply, the bill
before you chooses polluters over the public. Current law
requires delivery of clean air by 2009 for smog and 2010 for
soot pollution. The Administration's bill allows those
deadlines to be pushed back to 2022, and it undermines the
tools available to States and EPA to achieve even that lax
deadline. Enforcing today's Clean Air Act will achieve cleaner
air sooner.
The bill's backers claims lawsuits create uncertainty in
carrying out current law. In evaluating this claim, it is worth
remembering that polluters bring most of those lawsuits. The
shortest way to prevent lawsuits, of course, is to eliminate
laws. But that is not an effective way to regulate those who
elevate their own profits above the public health. Enforcing
the Clean Air Act promises more effective cleanup than
certainty of moving backwards with this legislation.
Without conceding our fundamental concerns with expressing
human deaths and adverse health effects in monetary terms, it
is also important to note that as of 2020 the public health
costs of the Administration's bill will exceed those of EPA's
earlier stronger proposals by $61 billion per year. Moreover,
EPA's proposal would only cost industry $3.5 billion more per
year in implementation expenses. In other words, the
Administration is promoting a bill that as of 2020 costs the
public $15 in health damage for every one dollar saved by
industry. Where is this Administration's claimed commitment to
cost benefit analysis when the benefits to the public vastly
outweigh the cost to industry?
Let me address four other secrets in the bill that are
worth noting. The biggest lie behind this bill is the claim
that it will cut power plant pollution 70 percent by 2018. It
will not. EPA and the Energy Department have told us plainly
that this legislation will not achieve actual pollution
reductions of 70 percent until sometime after 2025. Chairman
Connaughton's testimony this morning did not disagree with
that. Enforcing today's Clean Air Act will cleanup power plant
pollution more than a decade sooner than S. 131, enabling 159
million additional Americans to breathe healthy air by the end
of this decade. Second, the bill exempts more than half of the
Nation's coal-fired power plant units from toxic mercury
control. Mercury is a potent neurotoxin now present at
unhealthy levels in the blood of nearly 5 million American
women of childbearing age. The Country's 1100 coal-fired power
plants are the largest source of that mercury. Yet the bill's
cap and trade program to control mercury emissions simply
exempts 582 of those plants. As a result, the claimed 70
percent reductions in power plant mercury emissions are
entirely fictional. Half of the plants must reduce their
mercury pollution, but the remainder need not make any
reductions at all.
Further, due to other gimmicks that I detail in my written
testimony, even the plants subject to some controls will not
achieve 70 percent reductions. And whatever those reductions
end up being, they will occur after 2025, not by 2018, as
promised. Enforcing today's law would deliver far deeper
mercury cuts at every power plant in the Country and would
achieve those necessary cuts by 2008.
Third, the Administration's bill exempts as many as 69,000
dirty non-utility units from regulations already adopted by EPA
to control air toxics other than mercury, including arsenic,
lead, and carcinogens like formaldehyde. You heard me
correctly. Although advertised as a power plant bill, this
legislation actually confers unprecedented favors on oil
refineries, chemical facilities, and other industrial
categories.
By ostensibly agreeing to reduce smog-causing emissions by
30 percent by 2010 and 50 percent by 2018, an agreement with no
teeth due to clever loopholes in the bill, polluters can gain
exemptions from air toxic regulations already on the books.
Those exemptions could increase air toxic emissions by as many
as 74,000 tons per year compared to enforcing existing
standards.
Fourth, the bill introduces fatal loopholes into the Acid
Rain Trading Program, stripping away safeguards and
accountability measures that are integral to its effectiveness,
enforceability, and reliability. Power plants are the largest
source of global warming pollution in the United States,
responsible for 40 percent of U.S. carbon dioxide emissions.
Yet the Administration's bill allows those emissions to grow
unchecked.
In the 2 years since the bill's introduction, it has become
increasingly obvious that the failure to address CO<INF>2</INF>
emissions is out of sync with scientific and economic reality.
While there are pockets of denial left in the business and
political worlds, even leaders in the electric power industry
recognize the obvious. Listen to American Electric Power:
``Enough is known about the science and environmental impact of
climate change for us to take actions to address its
consequences. Delay only increases the danger we face, and at
the same increases the cost of addressing that danger later.''
We can do three things to limit CO<INF>2</INF> emissions
from the electric sector. First, produce and use electricity
more efficiency; second, dramatically increase our reliance on
renewable energy resources; third, pursue methods to capture
and permanently store CO<INF>2</INF> from the fossil energy
sources we continue to use. Deployment of all three of these
technologies will be stimulated by the market's signal from a
limit on power sector CO<INF>2</INF> emissions. All three will
languish if Congress ignores CO<INF>2</INF> in a power plant
bill.
The Administration's policy of ignoring CO<INF>2</INF>
limits will lock our children and grandchildren into two truly
bad choices: Either dangerously high CO<INF>2</INF> levels or
crash reductions later. This Congress must do better. Thank
you.
Senator Inhofe. Thank you, Mr. Walke.
Mr. Breehey.
STATEMENT OF ABRAHAM BREEHEY, LEGISLATIVE REPRESENTATIVE,
GOVERNMENT AFFAIRS DEPARTMENT, INTERNATIONAL BROTHERHOOD OF
BOILERMAKERS
Mr. Breehey. Mr. Chairman, Mr. Jeffords, thank you for the
opportunity to present our views on this important bill. My
name is Abraham Breehey. I am the legislative representative
for the International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers, and Helpers.
The Boilermakers are the principal union responsible for
the installation, maintenance, and repair of industrial
boilers, as well as the installation of the pollution control
equipment utilized to achieve the emission reductions that are
the goals of this legislation. Our members have a dual concern:
First and foremost, to have safe, productive workplaces; and,
second, to ensure the sensible implementation of clean air
standards that foster a market for our labor while protecting
the environment.
The Boilermakers have a significant interest in ensuring
the latest control technology is used to meet Federal multi-
pollutant emission standards. As an EPA analysis of the
engineering factors affecting the installation of pollution
control technology notes, the labor requirements needed to
retrofit scrubbers to remove SO<INF>2</INF> for a 500 megawatt
utility include about 150,000 boilermaker manhours.
Similarly, a retrofit of SCR NOx control technology of 500
megawatts requires as much as 350,000 manhours of construction
labor, with about half that amount available for boilermakers.
However, the vast majority of our manhours are generated
providing maintenance and upgrades to existing coal-fired
electric utilities. Too often under the status quo this work is
being put off or abandoned.
This legislation requires $52 billion in investment to meet
air quality standards, a significant portion of which will be
paid in wages to Boilermakers and other union craftsmen. We
believe it provides a clear path forward for new plant
construction, sets standards that are both technologically
feasible and no doubt within the current labor capacity.
We believe this legislation achieves a significant balance
in that it provides a protective approach on clean air that
maintains the competitiveness of our industrial facilities,
keeping Boilermakers and other union members' work from being
outsourced. By ensuring a continued role of coal in our energy
mix and providing greater regulatory certainty, this
legislation will promote stable energy prices that are
necessary for the economic growth that creates good paying
manufacturing and industry jobs.
I know we all agree that America's workers are the most
productive in the world. However, we are forced to succeed
under competitive disadvantages. Regulatory policies that delay
efficiency improvements or might lead to fuel switching from
coal to natural gas would only exacerbate our problems keeping
good paying jobs here at home.
The Boilermakers Union promotes the expansion of the Acid
Rain Program cap and trade system for SO<INF>2</INF> to NOx and
mercury as suggested under this legislation because it sets
predictable deadlines that are achievable with current
technology.
Workplace safety is a cornerstone of the Boilermakers
National Joint Apprenticeship Program. Our members work
together with our employers to limit workplace injury and
promote efficient operations. Too often important work is
delayed due to the uncertainty of the regulatory and permitting
process. Power generating facilities operate most efficiently
when they undertake repair and replacement projects on a
regular basis.
The varying interpretations of the requirements of New
Source Review often forces facilities to delay maintenance
while they await EPA approval. Further, the threat of
litigation too often acts as a deterrence to capital
investments that create work and maintain safe facilities for
our members. S. 131 will also prevent the litigation and delay
associated with the U.S. EPA rulemaking proceedings. The bill's
approach to mercury emissions will avoid the need for a
controversial EPA mercury rule, while ensuring the use of cost-
effective emissions trading as a means to achieve significant
emission reductions.
We specifically support the use of a co-benefits approach
for the first phase of mercury control to enable more accurate
measurements of the control capabilities of existing technology
and allow time for advanced mercury specific control to mature
in time to meet the final 2018 cap. Further, the caps,
timetables, and incentives of the Clear Skies Act will result
in high emissions reduction goals through the application of
technology, as opposed to fuel switching.
Sections 455 and 475 provide for early action reduction
credits to encourage NOx and mercury reductions, respectively,
through the application of technology. Certainly the
Boilermakers will realize significant benefits from these
provisions, but the implications of widespread fuel switching
to costly natural gas would be devastating across the
manufacturing sector. An important benefit of this legislation
is that it fosters reliable, affordable energy generated from
coal.
In conclusion, our union believes that among the greatest
challenges that the Senate is faced with this year is
maintaining the competitiveness of American manufacturing in
the global marketplace. Since its peak in 1998, the United
States has lost 3 million manufacturing jobs. There is a
palpable anxiety among working families across the Country.
Our union is committed to providing the highly skilled
labor needed to power the American economy, and we believe that
the legislation proposed by Senators Inhofe and Voinovich sets
our facilities on a path forward toward an affordable, stable,
and domestically produced energy supply. I know our members
look forward to continuing our role in this important debate.
Again, thank you for this opportunity.
Senator Inhofe. Thank you, Mr. Breehey, for an excellent
statement.
Mr. Houseal, you were here when Senator Clinton said that
you do not support this bill. Could you clarify that for the
record? Do you support the bill as it is being passed out of
committee?
Mr. Houseal. Sir, as my testimony indicated, I think there
could be some positive changes to the legislation, and to go on
record, we have said that we would support any legislation that
would stop acid rain.
Senator Inhofe. OK. Very good.
Mr. Walke, there are so many things in your statement that
totally contradict everything that Mr. Connaughton said, so I
am going to ask unanimous consent that the record be held open
so he can respond to some of your comments, and I am sure you
would have no qualms with that.
Mr. Walke. No, sir.
Senator Inhofe. Mr. Walke, do you really believe that there
is technology in place that would allow lignite-fired power
plants to have a 90 percent reduction by 2008?
Mr. Walke. Senator Inhofe, there was an excellent
presentation yesterday that I believe your staff and others
here attended by the Institute of Clean Air Companies that
demonstrated tremendous advances in mercury pollution control
technology for all types of coal, lignite, bituminous, sub-
bituminous, and the rest. And the Clean Air Act, if enforced
today by EPA, would give a compliance window for that
technology to be installed by 2008, with the law providing the
opportunity for an extension of 2009 if technology were not
available.
So what the vendors have said and what State air regulators
have said is that the availability of activated carbon
injection technology with scrubbers and other types of
technology by the time the compliance deadlines will arrive
under EPA's rulemaking authority will achieve far, far greater
reductions than the 29 percent cuts that this bill would allow
to occur for an additional 13 years.
As to any particular control level, EPA has yet to tell us
what that will be. My organization has advocated for a 90
percent level, and I have entered into the record through my
testimony comments that we provided to EPA to address those
technologies.
Senator Inhofe. And, once again, what percentage of
reduction would that be by 2008, the hearing that you had
yesterday, or the briefing, what did they come up with?
Mr. Walke. The presentation yesterday, to my knowledge, did
not address your specific question by the specific date of
2008, so I don't know that that question was answered
yesterday.
Senator Inhofe. OK. They are just saying that there is
technology out there, but it doesn't say--the question I had
for you was do you believe that a 90 percent reduction could--I
have been handed a note by someone who attended that. They said
that the vendors only promised 50 percent strict limits and 70
percent if flexible implementation, and that is what this bill
does. But it is 50 percent reduction according to a staffer who
was there.
Mr. Walke. The vendor is referring to authority under the
current Clean Air Act to extend the deadline by an additional
year, or even an additional 2 years with Presidential
involvement, which I think is what they said would kick that up
to a 70 percent. But, again, I don't believe that that precise
question was answered, and I will have to look in our comments
that were filed with EPA to see if it was answered there.
Senator Inhofe. That is fair enough.
Mr. Breehey, do you support the Clear Skies bill as it is
written right now to be passed out of committee?
Mr. Breehey. Yes, Mr. Chairman.
Senator Inhofe. All right.
I have a very distinguished group here for the national
prayer breakfast from Uganda, and I am going to have to run out
and say hello to them, so I am going to ask Senator Voinovich
if you would preside for just a moment.
Senator Jeffords.
Senator Jeffords. Thank you, Mr. Chairman.
I would like to ask each of you if you would like to take a
minute or two to respond to anything that you have heard from
the Senators or the first witnesses here.
Mr. Houseal. I am sorry, Senator, I didn't get the
question.
Senator Jeffords. If you have something that you would like
to relate to us relative to the first witnesses, we would be
happy to hear you.
Mr. Houseal. To further reflect on my answer to Senator
Inhofe, the members of this committee have introduced several
bills over the years that would address the issue of acid rain,
and we have endorsed one bill which is actually in the House
introduced by our New York Republican delegation, Sweeney
McHugh, House Bill 227, and would certainly urge this committee
to come to a compromise on the proposed bill and work with the
House as well to get something through.
Senator Jeffords. Mr. Walke.
Mr. Walke. Senator Jeffords, I would like to address a
statement that Chairman Connaughton made earlier in the panel,
where he indicated that, to his knowledge, there were not
exemptions from regulations that would be bestowed upon the
affected units covered under this bill. As I detailed in my
testimony, we have 582 of the 1100 power plants nationwide that
would need not adopt any mercury controls.
And because of the quite clever way the bill is structured,
in fact, some untold number of other power plants could escape
smog and soot controls as well under the cap because of the
opt-in provisions that Senator Clinton was referring to. The
truth is that EPA doesn't know how many power plants would be
exempt or well controlled under this, because they haven't even
analyzed this bill with the really devastating effect of the
opt-in provisions.
So I would encourage this committee to call upon EPA to
fully analyze all provisions of the bill that is before this
committee and to describe the impacts of those as compared to
enforcing current law, which we believe will protect the public
better.
Senator Jeffords. Thank you.
Mr. Breehey. Senator, as Mr. Connaughton discussed at
length, one of our primary concerns is the impact of any clean
air legislation on fuel switching to natural gas that will
drive up manufacturing costs and increase the outsourcing of
U.S. jobs. So we support the Administration's perspective on
that particular issue and believe that the bill that Mr. Inhofe
has put forward will go a long way to addressing it.
Senator Jeffords. Mr. Walke, why do you think that until
now no real effort has been made to mark up Clear Skies or move
it through Congress, since it was first introduced at the
request of the President July of 2002?
Mr. Walke. Well, my view is that it was the responsible
opposition of this Congress that prevented the bill from being
taken up seriously in the past 2 years, and that realizing that
EPA moved forward with regulations under its current authority
under the Clean Air Act that would actually protect the public
sooner and to a greater degree.
I think that case is made even tenfold today, where we have
a bill before us that is dramatically weaker and worse than the
bill that was even introduced in the year 2001. So I am hopeful
that with EPA facing deadlines to act in March, 2 months from
now, that we will actually have rules that are issued that will
protect the public and that Congress will move on to other
business and not go forward with this bill.
Senator Jeffords. Mr. Walke, also, according to the most
information that is available today, power plants are the
source of significant non-attainment in many parts of the
Country. They are also the most cost-effective control options
that States and local governments will rely upon to achieve
attainment. What do you believe are the most cost-effective
control options that will allow attainment to be reached on
schedule?
Mr. Walke. Senator, plainly, deeper reductions from the
power plant sector are more cost-effective than the other
cleanup measures that States would have to resort to in order
to clean up their air. EPA has found in the past that cost-
effective reductions from power plants are $2,000 a ton, and if
we were to adopt that same metric today, we would be cleaning
up power plant emissions by 90 percent within the next 5 years,
not by 70 percent over the course of the next two decades.
The truth is that the Administration low-balled the
requirements that they were willing to impose upon the power
sector, which resulted in a scandalously low cost-effectiveness
dollar figure of $700 a ton. The DC area has submitted controls
that would require three to five to $7,000 of tons of
reductions from other industry sectors, and we can do better
and more cost-effectively with power plants.
Senator Jeffords. Thank you, Mr. Chairman.
Senator Voinovich [assuming Chair]. Mr. Houseal, as you
know, some of my colleagues and witnesses claim that Clear
Skies is a rollback of existing Clean Air Act provisions. I
would just like you to comment on that.
Mr. Houseal. We agree with the cuts as presented in the
Clear Skies bill that are in front of you today, and in terms
of a rollback, I would agree with Mr. Walke's comment that we
have a floor available for us right now, which is the Clean Air
Interstate Rule, and a deadline of March, so that if this bill
is above that floor, I think we have a positive step forward
here.
Senator Voinovich. And your position is the one that you
have maintained for several years. I will never forget your
organization being criticized by the Clean Air Trust. You got
the villain of the month award because you said let us do
something about three Ps or three Es, and let us discuss carbon
at some other time, but let us get on with it so we can do
something about our problem.
Mr. Houseal. That is correct. If Congress had moved in
1995, when the first EPA study came out indicating further
reductions were necessary in NOx and SOx, and if it had
happened that year, I think the discussion today would be much
different about a multi-pollutant bill. It is indeed
unfortunate when we recognize that at the time of the Kyoto
protocols the Senate voted it down 95 to 0. That was
bipartisan. And more recently there has been slightly more
progress with the McCain-Lieberman bill. But obviously the
political will is not yet with us to have a bill.
Senator Voinovich. You want us to move on.
Mr. Houseal. Let us move on and get acid rain cured and
have the debate about CO<INF>2</INF>.
Senator Voinovich. Mr. Walke, as I stated in my opening
statement, I hoped that we could move passed many claims
against the bill and have a construction discussion about the
legislation. Instead you have levied many attacks against this
legislation that I disagree with, and I am glad the Chairman is
going to leave the record open so we can get at that. But one
of the things that bothers me about your testimony is this
issue of sinister motives by those of us that are involved in
this bill.
You just said the clever way the bill was constructed.
I want you to know that I was the chief environmentalist in
the House of Representatives in Ohio. I want you to know that I
was the father of the Ohio Environmental Protection Agency. I
want you to know that when I was Governor of Ohio, we moved
forward and we got every county to achieve the ambient air
standards.
I care about the people of Ohio. I care about the fact that
I don't believe that we have been moving rapidly enough to do
something about our environmental needs and our public health
needs, and I am very concerned about the fact, because we
haven't harmonized our energy and environmental and economic
needs, that many Ohioans today have been hurt economically. So
I just want you to understand that.
First, you claim that more can be done under the existing
Clean Air Act. I won't go into this again, but as I laid out in
my opening statement, the current Act NSR Section 126 have not
worked well in terms of meeting its deadlines. And I am glad
that Mr. Connaughton clarified what we are doing in that area,
and we would be glad to work on that area.
Second, you cite an EPA staff proposal that is much
stronger than Clear Skies. There is a long history on the Straw
proposal. I would just quote from a recent article in the issue
of Washington Monthly entitled, ``Partly Sunny, Why Enviros
Can't Admit that Bush's Clear Skies Initiative Isn't Half
Bad.'' One EPA career official said, ``We created the business
as usual scenario of what would happen under the Clean Air Act
out of whole cloth. To be honest, we wanted to scare the hell
out of the industry. Early on, said EPA staffer John Bachman,
we became convinced that we couldn't do the Straw proposal.''
Third, you state, ``It is absurd to think that starting
afresh with a new, untested legal framework would reduce future
litigation delays.'' As you cite Mr. Schneider's testimony from
last week, that two dozen rules are required to implement Clear
Skies, so there are going to be extensive litigation. I hate to
argue with you on this point, since your organization seems to
be an expert on litigation, but I disagree.
The rulemakings required are those that are required under
the Acid Rain Program, and they were not litigated. Clear Skies
contains provisions to assure the reductions. There is a
prohibition against legal challenges of the annual allowance
allocations and a default allowance procedure in case of any
problems. And, most importantly, the emission caps and
compliance deadlines to Clear Skies are set in statute and
cannot be disputed, delayed, or legally challenged.
Fourth, you claim that the Jeffords-Carper bill gets faster
reductions without more cost. This doesn't make sense. If you
look at the 2004 analysis of all three bills by the Energy
Information Administration, those two bills cause more
unemployment, higher natural gas and electricity prices, and
lower coal use than Clear Skies.
Fifth, you attack the transitional provision in the bill.
This provision follows the National Academy of Sciences
recommendation that ``the implementation of air quality
regulations should be less bureaucratic, with more emphasis on
results and the process.''
Mr. Breehey, you made reference to that in terms of your
people. It is stop, start, and you have no certainty there.
I have run out of my time, but let me quote from
Administrator Browner's testimony October 1, 1997, before a
joint committee hearing of the House Committee on Commerce. She
said, ``Our next implementation in this effort, NAAQS, is a
regional strategy, it is designed to target major utilities for
pollution reductions through a market-based cap and trade
program. Once this plan is given a chance to work, we believe
that the vast majority of cities that based on current data
would not meet a more protective health standard would be able
to go through this strategy without any additional new local
pollution controls or measures. The States will receive a
transitional classification. This classification will enable
them to avoid undue local planning requirements and the
restrictions on economic growth.''
Now, that is not from Christy Todd-Whitman or Mike Leavitt;
it is from Carol Browner, October 7, 1997.
Senator Inhofe [resuming Chair]. Thank you very much,
Senator Voinovich.
And I thank the panel. I thank you for your patience. The
first panel went a little bit longer than it was supposed to.
We appreciate your service very much.
We are adjourned.
[Whereupon, at 11:52 a.m., the committee was adjourned.]
[Additional statements submitted for the record follow:]
Statement of Hon. Max Baucus, U.S. Senator from the State of Montana
Mr. Chairman, Ranking Member Jeffords, thank you for holding this
hearing today on S. 131, the Clear Skies bill. This issue is very
important, to the country and to my state of Montana.
I believe we have an opportunity to craft a bi-partisan bill in
this Committee. But, this is not a simple task. It will require
difficult negotiations and a lot of hard work. We have to listen to
each other, rather than talking past each other. We've held a lot of
hearings, but we've had very little discussion about what was said at
those hearings.
I don't think there's a lot of disagreement over the basic
principles in this debate. Cleaner air and a healthier environment;
greater certainty for business; more efficient regulation; reduced
costs of compliance. That's our goal, to take what we've learned from
the implementation of the Clean Air Act Amendments of 1990, and craft a
better program that reduces pollution and enhances our global
competitiveness. The question, of course, is how do we achieve this?
Certainly, there is a significant difference of opinion among members
of this Committee as to what is the best approach.
But, a difference of opinion doesn't mean a good compromise is out
of our reach. It certainly doesn't mean that we shouldn't even try to
find common ground. That's what we're here for in this Committee.
That's what I want to see.
In order to do this, though, we need to build some trust. There
needs to been an understanding that this isn't a take it or leave it
situation, that the legitimate concerns of members of this Committee
about this legislation will not be ignored or dismissed, but considered
and, where possible, addressed.
Will we all be able to agree on what is the best way forward?
Probably not. But, I think we can do better than an even split, or a
bare majority. We should be shooting for as strong a bi-partisan vote
as possible that will help this bill survive on the floor. We have to
do that if we're serious about actually accomplishing something this
year. We still need 60 votes to pass anything in this body.
Personally, I have a few simple criteria for any multi-pollutant
bill: First, it must represent a clear and positive step forward on
clean air as compared to the status quo. I understand that we're facing
very different challenges now than we did in 1990, even if we just
consider the significant changes that have occurred within the utility
industry during that time. New challenges call for a new approach, such
as a sound multi-pollutant bill, but we have to make sure that we
maintain and improve upon the Clean Air Act's success at reducing air
pollution nationwide.
Second, legislation must not harm, and if possible, must promote,
the development of Montana coal. Montana sits on the largest coal
reserves in the nation. These coal reserves represent an enormous
economic potential for my state, in royalties, revenue and jobs.
Unfortunately, we just haven't been able to develop the markets for our
low-sulfur coal that our friends and neighbors in Wyoming have. I would
like to see if there's a way we can fix that problem. Additionally,
there are a lot of proposals out there right now to develop new power
plants in Montana that burn Montana coal. Of course, not all of them
will be built. But I want to be sure that any legislation treats new
plants fairly and provides sufficient incentives for them to be built.
New plants are cleaner and more efficient than older plants,
particularly those plants that are 40 and 50 years old. Efficient and
clean should be rewarded, not penalized, particularly if we want to
continue to advance clean coal technologies to ensure that coal has a
robust future.
Third, the legislation must substantively address carbon dioxide. I
think we can put together a strong package that passes the laugh test
and pushes the technology envelope without penalizing coal or harming
our economy. I think such a package would win the support of a majority
of Senators on this Committee and on the floor.
Right now, it's too soon for me to confirm whether Clear Skies
satisfies the first two criteria; I know that it does not satisfy the
third. However, I'm confident that we can find a compromise if, again,
we work hard and talk to each other. And, if we have the time to work
something out. A rush to mark-up, without laying any foundation for a
bi-partisan compromise to take to the floor, is not a strategy for
success. This is frustrating because I want a good bill. It's the right
thing to do and I think we can get it done.
I would like to associate myself with the earlier comments of
Senator Carper, where he noted that there is a great deal of room for
negotiation on this bill, in terms of caps and timelines, regulatory
relief and CO<INF>2</INF>. I have a great deal of regard for both
Senator Voinovich and Senator Carper, the Chairman and Ranking Member
of the Clean Air Subcommittee. They are both former Governors, they
know how to get things done. They have both indicated their willingness
to start a dialog and find a compromise. I fully support their efforts
and will do everything I can to help ensure they succeed.
Mr. Chairman, let's set this Committee up to succeed. I think we're
close on so many issues but the process needs time work itself out.
Let's give it that time to see what can be done. It will be time well
spent and I think it will only help this bill's prospects going
forward.
Thank you, Mr. Chairman.
__________
Statement of Hon. Barbara Boxer, U.S. Senator from
the State of California
Mr. Chairman, I appreciate having a hearing before this Committee
on the challenges of cleaning up the air. It is, however, unfortunate
that you have chosen to focus this hearing on legislation that would
actually increase pollution.
Significant progress has been made since the Clean Air Act was
enacted in 1970--U.S. emissions of smog forming pollutants have
decreased more than 50 percent while economic growth has increased well
over 150 percent. However, there is there is still much to be done to
clean up our air.
Dangerous levels of pollution are causing thousands of premature
deaths, hundreds of thousands of asthma attacks, neurological
disorders, and other illnesses each year, especially in our children,
our most vulnerable population.
According to the EPA, hospital admissions for asthma alone
increased approximately 30 percent between 1980 and 1999. Further, one
in six women of child bearing years has dangerous levels of mercury--a
potent neurotoxin that threatens the health of developing fetuses,
children, and other vulnerable populations in her system.
These are the issues that we should be addressing today--how to
reduce pollution and its public health and environmental effects.
If the administration and this committee's leadership were serious
about addressing pollution, this committee would not be discussing S.
131, a wholesale roll back of the Clean Air Act. We would be discussing
Senator Jeffords' bipartisan Clean Power Act, S. 150, which takes on
the challenge of protecting public heath by aggressively reducing power
plant emissions while keeping the Clean Air Act in tact.
Although Senator Inhofe presents his bill as addressing power plant
pollution--that is not the purpose of this bill. Make no mistake, the
purpose of S. 131 is to undermine and unravel the Clean Air Act,
undoing three decades of progress in cleaning up our air, under the
guise of a power plant bill.
Contained in S. 131 is virtually every roll back that industry has
fought for since the passage of the Clean Air Act. S. 131:
<bullet> Delays implementation of public health air quality
standards 5-17 years;
<bullet> Repeals air toxic regulations for power plants and more
than 73,000 other facilities, including emissions of cancer-causing
pollutants such as formaldehyde, benzene, arsenic, toluene and lead;
<bullet> Makes it harder for states to clean the air by removing
states' tools, such as the requirements that old, industrial
facilities, including power plants, install modern pollution controls
when they make significant changes that result in an increase in air
pollution or that they offset pollution increases; and
<bullet> Ignores emissions of carbon dioxide, the main cause of
global warming.
Each year of delay in cleaning up our air takes an unnecessary toll
on our public health, welfare and the environment. The solution is not
to defer deadlines and weaken regulations, but, rather, to accelerate
industry compliance with the current Clean Air Act.
Proposals such as S. 131 that fall short of protecting public
health or that seek to use the power plant debate to unravel the
current Clean Air Act should be soundly rejected because they do not
address the fundamental issue--the threat to the health of our
communities from air pollution.
Remember, S. 131 is not really about power plants, S. 131 is about
dismantling the Clean Air Act. It is an industry wish list that not
only fails to adequately address power plant pollution, but which would
result in at least 21 million tons of additional pollution placing
public health and the environment at risk.
We cannot, and will not, let the Clean Air Act be unraveled to
appease a powerful lobby. We can and should have an open, honest
bipartisan discussion about the threat that air pollution poses to
public health and the environment and the steps that we can take to
clean the air. I look forward to that discussion.
Statement of James L. Connaughton, Chairman, U.S. Council on
Environmental Quality
Mr. Chairman, Senator Jeffords and members of the Committee. I
appreciate the opportunity to appear before you today to strongly urge
passage of the President's Clear Skies Initiative. President Bush is
dedicated to providing our families and children with a healthier, more
economically vibrant and secure future. Important to achieving that
future is bringing proven, innovative tools to the task. Clear Skies
legislation is just such a tool, and means healthier citizens, stronger
communities, more affordable, reliable and secure energy, and more
vibrant wildlife habitat across America.
Clear Skies will significantly expand the Clean Air Act's most
innovative and successful program in order to cut power plant pollution
of sulfur dioxide, nitrogen oxides and, for the first time, mercury by
an unprecedented 70 percent in two phases. These cuts in pollution will
provide substantial health benefits, prolonging the lives of thousands
of Americans annually, and improving the conditions of life for
hundreds of thousands of people with asthma, other respiratory
illnesses, and heart disease.\1\ As the son of a pediatrician who is
also a chronic asthmatic, my passion for this policy is deeply
personal.
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\1\Further detail about these benefits can be found in the
materials accompanying this testimony and on the EPA and White House
Web sites (www.epa.gov/clearskies and http://www.whitehouse.gov/ceq/
clear_skies.html).
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Clear Skies will produce these health benefits with greater
certainty by imposing a mandatory, permanent, multi-pollutant cap on
emissions from more than 1300 power plants nationwide, reducing
pollution by as much as 9 million tons annually at full implementation.
Utilities will achieve this by spending more than 52 billion dollars to
install, operate and maintain new, primarily clean coal pollution
abatement technology on both old and new power plants. Clear Skies will
require only a few dozen government officials to operate and will
assure compliance through a system that is easy to monitor and easy to
enforce.
Accordingly, the Clear Skies cap and trade approach will give our
states the most powerful, efficient and proven tool available for
meeting our new, tough, health-based air quality standards for fine
particles and ozone. At the end of last year, EPA completed the process
of informing over 500 counties that they either do not meet or that
they contribute to another county not meeting the new standards. That
relatively straightforward act has now triggered a very complex process
that will lead later this year to a frenzy of intrastate negotiation
and conflict, interstate negotiation and conflict, Federal-state
negotiation and conflict, state and citizen petitions, lawsuits, and
heightened uncertainty in energy markets, producing an avoidable and
negative impact on local investment, jobs and consumer energy bills.
Not a pretty picture.
As a former Governor, the President personally experienced and
understands the complexities of developing and implementing state plans
to meet air quality standards. That is why he places a premium on
practical, common sense solutions. Clear Skies, in conjunction with the
Bush Administration's new rules cutting diesel engine pollution by more
than 90 percent, provides that solution. Most counties will be able to
meet the new standards without having to take any new local measures
beyond the Clear Skies power plant reductions. For the relative few
that remain, their burden will be substantially lighter and their
likely challenges local ones. This simple approach could save
governments and the private sector tens of millions of dollars in
negotiations, litigating and otherwise inevitable delay in meeting air
quality standards.
Clear Skies will also help keep communities together. Up front
assurance of meeting air standards will give communities the certainty
they need to keep and attract manufacturing jobs in the places where
generations of their families currently live, work, play, and pray. The
absence of such certainty could exacerbate the breakup of communities
experiencing the exodus of industrial jobs to either ``greenfields''
locations in the United States or, even more consequentially, overseas.
Clear Skies will also make communities stronger economically by
helping to keep energy affordable, reliable, and domestically secure
for their businesses and homes particularly important to those least
able to afford their energy needs. The market-based trading approach
will substantially cut the overall cost of compliance that is passed on
to consumers and shareholders. In addition, the specific cap levels in
Clear Skies--endorsed by organizations such as the U.S. Conference of
Mayors and National Association of Counties--are calibrated to
encourage utilities to put controls on coal rather than switch to
natural gas in order to comply. That minimizes the overall impact on
energy prices. Forcing fuel switching to natural gas, by contrast,
maximizes it.
Finally, Clear Skies will help our ecosystems and wildlife thrive.
It will eliminate chronic acidity in the Adirondacks and virtually
eliminate it in other Northeastern lakes. It will improve long-term
conditions in streams, rivers, lakes and bays. It will vastly improve
visibility in many of our parks and other scenic locations.
Mr. Chairman, for these reasons, a broad array of state, regional
and local officials, as well as unions and non-governmental
organizations, have endorsed the approach to meeting air quality that
Clear Skies delivers. We look forward to the Congress delivering Clear
Skies.
______
Responses of James L. Connaughton to Additional Questions from
Senator Inhofe
Question 1. In the testimony submitted by Mr. John Walke, Natural
Resource Defense Council, he states that a 2001 EPA document, entitled
``Comprehensive Approach to Clean Power: Straw proposal and Supporting
analysis for Interagency Discussion,'' shows that 115 counties will
still be in non-attainment in 2010 and that 66 counties will be in non-
attainment by 2020. These estimates, however, appear to conflict with
estimates included in EPA's 2003 analysis of the Clear Skies Act of
2003 ``Section B: Human Health and Environmental Benefits.'' In that
analysis, EPA concludes that only 45 counties (27 counties for the 8-
hour ozone standard and 18 for the PM<INF>2.5</INF> standard) will
remain in non-attainment out of a total of 419 counties deemed to be in
non-attainment based on 1999 to 2001 data. This represents close to a
90 percent reduction in the number of non-attainment areas. Please
explain to the Committee which set of estimates provides the most
accurate prediction of nonattainment counties likely to remain based on
existing information?
Response. In general, EPA's most recent modeling estimates are
based on more up-to-date air quality and emissions data and improved
modeling systems. The estimates in EPA's 2003 analysis are EPA's best
estimates of how many counties will attain the standards or continue to
monitor non-attainment in 2020 under the provisions of the Clear Skies
Act of 2003.
Question 2. Of the 45 counties that will remain in non-attainment,
please list the counties and provide information on when the Agency
expects that these counties will reach attainment based on the Agency's
current models. For each county, please include information on the
deadline assigned to the county in the recently promulgated
implementation rules for the 8-hour and the PM<INF>2.5</INF> standards.
How many of these counties does EPA believe. will not attain the
standard by their assigned deadline based on the Agency's current
models?
Response. The Clean Air Act requirement that states meet the
National Ambient Air Quality Standards (NAAQS) is unchanged in Clear
Skies legislation. By providing national and regional reductions in
pollution, Clear Skies would assist local areas in reaching attainment.
However, EPA cannot predict when some counties will actually reach
attainment, because EPA's modeling does not take into account the
local-level controls that could be adopted by areas to help them reach
attainment. Clear Skies modeling may predict that a county will monitor
non-attainment in 2020 with existing control programs and the Clear
Skies Act of 2003 power sector reductions; however, the county must
attain the air quality standards through imposition of local or State-
level controls.
There are 38 counties in all that EPA projects will not meet the
standards in 2020 without adoption of state or local control measures:
27 counties projected to monitor non-attainment for 8-hour ozone and 18
counties projected to monitor in non-attainment for PM<INF>2.5</INF>
(see table below). Seven of these counties are projected to monitor
nonattainment for both pollutants. The attainment deadlines for these
38 counties depend on several factors.
All PM<INF>2.5</INF> non-attainment areas are required to attain
the standards ``as expeditiously as practicable'' and no later than 5
years from the effective date of designation, i.e., April 2010. The
Administrator may grant an area an extension from 1 to 5 years (i.e.,
up to April 2015) based on the severity of the air quality problem and
the availability of emissions reduction options.
The attainment deadlines for the 8-hour ozone non-attainment areas
depend on whether they are subject to Subpart 1 or Subpart 2 of the
Clean Air Act. All 27 of these counties are subject to Subpart 2 of the
Clean Air Act. Subpart 2 ozone non-attainment areas are classified
according to the severity of their pollution problem. They must attain
as expeditiously as practicable but no later than the maximum deadlines
listed in the ozone implementation rule. These deadlines are the
following number of years after the effective date of designation
(which was 6/15/04 for each of the 27 areas):
Marginal - 3 years after designations, or 2007
Moderate - 6 years after designations, or 2010
Serious - 9 years after designations, or 2013
Severe - 15 or 17 years after designations, or 2019 or 2021
Extreme - 20 years after designations, or 2024
For each of the 27 Subpart 2 counties which are projected to
monitor nonattainment for ozone in 2020 based on Clear Skies and
existing control programs alone, the maximum statutory attainment date
is listed in the table below. To meet these attainment deadlines,
States will have to impose additional controls. The Administrator may
grant up to two one-year extensions of the attainment deadlines for any
PM<INF>2.5</INF> or 8-hour ozone non-attainment area that has
experienced only a minimal number of exceedances in its attainment year
and for which the State has met all the requirements in its State
implementation plan for the relevant area. In addition, if the State
believes the area cannot attain by the maximum attainment date, the
State may request that the area be reclassified to a higher
classification, which would give it a later attainment date.
--------------------------------------------------------------------------------------------------------------------------------------------------------
PM2.5: Counties Both: Counties
projected to Ozone: Counties projected to
monitor non- projected to monitor non- Maximum statutory
attainment in 2020 monitor non- attainment in 2020 attainment date
STATE COUNTY w/Clear Skies + attainment w/Clear w/Clear Skies + for ozone Subpart
existing programs Skies + existing existing programs 2 counties
THUS must take programs THUS must THUS must take
local action take local action local action
--------------------------------------------------------------------------------------------------------------------------------------------------------
AL Jefferson Co................ 1 .................. .................. ..................
CA Fresno Co................... 1 1 1 2013
CA Kem Co...................... 1 1 1 2013
CA Merced Co................... 1 .................. .................. ..................
CA Stanislaus Co............... 1 .................. .................. ..................
CA Tulare Co................... 1 .................. .................. ..................
CA Los Angeles Co.............. 1 1 1 2021
CA San Bernardino Co........... 1 1 1 2021
CA Orange Co................... 1 1 1 2021
CA Riverside Co................ 1 1 1 2021
CA San Diego Co................ 1 .................. .................. ..................
GA De Kalb Co.................. 1 .................. .................. ..................
GA Fulton Co................... 1 .................. .................. ..................
IL Cook Co..................... 1 .................. .................. ..................
MI Macomb Co................... .................. 1 .................. 2010
MI Wayne Co.................... 1 1 1 2010
OH Cuyahoga Co................. 1 .................. .................. ..................
OH Jefferson Co................ 1 .................. .................. ..................
PA Allegheny Co................ 1 .................. .................. ..................
CA Ventura Co.................. .................. 1 .................. 2010
CT Fairfield Co................ .................. 1 .................. 2010
CT Middlesex Co................ .................. 1 .................. 2010
CT New Haven Co................ .................. 1 .................. 2010
NJ Hudson Co................... .................. 1 .................. 2010
NJ Hunterdon Co................ .................. 1 .................. 2010
NJ Middlesex Co................ .................. 1 .................. 2010
NY Bronx Co.................... .................. 1 .................. 2010
NY Richmond Co................. .................. 1 .................. 2010
NY Westchester Co.............. .................. 1 .................. 2010
NJ Camden Co................... .................. 1 .................. 2010
NJ Gloucester Co............... .................. 1 .................. 2010
NJ Mercer Co................... .................. 1 .................. 2010
NJ Ocean Co.................... .................. 1 .................. 2010
PA Bucks Co.................... .................. 1 .................. 2010
PA Montgomery Co............... .................. 1 .................. 2010
TX Galveston Co................ .................. 1 .................. 2010
TX Harris Co................... .................. 1 .................. 2010
WI Kenosha Co.................. .................. 1 .................. 2010
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Question 3. S. 150, the Clean Power Act requires a 90 percent
reduction in mercury emissions by 2010 with no emission trading. If
units are not allowed to trade emissions, what would happen to
individual units that cannot reduce emissions by 90 percent? How many
coal-fired units are at risk of not being able to reliably meet a 90
percent reduction requirement by 2010?
Response. Mercury specific control technologies are not expected to
provide 90% control on all key combinations of coal type and control
technology in this timeframe. Power companies and technology vendors,
with substantial support from the Department of Energy (DOE), are
working to develop and commercialize technologies that are specifically
designed to control mercury emissions from coal-fired power plants. One
of the most promising technologies is Activated Carbon Injection (ACI).
However, except for testing purposes, no coal burning power plant is
using ACI or any other technology designed to control mercury
emissions. A limited number of full-scale ACI evaluations have been
conducted for short periods of time on units representing a fraction of
the boiler population. DOE is now implementing a second phase of field
testing, focusing on longer-term, full-scale field-testing on a wide
range of coal and device configurations. These longer-term tests will
provide information important to subsequent commercial demonstration
projects. Once ACI is commercially available, additional time will be
necessary to enable this technology to be deployed widely in the power
sector.
Thus, there could be a significant number of units that would be
unable to comply with a 90 percent reduction by 2010 and would likely
shut down. The Energy Information Administration (EIA) analysis shows
that the early timing and stringency of the emissions limits in the
Clean Power Act combined with the birthday provision in the bill leads
to the largest resource cost and electricity price impacts among the
three bills they modeled in May 2004 (S.1844, S.843 and S.366)\1\. The
stringent emission caps, particularly the CO<INF>2</INF> cap, cause a
large decline in coal generation. New coal capacity additions through
2025 would amount to only 3 gigawatts under the Jeffords bill, and
nearly 125 gigawatts of existing coal plants would be retired. Relative
to the reference case\2\, coal generation would be 35.3 and 54.7
percent lower in 2010 and 2025, respectively, under the Jeffords bill.
Coal production tracks this decline. Relative to the reference case,
coal production declines by 623.4 million tons (45.4 percent) in 2020
and 771.6 million tons (50.4 percent) lower in 2025.
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\1\ Analysis of S. 1844, the Clear Skies Act of 2003; S. 843, the
Clean Air Planning Act of 2003; and S. 366, the Clean Power Act of
2003, May 2004, Energy Information Administration, Office of Integrated
Analysis and Forecasting, U.S. Department of Energy.
\2\ The reference case in the EIA May 2004 analysis is based on the
reference case in the Annual Energy Outlook 20041, and it incorporates
final regulatory action under existing laws. However, consistent with
standard EIA practice requiring policy neutrality in baseline
projections, it does not include pending or proposed actions at the
time of the analysis, such as standards for mercury emissions from
power plants or actions that might be taken to comply with the revised
National Ambient Air Quality Standards for ozone and fine particulates.
Question 4. Does EPA believe there is sufficient data, including
full-scale test results of sufficient duration, to say with confidence
that there are now commercially available technologies for lignite or
sub-bituminous coal plants that can reliably achieve a 90 percent
reduction in mercury emissions? Is EPA aware of any vendors that have
guaranteed a 90 percent reduction in mercury emissions from either
lignite or sub-bituminous powered coal plants? If there are guarantees
available, how substantial are the penalties for failure to achieve the
performance requirement? What would happen to the utility versus the
vendor if the performance level was not achieved under legislative
proposals, such as the Clean Power Act of 2005?
Response. Power companies and technology vendors, with substantial
support from the DOE, are specifically working to develop and
commercialize technologies that are designed to control mercury
emissions from coal-fired power plants. One of the most promising
technologies is Activated Carbon Injection (ACI). However, except for
testing purposes, no coal burning power plant is using ACI or any other
technology designed to control mercury emissions because the technology
has not been fully demonstrated. A limited number of full-scale ACI
evaluations have been conducted for short periods of time on units
representing a small fraction of the boiler population. DOE is now
implementing a second phase of field testing, focusing on longer-term,
full-scale field-testing on a wide range of coal and device
configurations. These longer-term tests will provide information
important to subsequent commercial demonstration projects. Once ACI is
commercially available, additional time will be necessary to enable
this technology to be deployed widely in the power sector.
In terms of guarantees, assumption of risk is a contractual
arrangement between the seller (vendor) and purchaser (utility). The
level of risk a vendor will be willing to assume is unknown as this is
a matter that would be subject to negotiation between the contracting
parties, however, failure of the utility to comply with Clear Skies
requirements would subject the company to serious penalties.
Question 5. If legislation does not pass and if litigation delays
the implementation of the CAIR rule, how much more costly will it be
for states and locals areas to attain the 8-hour ozone and
PM<INF>2.5</INF> standards? How likely will it be that more areas will
fail to meet their attainment deadlines? Will these areas be forced to
bump-up to higher categories in order to avoid sanctions? What would
happen to areas that are unable within the next three years to submit
an implementation plan that can demonstrate attainment by the required
deadline?
Response. We do not know how much more costly it would be for
states and local areas to attain the 8-hour ozone and PM<INF>2.5</INF>
standards if litigation delays the implementation of CAIR and
legislation does not pass nor can we predict how likely it would be
that areas would fail to meet their attainment dates or whether ozone
nonattainment areas would be forced to bump up to a higher
classification in the event of litigation delaying implementation of
CAIR. Our experience with passage of the Acid Rain Program and the NOx
SIP Call illustrate our preference for legislation instead of
rulemakings. Litigation did not delay the Acid Rain Trading Program at
all, while litigation did delay the NOx SIP Call over a year in most
states and even longer in other states.
If EPA determines that a state fails to submit within three years
of designation an implementation plan that demonstrates attainment by
the required deadline, or if EPA disapproves a submitted plan, then two
sanction clocks would start. Eighteen months after the clock is
started, if the State has not submitted the plan where EPA found it had
failed to do so, or if EPA has not approved a plan where it has
disapproved the submission, sources in the area subject to the
nonattainment new source review requirements would be subject to an
increased offset requirement. If the deficiency has still not been
corrected, six months later, the area would be subject to limitations
on federal highway funding. In addition, EPA is required to promulgate
a Federal Implementation Plan (FIP) no later than 24 months after it
has found the state failed to submit the plan or it has disapproved the
plan and that obligation remains until EPA has approved the required
plan. EPA may grant extension(s) of the attainment deadline for Subpart
I ozone nonattainment areas and all PM<INF>2.5</INF> nonattainment
areas (which are also covered under Subpart 1 of the Clean Air Act) for
up to 5 years beyond the original 5-year attainment deadline if in its
attainment demonstration, the state justifies such an extension based
on the severity of the pollution in the area and the availability and
feasibility of control measures.
Question 6. In your testimony, you state that mandatory caps on
CO<INF>2</INF> emissions will not produce a favorable economic climate
for investing in new clean coal technologies, such as IGCC, which are
more efficient (less CO<INF>2</INF> producing) and which hold the
potential of allowing for future sequestration of CO<INF>2</INF>
emissions. You also state, however, that these technologies are
significantly more expensive to build when compared to traditional
fossil fuel or nuclear powered electricity. What is the Administration
currently doing to encourage the adoption of technologies, such as
IGCC? How important is regulatory certainty to encouraging the
construction of IGCC and other comparable next generation clean coal
technologies?
Response. Under Clear Skies, the power sector will spend more than
$52 billion to install, operate, and maintain pollution abatement
technology on both old and new power plants. The cap-and-trade system
encourages investment in innovative pollution control technologies as
we have seen under the Acid Rain Trading Program.
This investment future is enhanced by DOE's Office of Fossil Energy
research and, through programs such as FutureGen, development of future
gasification concepts that offer significant improvements in
efficiency, fuel flexibility, and economics. Tomorrow's IGCC plants
could conceivably process a wide variety of low-cost fuels, handling
not only coal but also biomass, municipal and other solid wastes, or
perhaps combinations of these feed stocks. DOE is currently
investigating new gasifier configurations that can adapt to variances
in fuel composition, heating values, ash content, and other factors.
DOE is also working with its private sector partners to develop a new,
potentially low-cost configuration for a future gasifier-based advanced
circulating fluidized-bed technology. Finally, DOE is looking to
develop lower-cost ways to produce the oxygen used in the gasification
process, including use new innovations in ceramic membranes to separate
oxygen from the air at elevated temperatures.
In addition, significant improvements in overall project economics
can be obtained through actions to make the siting and permitting of
IGCC plants more predictable and efficient. Pursuant to Executive Order
13212, the Task Force on Energy Project Streamlining has begun a review
of existing Federal permitting processes to identify potential
opportunities to make such processes more efficient, and is consulting
with States and interested private parties in an effort to reduce the
barriers to deployment for IGCC and comparable clean coal technologies.
______
Responses of James L. Connaughton to Additional Questions from
Senator Lautenberg
Question 1. Eight million New Jerseyans live where ozone health
standards are being violated, yet one-third of our ozone comes from
upwind. Why does this bill take away my state's ability to reduce out-
of-state pollution that threatens our health?
Response. Changes to the Clean Air Act interstate transport
provisions are designed to ensure that transported pollution is
controlled from the power sector and preserve the flexibility and cost-
effectiveness of the trading program. Clear Skies reductions are
greater or equal to the reductions over the next decade that could be
requested of downwind states that submitted petitions today. This is
why the President's Clear Skies legislation would not subject affected
units to additional reductions as a result of section 126 petitions
until 2012.
The cap and trade approach to reducing emissions from the power
generating sector is the most efficient and effective route to reduce
transported air pollution from this sector. The Acid Rain Trading
Program's outstanding success demonstrates the benefits of this
approach. Clear Skies provides the power generation sector with
certainty about upcoming regulations and promises the public a
mandatory program to reduce air pollution.
Question 2. About 10 percent of New Jersey's school kids have
asthma, and about 150,000 of them are hospitalized each year. Why does
``Clear Skies'' let industry off the hook for meeting the health
standards until 2025 or even later? Does the president believe that we
should aim to still protect the health of our children?
Response. The Clean Air Act air quality goals, the National Ambient
Air Quality Standards (NAAQS), are unchanged under the Clear Skies
proposal. New Jersey is required to put in place a State Implementation
Plan that will bring New Jersey into attainment with the new NAAQS for
ozone and fine particulate matter on time. Clear Skies, by mandating
enforceable emission caps for power plants, will help New Jersey attain
these air quality standards.
Clear Skies will provide significant air quality benefits to
Northeastern states. Interstate ozone transport would be significantly
reduced under these cap levels. The proposal recognizes the unique
circumstances of various regions of the country while retaining the
economic benefits of national emission allowance markets. The
SO<INF>2</INF> and NOx reductions required under Clear Skies in those
states having or contributing to ozone nonattainment will address the
problem of ozone and particulate matter nonattainment and transport on
or ahead of schedule.
Question 3. I'm sure you've taken your family to one of our
national parks, where most of us expect to enjoy fresh air and
beautiful vistas, yet shockingly the air in many of our National Parks
is hazy and doesn't meet the ozone health standard (Including Yosemite,
the Great Smoky Mountains, and Shenandoah). Why does Clean Skies remove
the Clean Air Act's special protections for national parks?
Response. Due to Clear Skies and the suite of diesel rules, major
parks in the east are expected to come into attainment for smog by
2015, to see substantial improvements in visibility, and reductions in
acid rain. The Department of Interior and the National Park Service
have been working collaboratively with EPA, States, Tribes, and
stakeholders for many years to develop comprehensive pollution control
strategies that will benefit the national parks.
Clear Skies will modify certain Clean Air Act programs and retain
important environmental backstops. Given the substantial and cost
effective improvements in regional pollution which the President's
Clear Skies Act could achieve, it is appropriate to consider ways to
streamline the regulatory process for sources affected by the caps,
while still providing appropriate protection for class I areas such as
national parks. Accordingly, the President's Clear Skies legislation
simplifies new source review because the Clear Skies mandatory caps and
70% reduction make such programs largely redundant. At the same time,
the legislation maintains the requirement that new or modified sources
be assessed as to whether they would affect any air quality related
values, including visibility, in class I areas. Because the major
visibility impacts of well controlled single sources occurs relatively
near the source, the requirement is limited to facilities located
within 50 km of the area.
______
Response of James L. Connaughton to Additional Question from
Senator Voinovich
Question 1. Some critics of Clear Skies claim that it is less
stringent than existing law, and they advocate simply for the Clean Air
Interstate Rule and Clean Air Mercury Rule. Is existing law better for
the environment and are the rules better than Clear Skies legislation?
Response. Clear Skies is not less stringent than existing law.
Clear Skies does not change the new, more stringent health-based air
quality standards that the federal government set and the states must
now meet. What Clear Skies provides is an effective tool to help the
states get there with certainty. Clear Skies will significantly expand
the Clean Air Act's most innovative and successful program in order to
cut power plant pollution of sulfur dioxide, nitrogen oxides and, for
the first time, mercury by 70 percent in two phases. These cuts in
pollution will provide substantial health benefits, prolonging the
lives of thousands of Americans annually, and improving the conditions
of life for hundreds of thousands of people with asthma, other
respiratory illnesses, and heart disease.
Clear Skies will produce these health benefits with greater
certainty than the Clean Air rules because Clear Skies imposes a
mandatory, permanent, multi-pollutant cap on emissions from more than
1,300 power plants nationwide, reducing pollution by as much as 9
million tons annually at full implementation.
______
Responses of James L. Connaughton to Additional Questions from
Senator Baucus
Question 1a. Will Clear Skies provide adequate incentives for the
construction of new, cleaner coal-fired power plants? If yes, why and
how? How many new coal plants are projected to come on-line under Clear
Skies versus the status quo?
Response. Analyses by the Energy Information Agency (EIA) and the
Environmental Protection Agency (EPA) show that Clear Skies helps
maintain coal as an important fuel source. EIA and EPA both predict
increases in coal production. EIA analysis shows, under the Clear Skies
bill modeled in May 2004, that new coal capacity additions through 2025
amount to 92 gigawatts under Clear Skies compared to 108 gigawatts in
the reference case. EIA projections show an increase under Clear Skies
of new, cleaner, more efficient Integrated Gasification and Combined
Cycle (IGCC) additions to nearly 26 gigawatts compared to the reference
case projection of only 14 gigawatts of IGCC capacity additions by
2025. Both EIA and EPA projections show that power generators are
expected to rely primarily on the addition of emissions control
equipment to comply with the emission caps--little fuel switching from
coal to natural gas is projected. In fact, EPA modeling projects that
coal-fired generation will increase 9% by 2020 compared to 2003 levels.
When EPA modeled Clear Skies with EIA assumptions for natural gas
prices and electricity growth, coal-fired generation was projected to
increase by roughly 54% compared to 2003 levels. The EPA 2003 analysis
of Clear Skies shows that approximately 5.2 gigawatts of coal-fired
capacity comprised mostly of small units under 100 megawatts will no
longer be economic to maintain. Using EIA assumptions for natural gas
prices and electricity growth leads to about 0.4 gigawatts of coal-
fired capacity that is no longer economic to maintain. EIA and EPA also
project a small effect on national electricity prices under Clear
Skies.
To compare, EIA's May 2004 analysis shows that fewer new coal
plants will be constructed under the Carper bill than under the Inhofe
Clear Skies bill and the reference case. New coal capacity additions
through 2025 range from 21 gigawatts to 35 gigawatts under the Carper
bill analysis. Under the Jeffords bill, new coal plant additions are
much lower while retirements are higher compared to the reference case.
New coal capacity additions through 2025 amount to only 3 gigawatts
under the Jeffords bill, and nearly 125 gigawatts of existing coal
plants are retired.
Question 1b. Could and/or should Clear Skies be improved to provide
greater incentives for new coal-fired plants, and do more to encourage
the retirement of older, less efficient facilities with no pollution
controls? Can the Administration recommend any proposals along these
lines?
Response. Clear Skies is designed to cut emissions from the power
sector thus assisting the states in meeting new stringent air quality
standards for ozone and particulate matter while ensuring a diverse
energy future for the U.S., including coal use.
Flexibility of compliance choices for the power sector, maintenance
of fuel diversity, and the cost savings passed on to consumers through
low electricity prices are the benefits of the approach taken in Clear
Skies, particularly when compared with the other proposals that support
more stringent targets, shorter compliance periods, or command and
control regulatory approaches. Low electricity prices are maintained
under Clear Skies. EPA and EIA analysis shows that the power sector
will rely heavily on emission control technologies under Clear Skies to
meet the caps; EPA's analysis of the Clear Skies Act of 2003 projected
that 80 percent of coal-fired capacity would have either SO<INF>2</INF>
or NOx controls by 2020. Emissions trading will provide flexibility to
the sector to keep their resource costs low. Coal is maintained as an
important fuel source, thereby avoiding excessive pressure on natural
gas prices; EPA and EIA both predict coal generation will grow under
Clear Skies and natural gas consumption under Clear Skies tracks the
reference case.
In addition, President Bush pledged during the 2000 campaign to
invest $2 billion over 10 years to fund research into clean coal
technologies and is on track to exceed that goal by more than 50%. The
2006 Budget provides $286 million, an increase of $13 million over 2005
enacted levels, for the President's Coal Research Initiative to improve
the environmental performance of coal power plants by reducing
emissions and improving efficiency. This includes:
<bullet> $68 million for the Clean Coal Power Initiative, of which
$18 million is allocated to continue development of FutureGen, the
coal-fueled, near-zero--emissions electricity and hydrogen generation
project announced by the President in February 2003;
<bullet> A commitment to FutureGen beyond 2006, by proposing a $257
million advance appropriation for 2007 to provide the Federal share of
FutureGen for several years; and
<bullet> $218 million for research and development of other clean-
coal technologies, such as Integrated Gasification Combined Cycle
systems, carbon sequestration, and next-generation turbines.
Question 1c. How will Clear Skies promote the deployment of
advanced clean coal technologies, like IGCC, that currently face
barriers to commercialization? Please be specific.
Response. Under Clear Skies, the power sector will spend more than
$52 billion to install, operate, and maintain pollution abatement
technology on both old and new power plants. The cap-and-trade system
encourages investment in innovative pollution control technologies as
we have seen under the Acid Rain Trading Program.
This investment future is enhanced by DOE's Office of Fossil Energy
research and development of future gasification concepts that offer
significant improvements in efficiency, fuel flexibility, and
economics. Tomorrow's IGCC plants could conceivably process a wide
variety of low-cost fuels, handling not only coal but also biomass,
municipal and other solid wastes, or perhaps combinations of these feed
stocks. DOE is currently investigating new gasifier configurations that
can adapt to variances in fuel composition, heating values, ash
content, and other factors. DOE is also working with its private sector
partners to develop a new, potentially low-cost configuration for a
future gasifier-based advanced circulating fluidized-bed technology.
Finally, DOE is looking to develop lower-cost ways to produce the
oxygen used in the gasification process, including use new innovations
in ceramic membranes to separate oxygen from the air at elevated
temperatures.
In addition, significant improvements in overall project economics
can be obtained through actions to make the siting and permitting of
IGCC plants more predictable and efficient. Pursuant to Executive Order
13212, the Task Force on Energy Project Streamlining has begun a review
of existing Federal permitting processes to identify potential
opportunities to make such processes more efficient, and is consulting
with States and interested private parties in an effort to reduce the
barriers to deployment for IGCC and comparable clean coal technologies.
Question 2. How many facilities nation-wide that currently have not
installed any pollution control equipment will install some form of
pollution control equipment under Clear Skies? Where are the majority
of these facilities located?
Response. EPA's analysis of the Clear Skies Act of 2003 projects
that an additional 270 units that currently do not have any advanced
pollution controls to reduce emissions of SO<INF>2</INF> and NOx will
install controls to meet the emission reduction requirements of Clear
Skies. Currently, roughly 55 percent of coal-fired capacity does not
have advanced pollution controls for either SO<INF>2</INF> or NOx
removal (i.e., a scrubber or SCR). EPA's analysis of the Clear Skies
Act of 2003 projected that 80 percent of coal-fired capacity would have
either SO<INF>2</INF> or NOx controls by 2020. The additional pollution
controls projected to be installed for Clear Skies are geographically
dispersed throughout the country. Clear Skies results in emission
reductions where they are needed most and where they will have a high
impact on attainment of air quality standards; in the highest emitting
regions of the country such as the Mid-West, the Mid-Atlantic, and the
South.
Question 3a. Specifically, how will Clear Skies impact Montana coal
production compared to the status quo? This includes Montana coal
shipped out-of-state, as well as Montana coal consumed in-state for
power production. Please explain your answer. If Clear Skies maintains
current production levels, or decreases production, please explain how
that outcome might be changed.
Response. Although we have not performed similar analysis for
S.131, EPA's 2003 analysis of the Clear Skies Act of 2003 projected
that that coal production in Montana will increase from today's
production levels.
Question 3b. How will S. 131 impact air quality in Montana?
Response. Although we have not performed similar analysis for S.
131, EPA modeling of the President's 2003 Clear Skies Act projected
that all counties in Montana would meet the 8-hour ozone and fine
particle standards by 2020. Lincoln County would be brought into
attainment with the fine particle standards by 2020 under existing
programs. In addition, Clear Skies would reduce fine particle
concentrations throughout the state and would prevent degradation of
visibility in Montana's parks, ensure nitrogen deposition does not
increase, and reduce mercury deposition.
Question 4. I understand that EPA staff has verified an analysis
performed by Westmoreland Resources, Inc. (WRI) that shows that market
pressure created by implementation of Title IV of the Clean Act (CAA)
will force the closure of the Absaloka Mine, owned by the Crow Tribe
and operated by WRI. The market advantage that the Crow coal has had is
that it is 300 miles closer by rail to customers in the Midwest than
other producers of western low-sulfur coal. As successive phases of the
Clean Air Act have been implemented, the Crow have lost customers to
the point where now it has one customer who purchases 90% of the mine's
production. This customer operates a scrubbed plant which emits
SO<INF>2</INF> below its permitted levels and is among the lowest
emitting coal plants in the country. Losing this customer would close
the mine.
Please confirm this verification.
Response. EPA agrees that the rising price of Title IV allowances
is predicted to encourage the owners of the unit that the Crow Tribe is
supplying to switch to a lower sulfur coal. Representatives of the Crow
Tribe have explained to EPA that they are investigating other
customers, including a new nearby coal plant and the possibility of
building a plant on the reservation. EPA has not done any analysis of
these scenarios or their impact on the Crow Tribe's mine.
Question 5. I also understand that EPA staff agreed with the WRI
analysis showing that granting the Crow Tribe and WRI relief will have
negligible impacts on the SO<INF>2</INF> emissions of the primary
surviving customer of the Absaloka mine. This customer operates a
scrubbed plant in the Midwest that emits SO<INF>2</INF> below its
permitted levels. This customer will coal source switch for economic
purposes only--no tangible environmental gain will be had for closing
the Crow Nation's main source of income. This relief will not increase
emissions; switching coal will decrease emissions in a negligible
amount.
Please confirm this verification.
Response. According to the information provided by the Crow Tribe,
the switch to lower sulfur coal would result in about a 50% reduction
in emissions (11,000 tons). EPA has not analyzed the environmental
benefits of that reduction. However, this switch to low sulfur coal
would not produce a net nationwide increase in emissions, since the
customer would presumably free-up allowances for sale on the market.
The impact of specific relief to the tribe on emissions at the
customer's plant and the cap-and-trade program in general would depend
on the nature of the relief being provided.
Question 6. What has been the cumulative net cost (total cost minus
the value of allowances distributed to them) of compliance incurred by
electric generating unit owners under Title IV of the Clean Air Act
Amendments of 1990?
Response. The costs of Title IV are not typically estimated in this
manner. Several outside experts have provided estimates of the cost of
Title IV, and their estimates of the annualized costs of Title IV are
in the range of $1 billion to $3 billion for 2010 when the program is
to be fully implemented. OMB's 2003 Report to Congress on the Costs and
of Federal Regulation reports EPA estimates that annual cost of Title
IV's SO<INF>2</INF> reductions ranged between $1.1 billion and $1.9
billion (2001$); EPA estimates of the NOx program's annual costs added
$0.4 billion.
Question 7. How will S.131 impact visibility in National Parks and
other Public Lands, and on air quality in existing Class I areas? What
is the scientific basis for setting a 51 kilometer distance from Class
I areas beyond which advanced pollution control requirements would not
be required for new or modified sources? How does this distance comport
with the requirements?
Response. Although EPA has not analyzed how S. 131 would impact
visibility in National Parks and other public lands or air quality in
existing Class I areas, EPA's analysis of the effects of the
President's Clear Skies legislation on visibility in these areas and
found that the Clear Skies Act of 2003 would benefit the ecosystems and
air quality in national parks across the country, especially in the
eastern states.
The 2003 analysis projected benefits due to improvements in
visibility in National Parks and Wilderness areas in many Class I areas
in the Southeast (including Shenandoah and Great Smoky Mountain
National Parks), the Southwest, and California. The reductions in acid
rain, eutrophication, mercury deposition and regional haze from Clear
Skies would also improve these resources. By addressing air pollution
from a regional perspective, the transport of air pollution into
national parks and wilderness areas would be reduced. We expect that S.
131 would have similar types of benefits to National Parks and Class I
areas.
Clear Skies would require all new facilities governed by Clear
Skies to have, at a minimum, the level of modern pollution controls as
specified in section 481 (National Emission Standards for Affected
Units). Subsequent review by the Federal Land Manager of facilities
within the 50 km of a National Park or other Class I area would ensure
a review of potential impacts of new sources to avoid significant local
effects.
______
Responses of James L. Connaughton to Additional Questions from
Senator Obama
Question 1. Section 407(j)(1)(A): Please provide an estimate of the
number of sources in Illinois that could potentially opt-in under this
provision and specifically which hazardous air pollutants these sources
may be withdrawing from regulation under Section 112 of the Clean Air
Act. Please also provide an estimate of the amount of these pollutants
that could be emitted under this provision and compare it with current
emissions as currently regulated.
Response. We cannot provide this data at the State level, because
EPA only estimates emissions from source categories at the national
level.
Question 2. What safeguards could be added to Clear Skies to ensure
the trading process does not create mercury hot spots?
Response. The Agency believes that a cap and trade system, coupled
with States' ability to control sources further, will effectively
address any local risks from power plants.
EPA analysis suggests that large coal-fired utility units--those
that tend to have relatively high emissions of the type of mercury that
can deposit locally--have greater local-scale deposition footprints
than medium-sized and smaller coal-fired utility units. The trading of
allowances is likely to involve large utility units controlling their
emissions more than required and selling allowances to smaller units,
rather than the reverse scenario. This prediction arises from the basic
economics of capital investment in the utility industry. Under a
trading system where the firm's access to capital is limited, where the
up-front capital costs of control equipment are significant, and where
emission-removal effectiveness (measured in percentage of removal) is
largely unrelated to plant size, it makes more economic sense for the
utility company to allocate pollution-prevention capital to its larger
facilities than to the smaller plants. Any economies of scale of
pollution control investment will result in investment at the larger
plants.
Second, the types of mercury that are deposited locally are
controlled by the same equipment that controls criteria air pollutants
(fine particles, SO<INF>2</INF>, and NOx). As utilities invest in
equipment to comply with the Clear Skies SO<INF>2</INF> and NOx
requirements, the Agency expects a ``co-benefit'' in mercury controls
as particulate controls, scrubbers, and SCR systems are installed on an
increasing percentage of coal-fired utility units. The type of mercury
that is most difficult to control is the elemental form of mercury that
is most likely to be transported long distances from utility units.
Effective control of this type of mercury may require significant
investment in mercury-specific control technologies that are now only
in the development stage. Considering the economies of mercury trading,
utility units that have significant emissions of the elemental mercury
may become buyers of allowances from plants that can cost-effectively
control mercury. Consequently, the economics of the trading system are
likely to favor controls of mercury that are likely to be deposited
locally, thereby reducing any local hot spots. In addition, Clear Skies
does not change Clean Air Act authority that allows States to adopt
more stringent performance standards.
Question 3. How will Clear Skies help states meet Clean Water Act
requirements for impaired water bodies?
Response. EPA analysis of the environmental impacts of the
Administration's Clear Skies Act of 2003 projected that the required
reductions in emissions of SO<INF>2</INF>, NOx, and mercury would
result in significant reductions in acid deposition and deposition of
nitrogen and mercury. All three types of deposition are responsible for
or contribute to water quality impairments. EPA's 2003 modeling of
Clear Skies shows that implementation of Clear Skies would virtually
eliminate chronic acidification in Adirondack lakes and improve other
areas of the Northeast and Southeast.
Question 4. Under Clear Skies Illinois may have difficulty
demonstrating attainment for the new 8-hour ozone and PM<INF>2.5</INF>
standards. Please provide an analysis of other source categories that
that can help Illinois meet these deadlines at a cost comparable to
power plant reductions?
Response. EPA's analysis shows that reductions from power plants
are currently the most cost-effective measures that can be taken to
demonstrate attainment for the new 8-hour ozone and PM<INF>2.5</INF>
standards. EPA does not have comprehensive cost-effectiveness
information for ozone precursors (NOx and VOC), direct
PM<INF>2.5</INF>, and PM<INF>2.5</INF> precursors (SO<INF>2</INF>, NOx,
VOC). Also, the cost-effectiveness of measures will vary from state to
state depending on measures already in place. Moreover, it is difficult
to rank measures by cost effectiveness ($/ton) when comparing direct
PM<INF>2.5</INF> sources with sources whose emissions form
PM<INF>2.5</INF> only after reactions occur in the atmosphere. However,
the local reduction measures listed below may help Illinois meet their
deadlines.
For the proposed CAIR rule, EPA conducted an analysis of available
local measures (see pp 46 to 56 of http://www.epa.gov/air/
interstateairquality/tsd0162.pdf). The following measures, taken from
this study, are examples of options states have the power to adopt as
part of Implementation Plans under current law and under S. 131:
Examples of direct PM measures:
1. Programs to require or encourage retrofit controls for on-road,
off-road, and stationary source diesel engines.
2. Programs to curtail use of woodstoves on high-PM days and to
encourage replacement of older high-emitting woodstoves with cleaner-
burning woodstoves.
3. Emissions limitations (for example RACT for major sources) for
industrial sources of PM<INF>2.5</INF>.
4. Regulations to ban open burning of refuse, and programs to
improve enforcement of bans which are already in place.
Examples of SO<INF>2</INF> reduction measures for categories other
than electric power generation:
5. Emissions limitations for coal-fired industrial boilers.
6. Greater emission reductions for petroleum refineries.
7. Emission limitations for sulfuric acid plants not currently
meeting NSPS standards.
Examples of NOx reduction measures for categories other than
electric power generation:
8. Emission limitations reflecting low NOx burners for industrial
boilers.
9. Requirements for emission reductions from cement kilns.
10. RACT measures for major sources of NOx.
Examples of VOC control measures:
11. Adopt more stringent limits for architectural and industrial
maintenance coatings.
12. Requirements to prevent emissions from underground storage
tanks at gasoline service stations.
______
Responses of James L. Connaughton to Additional Questions from
Senator Jeffords
Question 1. Please provide by February 16, 2005, for the
Committee's business meeting at which Clear Skies is expected to be
marked up, an Administration analysis of the substantive changes to
current laws, regulations and programs made by S. 131, if it were
enacted, including the potential impact on state authorities.
Response. S. 131 would not affect a state's ability to regulate
sources within its borders. The EPA does not have an analysis of all
the other substantive changes to current laws, regulations and programs
made by S. 131.
Question 2. Please provide a list of the ten most cost-effective
control options that states have the power and authority to adopt,
under current law and under S. 131, as part of a State Implementation
Plan to attain the ozone and PM<INF>2.5</INF> NAAQS by the deadlines
specified in the Clean Air Act.
Response. The EPA does not have comprehensive cost-effectiveness
information for ozone precursors (NOx and VOC), direct
PM<INF>2.5</INF>, and direct PM<INF>2.5</INF> precursors
(SO<INF>2</INF>, NOx, VOC). Also, the cost-effectiveness of measures
will vary from state to state depending on measures already in place.
Moreover, it is difficult to rank measures by cost effectiveness ($/
ton) when comparing direct PM<INF>2.5</INF> sources with sources whose
emissions form PM<INF>2.5</INF> only after reactions occur in the
atmosphere.
For the proposed CAIR rule, EPA conducted an analysis of available
local measures (see pp 46 to 56 of http://www.epa.gov/air/
interstateairquality/tsd0 162.pdf). The following measures, taken from
this study, are examples of options states have the power to adopt as
part of implementation plans under current law and under S. 131:
Examples of direct PM measures:
1. Programs to require or encourage retrofit controls for on-road,
off-road, and stationary source diesel engines.
2. Programs to curtail use of woodstoves on high-PM days and to
encourage replacement of older high-emitting woodstoves with cleaner-
burning woodstoves.
3. Emissions limitations (for example RACT for major sources) for
industrial sources of PM<INF>2.5</INF>.
Examples of SO<INF>2</INF> reduction measures for categories other
than electric power generation:
4. Emissions limitations for coal-fired industrial boilers.
5. Greater emission reductions for petroleum refineries.
6. Emission limitations for sulfuric acid plants not currently
meeting NSPS standards.
Examples of NOx reduction measures for categories other than
electric power generation:
7. Emission limitations reflecting low-NOx burners for industrial
boilers.
8. Requirements for emission reductions from cement kilns.
9. RACT measures for major sources of NOx.
Examples of VOC control measures:
10. Adopt more stringent limits for architectural and industrial
maintenance coatings.
11. Requirements to prevent emissions from underground storage
tanks at gasoline service stations.
Question 3. Please compare the difference in lives saved or
premature deaths avoided and the number of people living in
nonattainment areas as would occur between implementation of the Clean
Air Interstate Rule as proposed and S. 131 as introduced for the
following years: 2010, 2015, and 2020.
The Clean Air Act requirement that states meet the National Ambient
Air Quality Standards (NAAQS) is unchanged in Clear Skies legislation.
By providing national and regional reductions in pollution, Clear Skies
would assist local areas in reaching attainment of the air quality
standards. Cap and trade systems have also been shown to encourage
early reductions in emissions. Such reductions could assist areas with
near-term attainment dates. EPA modeling of the President's Clear Skies
legislation in 2003 shows dramatic attainment under the reductions. Of
over 350 monitored counties which had violations, the 2003 analysis
indicated that all but 38 counties would be in attainment by 2020
solely with operation of the Clear Skies Act of 2003 and state and
federal Clean Air Act programs already in existence. In addition, of
the counties that monitored nonattainment with the PM<INF>2.5</INF>
standard in the 2003 analysis, about 70% were expected to come into
attainment by 2010. Should areas not come into attainment with these
reductions from the power sector, they will still have to take
additional local steps. Depending on the area, the Clear Skies
reductions may make the burden on the need for additional local
controls lighter.
Question 4. If S. 131 were to be enacted as introduced, please
describe the responsibility that a designated ``transitional area''
would have to ensure that its pollution did not cause or contribute to
nonattainment in downwind areas, prior to and after such designation?
Response. For transitional non-attainment areas, S. 131 does not
change area specific requirements with respect to the need to address
transport. Under S. 131, all areas-attainment, non-attainment, and
transitional--would fall under the national and regional caps that are
intended to reduce power sector SO<INF>2</INF> and NOx contributions to
transport affecting PM<INF>2.5</INF> and ozone nonattainment. S. 131
would not eliminate the fundamental requirements that sections 110 and
126 impose on States regarding the need to address emissions from
sources other than affected units under S. 131 that contribute
significantly to nonattainment in downwind states.
Question 5. According to EPA, the Clean Power Act, S. 150, when
compared to the predecessor of S. 131, would prevent 13,000 fewer lives
from ending prematurely in 2010, and 18,000 in 2015. Is that still
accurate? How does S. 131 compare to S. 1844 or S. 2815 in avoiding
premature mortality?
Response. The Environmental Protection Agency (EPA) has not yet
analyzed S. 131 with respect to the impact on statistical life. EPA has
committed to provide this information under S. 131, S. 150, S. 485, S.
843 and the Manager's Amendment for 2010 and 2015.
However, as you know, the Clean Air Act requires that states meet
Federal air quality standards designed to protect human health. States
must meet the new national, health-based air quality standards for
ozone and PM<INF>2.5</INF> standards by requiring reductions from many
types of sources. Clear Skies legislation and other multi-pollutant
bills provide a Federal program to cut emissions from the power
generation sector. The reductions from the power sector are substantial
and cost-effective, so in many states, the reductions are large enough
to meet the air quality standards. Some areas may need to take
additional local actions. Depending on the area, the Clear Skies
reductions may make the burden lighter on the need for additional local
controls.
Question 6. Why does the Administration's Clear Skies proposal
result in an increase in greenhouse gas emissions from the power sector
by 13% or by 425 million tons in 2020 from today's levels, according to
EPA projections?
Response. Greenhouse gas emissions will increase from the power
sector over the next 15 years regardless of whether Clear Skies is
enacted or not, as a result of an expected 1.5-2.0% per year growth in
electricity demand to support a growing economy. Based on previous
analysis of the Clear Skies Act of 2003, EPA believes most of this
electricity demand will meet with new natural gas and coal-fired
generation plants, as fossil fuels are expected to remain the cheapest
sources of electricity for the country. This expected increase in
fossil-fired generation, and not Clear Skies, is responsible for the
projected increase in greenhouse gases in 2020.
The President's Clear Skies proposal does not specifically address
greenhouse gas emissions from the power sector, but it will encourage
cleaner, more efficient electric generation technologies that produce
fewer air pollutants and greenhouse gases than technologies in use
today. This approach is consistent with the President's overall aim to
reduce the greenhouse gas intensity of the U.S. economy by 18% by 2012
compared to 2002, as the first step in a global, long-term effort to
slow the growth of our greenhouse gas emissions and, as science
justifies, to stop and then reverse the growth of emissions. The Bush
Administration is carrying out a broad range of innovative domestic and
international policies and programs to achieve this goal, and work in
partnership with other developed and developing nations on a common
approach to addressing global climate change.
Question 7. A reasonable estimate of achieving attainment for the
PM-<INF>2.5</INF> standard in all areas by the statutory deadline of
2010 is avoiding 25,000 premature deaths, 4,000 to 7,000 thousand heart
attacks, and hundreds of thousands of asthma attacks each year. Could
you provide the Committee with an estimate of the total annual health
costs, including Medicare and Medicaid, associated with delaying
attainment of the national air quality standards in all currently
designated nonattainment areas by a year, and a separate estimate of
the impact of the specific delays in attainment such as provided for in
the designation of ``transitional areas'' in S. 131?
Response. We do not have an analysis that would allow us to provide
the requested estimates.
Question 8. The Energy Information Administration analysis (May
2004) from last year says that Clear Skies (S. 1844) never achieves a
70% reduction in emissions. Do you agree with this analysis? If not,
please describe the errors in that analysis that need correction.
Response. In the Energy Information Agency (EIA) May 2004 analysis
of S. 1844, emissions of nitrogen oxides (NOx) are projected to fall to
1.79 million tons by 2025, meeting the target called for in the bill.
Projected emissions of sulfur dioxide (SO<INF>2</INF>) and mercury (Hg)
did not meet the bill's emission cap targets by 2025. For
SO<INF>2</INF> this occurs in the analysis because power companies
reduce emissions early by banking 18.81 million tons before the first
phase of the program. Early reductions are one of the most significant
environmental benefits of a cap and trade program that allows banking.
The power sector would then use the banked allowances during the Clear
Skies compliance period. The bank balance is projected to fall to 12.33
million tons in 2017 and further to 5.11 million tons in 2025. In 2025,
SO<INF>2</INF> emissions are projected to be 3.62 million tons, 0.62
million tons above the 3.0 million ton cap that began in 2018. EIA
predicts that if the usage of banked allowances were to continue at the
rate seen between 2020 and 2025, the 5.11 million tons of banked
allowances remaining in 2025 would be exhausted in 2030 or 2031. It is
highly likely that the 3.0 million ton cap would be reached soon after
2030-31. This gradual decline of SO<INF>2</INF> emissions is consistent
with the implementation of the Acid Rain program. For Hg, the 15-ton
cap called for in 2018 and beyond was not achieved because power
generators are expected to reduce their mercury emissions prior to 2010
to take advantage of the early credit program. Between 2004 and 2009, a
total of 42 tons of early reductions occurs because of the early credit
program. Also, the $2,875.50 per ounce ($35,000 per pound) allowance
price safety valve is triggered. Hg emissions in 2025 are projected to
be 29 tons, 14 tons above the cap. If advancements in mercury control
technologies lower the costs of control, as expected, for most plants
and coals below the safety valve, then further reductions would occur.
Emissions banking results in early reductions as companies over-
control their emissions early in the program and bank allowances for
future use. Banked allowances can be used at any time so they provide
flexibility for companies to respond to growth and changing marketplace
conditions over time and, although banking can result in emissions
above the cap level in the later years of the compliance period,
because the cap is permanent banking does not result in an increase in
cumulative emissions. This is an important trade-off for early
reductions.
Question 9. As the Chairman of the Council on Environmental
Quality, you have the primary responsibility of ensuring the
implementation of the National Environmental Policy Act or NEPA. That
Act requires all Federal agencies to include in every recommendation or
report on proposals for legislation and other major Federal actions a
detailed statement for the public by the responsible official on
alternatives to the proposed action. What alternatives did the Federal
government present to the public when it sent up Clear Skies for
Congress' consideration in July 2002 and again in February 2003?
The President's Clear Skies legislation was not subject to NEPA.
NEPA requires Federal agencies to prepare an environmental impact
statement on ``every recommendation or report on proposals for
legislation or other major Federal actions significantly affecting the
quality of the human environment . . . .'' 42 U.S.C. Sec. 4332(2)(C).
The President is not a Federal agency. (See 40 C.F.R. Sec. 1508.12
``Federal agency' means all agencies of the Federal Government. It does
not mean the Congress, the Judiciary, or the President . . . .'') In
this particular case, Congress exempted federal agencies drafting
legislation for the President from NEPA under Section 7(c)(1) of the
Energy Supply and Environmental Coordination Act of 1973, 15 U.S.C.
Sec. 793(c)(1). (``No action taken under the Clean Air Act [42 U.S.C.A.
Sec. 7401 et seq.] shall be deemed a major Federal action significantly
affecting the quality of the human environment within the meaning of
the National Environmental Policy Act of 1969.'') Moreover, the
Constitution vests exclusively in the President the authority to submit
for the consideration of Congress such measures as he deems necessary
and expedient, and in aid of that function, the President may direct
that his subordinates in the executive branch provide him advice and
assistance.
Notwithstanding NEPA requirements, the Administration has provided
for the public and for Congress' consideration extensive modeling by
EPA and EIA on the President's Clear Skies bill and other multi-
pollutant alternatives such as Senator Carper's bill and your bill.
Administrator Johnson has also committed to provide further analysis of
S. 131, S. 150, S. 485, S. 843 and the Manager's Amendment per his
letter to Chairman Inhofe on May 26, 2005. Further, EPA proposed two
rulemakings, the Clean Air Interstate Rule and the Clean Air Mercury
Rule, which are similar to Clear Skies. These rulemakings included an
extensive and detailed technical analysis and lengthy public comment
periods.
EPA and EIA Analyses of Clear Skies and Multi-pollutant Legislation
<bullet> EIA December 2000 ``Analysis of Strategies for Reducing
Multiple Emissions from Power Plants: Sulfur Dioxide, Nitrogen Oxides,
and Carbon Dioxide''
http://www.eia.doe.gov/oiaf/servicerpt/powerplants/pdf/
sroiaf(2000)05.pdf
<bullet> EIA July 2001 (Congressman McIntosh request) ``Analysis of
Strategies for Reducing Multiple Emissions from Electric Power Plants:
Sulfur Dioxide, Nitrogen Oxides, Carbon Dioxide, and Mercury and a
Renewable Portfolio Standard''
www.eia.doe.gov/oiaf/servicerpt/epp/pdf/sroiaf(2001)03.pdf
<bullet> EIA Sept 2001 (Smith/Voinovich/Brownback request)
``Reducing Emissions of Sulfur Dioxide, Nitrogen Oxides, and Mercury
from Electrical Power Plants''
http://www.eia.doe.gov/oiaf/servicerpt/mepp/index.html
<bullet> EPA economic analysis of various multi-pollutant scenarios
requested by Smith/Voinovich/Brownback June 8, 2001 ``Analysis of
Multi-Emissions Proposals for the U.S. Electricity Sector''
http://www.epa.gov/air/meproposalsanalysis.pdf
<bullet> EPA economic analysis of various multi-pollutant scenarios
requested by Jeffords/Lieberman October 31, 2001 ``Economic Analysis of
a Multi-Emissions Strategy''
http://www.epa.gov/air/jeffordslieberm.pdf
<bullet> EIA economic analysis of the Jeffords bill October
2001``Analysis of Strategies for Reducing Multiple Emissions from Power
Plants: Sulfur Dioxide, Nitrogen Oxides, and Carbon Dioxide''
http://www.eia.doe.gov/oiaf/servicerpt/powerplants/index.html
<bullet> EPA comprehensive modeling to support Clear Skies
announcement Feb 2002 ``2002 Technical Support Package for Clear Skies;
Section G: Summary of the Models used for the Analysis''
http://www.epa.gov/air/clearskies/tech--sectiong.pdf
<bullet> EIA/EPA modeling of the Clear Skies mercury provisions
Spring-Fall 2003 Testimony before Senate EPW committee (S. Hrg. 108-
359) July 29, 2003
http://www.access.gpo.gov/congress/senate/senate09sh108.html
<bullet> EPA Clear Skies updated comprehensive analysis July 11th
2003 ``The Clear Skies Act Technical Support Package''
http://www.epa.gov/air/clearskies/03technical--packagetofc.pdf
<bullet> EIA economic analysis of Carper and Jeffords bills
September 2003 ``Analysis of S. 485, the Clear Skies Act of 2003, and
S. 843, the Clean Air Planning Act of 2003''
http://www.eia.doe.gov/env/utility.html
<bullet> EIA economic analysis of Inhofe-Voinovich Clear Skies
2003, Carper and Jeffords bills May 2004 ``Analysis of S. 1844, the
Clear Skies Act of 2003; S.843 the Clean Air Planning Act of 2003; and
S.336, the Clean Power Act of 2003''
http://www.eia.doe.gov/oiaf/servicerpt/csa/executive--summary.html
Question 10. My tri-partisan bill, the Clean Power Act of 2005,
which has 18 co-sponsors, achieves more net benefits in 2010 and 2020
than S. 131, as does Senator Carper's. Does the Administration support
maximizing net benefits?
Response. EPA's 2003 analysis shows that all three multi-pollutant
bills--Clear Skies legislation, the Clean Power Act (CPA), and the
Clean Air Planning Act (CAPA) would bring a significant number of areas
into attainment with the fine particle (PM<INF>2.5</INF>) standard when
compared with continued implementation of existing Clean Air Act
programs. In 2010, Clear Skies is projected to bring 42 additional
counties into attainment; the Clean Air Planning Act would bring 48
additional counties into attainment; and the Clean Power Act would
bring 53 additional counties into attainment. EPA's analysis of
nitrogen oxide (NOx) emissions and ozone shows that there would be no
incremental ozone attainment benefits from the Jeffords bill and the
Carper bill over those projected for Clear Skies in 2010 or 2020.
However, as you know, this does not mean that the three bills would
result in different levels of air quality: the Clean Air Act requires
that states meet Federal air quality standards. States must meet the
new national, health-based air quality standards for ozone and
PM<INF>2.5</INF> standards by requiring reductions from many types of
sources. Clear Skies legislation and other multi-pollutant bills
provide a Federal program to cut emissions from the power generation
sector. The reductions from the power sector are substantial and cost-
effective, so in many states, the reductions are large enough to meet
the air quality standards. Some areas may need to take additional local
actions. Depending on the area, the Clear Skies reductions may make the
burden on the need for additional local controls lighter.
The different approaches in the Jeffords bill and the Carper bill
would, however, cost Americans significantly more than Clear Skies. The
Carper bill program costs are 53% higher in 2010 ($6.6 billion) and 57%
higher in 2020 ($9.9 billion) than Clear Skies. On a net present value
basis, for the period 2005 to 2030, the cumulative cost of Senator
Carper's bill is projected to be $82.7 billion--57% more than the net
present value of the cumulative cost of the Clear Skies legislation for
the same period ($52.5 billion). The projected cost differences are
even greater for the Jeffords' bill. Relative to Clear Skies, CPA's
program costs are projected to be almost 300% higher in 2010 ($16.5
billion). In addition, pursuing sharp reductions in CO<INF>2</INF> from
the electricity generating. sector alone would cause a dramatic shift
from coal to natural gas. The Jeffords bill is projected to increase
electricity prices 39% in 2010 and 50% in 2015, whereas Clear Skies is
projected to have only a small impact on electricity prices.
The compliance dates and control levels of CPA and CAPA will also
increase the cost to American consumers. In constructing the Clear
Skies Act, we were conscious of not extending beyond the limits of
available labor and other construction resources even though Clear
Skies requires very substantial increases in installation of advanced
pollution controls. CPA and CAPA require even more control technology
installations in a very short time frame, which could hinder
electricity reliability.
Question 11. Under S. 131, what is likely to be the maximum number
of major sources that could obtain an exemption from the air toxics
requirements of the current Clean Air Act to use maximum available
control technology? Considering those facilities, what is the
approximate number of tons of HAPs currently emitted by those
facilities and how much more would their annual emissions under S. 131
be than under current applicable maximum achievable control technology
requirements of section 112 of the Clean Air Act for those same
sources?
Response. EPA has not analyzed S. 131 with respect to the number or
type of facilities that might take advantage of opting into the trading
program. EPA does not have a database nor does it have a modeling tool
that could predict which facilities would voluntarily opt-in.
Question 12. Serious criticism has been leveled against the
Administration for failing to follow an open and transparent process as
required by EPA guidance and Executive Orders in the development and
setting of the mercury reduction goal in Clear Skies and in the
proposed mercury rule. Did you at any time instruct or otherwise
encourage any CEQ or any EPA employees or appointees to disregard EPA
guidance on rulemakings, or the directives in any of the Executive
Orders, including no. 12866 on regulatory review and no. 13045 on
children's health?
Response. The EPA finalized a rule to control mercury emissions
from the power sector on March 15 and we have followed guidelines for a
proper rulemaking. Criticism of the rulemaking was addressed by
Assistant Administrator Jeff Holmstead in his response letter to the
EPA Office of Inspector General. It can be viewed at http://
www.epa.gov/oig,/reports/2005/20050203-2005-P-00003.pdf
Question 13. You indicated that the cost to utilities to comply
with the Clear Skies legislation would be approximately $52 billion.
What is expected to be the cumulative value of the allowances allocated
to utilities in the same time period that they spend this $52 billion?
What is expected to be the cumulative value of allowances to non-
utilities participating in the program compared to their costs of
compliance?
Response. It is important to understand that the estimated cost of
compliance with Clear Skies 2003 only includes the capital, operations
and maintenance, and fuel use costs. We do not assume any costs
associated with the use of allowances. This is because most of the
value of the allowances is given to power companies. This cost does not
have a significant impact in the early years of the program because the
2003 legislation included an auction that was phased in. The power
companies are then required to surrender allowances as part of
compliance; thus on net, allowances do not represent either a cost or
an expense. This could be different for individual power companies.
Question 14. Please describe the effect, if any, that enactment of
S. 131 would have on ongoing legal actions related to EPA regulations,
programs, enforcement, or guidance, including New Source Review, New
Source Performance Standards, and Hazardous Air Pollutants.
Response. We have not analyzed the effect of enactment of S. 131 on
ongoing legal actions.
Question 15. What is the cumulative total of the President's budget
requests, including FY06, for the FutureGen program and how much has
been appropriated for this program to date?
Response. FutureGen is a Presidential initiative to build the
world's first integrated sequestration and hydrogen production research
power plant. The $1 billion dollar project is intended to create the
world's first zero-emissions fossil fuel plant. When operational, the
prototype will be the cleanest fossil fuel fired power plant in the
world. The FY 2004 budget included $9 million to initiate FutureGen,
and the FY 2005 budget included another $18 million for FutureGen
consistent with the funding profile contained in the Department of
Energy's March 2004 Report to Congress. The President's FY 2006 Budget
requests another $18 million to continue FutureGen, as well as ensures
that the $257 million in unexpended funds available from prior years'
clean coal projects are available to fund future clean coal activities,
beginning with FutureGen. The total Federal contribution to FutureGen
is expected to be $500 million in direct funding for FutureGen, and
another $120 million from DOE's carbon sequestration programs.
Question 16. An Associated Press report from December cited you and
Secretary Leavitt as saying that President Bush had made a decision to
finalize the Clean Air Interstate Rule by mid-March 2005, unless
Congress passes the Administration's proposed Clear Skies Act by then.
Did the President tell you or anyone else in the White House that he
had made a decision to issue the Clean Air Interstate Rule by March
unless Congress enacts Clear Skies by such date? Is it still the
Administration's intention to promulgate the final rule by that date?
Response. The EPA finalized the Clean Air Interstate Rule and the
Clean Air Mercury Rule by March 15, 2005.
Question 17. Has the Agency or the Administration analyzed setting
more stringent caps than those in S. 131 that were as cost-effective or
had greater net benefits? For instance, moving the SO<INF>2</INF>
emissions cap to 3 or 2 million tons in 2012 instead of 2018. If so,
please provide these analyses.
Response. Extensive modeling has been done on the President's Clear
Skies bill, Senator Carper's bill and Senator Jeffords bills since 2001
by EPA and EIA and all of these analyses are publicly available:
<bullet> EIA economic assessments of various multi-pollutant
scenarios, December 2000 and July 2001 (Congressman McIntosh request),
September 2001 (Smith/Voinovich/Brownback request)
<bullet> EPA economic analysis of various multi-pollutant scenarios
(Smith/Voinovich/Brownback request), 2001
<bullet> EPA economic analysis of various multi-pollutant scenarios
(Jeffords/Lieberman request), 2001
<bullet> EIA economic analysis of the Jeffords bill, October 2001
<bullet> EPA comprehensive modeling to support Clear Skies,
February 2002
<bullet> EPA costibenefits assessment of the Jeffords bill, June
2002
<bullet> EPA Clear Skies updated comprehensive analysis, July 2003
<bullet> EIA economic analysis of Carper and Jeffords bills,
September 2003
<bullet> EPA cost/benefit assessment of Carper and Jeffords bills,
October 2003
<bullet> EIA economic analysis of Inhofe-Voinovich Clear Skies
2003, Carper and Jeffords bills May 2004
Question 18. S. 131 eliminates the National Acid Precipitation
Assessment Program and that program's reporting requirement. As you may
know, section 103(j) of the Clean Air Act requires the Administration
to submit a report to Congress every two years showing acid deposition
trends and every four years recommending the reduction in deposition
rates that must be achieved in order to prevent adverse ecological
effects. The last report was in 1998. Please provide by March 1, 2005,
the status of these reports and any working drafts of the four-year
report that are available.
Response. The NAPAP Report is currently undergoing interagency
review.
______
Responses of James L. Connaughton to Additional Questions from
Senator Murkowski
Question 1. Mr. Connaughton, we in Alaska are lucky to have avoided
many of the air pollution problems evident in more populous states. In
fact, it has been suggested that much of the pollution that can be
found in our state is transported from overseas. To what degree is
pollution from other countries an issue and what can we do about it?
Response. It is well established that the growing economies of East
Asia are a large and growing source of pollution, and that these
pollutants can be transported over large distances in the atmosphere.
The Bush Administration is partnering with these nations, such as China
and India, to develop and deploy cleaner, more efficient energy
technologies that will provide more energy with fewer emissions that
can be transported across the Pacific to North America.
Question 2. There has been a lot of discussion in the media about
whether human-caused CO<INF>2</INF> is aggravating global warming. We
are seeing events in Alaska that may be temperature-related, such as
changes in ice cover in the Arctic Ocean, changes in the flora and
fauna of different areas, insect infestations, and erosion, among
others. Other than the general category of ``global warming,'' what
other credible explanations exist for these events?
Response. The IPCC notes that ``even without changes in external
forcing, the climate may vary naturally, because, in a system of
components with very different response times and non-linear
interactions, the components are never in equilibrium and are
constantly varying.'' An example of such internal climate variation is
the El Nino and La Nina-Southern Oscillation (ENSO), resulting from the
interaction between atmosphere and ocean in the tropical Pacific.
Of importance to Alaska is the Pacific Decadal Oscillation (PDO),
which is a natural oscillation of sea surface temperature in the North
Pacific with a 20-30 year cycle. It has been linked to major changes in
the productivity of northeast Pacific marine ecosystems, prevailing
atmospheric winds and the average ``storm track'' location which
affects erosion patterns, and the temperature of water entering the
Arctic Ocean through the Bering Strait which affects the extent and
thickness of Arctic sea ice. These natural cycles are being intensely
studied through the Climate Change Science Program, and improved
understanding of these cycles will yield improved climate forecasts on
seasonal-to-decadal time scales.
A sense of the natural variability of Arctic temperature can be
obtained through an examination of the following diagram, which is
based on data from the Global Historical Climatology Network, and is
available from GISS.
[GRAPHIC] [TIFF OMITTED] T2206.158
This figure shows that today's temperatures were comparable to
those in the late 1930s. The highest annual temperature for the area
between 64<SUP>+</SUP> N and 90<SUP>+</SUP> N occurred in 1938, while
the 2000-2004 had the highest 5-year period.
Question 3. Are you familiar with the papers that have raised
questions about the ``hockey stick'' graph used by the IPCC? In your
view, what effect do these questions have on the overall issue of the
relationship between anthropogenic CO<INF>2</INF> and climate change?
Response. These questions are the focus of one of the ``synthesis
and assessment reports'' that will be published as part of the Climate
Change Science Program. The ongoing debate of reconstructing climate
over the past 1000-2000 years underscores the need to invest in new
knowledge on natural climate variability, including developing and
deploying comprehensive and sustained global observations of the
climate system through programs such as the U.S.-led Global Earth
Observation System of Systems (GEOSS) international partnership.
Question 4. I recently had a conversation in which a colleague
suggested that we should act to reduce CO<INF>2</INF> and commented
that ``other countries'' are already doing it. Russia and the EU were
specifically mentioned. Are other countries around the world actually
taking the same level of action on CO<INF>2</INF> that is recommended
by U.S. proponents of Kyoto? Is the estimated effect on their economies
the same as it would be on ours?
Response. While the EU as a whole had 2002 emissions that were 2.5%
below their 1990 levels, some individual EU members, such as Spain,
Portugal, and Ireland had emissions increase at a faster rate that the
U.S. over that same period of time. Many of the emissions reductions
counted by the EU in their aggregate total come from improvements of
efficiency within high-emitting industries in Germany, and from a
switch (for other policy reasons) from coal to natural gas within the
U.K. In the case of Russia, a significant decline in economic activity
since 1990 has resulted in significant emissions reductions.
Question 5. It has been suggested that stronger controls--as
suggested in other proposed bills--would harm the economy by causing a
larger and more rapid shift to alternative fuels such as natural gas.
But I represent a state with abundant natural gas that we would like to
market. Why would an immediate, largescale shift to natural gas NOT be
in our best interest?
Response. As documented in recent studies from the National
Petroleum Council and the American Gas Foundation, we currently do not
have enough natural gas supply within the Lower 48 and Alaska to meet
our current needs. This has led to consistent upward price pressure on
natural gas, augmented only by a modest increase in domestic production
and in imports of LNG. These increased natural gas prices have already
affected industries that rely on natural gas as a feedstock, such as
chemicals, pharmaceuticals, and plastics. Even with access to the
abundant natural gas supplies in Alaska and no change in emissions
controls, we would be facing significantly higher future prices for
natural gas.
Unlike competing proposals that would result in shifts of capital
investments from coal to natural gas, the Clear Skies legislation is
designed to ensure that electricity generators are able to obtain
financing and perform installation of the necessary pollution control
equipment cost effectively. Clear Skies will ensure that our economy
continues to grow and create new jobs, while other proposals would
result in exports of jobs and revenue overseas to where natural gas is
cheaper. More stable domestic markets for natural gas are in the long
term interests of the nation and the state of Alaska.
Responses of James L. Connaughton to Additional Questions from
Senator Vitter
Question 1. Is there a basis in the CAA to require that an area
implement requirements that would not be applicable under the 8-hour
classification and are not part of an approved SIP? Isn't it true that
anti-backsliding under the CAA involves holding in place the
requirements found in a SIP or Applicable Implementation Plan and
applying the requirements of the 8-hour standard?
Response. The Clean Air Act does not expressly address the
interplay between obligations that applied for a standard and the new
obligations that arise when that standard has been revised. In the
preamble to the proposed and final rule to implement the 8-hour ozone
standard, EPA explained that in designing a transition from the 1-hour
ozone standard to the 8-hour standard, we looked to various CAA
provisions concerning anti-backsliding to ascertain Congressional
intent. These provisions included section 110(1), section 193, subpart
2 of part D of Title I together with the classification process under
section 181, and section 172(e). See the April 30, 2004 (69 FR 23951 at
23972) and the June 2, 2003 proposal (68 FR 32819) for a detailed
discussion of the rationale. EPA concluded that Congress intended 1-
hour ozone nonattainment areas to remain obligated to adopt and
implement those control obligations mandated by Congress for the area's
1-hour classification. Thus, under our anti-backsliding regulation,
areas must continue to implement control obligations that applied for
purposes of the 1-hour standard and to adopt any control obligations
that applied but that the area had not yet adopted. States may modify
or remove control obligations in the SIP that were not mandated by
Congress so long as the State demonstrates that removal or modification
will not interfere with attainment or maintenance of the 8-hour ozone
standard or interfere with any other applicable requirement.
Question 2. If the City of Baton Rouge continues to be classified
as severe under the 1-hour standard, major sources of VOCs in the
nonattainment area would be subject to the imposition of penalty fees
if the area fails to attain the standard by the attainment date. Have
the major sources in any other city in the United States ever been
required to pay fees under this standard?
Response. The CAA Section 185 fees provision applies to ozone
nonattainment areas classified as severe or extreme when such an area
fails to attain the standard by its attainment date. Since severe and
extreme areas have attainment dates of November 15, 2005 or later, no
such area has yet failed to attain the 1-hour standard by its 1-hour
attainment date. The Phase I Rule to implement the 8-hour ozone NAAQS
(69 FR 23951) provides that once the 1-hour standard is revoked in June
2005, EPA will no longer make findings of whether areas attain the 1-
hour standard and also provides that the section 185 fee provisions
will no longer apply for purposes of failing to attain the 1-hour
standard. On June 29, 2004, EPA received a Petition for Reconsideration
that requested that the Agency reconsider, among other issues, the
section 185 fee issue because EPA had not proposed that these
provisions would no longer apply once the 1-hour standard is revoked.
EPA granted the petition and issued a proposal seeking comment on the
portion of the Phase I Rule that addressed the continued applicability
of the section 185 fees (February 3, 2005; 70 FR 5593). This proposal
reiterated EPA's belief that once the 1-hour standard is revoked, the
section 185 fee provisions of the CAA should no longer apply for
failure to attain the 1-hour standard because there will be no
``applicable'' 1-hour attainment date. EPA plans to take final action
on this issue by mid-May 2005.
Question 3. On January 25, 2005, I requested that CEQ furnish my
office with a detailed analysis of how S. 131, ``the Clear Skies Act of
2005'' would impact the State of Louisiana (and Baton Rouge in
particular) as compared to existing law. When can we expect to receive
that information?
Response. The EPA has not analyzed the impact of S. 131 on states;
however, EPA has provided detailed analysis of state-by-state effects
of the Administration's Clear Skies legislation. The Louisiana analysis
can be found at http://www.epa.gov/air/clearskies/state/la.html.
__________
Statement of Brian Houseal, Executive Director, Adirondack Council
Good morning. Thank you, Mr. Chairman and Committee members, for
the opportunity to testify before you today. I am Brian Houseal, the
Executive Director of the Adirondack Council.
The Adirondack Council is a privately funded, not-for-profit
organization dedicated to ensuring the ecological integrity and wild
character of the Adirondack Park. This year, the Adirondack Council and
our 18,000 members are celebrating our 30th anniversary of protecting
the Adirondack Park. We have been fighting to stop acid rain for 25 of
those 30 years.
New York's 6-million acre Adirondack Park is the largest park of
any kind in the lower 48 states. It is nearly three times the size of
Yellowstone National Park and roughly the size of Vermont. It contains
the largest assemblage of old growth forest east of the Mississippi
River. The Park contains over 1,500 miles of rivers and 30,000 miles of
streams and brooks. It also has 46 mountain peaks of over 4,000 feet
tall. The nearly three million acres of public land has been protected
by our state constitution as ``Forever Wild'' for over 100 years, with
one million acres being classified as Wilderness.
The Adirondack Park has suffered some of the greatest damage from
acid rain due to its geology and geography. Prevailing winds bring
power plant emissions from outside New York into the Adirondacks where
it is deposited in many forms including acid rain, acid snow and acid
fog. The acid deposition then leaches nutrients out of the soil
affecting the growth of vegetation. On many mountaintops, 80 percent of
the lush red spruce and balsam fir forests have turned brown and died
as the soil has been poisoned. Sugar maples and the maple syrup
industry are also profoundly affected by acid rain.
Acid rain has reduced the pH of some of our lakes to the same level
as vinegar. Approximately one quarter of the Park's 2,800 lakes and
ponds are biologically dead, meaning they can no longer sustain their
native plant and animal life. Those lakes and additional waterways are
further impacted seasonally by ``spring shock,'' a phenomenon that
occurs when the winter snowpack melts and sends a high level of
nitrogen into the water.
Haze obscures the view for hikers who climb to the tops of the
state's highest peaks. Whiteface Mountain, a place where the air should
be clean, crisp, and healthy, is out of compliance for national air
quality standards. Without Federal action, our Park will not recover
and our ecosystems will continue to be unhealthy and unproductive.
Acid rain affects all parts of the state, not just the Adirondack
Park. A recent study found that many locations where historic marble,
limestone and sandstone buildings are being eaten away by acid rain are
in New York State. Albany, Buffalo, New York City, Rochester, and
Syracuse all made the list of the top 20 areas (``The Effect of Acid
Rain/Budget Cuts on Helping Our Community Treasures.'' DOC
Communications, July 31, 2003). Our cities and our heritage can no
longer withstand the effects of this pollution.
In addition, grape growers from Long Island to the Finger Lakes
note that their harvests are diminished in vitality each year as the
nutrients needed to grow vines and fruit are depleted from the soil by
polluted rain and snow. The Long Island Pine Barren, the Catskill Park,
the Taconic Mountain Ridge near Massachusetts and the Hudson Highlands
are all suffering extensive environmental damage from decades of acid
rain.
The damage that sulfur and nitrogen pollution causes is far from a
regional issue. It is an issue of national, even international
importance. Excess nitrogen in waters and in soils--``nitrogen
saturation''--can be found in the Northeast and in West Virginia's
Allegheny Mountains, Tennessee's Great Smoky Mountains, Colorado's
Front Range of the Rockies and even as far west as the San Bernardino
and San Gabriel Mountains of California. Studies conducted in the
Shenendoah National Park show that fish species richness, population
density, condition, age distribution, size and survival rate were all
reduced in streams no longer able to neutralize acidity.
Estuaries along the entire east coast suffer from airborne inputs
of nitrogen that can make up nearly 40 percent of the total nitrogen
loaded into their systems. In estuary systems such as Long Island
Sound, Narragansett Bay, Chesapeake Bay and Tampa Bay in Florida,
nitrogen-based pollution is overloading the water with nutrients. This
causes ``eutrophication''--an overabundance of algae. When algae dies
and decays, it depletes the water of precious oxygen needed by all
aquatic animals. This condition is known as hypoxia. These blooms are
associated with fin fish kills, shellfish kills and human illness.
Acid rain is also falling on the District of Columbia. Acid rain is
eating away at the marble of the Capitol building and many of the great
monuments on the mall. The Lincoln memorial corrodes more every year.
So it is with buildings and monuments throughout the Capitol. The
monuments to the fallen on the great battle sites of the Civil War,
Gettysburg and Vicksburg, lose their inscriptions and carved features
from the acid bath they endure each rainy day. The Statute of Liberty
simply slowly melts away, day by day. This is why the fight to stop
acid rain has been joined by many of the nation's prestigious
organizations dedicated to historic preservation.
Although the 1990 Clean Air Act Amendments have begun to lessen the
impacts of acid rain, the problem has clearly not been solved. Some
early data has shown a slight improvement in the acid neutralizing
capacity (ANC) of a handful of our lakes. This evidence, along with a
litany of reports from government agencies and non-governmental
organizations indicates that the 1990 amendments targeted the right
pollutants to combat acid rain, but did not reduce the pollution levels
sufficiently.
Today, we are here to make three requests as you consider new
legislation in order to help solve the acid rain problem. First, action
to stop acid rain must be taken this year. Second, it must be as good
as or better than the Environmental Protection Agency's Clean Air
Interstate Rule (CAIR). Finally, no individual state's current
enforcement mechanisms should be eroded.
The Adirondack Council has been actively calling for further
reductions in the emissions that cause acid rain for almost a decade
since the EPA first reported in 1995 that further reductions beyond the
1990 Clean Air Act Amendments would be necessary. In 1997, we
encouraged then-New York Senators Moynihan and D'Amato to introduce
legislation that would stop the damage and start the recovery process.
That roughly translated into an additional 50 percent reduction in
sulfur emissions below the phase 2 levels and a 70 percent cut in
nitrogen from 1990 levels, including a year-round cap-and-trade
program. This bill was later sponsored by New York's entire
Congressional delegation and reintroduced several times through 2002
when it was sponsored by our current New York Senators Clinton and
Schumer.
The Council has testified before this committee twice before on the
problem of acid rain since the Moynihan bill was first introduced. It
has now been 10 years since EPA's 1995 report detailing the need for
additional cuts to help places like the Adirondacks recover. Something
must be done this year to stop acid rain. Studies have shown that
approximately 25,000 U.S. citizens die annually because of power plant
pollution. In essence, the lack of action by Congress since the first
time that the Adirondack Council testified here over 5 years ago has
resulted in roughly 133,000 lives being needlessly cut short. We need
progress this year--you cannot come home empty-handed yet again. Action
is long overdue. While I am honored to testify before you and this
committee, I would be even more honored if the problem was solved this
year and I did not have to return again to testify.
In the late 1990s the Moynihan proposal was considered neither
politically nor economically feasible. However, we now know that this
level of reductions is possible on both counts. For several years now,
the Moynihan bill, once considered a radical notion, has become the
``floor'' that other proposals would have to exceed. Numerous members
of this committee have introduced or soon will introduce legislation,
all of which go beyond what Senator Moynihan first suggested.
Today, we have a new ``floor'' in the form of the Clean Air
Interstate Rule (CAIR). CAIR represents a reduction of 65 percent of
nitrogen emissions and 70 percent of sulfur emissions respectively from
current levels in 29 eastern states plus the District of Columbia. This
rule, proposed by the Environmental Protection Agency in December 2003,
is scheduled to be finalized in March. Any legislation that is passed
must buildupon the floor established by CAIR. In order to achieve this,
Clear Skies would have to be amended to move the compliance dates up
from 2018 to 2015. We believe this is possible as it would follow the
model of the 10-year phase-in of the Clean Air Act Amendments of 1990.
Even lower emissions caps and compliance dates would serve to speed up
the recovery process of our lakes, streams and mountains. Lowering the
cap on sulfur dioxide further would also produce a significant co-
benefit in terms of reducing mercury emissions.
We would like to see deeper cuts for mercury, and do not agree with
the proposed trading scheme due to the demonstrated neurotoxicity of
mercury in both human and wildlife populations.
This bill does not include reductions in carbon dioxide one of the
major ingredients of global climate change. While we are very concerned
about the serious environmental impacts that are already underway, we
do not think that progress on ending acid rain should be delayed while
carbon is further debated. We support Governor Pataki's twelve-state
Regional Greenhouse Gas Initiative (RGGI), and the McCain-Lieberman
bill, which we are hopeful the Senate will act on soon.
While we support CAIR, we would like to see legislation to ensure
more legal certainty in the cap levels and timelines. We have witnessed
numerous regulations tied up in the court system for many years.
Another benefit of legislation is that reports to Congress on the
progress of the program, along with funding necessary to expand the
chemical and ecological monitoring of sensitive ecosystems like the
Adirondacks, can be mandated. We would encourage you to consider
strengthening these provisions of the legislation as it is marked up in
the near future.
We would also urge the committee members to carefully consider
whether or not it is necessary to make other changes to the existing
Clean Air Act. While we understand the need for regulatory certainty
for industry compliance, changing programs such as regional haze,
Section 126 petitions, and rigorous monitoring from continuous
emissions monitoring systems (CEMS) should be closely examined.
Including new requirements such as early reduction credits (ERC's),
opt-ins and safety valve provisions could also have a negative impact
on the effectiveness of the successful acid rain program started by EPA
and the Clean Air Markets Division fifteen years ago.
Enforcement tools currently used by the states to clean up their
air should not be diminished in any way. A prime example of the
usefulness of these enforcement tools came last month from New York's
Governor George Pataki and Attorney General Eliot Spitzer, two men who
have done a great deal to protect the Adirondack Park from acid rain.
They announced an agreement with the current and former owners of some
of New York's largest and dirtiest coal-fired power plants to settle
potential violations of the Clean Air Act's New Source Review (NSR)
requirements. These settlements will result in the largest reductions
in air pollution ever attained through a settlement in New York.
Last week, our Governor and Governor Schwarzenegger of California
sent you a letter stating, in part, ``These states, like ours, will
need all the tools available under the Act to craft effective
strategies to meet the standards,'' [referring to 8-hour ozone and
particulate matter (PM<INF>2.5</INF>) standards.] We wholeheartedly
agree with their position, which was also echoed by Massachusetts
Governor Mitt Romney.
The Adirondack Council first testified before this committee on the
need to address acid rain in October 1999. On that same day, Governor
Pataki announced that he would enact the toughest acid rain regulations
in the country. After several court challenges, those rules went into
effect on October first of 2004 with year-round nitrogen controls, and
a month ago, further sulfur reductions. New York's regulations mirror
the Moynihan legislation. New York has now taken exhaustive measures to
clean up its own plants. We are now asking the rest of the country to
do the same.
Thank you again for allowing me to testify here today.
______
Response of Brian L. Houseal to Additional Question from Senator Inhofe
Question. Do you believe that if the CAIR rule is delayed from
litigation that it will achieve SO<INF>2</INF> reductions equal to
Clear Skies?
Response. If CAIR is the subject of litigation, we hope that it
will be implemented without a stay, in order to start the reductions as
scheduled while the specific issues related to the litigation are
resolved. Previous court decisions related to EPA Clean Air Act
regulations have proceeded in this manner.
As the CAIR rule is only a regional program and Clear Skies is
national, the approximately 70 percent reductions in both for sulfur
and nitrogen are similar in nature. The overall emissions reductions in
Clear Skies may be greater over time, insofar as it covers the entire
country.
In order to ensure the eastern states see the benefits of the
proposed reductions, east and west regions could be established for
sulfur similar to the nitrogen program in Clear Skies.
However, early reduction credits and opt-ins may have the
unintended consequence of eroding the goal of 70 percent reductions in
the Clear Skies bill.
______
Response of Brian L. Houseal to Additional Question
from Senator Jeffords
Question. Do you support S. 131 as introduced?
Response. We support the intent of the legislation to reduce the
pollution that causes acid rain and we also support the mechanism by
which this is achieved, the successful cap-and-trade program. As S. 131
will be the vehicle for clean air legislation in the Senate this year,
we respectfully request that the bill be improved before it is passed
by the committee. These improvements include: making the reductions of
sulfur dioxide and nitrogen oxides deeper and sooner; increasing the
ratio of avoided emissions necessary for power plants to receive an
allowance through the early reduction credit (ERC) program; and,
determining if it is necessary to make any changes to new source review
(NSR), Section 126 petitions, and continuous emissions monitoring
systems (CEMS) requirements. We also urge you to also make deeper cuts
for mercury but do not support the trading of mercury as it is a
neurotoxin and has localized effects on both human and wildlife
populations.
______
Responses of Brian L. Houseal to Additional Questions
from Senator Lautenberg
Question 1. The Acid Rain Program's cap and trade approach has been
very successful. Would this bill's cap and trade system be as
protective of public health as that program?
Response. This bill uses the successful Acid Rain Program cap and
trade system administered by the EPA's Clean Air Markets Division over
the past 15 years for sulfur dioxide and replicates it for nitrogen
oxides. Public health will be improved by mandating deep cuts in these
emissions as soon as possible. The faster and deeper the cuts, the
better the results will be for public health and the environment.
Question 2. As someone who came out of the corporate world, I can
appreciate the importance of making sound investments in new
technologies. Is the cap and trade system in Clear Skies as cost-
effective at reducing pollution as other approaches?
Response. Yes, the 1990 Clean Air Act amendments provided clear
results. EPA's acid rain program has nearly 100 percent compliance and
costs for industry to comply were a fraction of the original estimates.
In addition, the program is run by only a handful of EPA staff.
The reductions mandated by the amendments were easily obtained by
the industry ahead of schedule. In fact, that is why new legislation is
necessary. Industry over-complied with the requirements and now have a
``bank'' of excess allowances to use. Further cuts are necessary to
provide the health and ecological benefits anticipated in 1990.
New source review (NSR) can be an effective tool in terms of
reducing power plant emission at individual plants. However, this is a
long process and produces uncertain outcomes. Cap-and-trade is more
certain and provides reductions for an entire airshed, which can help
the Adirondacks recover from acid rain. Both cap-and-trade and NSR
should be available as resources to clean up the air.
Question 3. Clear Skies proposes giving many industries a free pass
when it comes to reducing hazardous air pollutants--some of them known
to cause cancer. What impacts do you foresee from this dramatic retreat
from Clean Air Act protections?
Response. The Adirondack Council claims no expertise in this area.
It is our opinion that current Clean Air Act standards should not be
weakened and the trading of mercury should not be allowed.
Question 4. My entire home State of New Jersey was recently
declared ``out of attainment'' for nitrogen oxides, which help form
ozone and damage lungs--especially of kids. Do you believe this bill
will improve New Jersey's air quality?
Response. Insofar as this bill includes year-round controls on
nitrogen oxides, New Jersey's air quality should improve. A 70 percent
reduction in both sulfur and nitrogen should help New Jersey meet its
attainment goals. We do not believe that any one proposal is a ``silver
bullet,'' but think that cap-and-trade programs will limit interstate
pollution, allowing individual states to take further actions on their
own to meet the necessary requirements.
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Responses by John Walke to Additional Questions from Senator Inhofe
Question 1. Please disclose a listing of the number and caption of
all cases filed by the Natural Resources Defense Council as plaintiff
or as one of other plaintiffs against the U.S. Environmental Protection
Agency seeking any action or relief under any section of the Air
Pollution Prevention and Control Act, (``Clean Air Act,'' 42 U.S.C. s.
7401 et seq.) since January 1, 1985.
Question 2. Please disclose a listing of the number and caption of
all cases against the U.S. Environmental Protection Agency wherein the
Natural Resources Defense Council is a named party since January 1,
1985.
Response. The Natural Resources Defense Council's (``NRDC'')
mission is ``to safeguard the Earth: its people, its plants and animals
and the natural systems on which all life depends,'' ``to restore the
integrity of the elements that sustain life,'' and ``to defend
endangered natural places.'' \1\ Toward those ends, we pursue
litigation challenging Environmental Protection Agency (``EPA'')
rulemakings and other agency activities when the agency violates
environmental or public health statutes or otherwise fails to perform
its mission of ``protect[ing] human health and the environment.'' \2\
---------------------------------------------------------------------------
\1\ NRDC: About Us,http://www.nrdc.org/about/default.asp.
\2\ About EPA, http://www.epa.gov/epahome/aboutepa.htm#mission.
---------------------------------------------------------------------------
The first table below identifies cases since 1985 in which NRDC has
challenged an EPA rulemaking or other action. The table does not
include attorneys fees cases (of which there have only been a few) nor
cases in which NRDC intervened in support of the agency. (For our
methodology in compiling this table, please see footnote 3.)
Following this table of NRDC cases is a comparable table of cases
since 1985 in which industry has challenged an EPA action. In virtually
every such case, industry has sought not to assist EPA in performing
its mission of protecting public health and the environment but instead
to thwart and delay the agency's efforts. Due to time constraints, the
list is significantly underinclusive, not least because it excludes (1)
district court cases that were never appealed, and (2) the many cases--
including a significant number of NRDC's case--in which an industry
party did not file the original complaint but did subsequently
intervene against the agency. Despite that shortcoming, the list's
relative length (339 industry-filed cases, versus 92 cases in which
NRDC has opposed the agency) is quite telling. (For our methodology in
compiling the table of industry cases, please see footnote 4.)
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Question 3. Please disclose a listing of the number of consent
agreements involving the U.S. Environmental Protection Agency to which
the Natural Resources Defense Council has been a party since January 1,
1985 including a listing of all parties involved and the terms of each
agreement.
Response. Consistent with NRDC's mission, described above, the
organization occasionally enters into consent decrees with EPA. These
judicially enforceable agreements limit litigation delays and assist
EPA in protecting public health and the environment in a timely and
mutually acceptable manner.
NRDC does not have a data base identifying all of the consent
decrees to which the organization has been a party. The Department of
Justice does, however, publish notices of EPA consent decrees in the
Federal Register. In addition, when EPA initiates a rulemaking pursuant
to a consent decree, it identifies the decree in the rulemaking notice
published in the Federal Register. Together, those two categories of
notices should identify the terms of, and parties to, each consent
decree between EPA and NRDC since the beginning of 1985. For the
convenience of the Committee, we have searched Westlaw's Federal
Register data base for all post-January 1, 1985 notices containing the
terms ``Natural Resources Defense Council,'' ``Environmental Protection
Agency,'' and ``consent decree.'' Due to time constraints, we have not
further winnowed this list. It is therefore significantly
overinclusive, as it includes all decrees that mention EPA and NRDC,
whether or not the agency and the organization were parties to the
decree.
------------------------------------------------------------------------
------------------------------------------------------------------------
November 24, 2004 69 FR 68444-01.......... February 26, 1997 62 FR 8726-
01
September 8, 2004 69 FR 54476-01.......... February 21, 1997 62 FR 8012-
01
September 2, 2004 69 FR 53705-01.......... January 8, 1997 62 FR 1150-
01
August 23, 2004 69 FR 51892-01............ December 16, 1996 61 FR
66086-01
July 9, 2004 69 FR 41576-01............... December 9, 1996 61 FR 64876-
03
June 2, 2004 69 FR 31104-01............... November 6, 1996 61 FR 57518-
01
May 14, 2004 69 FR 26942-01............... October 7, 1996 61 FR 52582-
01
April 26, 2004 69 FR 22472-01............. August 29, 1996 61 FR 45778-
01
December 31, 2003 68 FR 75515-01.......... August 28, 1996 61 FR 44619-
01
November 7, 2003 68 FR 63085-02........... August 28, 1996 61 FR 44396-
01
August 6, 2003 68 FR 46684-01............. August 12, 1996 61 FR 41786-
01
May 13, 2003 68 FR 25686-01............... June 20, 1996 61 FR 31736-01
April 25, 2003 68 FR 21002-01............. March 1, 1996 61 FR 8174-01
February 12, 2003 68 FR 7176-01........... February 7, 1996 61 FR 4600-
01
December 27, 2002 67 FR 79020-02.......... December 19, 1995 60 FR
65438-01
December 9, 2002 EPA 67 FR 74232-01....... December 19, 1995 60 FR
65387-01
November 29, 2002 67 FR 71165-01.......... November 28, 1995 60 FR
59658-01
November 20, 2002 67 FR 70070-03.......... August 3, 1995 60 FR 39804-
01
October 17, 2002 67 FR 64216-01........... June 29, 1995 60 FR 33926-01
September 12, 2002 67 FR 57872-01......... May 30, 1995 60 FR 28210-01
August 27, 2002 67 FR 55012-01............ May 2, 1995 60 FR 21592-01
June 24, 2002 67 FR 42644-01.............. February 27, 1995 60 FR
10654-01
June 18, 2002 67 FR 41417-01.............. February 17, 1995 60 FR 9428-
01
March 26, 2002 67 FR 13826-01............. February 9, 1995 60 FR 7824-
01
February 25, 2002 67 FR 8582-01........... January 27, 1995 60 FR 5464-
01
February 4, 2002 67 FR 5170-01............ January 27, 1995 60 FR 5389-
01
February 4, 2002 67 FR 5152-01............ January 24, 1995 60 FR 4712-
01
January 23, 2002 67 FR 3370-01............ September 22, 1994 59 FR
48664-01
December 18, 2001 66 FR 65256-01.......... September 20, 1994 59 FR
48228-01
December 11, 2001 66 FR 63921-01.......... September 20, 1994 59 FR
48198-01
December 3, 2001 66 FR 61268-01........... September 19, 1994 59 FR
47982-01
November 14, 2001 66 FR 57160-01.......... August 26, 1994 59 FR 44234-
01
October 26, 2001 66 FR 54143-01........... April 22, 1994 59 FR 19402-
01
September 7, 2001 66 FR 46754-01.......... April 14, 1994 59 FR 17850-
01
July 20, 2001 66 FR 37955-01.............. December 17, 1993 58 FR
66078-01
July 12, 2001 66 FR 36542-01.............. October 29, 1993 58 FR 58168-
01
July 11, 2001 66 FR 36370-01.............. October 27, 1993 58 FR 57898-
01
June 8, 2001 66 FR 30902-01............... September 28, 1993 58 FR
50638-01
May 15, 2001 66 FR 26914-01............... June 21, 1993 58 FR 33813-03
February 26, 2001 66 FR 11638-01.......... April 16, 1993 58 FR 20802-
01
January 22, 2001 66 FR 6850-01............ April 7, 1993 58 FR 18011-01
January 12, 2001 66 FR 2960-01............ March 4, 1993 58 FR 12454-01
January 3, 2001 66 FR 666-01.............. December 4, 1992 57 FR 57534-
01
January 3, 2001 66 FR 634-01.............. September 24, 1992 57 FR
44210-03
January 3, 2001 66 FR 586-01.............. September 8, 1992 57 FR
41000-01
January 3, 2001 66 FR 424-01.............. August 18, 1992 57 FR 37194-
01
December 27, 2000 65 FR 81964-01.......... July 21, 1992 57 FR 32250-01
December 22, 2000 65 FR 81242-01.......... May 7, 1992 57 FR 19748-01
November 30, 2000 65 FR 73453-01.......... April 10, 1992 57 FR 12560-
01
September 14, 2000 65 FR 55522-02......... March 19, 1991 56 FR 11513-
01
August 31, 2000 65 FR 53008-02............ February 11, 1991 56 FR 5488-
01
July 13, 2000 65 FR 43586-01.............. January 30, 1991 56 FR 3526-
01
July 12, 2000 65 FR 43002-01.............. August 8, 1990 55 FR 32268-
01
June 16, 2000 65 FR 37783-01.............. March 27, 1990 55 FR 11183-
01
May 1, 2000 65 FR 25325-01................ March 8, 1990 55 FR 8666-01
April 11, 2000 65 FR 19440-01............. January 2, 1990 55 FR 80-01
February 24, 2000 65 FR 9322-01........... December 20, 1989 54 FR
52251-01
January 27, 2000 65 FR 4360-01............ December 20, 1989 54 FR
52209-01
January 19, 2000 65 FR 3008-01............ June 2, 1989 54 FR 23868-01
December 21, 1999 64 FR 71453-01.......... March 29, 1989 54 FR 12926-
01
November 22, 1999 64 FR 64023-01.......... October 17, 1988 53 FR 40562-
01
August 23, 1999 64 FR 46012-01............ May 24, 1988 53 FR 18764-01
August 18, 1999 64 FR 45072-01............ April 26, 1988 53 FR 14926-
01
June 7, 1999 64 FR 30276-02............... November 24, 1987 52 FR
45044-01
May 25, 1999 64 FR 28249-01............... November 5, 1987 52 FR 42522-
01
March 30, 1999 64 FR 15158-01............. June 22, 1987 52 FR 23477-02
February 3, 1999 64 FR 5488-01............ December 4, 1986 51 FR 43814-
01
January 13, 1999 64 FR 2280-01............ October 9, 1986 51 FR 36368-
01
November 9, 1998 63 FR 61340-01........... September 30, 1986 51 FR
34904-01
October 21, 1998 63 FR 56292-01........... August 22, 1986 51 FR 30166-
01
September 21, 1998 63 FR 50388-01......... August 4, 1986 51 FR 27956-
01
September 4, 1998 63 FR 47285-01.......... June 12, 1986 51 FR 21454-01
April 15, 1998 63 FR 18504-01............. June 4, 1986 51 FR 20426-01
April 3, 1998 63 FR 16500-01.............. January 17, 1986 51 FR 2492-
01
February 6, 1998 63 FR 6426-01............ November 14, 1985 50 FR
47142-01
February 6, 1998 63 FR 6392-01............ October 30, 1985 50 FR 45212-
01
January 9, 1998 63 FR 1536-01............. October 4, 1985 50 FR 40672-
01
January 7, 1998 63 FR 846-01.............. September 20, 1985 50 FR
38276-01
December 17, 1997 62 FR 66182-01.......... August 23, 1985 50 FR 34242-
01
October 29, 1997 62 FR 58141-02........... May 9, 1985 50 FR 19664-01
October 20, 1997 62 FR 54453-02........... February 7, 1985 50 FR 5237-
01
------------------------------------------------------------------------
______
Responses by John Walke to Additional Questions from Senator Jeffords
Question 1. What affect will the allocation system in S. 131 have
on the development and enhancement of new and existing utility
investments in cleaner and more efficient electricity generation?
Response. The allocation system in S. 131 will have a negative
impact on the development and enhancement of new and existing utility
investments in cleaner and more efficient electricity generation,
primarily due to the structuring of the allowance baselines provisions
and the allocation of allowances for new sources. The legislation
represents not only a transfer of wealth to the power sector and away
from the public, in terms of higher health costs and other social
costs. But even within the power sector, the legislation imposes
relatively more of the burden of cleaner air policies on the most
efficient, the newest and the lowest emitting sources.
Along similar lines, the legislation misses an excellent
opportunity to encourage more renewable sources of energy, since it
does not appear to provide any allocation for renewable power.
Given time constraints in responding to the Committee's questions,
I will be pleased to provide you with additional information in
response to this question if you wish.
Question 2. What are the problems that S. 131 creates with respect
to the integrity of the existing cap and trade system?
Response. As detailed in my written testimony, S. 131 departs in a
negative fashion from the basic role played by the acid rain cap-and-
trade program in the 1990 Amendments. Moreover, the bill does damage
even to that role by eliminating or undermining the integrity and key
accountability measures of the acid rain trading program, while
introducing loopholes and destabilizing elements that Title IV does not
contain. Indeed, S. 131 strips away safeguards and accountability
measures that are integral to the effectiveness, enforceability and
reliability of a national cap-and-trade program. The overall result is
that the proponents of the bill cannot claim the successes of the acid
rain program as a justification for their bill. To the contrary, the
history and success of the acid rain trading program necessitate
opposition to S. 131.
First, S. 131 repeals or weakens an array of statutory safeguards
protecting local and downwind communities from harmful smog and soot
pollution (such as new source review (``NSR''), the section 126
interstate air pollution program, new source performance standards
(NSPS), and best available retrofit technology (BART), as well as toxic
air pollution (Maximum Achievable Control Technology (MACT) standards).
When Congress adopted the Clean Air Act amendments in 1990, it either
added, retained, or strengthened each of these safeguards. The
safeguards have helped to protect communities against local pollution
increases that have occurred even as the acid rain program's national
SO<INF>2</INF> cap has been met and its NOx provisions have been
implemented.
Second, S. 131 abandons critical features of the acid rain trading
program that have been integral to the integrity, accountability, and
therefore success of that program. Inadequate monitoring requirements
in S. 131 render its trading programs for SO<INF>2</INF>, NOx and
mercury unverifiable and untrustworthy.
The opt-in and ``early reduction'' provisions in the bill damage
the integrity of the trading program and effectively authorize
emissions above the caps. In particular, voluntary participation and
self-selection associated with the opt-in provisions will ensure gaming
and worsen emissions performance. Moreover, inflated pollution
baselines for opt-in units produce bogus allowances that do not reflect
actual emissions reductions--again, effectively raising the caps above
the levels claimed by the Administration.
In addition, the bill allows unlimited ``shutdown'' credits,
creating bogus allowances that do not reflect actual emissions
reductions. This is because the bill's limitation on shutdown credits
is substantially weaker than the corresponding provision in the current
acid rain program. These shutdown credit provisions, when combined with
the inflated baseline provisions, allow for older sources to run hard
for 3 years, opt in, then later shut down and create an enormous stream
of added allowable emissions that can be transferred to any other unit
in the cap programs--again, effectively raising the caps above touted
levels.
Finally, the bill allows mercury ``early reduction'' credits to be
generated by opt-in units without limit, and even above the cap
levels--effectively increasing the mercury caps. As detailed in my
written testimony, Section 475 of the legislation allows the generation
of early reduction credits for mercury emissions:
<bullet> Above cap levels, effectively raising the phase I and
phase II mercury caps;
<bullet> Without any limitation on total mercury early reduction
credits, rendering indeterminate the actual reductions achieved from
the power sector or under the bill;
<bullet> Already required by state laws or regulations, obviating
the benefits of those state mercury reductions, allowing windfall sales
of mercury allowances from reductions already required by state law,
and permitting other affected units to maintain high mercury levels or
even increase those levels from allowance purchases; and
<bullet> From incidental mercury reductions occurring anyway as a
result of SO<INF>2</INF> or NOx reductions, allowing discredited
``anyway tons'' to undermine the integrity of allowances and, again,
raise the mercury cap levels.
The effect of all this is that S. 131 re-introduces a host of
loopholes, accounting gimmicks, free-rider problems and accountability
defects that rightfully caused trading approaches to be held in low
regard until the acid rain program corrected these deficiencies in the
1990 Clean Air Act amendments. This bill strips the acid rain trading
program model of the very integrity that has justified public
confidence in the program, and ensures that S. 131 would not be as
protective of public health as the acid rain program.
Question 3. What, if any, comments would you care to make in
response to the points made by the Chairman of the Council on
Environmental Quality in his testimony?
Response. As a general matter, neither the Council on Environmental
Quality, Environmental Protection Agency, nor any other administration
entity has provided analysis or data to the Congress, or the American
people, to support the claim that S. 131 would protect Americans in a
stronger and timelier fashion than enforcement of the current Clean Air
Act. Nor have the sponsors of the legislation or other Members of
Congress provided that information. Finally, none of the witnesses
appearing before the Committee or Subcommittee in favor of S. 131 has
provided that support either.
NRDC's written testimony provides a detailed and comprehensive
analysis of the many flaws in S. 131, flaws that would make the bill
less protective of public health and America's lands and waterway, by
weakening and delaying the Clean Air Act's protections. The
administration has declined thus far to provide a comparable public
analysis for the benefit of the American people, despite the EPA's role
as guardian of the Clean Air Act and enforcer of its public health
protections.
Regrettably, the frustrating reality is that the administration has
not provided analysis about the negative impacts of S. 131 on existing
Clean Air Act safeguards; the failure of the bill to deliver healthy
air to tens of millions of Americans by current statutory deadlines,
within the next 5 years; the multitude of new harmful exemptions and
other weaknesses added even since the introduction of the already lax
Clear Skies bill (S. 485) in 2003; and the bill's introduction of
loopholes and infirmities that damage the integrity of the acid rain
trading program model. Accordingly, there is little administration
analysis to which one could respond.
With that caveat noted, I will address one central point made by
Chairman Connaughton during his oral testimony. It is not correct that
S. 131 will reduce emissions of sulfur oxides, nitrogen oxides and
mercury by 70 percent in two phases. As detailed in my written
testimony, S. 131 contains a host of provisions that ensure that the
three caps tied to 70 percent emissions reductions will not be met, if
industry simply acts in ways that the bill allows. This is primarily
due to the opt-in provisions and early reduction provisions in the
legislation. But it is also true because of provisions such as the
exemption from the mercury cap for affected units emitting less than 50
pounds of mercury annually. As discussed in my written and oral
testimony, this exemption ensures that the bill would not reduce power
plant mercury pollution 70 percent from today's levels of approximately
48 tons nationwide.
______
Responses by John Walke to Additional Questions from Senator Lautenberg
Question 1. The Acid Rain program's cap and trade approach has been
very successful. Would this bill's cap and trade system be as
protective of public health as that program?
Response. No. As detailed in my written testimony, S. 131 departs
in a negative fashion from the basic role played by the acid rain cap-
and-trade program in the 1990 Amendments. Moreover, the bill does
damage even to that role by eliminating or undermining the integrity
and key accountability measures of the acid rain trading program, while
introducing loopholes and destabilizing elements that Title IV does not
contain. Indeed, S. 131 strips away safeguards and accountability
measures that are integral to the effectiveness, enforceability and
reliability of a national cap-and-trade program. The overall result is
that the proponents of the bill cannot claim the successes of the acid
rain program as a justification for their bill. To the contrary, the
history and success of the acid rain trading program necessitate
opposition to S. 131.
First, S. 131 repeals or weakens an array of statutory safeguards
protecting local and downwind communities from harmful smog and soot
pollution (such as new source review (``NSR''), the section 126
interstate air pollution program, new source performance standards
(NSPS), and best available retrofit technology (BART), as well as toxic
air pollution (Maximum Achievable Control Technology (MACT) standards).
When Congress adopted the Clean Air Act amendments in 1990, it either
added, retained, or strengthened each of these safeguards. The
safeguards have helped to protect communities against local pollution
increases that have occurred even as the acid rain program's national
SO<INF>2</INF> cap has been met and its NOx provisions have been
implemented.
Second, S. 131 abandons critical features of the acid rain trading
program that have been integral to the integrity, accountability, and
therefore success of that program. Inadequate monitoring requirements
in S. 131 render its trading programs for SO<INF>2</INF>, NOx and
mercury unverifiable and untrustworthy.
The opt-in and ``early reduction'' provisions in the bill damage
the integrity of the trading program and effectively authorize
emissions above the caps. In particular, voluntary participation and
self-selection associated with the opt-in provisions will ensure gaming
and worsen emissions performance. Moreover, inflated pollution
baselines for opt-in units produce bogus allowances that do not reflect
actual emissions reductions--again, effectively raising the caps above
the levels claimed by the Administration.
In addition, the bill allows unlimited ``shutdown'' credits,
creating bogus allowances that do not reflect actual emissions
reductions. This is because the bill's limitation on shutdown credits
is substantially weaker than the corresponding provision in the current
acid rain program. These shutdown credit provisions, when combined with
the inflated baseline provisions, allow for older sources to run hard
for 3 years, opt in, then later shut down and create an enormous stream
of added allowable emissions that can be transferred to any other unit
in the cap programs--again, effectively raising the caps above touted
levels.
Finally, the bill allows mercury ``early reduction'' credits to be
generated by opt-in units without limit, and even above the cap
levels--effectively increasing the mercury caps. As detailed in my
written testimony, Section 475 of the legislation allows the generation
of early reduction credits for mercury emissions:
<bullet> Above cap levels, effectively raising the phase I and
phase II mercury caps;
<bullet> Without any limitation on total mercury early reduction
credits, rendering indeterminate the actual reductions achieved from
the power sector or under the bill;
<bullet> Already required by state laws or regulations, obviating
the benefits of those state mercury reductions, allowing windfall sales
of mercury allowances from reductions already required by state law,
and permitting other affected units to maintain high mercury levels or
even increase those levels from allowance purchases; and
<bullet> From incidental mercury reductions occurring anyway as a
result of SO<INF>2</INF> or NOx reductions, allowing discredited
``anyway tons'' to undermine the integrity of allowances and, again,
raise the mercury cap levels.
The effect of all this is that S. 131 re-introduces a host of
loopholes, accounting gimmicks, free-rider problems and accountability
defects that rightfully caused trading approaches to be held in low
regard until the acid rain program corrected these deficiencies in the
1990 Clean Air Act amendments. This bill strips the acid rain trading
program model of the very integrity that has justified public
confidence in the program, and ensures that S. 131 would not be as
protective of public health as the acid rain program.
Question 2. As someone who came out of the corporate world, I can
appreciate the importance of making sound investments in technologies.
Is the cap and trade system in Clear Skies as cost-effective at
reducing pollution as other approaches?
Response. No. The pollution cap levels and schedules in the Clear
Skies legislation are not as cost-effective at reducing pollution as
other approaches for two fundamental reasons--the weak control levels
and extended control schedules. Moreover, the legislation is less cost-
effective than other approaches, including the current Clean Air Act,
using two different measures of cost-effectiveness.
First, the bill stops well short of requiring feasible pollution
control measures for power plants, allowing utilities to pollute well
in excess of feasible control levels and well in excess of levels
necessary to achieve timely public health standards. This is a
consequence of the legislation's weak caps, i.e., the pollution levels
at which the bill allows the electric utility sector to continue to
pollute for the next two decades and beyond. This is discussed at
greater length below.
Second, in addition to refusing to impose feasible control measures
on power plants, the legislation adopts unjustifiably extended
timelines for requiring pollution cuts from power plants. This means
that SO<INF>2</INF> and NOx emissions reductions would be too little,
too late to provide meaningful assistance to states required to meet
public health standards for 8-hour ozone and PM<INF>2.5</INF> by 2009
and 2010, respectively. States would be forced to require more
expensive, less feasible reductions from other industries and sources,
and some would find it very difficult to meet deadlines to provide
healthy air for their citizens.
In effect, by taking more cost-effective pollution reductions from
power plants off the table--by granting them more drawn out compliance
deadlines and weaker pollution reduction obligations--the legislation
saddles states, localities, other industries, the transportation sector
and, ultimately, the public with less cost-effective options for
meeting essential public health objectives.
This outcome concerns the first measure of cost-effectiveness that
the legislation fails--the measure of relative feasibility. By
foregoing more cost-effective and feasible pollution reductions from
power plants, the consequence is to impose less cost-effective, less
feasible control obligations about other sources of air pollution.
To better understand the question of cost-effective emissions
reductions from power plants, and to compare those to less cost-
effective emissions reductions from other industries and sources to
which states and localities would be forced to resort, I am attaching
to these responses comments filed by a coalition of public health
organizations on EPA's Proposed Rule to Reduce Interstate Transport of
Fine Particulate Matter and Ozone (Interstate Air Quality Rule), 69
Fed. Reg. 4566 (January 30, 2004).\1\
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\1\ Clean Air Task Force et al., ``Comments on Proposed Rule to
Reduce Interstate Transport of Fine Particulate Matter and Ozone
(Interstate Air Quality Rule), 69 Fed. Reg. 4566 (January 30, 2004),''
(``IAQR Comments''), April 2, 2004.
---------------------------------------------------------------------------
As explained in those comments, in its 1998 NOx SIP Call
rulemaking, EPA determined an appropriate level for reductions of
regional NOx emissions by examining the cost-effectiveness of feasible
control measures.\2\ EPA determined that ``highly cost-effective''
controls were those with a cost-effectiveness (measured in terms of
average cost per ton of pollutant removed) equivalent to or slightly
greater than that of controls that had already been implemented or
planned, while achieving the greatest feasible emissions reductions.
---------------------------------------------------------------------------
\2\ NOx SIP Call ,63 Fed. Reg. at 57399-402.
---------------------------------------------------------------------------
Specifically, EPA determined in the NOx SIP Call that ``highly
cost-effective'' controls were those that ``achieve the greatest
feasible emissions reduction but still cost no more than $2,000 per ton
of ozone season NOx emissions removed (in 1990 dollars), on average.''
\3\ EPA determined the $2,000/ton average cost figure based on ``NOx
emissions controls that are available and of comparable cost to other
recently undertaken or planned NOx measures.''\4\
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\3\ 63 Fed. Reg. at 57399.
\4\ 63 Fed. Reg. at 57400.
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The proposed Interstate Air Quality Rule's (now called Clean Air
Interstate Rule) establishes eastern regional caps for SO<INF>2</INF>
and NOx that approximate Clear Skies' eastern regional caps for these
pollutants. And the proposed CAIR caps result in SO<INF>2</INF> control
levels costing between $700 and $800 per ton on average, and NOx
control levels costing between &700 and $800 per ton on average.\5\
Accordingly, there is reason to believe that the average control costs
by utilities for SO<INF>2</INF> and NOx reductions under Clear Skies
would be comparable.
---------------------------------------------------------------------------
\5\ See IAQR Comments at 11-12.
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But control levels for NOx and SO<INF>2</INF> with average costs in
the range of $700-$800 clearly do not achieve the ``greatest feasible
emissions reductions.'' These cost figures are substantially less than
what EPA determined to be highly cost effective 7 years ago;
substantially less than the average cost effectiveness of other NOx
control measures examined by the agency 7 years ago (63 Fed. Reg. at
57400, Table 1); substantially less than the average cost of other
control measures identified by EPA in its CAIR proposal (69 Fed. Reg.
at 4613-4615); and even more substantially less than numerous other
measures that public health groups identified and that states have
either adopted or are proposing to adopt.\6\
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\6\ In fact, EPA states: ``These reductions are among the lowest
cost EPA has ever observed in NOx control actions . . .'' 69 Fed. Reg.
at 4614. Such reductions clearly come nowhere near to representing the
``greatest feasible emission reduction'' as required by controlling
Clean Air Act precedent and policy.
---------------------------------------------------------------------------
If the Clear Skies legislation were based upon the ``highly cost-
effective'' criteria in EPA's NOx SIP Call rulemaking--an approach
ratified by the United States Court of Appeals for the D.C. Circuit--
that approach would lead to a determination that ``highly cost-
effective'' controls are those that achieve the ``greatest feasible
emission reductions'' \7\ but cost on average up to $2,000 per ton of
SO<INF>2</INF> removed and up to $2,500 per ton of NOx removed.\8\ This
would yield regional annual control caps for power plants of 1.84
million tons for SO<INF>2</INF> and 1.04 million tons for NOx, well
within these limits for highly cost-effective controls. Based on the
relative percentage of national 2002 power plant NOx and SO<INF>2</INF>
emissions that were within the IAQR, the recommended regional caps are
equivalent to a 2.0 million ton national SO<INF>2</INF> cap, and a 1.25
million ton national NOx cap--well below the lax SO<INF>2</INF> and NOx
pollution caps reflected in S. 131.\9\
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\7\ NOx SIP Call, 63 Fed. Reg. at 57399: ``[T]he required emission
levels . . . were determined based on the application of NOx controls
that achieve the greatest feasible emissions reductions while still
falling within a cost-per-ton-reduced range that EPA considers to be
highly cost-effective.''
\8\ Unless otherwise noted, all cost figures are in 1999$.
\9\ Section V of the IAQR Comments contains a Clean Air Task Force
analysis of the costs and benefits of a similar alternate control
scenario.
---------------------------------------------------------------------------
In effect, the Clear Skies bill short changes emissions reductions
from power plants that should be considered the greatest feasible
emissions reductions, based upon s refusal to require greater but
eminently feasible SO<INF>2</INF> and NOx reductions to better protect
public health.
The other side of the feasibility coin in the zero sum calculation
of air pollution controls is the question of the cost-effectiveness of
other state and local control measures--beyond power plant controls.
The failure of the Clear Skies legislation to require the greatest
feasible emissions reductions that are highly cost effective would
force state and local jurisdictions to resort to control measures with
average costs far in excess of the $700-800 average cost per ton of
SO<INF>2</INF> and NOx reductions. The following representative sample
of control measure costs demonstrates the degree to which S. 131 would
saddle state and local air pollution control agencies with far greater
cost impositions on local businesses, while still failing to ensure
that attainment of public health standards would be achieved as
expeditiously as practicable:
TEXAS EMISSION REDUCTION PLAN (TERP)--INCENTIVES GRANTS
FOR REDUCING EMISSIONS\10\
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\10\ Texas Natural Resource Conservation Commission. Texas Emission
Reduction Plan (TERP)--Incentives Grants for Reducing Emissions.
Projects Selected for Funding to Date: http://www.tnrcc.state.tx.us/
oprd/sips/grants.html.
---------------------------------------------------------------------------
<bullet> The Texas Council of Environmental Quality's Emissions
Reduction Inventive Grants Program provides grants to eligible projects
in nonattainment areas and affected counties. The grants offset the
incremental costs associated with reducing emissions of NOx from high-
emitting internal combustion sources.
<bullet> Cost-effectiveness of a project, other than a
demonstration project, may cost up to $13,000 per ton of NOx emissions
reduced in the eligible counties for which the project is propose.
Infrastructure activities are excluded from the $13,000 per ton cost-
effectiveness limit.
------------------------------------------------------------------------
Projected Project Cost Per
Ton NOx Reduction
------------------------------------------------------------------------
Grants Projects FY 2002-2003.............. Majority of projects $6,000
to $12,118.
Eligible Application Recommended for Majority of projects $11,000
Funding FY 2004--1st Round. to $12,998.
------------------------------------------------------------------------
WASHINGTON DC METRO AREA--MWCOG\11\
---------------------------------------------------------------------------
\11\ Metropolitan Washington Council of Governments. http://
www.mwcog.org/uploads/committee-documents/z1ZZXg20040217144350.pdf.
---------------------------------------------------------------------------
ANALYSIS OF POTENTIAL REASONABLY AVAILABLE CONTROL MEASURES (``RACM''):
AREA, NON-ROAD, AND MOBILE SOURCES
<bullet> The cost to an affected area of any alternative emissions
reduction program to offset internal combustion stationary sources
significantly exceeds the cost to the stationary source of the
equivalent emissions reduction. The potential emissions reduction of
RACM projects may not exceed that of high-emitting stationary sources.
<bullet> Projects Determined to be ``Economically Feasible'' or
``Possible'' by MWCOG:
------------------------------------------------------------------------
Cost ($/ton
Source Category Measure NOx)
------------------------------------------------------------------------
Area Sources:
L1.............................. Control Locomotive $1,250
Idling.
G6.............................. Preference for low- 7,238
emissions lawn &
garden equipment.
S4.............................. Reduce idling by 3,155
airport GSE.
Mobile Sources:
B6.............................. Bicycle Racks in DC. 9,017
E3.............................. Telecommuting 7,279
Centers.
E10............................. Government Actions 5,030
(ozone action day
similar to snow
day).
F3.............................. Permit Right Turn on 1,245
Red.
O4.............................. Employer Outreach 3,542
(Private Sector).
O6.............................. Mass Marketing 2,393
Campaign.
T1.............................. Transit 8,480
Prioritization.
------------------------------------------------------------------------
Finally, EPA has reviewed potential applications of local controls
of PM precursor emissions to determine the extent to which such
controls could solve the ozone and PM<INF>2.5</INF> nonattainment
problems.\12\ As part of that analysis, EPA listed a variety of control
measures, and in some cases, their costs, that it believed would be
appropriate to model for their air quality impact.\13\ In the 290
county study, EPA listed a variety of local NOx control measures with
costs ranging from $150/ton to $10,000/ton NOx removed.\14\ The
emission-weighted average cost per ton of the measures for which costs
are listed is about $2,545/ton, consistent with the position that
regional NOx controls with average costs below $2,500 per ton be
considered highly cost effective.
---------------------------------------------------------------------------
\12\ 69 Fed. Reg. at 4596-99; EPA's Technical Support Document for
the IAQR Air Quality Modeling Analyses (January 2004) (``AQMTSD'') at
46-56, App. I-L.
\13\ Id.
\14\ In EPA's study of local measures in the IAQR, it listed
several local SO<INF>2</INF> reduction measures, but did not provide
costs for any of them.
---------------------------------------------------------------------------
A second measure of cost-effectiveness that the legislation also
fails is one concerning net social benefits. As explained at pages 13-
14 of my February 2, 2005 written testimony, without conceding the
fundamental concern with expressing human deaths and adverse health
effects in monetary terms, as of 2020, the public health costs of the
Administration's bill exceed those of EPA's original proposal by $61
billion per year.\15\ Moreover, the EPA proposal's public health
savings come at the relatively small annual price of $3.5 billion in
implementation expenses.\16\ In other words, the Administration is
promoting a bill that--as of 2020--costs the public $15 for every $1
saved by industry. Plainly, much more protective pollution caps would
still provide net social benefits and would be more cost-effective for
society than the lax and delayed pollution reduction levels in S. 131.
---------------------------------------------------------------------------
\15\ U.S. EPA, ``Comprehensive Approach to Clean Power: Straw
Proposal and Supporting Analysis for Interagency Discussion'' (Aug. 3,
2001), available at http://www.catf.us/publications/other/
EPA_Straw_Proposal.pdf.
\16\ Id.
Question 3. Clear Skies proposes giving many industries a free pass
when it comes to reducing hazardous air pollutants--some of them known
to cause cancer. What impacts do you foresee from this drastic retreat
from Clean Air Act protections?
Response. The Clear Skies legislation marks the first time in the
35-year history of the Clean Air Act that a bill in Congress has sought
to allow industrial polluters to escape air toxics regulations already
adopted by the Environmental Protection Agency, here Maximum Achievable
Control Technology (MACT) standards. Worse, the legislation does so
without substituting any mandatory regulation for the air toxics
pollution (except mercury) that the bill allows to escape regulation.
Finally, for the first time in the Act's history, a Congressional bill
would allow weak reductions in criteria air pollutants (SO<INF>2</INF>
or NOx) to serve as the basis for emitting higher levels of
uncontrolled hazardous air pollution, including probable carcinogens.
And S. 131 does so for not just one industrial source category, but
four:
<bullet> Industrial, Commercial, and Institutional Boilers and
Process Heaters (69 Fed. Reg. 55217);
<bullet> Plywood and Composite Wood Products (69 Fed. Reg. 45943);
<bullet> Reciprocating Internal Combustion Engines (69 Fed. Reg.
33473); and
<bullet> Stationary Combustion Turbines (69 Fed. Reg. 10511).\17\
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\17\ S. 131, Sec. 407(j)(1)(A).
---------------------------------------------------------------------------
From these four industrial source categories, the Administration's
bill exempts as many as 69,000 industrial units from the Clean Air
Act's mandate of deep emissions reductions by 2008.\18\ The result is
to override the removal of as many as 74,000 tons-per-year of toxic and
even carcinogenic chemicals from the air we breathe.\19\
---------------------------------------------------------------------------
\18\ Id.
\19\ See http://www.epa.gov/ttn/atw/rice/ricefactsheetfnl.pdf; /
boiler/bolersfactsheetfnl.pdf; /plypart/plywoodfactfinal.pdf; turbine/
turbine_fs.pdf.
---------------------------------------------------------------------------
The following information is taken from EPA fact sheets issued with
the promulgation of these four rules. These fact sheets provide EPA
estimates of the number of current and future industrial units covered
by the rules, as well as the nature and amount of hazardous air
pollution (HAP) regulated. Critically, these fact sheets also provide
estimates of the health benefits that EPA assigned to these
rulemakings. Depending upon the extent of participation by industrial
units that avail themselves of the air toxics regulatory relief in S.
131, virtually all of these health benefits could be lost, and
virtually all of the toxic air pollution emitted by these tens of
thousands of industrial units could escape regulation.
industrial, commercial, and institutional boilers and process heaters
EPA estimates that 58,000 existing boilers and process heaters, and
800 new boilers and process heaters built each year over the next 5
years will be subject to this final rule.
This rule reduces emissions of a number of toxic air pollutants,
including hydrogen chloride, manganese, lead, arsenic and mercury, by
more than 58,000 tons annually in the fifth year after promulgation.
This rule also reduces emissions of sulfur dioxide and particulate
matter in conjunction with the toxic air pollutant reductions. This
rule may result in 2,270 fewer premature deaths, 5,100 fewer cases of
chronic bronchitis, reduced hospital admissions for pneumonia, asthma
and cardiovascular problems. It may also result in 150,000 fewer
respiratory incidences in children, lost work days, and restricted
activity days for people with respiratory problems.
http://www.epa.gov/ttn/atw/boiler/boilersfactsheetfnl.pdf
PLYWOOD AND COMPOSITE WOOD PRODUCTS
EPA estimates that about 220 plywood and composite wood products
facilities are major sources of air toxics.
The rule will reduce air toxics from the manufacturing of Plywood
and Composite Wood Products (PCWP) by between 6,600 and 11,000 tons per
year, or a 35 to 58 percent decrease from 1997 levels. The final rule
will also reduce volatile organic compound emissions by between 14,000
and 27,000 tons per year, or a 28 to 52 percent decrease from 1997
levels.
http://www.epa.gov/ttn/atw/plypart/plywoodfactfinal.pdf
RECIPROCATING INTERNAL COMBUSTION ENGINES
EPA estimates that approximately 8,120 new stationary RICE will be
built at major sources of air toxic emissions by the end of the 5th
year after this rule takes effect. In addition, about 1,800 existing
stationary RICE located at major sources may potentially be subject to
the rule.
The final rule will reduce emissions of a number of toxic air
pollutants such as formaldehyde, acrolein, methanol, and acetaldehyde
by 5,6000 tons in the fifth year after promulgation. These pollutants,
also known as air toxics, are known or suspected to cause adverse
health and environmental effects. Formaldehyde and acetaldehyde are
probable human carcinogens.
http://www.epa.gov/ttn/atw/rice/ricefactsheetfnl.pdf
STATIONARY COMBUSTION TURBINES
EPA estimates that 9 new stationary combustion turbines will be
built each year over the next 5 years and will be subject to the final
rule.
The final rule will provide improvements in protecting human health
and the environment by reducing air toxic emissions 98 tons per year in
the 5th year after the rule is final. The air toxics reduced are listed
below:
Pollutant Emission Reductions Percent Reduction (in 5th yr after
promulgation) (after controls are installed)
Formaldehyde 67 tons, 90 percent
Toluene 17 tons, 90 percent
Acetaldehyde 11 tons, 90 percent
Benzene 3 tons, 90 percent
http://www.epa.gov/ttn/atw/turbine/turbine_fs.pdf
One additional observation bears mention. Of the four MACT source
categories above that are eligible for regulatory relief in S. 131, at
least three involved rulemakings where industry lobbyists were urging
EPA and the Office of Management and Budget to adopt unlawful ``risk-
based exemptions'' from MACT standards.\20\ Industry was successful in
persuading the Bush administration to adopt these harmful and illegal
exemptions in the final MACT standards for Industrial, Commercial, and
Institutional Boilers and Process Heaters, and Plywood and Composite
Wood Products. The result of these exemptions is that thousands of tons
of hazardous air pollution (HAP) would escape into the air we breathe,
uncontrolled, when the Clean Air Act requires these pollutants to be
minimized with advanced pollution control technology. EPA declined to
adopt the same risk-based exemptions for the final Reciprocating
Internal Combustion Engines MACT standard.
---------------------------------------------------------------------------
\20\ See, e.g., ``EPA Relied on Industry for Plywood Plant
Pollution Rule,'' Alan C. Miller & Tom Hamburger, L.A. Times (May 21,
2004).
---------------------------------------------------------------------------
Because these exemptions are plainly contrary to the language,
structure, purposes and legislative history of the technology-based
MACT program adopted by Congress in the 1990 Clean Air Act Amendments,
NRDC and Earthjustice are currently challenging the two final rules
that contain these exemptions in the U.S. Court of Appeals for the D.C.
Circuit.
Accordingly, S. 131 represents a blatant attempt to override those
lawsuits before the judicial branch has the opportunity to review the
lawfulness of EPA's actions. Worse, S. 131 would not simply override
legal challenges by the public to illegal EPA rule exemptions; the
legislation would allow tens of thousands of industrial polluters to
escape HAP regulation altogether, going well beyond EPA's unjustified
and unlawful exemptions. All without any risk determination, without
any substitute HAP regulation for non-mercury HAPs, without any logical
linkage to the putative power plant control purposes of S. 131--
ultimately, without any announced justification in the Congressional
record for this legislation.
Finally, it bears noting in conclusion that neither the bill's
proponents or administration officials have provided data or analytic
support--at least publicly--to explain or justify the impacts of these
exemptions from already adopted protections against hazardous air
pollution. The technical supporting documents for the legislation,
which include the only assessment of health and environmental effects
by the administration that we are aware of, were published in July of
2003, 4 months before the regulatory relief from HAP protections for
opt-in units first appear in Clear Skies legislation (S. 1844) and 7
months before the appearance of the current iteration of this provision
in S. 131.\21\
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\21\ ``The Clear Skies Act Technical Support Package'' is available
at http://www.epa.gov/air/clearskies/03technical_packagetofc.pdf.
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Accordingly, the best information available concerning the public
health and environmental impacts of the opt-in MACT exemptions comes,
first, from a facial reading of the vast regulatory relief that the
bill would authorize; and second, from EPA's own estimation of the
total amount of HAPs controlled by these four rules, as well as the
tremendous health benefits that these rules will deliver when fully
implemented. On the basis of that information, the impacts from this
drastic retreat from Clean Air Act protections could be devastating.
The environmental and public health organization Earthjustice has
produced a series a of fact sheets that use publicly available EPA
information to produce state-level snapshots of the number of
facilities that could be eligible for this opt-in provision. I am
attaching these fact sheets to my responses.
Using the listings of potentially regulated industries found in the
final MACT rules noted above, and EPA's Enforcement and Compliance
History Online (ECHO), Earthjustice determined that as many as 12,814
facilities nationwide could be eligible for the opt-in provisions'
regulatory relief, should it become law. At the state level, the
organization found that as many as the following numbers of facilities
in these states could be eligible for the bill's regulatory relief: 777
facilities in California, 83 facilities in Connecticut, 511 facilities
in Illinois, 438 facilities in Louisiana, 53 facilities in Montana, 220
facilities in New Jersey, 347 facilities in New York, 35 facilities in
Rhode Island, 1,021 facilities in Texas, and 16 facilities in Vermont.
S. 131's regulatory relief would permit uncontrolled air toxic
emissions (other than mercury) from affected units at those
facilities.\22\
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\22\ For the purposes of estimating the number of potentially
eligible facilities, Earthjustice only considered major sources.
Enforcement and Compliance History online available at http://
www.epa.gov/echo/
---------------------------------------------------------------------------
Earthjustice also used EPA's Toxic Release Inventory (TRI) data
from 2002 to assess the quantity of toxic emissions reported by
potentially regulated industries from the four relevant industrial
source categories. Since the TRI data base contains emissions data at
the facility level and not the unit level, this information does not
purport to estimate the potential effect of the opt-in provision on the
basis of unit participation. The data does demonstrate, however, that
the potentially regulated industries that could escape air toxics
regulation should S. 131 become law, are major contributors to toxic
air pollution in this country. 2002 TRI data show that nationwide,
potentially regulated industries under the four source categories
affected by S. 131's opt-in provision reported more than 1.2 billion
pounds of point source toxic air emissions. These are the very
industries that should be doing more to control their toxic emissions--
as EPA founded in adopting rules to cover their toxics pollution--and
not less, as S. 131 would allow.
Question 4. My entire home State of New Jersey was recently
declared ``out of attainment'' for nitrogen oxides, which help form
ozone and damage lungs--especially of kids. Do you believe this bill
will improve New Jersey's air quality?
Response. This bill will not improve New Jersey's air quality
compared to the timelier, better air quality improvements that New
Jersey would experience from EPA and the states simply enforcing the
Clean Air Act that we have today. This legislation delays the timelines
and dilutes the rigor of pollution control measures that otherwise
would apply to SO<INF>2</INF> and NOx pollution from dirty coal-fired
power plants located upwind of New Jersey, pollution that causes and
contributes to New Jersey's ozone nonattainment problems.
In other words, this legislation is worse for New Jersey and the
country than the current Clean Air Act. Enforcing the current Clean Air
Act will better protect Americans, and do so more quickly and cost-
effectively, than going backwards with the Clear Skies legislation.
My February 2nd written testimony details the numerous and varied
ways in which S. 131 weaken and delays more protective air pollution
control measures currently afforded--and mandated--by the current Clean
Air Act. These protections run the gamut from better protections
against local smog and soot pollution contributing to nonattainment;
protections against transported air pollution from upwind source, an
especially critical concern for New Jersey; stronger protections
against acid rain; more rigorous and timely protections against mercury
poisoning and other hazardous air pollution; and better safeguards for
visibility and ecosystem health in national parks and wilderness areas.
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Presentation by Quin Shea, Senior Director for Environmental
Activities, Edison Electric Institute
Mr. Shea. What I want to share with you are some insights based on
the work that I do every day and in the last couple months particularly
so at the White House with key staff there that are working on the
energy policy development task force, that are working on some of these
EPA regulatory programs, and give you some thoughts as to what is going
on behind the scenes to supplement maybe what you're reading in the
newspapers. I think you'll find it interesting.
Obviously, electricity and economic growth, linked. Almost, you
know, right across the board for the last 30 years. We know that. It's
a matter of fact of life. Electric drives the economic engine in the
U.S. And demand of anything is going up. Jan mentioned that DOE--and
these are rather conservative forecasts in my opinion--is estimating
that we're going to need about 393,000 megawatts over the next 20
years. And that's right, if you think about it, based on what we're
using today, approximately 850,000 megawatts for total generation,
close to 700,000 just in the utility sector. We're looking at between a
50 and a 60 percent increase in the amount of generation that we're
going to need over the next 20 years.
Ladies and gentlemen, that is a lot of juice. And we do not have
the ability right now in my industry to produce that. And there are a
lot of impediments. California is perhaps the best example, but it's
not the only one. I'm actually quite afraid when I'm listening to a
number of our CEOs talk, that they know for a fact and there's nothing
that they or the administration can do about it, that we're looking at
extensive blackouts this summer in California and perhaps other parts
of the country. It's very disheartening. And it is going to happen. And
the underlying cause is the fact that we do not have sufficient
capacity and generation in this country, we do not have sufficient
infrastructure to allow for the transmission of power. And we need to
have it.
Now, as to fuel choice, obviously, my numbers will burn anything,
up to and including dirty socks if it's economic and they can do it. It
doesn't matter if it's nuclear, or if it's hydro, or if it's coal or if
it's gas. I can tell you emphatically, not just being an old coal guy
myself, that we want to burn more coal. We desperately want to burn
more coal. We've got over 30 plants that were announced in the last
year. Some of those I think are at risk for some of the issues that I'm
going to get into.
Coal is cost effective. Working with the Vice President, we're
hoping that the market share goes up, we want it to go up as the fuel
of choice. There simply isn't the gas out there to provide base-load
generating capacity. Not a week goes by where I don't get a call from
some of the industrials, the chlorine industry, the copper industry,
saying they cannot compete, they cannot buy the electricity, because
we're buying it all in the electricity industry or in the utility
industry. And that's true.
Now, you've already seen a number of iterations of this, the pie
chart on fuel mix. Some call it sort of energy balance, and I call it
fuel diversity. That's sort of the term of art that's used within the
administration, fuel diversity. Again, I will reiterate what other
people said. That is a good thing. The fact that you've got these
different types of fuels, particularly in different parts of the
country, is incredibly important. And it actually helps coal's case.
Another handout that was over there was a one-page map of the
United States depicting sort of the fuel choice by area of the country.
That's very important. You obviously have the parts of the country
where coal is the predominant source. Others like in the northwest
where it's hydro. Take a good look at that. The underlying point there
is you can't screw around with the generation mix in certain parts of
the country, because it would be disastrous.
Here's what you already know. It's out there. Coal is our friend.
We know how to get it. We can do it cheaply. We can bring it to market.
Abundant, affordable, reliable, increasingly clean. You'll hear me say
that a couple times. You'll hear the administration use those terms
quite a bit.
Bottom point here actually applies to many of you in the room. We
can bring it to market very effectively through our partners in the
rail industry. Increasingly clean. This is a little tough to see, but
again you have in your handout--again, as Jan and other speakers have
mentioned, emissions are coming down. They're coming way down.
What actually is not on this particular chart, we can also show
that particulate matter emissions are coming way down. And now that
we're moving into an area where we're looking at potential air toxics
regulations for coal-fired generation, it's interesting to note that
just through the application of existing controls on our facilities,
whether it's scrubbers for SO<INF>2</INF>, low NOx burners or selective
catalytic reduction for NOx, or precipitators for PM, we're getting
about 40 percent of the mercury that's emitted from coal generation
right now without doing anything else. Forty percent. The same for some
of the other metals that are in the coal content. That actually is a
piece of good news with respect to the pending mercury controls that
we're looking at in the next few years.
Now, the general outlook. I've got a lot of environmental concerns
and I'm going to touch on a couple of the big ones in a second. These
are a big, big deal. For those of you that work on sort of the negative
side of the equation within your companies, not out there generating
product and making sales, but trying to keep as much as possible of
that from going away. Like in the environmental area, we work on--it's
not a very glorious side, but we're trying to help. We've got some
serious, serious problems. And they haven't gone away, even with the
change in administration. Very important point. All right.
Here, in my opinion, are sort of the main points that are coming
through, when we have discussions with Andrew Lundquist, who heads the
Vice President's energy policy task force at the staff level. Larry
Lindsay, who's one of the President's principal economic advisors,
Mitch Daniels, who heads the office of management and budget. These are
the terms or the phrases that come out over and over and over again.
When the energy policy task force report is issued in mid-May, you're
going to see a lot of this in there.
Diversity of fuels, new technology options, appropriate incentives
for electricity generation. A lot of interesting things in there. Up
and including possible tax relief. Develop and commercialize clean coal
technologies and provide funding for coal R&D. I can give you an
example of Senator Byrd's bill, the national electricity and
environmental technology act, or F-60. These things are going to be in
there, guaranteed.
Now, you're also going to see a lot of words devoted to
environmental policy. Now, the President's getting some opposition.
Certainly among his staff and certainly within our party; the
Republican party, about how much environmental stuff should be in this.
He has argued, as have a number of his close advisors, that the two are
inexorably intertwined. You cannot move forward on a national energy
policy without taking into account where we are on environmental
policy. It's very clear from his letter to the U.S. Senate on March
13th which is the horse and which is the cart. Energy policy is going
to drive the two in his administration, but he is going to include some
addressing of environmental policies.
Now, here are the points that you're going to see. Rely on sound
science and verifiable health benefits. I love this one. Everyone knows
what we went through over the last 5 or 6 years on the national ambient
air quality standards. We had EPA coming out and saying 100,000
children are at risk, or the elderly, for premature mortality. They're
going to die in the streets from the fine particulate matter that's
being emitted from coal-fired generation. Well, guess what? Six months
later that number had become 75,000, then it was 65,000, then it was
50,000, then it was 35,000, then it was 20,000, and now it's 15,000.
Folks, these are just numbers. These are just numbers. They're
scary numbers. They're used provocatively by those, particularly in the
public health and environmental communities. They scare people. They've
scared my grandmother. She's 97 and said, what is going on? I said,
Gram, this is wrong. Plus, it's a premature mortality. If you die a day
early, you're a statistic. She said, oh, OK. She didn't really
understand, but she sort of got it that I was taking care of it and it
wasn't a problem.
Beware of these numbers. Verifiable health benefits. It's very
important. Consider fuel costs. There's the link to energy policy. The
environmental section is going to have a strong linkage to energy
policy. Practical compliance deadlines. If we're going to set hard
targets for reductions of different things, give us a reasonable amount
of time to do it. Don't stick us with a deadline that's impractical or
is effectively technology forcing or will cause fuel switching, because
we can't meet it in an appropriate amount of time. That will not happen
over the next few years.
Reasonable certainty for investments. Do not tell me to do
something today where I have to and plug in this widget or bolt on this
piece of equipment and 2 years later it's effectively a stranded
environmental requirements with a couple of new ones. Don't do that to
me. Give me some certitude for investments along with those reasonable
compliance schedules.
Give states appropriate flexibility. This is a big one. You've got
a Governor, you've got a lot of folks in the administration with state
background. My opinion over the last 8 years we've seen a serious
erosion in the so-called Federal-state partnership. A lot of these
rules and regulations, whether they're health or environment, the big
ones that you have to deal with every day are supposed to be
implemented by the states. Sometimes without any money, and we call
that an unfunded mandate. But in any event, there's supposed to be a
balancing of power there. That hasn't occurred. There has been a steady
erosion. We've got Big Brother basically telling the states what to do
on most of these environmental issues. That's got to change. And it
will change.
Now, specific policies initiatives. Here are the big daddies, in my
opinion. These are the issues, maybe there's 20 or 30, crossing the
water area, the solid waste area, the air area and, of course, climate
change that we all work on on any given day. These are the big ones.
These are the coal killers. These are the ones that we need relief on
and I'm actually fairly optimistic about.
New source review. You can't help but have heard about this one,
because basically we've had a reinterpretation of this entire program
that EPA administers that does not allow our plants to conduct routine
maintenance and repair. Now yeah, they're going to run the risk of
violating the law and looking at penalties and possibly jail time for
CEOs because they're not going to cutoff the power to the elderly
citizens in Chicago in the middle of July or August. That's not going
to happen. But this particular rule is the largest impediment to making
changes, basic changes at plants. It's an impediment to environmental
progress. It's an impediment to safety, worker safety. And ironically,
the fact that it doesn't allow us to make efficiency improvements at
our plants, ironically, it also doesn't allow us to do projects that
could be a CO<INF>2</INF> beneficial.
I will point outside that this change started occurring in 1996,
and then in earnest in 1998 when EPA tried to do away with the so-
called wet pro rule, which allows us some safety on new source review.
I was at EPA for 4 years. I worked in the enforcement program. I was
the chief of staff to the then-assistant administrator Jim Straff, who
then went to California. I was very zealous at my job. We both had cots
at our office. You can call that insane. We worked very hard. We used
every enforcement tool in the tool kit available to us. So did our
colleagues at Justice.
Nowhere, nowhere in the deepest recesses of our gray matter did it
ever occur to us that we could so warp the new source review program to
do what was done in roughly 1998. This is going to change in the next
few months. I guarantee it.
Mercury. All right. Also on a substantive matter, we've talked
about Kyoto a lot. That's been out there. It's the big boogie man in
the last few years. Kyoto is dead. Kyoto is absolutely dead. It's not
going to happen. We're taking steps right now to reverse every piece of
paper that EPA has put together where they could call CO<INF>2</INF> a
pollutant under the Clean Air Act. That's going to be nailed down in
the next few months.
Internationally, the U.S. is not going to work on Kyoto. It is
dead. For those of you, not you specifically, but for those who want to
continue to beat that dead horse, let me tell you right now, there will
be no equine resurrection here. Now, having said that, mercury, in my
opinion, is very Kyoto-like in its potential impacts. Mercury to me is
the issue that scares me the most of the ones that are out there right
now.
EPA had a regulatory determination in December of last year,
another 11th hour initiative, where they basically determined, as they
were supposed to, whether there would or would not be a mercury
rulemaking over the next few years. And there will be. Could have been
two paragraphs long. Instead, EPA went ahead of the multi-year process
that will result in a program, basically prescribed the regulatory
approach that we're going to have to comply with several years down the
road. They did that now, before we've gone through rulemaking, public
review and comment, before EPA builds a technical record. They did it
now.
Coincidentally, by virtue of having selected that particular
approach, maximum achievable control technology, they also triggered
another part of Title 3 of the Clean Air Act that means that any new or
reconstructed coal-fired unit must go through what is called case-by-
case MACT review for mercury, and possibly other air toxics.
The punch line of that, the 4 to 5 sometimes 6 years that you
normally count on for permitting, procuring materials and then
constructing a new coal-fired unit, start at adding a year, maybe 18
months, maybe more. Of those 30 new coal-fired plants that were
announced, a lot of them will never be built because my CEOs will
figure out that it's not cost effective. They'll look for a way to do
something else even though they don't want to. And it's because of
mercury. Mercury is the killer.
Harmonize conflicting compliance deadlines for implementation of
the NOx rules. Not that big of a deal out west, you say. It's mostly a
battle of the states, Midwest versus the Northeast. It all comes down
to, well, we're going to do the NOx reductions, but what timeframe? And
we're going to fix this one in the next few months, as well, we're
going to get the more reasonable timeframe. Why should it be a big deal
for you? I'll tell you why. Because the logical next step for NOx
related programs nationally will be to take what is roughly now the
Mississippi River border where these new controls are applying east,
those are going to move west. That's going to happen. There is going to
be a truing up of national NOx reduction programs probably within the
next couple of years on this President's watch.
Provide states with greater flexibility on regional haze. I think
most everyone in this room is probably an expert on this issue. Terry
Ross and others have worked on this very, very hard. It will be with us
for a while. You know that a regional haze program, which is intended
alleviate basically secondary impacts, visibility, can actually be more
onerous than the particulate matter national ambient air quality
standard. Finally, support programs for voluntary reductions of
greenhouse gas emissions and technology solutions. Another very
important footnote. Listen to this very carefully. Now, in the March
13th letter to the Senate, the President made it very clear that he
didn't support Kyoto, and if you read between the lines, we're going to
be unraveling everything that Kyoto was based on. That's going to
happen.
But the President did two other things once we sort of came off of
our cloud of euphoria. He committed to some kind of CO<INF>2</INF>
program, a voluntary program. Think about that. Some day we're going to
have to figure out what that means. He also talked about a multi-
pollutant strategy for further SO<INF>2</INF> and. NOx reductions
beyond what are required right now, as well mercury. He made that
commitment.
In two successive cabinet meetings following the issuance of that
letter, he told his cabinet, you will do this. He's not backing away
from that. We're going to have those reductions. We're going to have a
voluntary program.
This is not going to thrill some of you when I say that the utility
industry right now is putting together a very comprehensive near-term-
reduction CO<INF>2</INF> voluntary program. CEOs are working on this
right now. I was actually showing a draft to a couple folks here like
Greg Schaefer, just to see if I could survive the swing test, which is
the right across to the nose.
And what I'll say here is since the mid 1990s, EEI and the
utilities have already had a voluntary program in place that has
resulted in over 170 million metric tons of carbon being retired. We do
it with DOE, not EPA. It's not regulatory, it's voluntary. There's
going to be a next generation of this. We're working very closely right
now with folks at the White House in putting this program together.
Let me put it to you in political terms. The President needs a fig
leaf. He's dismantling Kyoto, but he's out there on a limb. He's told
his staff, you will come up with something. They're going to do it.
Wouldn't you like to be involved in what they put together? We
certainly have made the cut that way.
This gives you another look at some of the things that are coming
up, both definites and maybes. In summary, again, fuel diversity. Fuel
diversity is the key here which allows us to push a very pro-coal
agenda. Coal is affordable, reliable, adequate and increasingly clean.
I'm going to switch gears here. I've talked about the President's
commitment to the so-called multi-pollutant approach. It's going to
happen. Terry Ross asked the question of Senator Enzi, Are we talking
about legislation coming out of Senate Environment Public Works
courtesy of Senator Smith from New Hampshire? Maybe, maybe not. I would
suggest that certainly within this Congress these next 2 years and
possibly within over the next 4 years, the chances of getting
comprehensive, multi-emission legislation through are probably fairly
low. It's not there. It's not there.
Having said that, the President is prepared to do this
administratively. Now, it won't be as robust a program because you
won't, in effect, be amending the Clean Air Act and all of the other
statutes that we're subject to right now, but it will be the next
generation of regulatory programs. And the goal here will be to gain a
foothold, an irreversible foothold on the next generation of reasonable
cost effective SO<INF>2</INF> and NOx reduction, plus air toxics that
we can all live with and that someone else can't undo.
I've laid out here, basically, the issue. You've already seen the
list. I'll show it to you one more time. We've got a lot of things
going on right now, whether it's the Clean Air Act of 1970, the
amendments in 1977 or the 1990 amendments. The guys that do the permits
for your companies will tell you, it's is a pain in the ass. You've got
requirements coming over 30 years that are like on top of one another,
they're duplicative, some of them lead to a forced result of a
different technology or process that just doesn't make sense. But it's
an artifact of how we do business.
What if someone were to tell you that you had 15 or 20 years, here
is the NOx reduction target we want you to hit in that timeframe,
here's the SO<INF>2</INF> reduction we want you to hit, and the here's
the toxics reduction that we want you to hit. And those reductions are
fairly reasonable, but it's one, one number, one timeframe, with lots
of bennies built in. I will tell you that's very interesting to me, and
I tend to be a big disbeliever of this, and still have sort of mixed
views.
Goals, provide regulatory certainty and stability. We want that.
Continue improving air quality. We want that. Increase compliance,
flexibility and reduce costs through market-based approaches. Sounds
interesting, tell me more. Maintain coal-fired generation as part of
the electricity supply mix. And I'm not talking about maintaining it at
10, 20, 25 percent. I mean where it is or better. And it's possible.
Benefits, talked about that. Single set of reduction requirements,
Clean Air Act, lower cost of emission reductions, facilitates building
of new plants. Part of the problem that we have right now, this lack of
certainty that I keep talking about in terms of what's happening with
the environmental controls, not being able to rely anymore on the U.S.
Court of Appeals for the District of Columbia or even the Supreme Court
to help us out in what are some of the most ridiculous rules on their
face to ever occur. We can't rely on that. We need to have some
certainty. This is possibly a way to get at that.
Now, the elements, and these, I will tell you, again, working with
our CEOs behind closed doors, some of them hate this idea because
they'd rather take their chances under a business-as-usual approach,
saying, well, we'll get Bush or Atilla the Hun as president for the
next five terms, right? Well, maybe not. What happens if we don't? So
we've got some guys way out there and some guys who have embraced this.
All of them are continuing to work on this.
Types of emission, reduction levels, deadlines, safe harbor. That's
the big deal. If you do these things, you're into this program, you get
that safe harbor, you're not going to get nickeled and dimed every 2
years for additional reductions of different types of pollutants. New
source review. We get that fixed. That is non-negotiable. Non-
negotiable. It's got to go away.
Here's the list put another way. Comprehensive approach, single
SO<INF>2</INF> reduction requirement. Over on the right-hand side are
some of the items, past and present and potential, that are out there
that could affect SO<INF>2</INF> reduction requirements. Same thing for
NOx. On mercury, same thing here. We've got very--EPA, if nothing else,
is very clever. And I'm a product, obviously, of that sort of way of
thinking and they taught me well. And I know how they work and they're
smart guys.
What they figured out is that as you have sort of an impediment to
maybe doing what you want to do through the front door, through the
Clean Air Act, there's plenty of other ways to get at you. They're
starting to look at hitting us with mercury controls through the water
program. Through the water program. Very interesting.
Internationally, the EPA ramped up its discussions with Canada. The
northeastern states, any Federal EPA working with Canada, to see what
they could do--they did this with NOx, as well--but to see what they
could do to have Canada bring pressure on the U.S. Government to maybe
speed up its mercury rule or to have Canada develop a mercury MACT at
like 9 percent removal in the next couple years, again, to put pressure
on. Very, very clever. And finally we have Henry Waxman and others on
the hill putting out a bill a day with these just like crazy, not well-
thought-out plans. But they've got them in play, they get press, they
get people scared, and they get a reaction. I put CO<INF>2</INF> in
here as a place holder. CO<INF>2</INF> is not going to be part of a
mandatory anything.
Having said that, it is possible, important point, I will predict
that when the President sort of finishes off his multi-pollutant
approach or his ideas for an administrative program, he will package
the voluntary CO<INF>2</INF> program with whatever is mandatory, giving
you the so-called four pollutant approach that everyone says he backed
off on in terms of his campaign pledge. It's packaging, not substance,
but it's a very important point inside the beltway.
NSR, safe harbor, flexibility. All the elements are there.
I want to talk to you about some numbers we ran. Again, putting
myself at the top of the list of doubting Thomases, we have been
spending hundreds of thousands of dollars over the last few months at
EEI and some of our companies engaging some top notch economic
consultants, people with no ax to grind in this debate, to start
running scenarios for us; different combinations of reductions of
SO<INF>2</INF> and NOx, mercury, and seeing what that gets us.
Different timeframes for having to do that. And then comparing that to
several scenarios of what EPA would logically be expected to do in that
same timeframe between now and 2020, including some very conservative
ones. We used a lot of EIA's natural gas projections or we had other
ones, perhaps even more conservative or more robust. We used those as
well.
Now, jump to the punch line. And this is what catches a CEO's
attention or your shareholders. Net present value. I can also give you
the numbers on sort of an annual basis between now and 2020. Scenario
one is roughly 35 percent SO<INF>2</INF> and NOx reductions beyond
baseline, beyond what's required now, with no additional mercury
requirement. We just go with co-benefits, roughly what we're getting
from existing controls. Scenario two, we ramped that up a little bit,
where I think we're looking at 50/50 and co-benefits. Scenario three, I
think, it's 60, 60 and 60 percent for mercury, which I think is pretty
realistic based on what the health evidence shows up. And finally the
EPA future. These are extraordinary deltas here.
Now, we've got to continue to refine these numbers. I'm going to
spend the latter part of this week going over, talking to Jack Gerard.
Well, maybe not. Our prayers are with Jack, hopefully he's better. But
certainly with his staff and with some of the mining companies to let
them go through this and see what they think. Because they have the
most at risk. I already told you we don't. The mine industry and rail
industry have more at risk. It's important that our partners understand
what we're doing and see if they agree on these numbers.
Finally, initial findings. Scenarios one, two and three, less
expensive than the EPA future. Ninety percent mercury reduction. That's
the number that EPA, the career staff, are looking at right now.
They're even looking at 95 percent reduction. They're not equating this
at all to public health benefit, they're just focusing on a number--
Henry Waxman uses numbers as well--as a hard target. That number is
Kyoto. That number is Kyoto.
EPA future, reduces coal use, increases gas. Uses more than
scenarios one, two and three. We know that. The cost of reducing carbon
can vary widely depending on the permit allocation scheme. It's
interesting we're finding through some of the scenarios we're running,
we can get some carbon co-benefits. Plus when you tack on the voluntary
program, we think we can do a pretty good job of having a robust
CO<INF>2</INF> element to this program that does not hurt coal.
There you have it. Basically, sort of some thoughts of mine on
energy policy, a little bit on environmental policy at the 20,000 foot
level, and something to think about in terms of what is being debated
right now inside the beltway as an alternative to business as usual at
EPA. Thank you very much.
Mr. Linton. I'm just going to ask if Jan has any comments on Shea's
presentation at this point? Or we'll hold for the questions, any other
questions, I guess, from the audience until all four presenters
present.
Mr. Laitos. What do you think the chances are within the next 2 or
3 years there will be a reauthorization of the Clean Air Act, Clean
Water Act or CERCLA?
Mr. Shea. I think the chances are very low. I'll tell you, maybe a
little better on Clean Water Act. I think CERCLA, in my opinion, is
sort of like coal. It's a fossil. I think CERCLA in its present format
is an artifact of a time when there was a good idea but bad
implementation. I see that possibly being dismantled.
Clean Water Act, I take back what I said, I do see opportunity for
Clean Water Act reauthorization over the next 4 years. I don't see it
for air. I'll tell you why. Very simply that while we now know where we
might make surgical fixes to make the Act run better, these are even
things that we--Henry Waxman and I might agree that there's problems
with the permitting process in the Clean Air Act that weren't
envisioned in 1990 that need to be fixed. The problem is if you want to
open the Act up to technical changes or to those streamline fixes, much
less a broader reauthorization, people start piling on everything.
Now to the extent that the President is pushing in concert with
Senator Smith or others a so-called multi-pollutant bill, that might be
a de facto substitute for Clean Air Act reauthorization. But Clean Air
Act reauthorization amendments of 2004, right now I don't see it.
There's no impetus there, there's no political will and there's too
much risk.
Mr. Laitos. One more question. Do you think, based on your
experience with what's going on in the energy policy center in
Washington, D.C. within the White House or within the executive branch,
do you see any interest as there was in the 1970s, the late 1970s, in
terms of providing incentives, initiatives or grants for coal
gasification or coal liquification efforts?
Mr. Shea. There is some. And that's a fair point. Because I stayed
away from a couple points in my presentation that started talking about
clean coal technology or future R&D.
The Department of Energy is going to make out fairly well over the
next few years. It's no longer going to be the red-headed stepchild
cabinet office that it has been in the last 8 years. It's going to be
reinvigorated. The fossil office and the policy office are going to be
the key conduits to implementing a very important piece of the energy
policy task force that's going to be issued, again, in mid-May. That's
going to be long-term R&D.
Jan was talking about coal gasification. That is going to continue.
Obviously, it's very speculative. We're looking really at 10 years plus
out. But that's OK. Yes, it is clearly in the mix right now. They are
looking at it in addition to other basic clean coal technologies, and
even carbon capture and sequestration technologies.
I can't tell you how much of an emphasis proportion or percentage
wise there will be, but I do know that there will be staff in fairly
significant sums appropriated for that.
Mr. Linton. Thank you.
Statement of Abraham Breehey, Legislative Representative, Government
Affairs Department, International Brotherhood of Boilemakers
Chairman Inhofe, Senator Jeffords, and Members of the Committee,
good morning. I am Abraham Breehey, Legislative Representative for the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers. On behalf of our International
President Newton Jones and our approximately 75,000 members across the
country, thank you for the opportunity to present our views on S. 131.
The Boilermakers are the principal union responsible for the
installation, maintenance, and repair of industrial boilers, as well as
the installation of the pollution control equipment utilized to achieve
the emissions reductions that are the goals of this legislation. As a
result, our members have a dual concern: first and foremost, to have
safe and productive workplaces for boiler operations; and second, to
ensure the sensible implementation of clean air standards that foster
the market for our services while protecting the environment.
Boilermakers have been active participants in the policymaking
process. Representatives from our locals across the country have
testified at EPA field hearings, and our Government Affairs Office has
submitted testimony for the record and letters on Clean Air topics
going back for some years. The discussion of Clear Skies is one in
which all participants share the same goal: sensible protection of air
quality. There are good natured disagreements about the best approach
to achieve that goal, but that should not keep us from proceeding with
dedication.
Indeed, the Boilermakers have a significant interest in ensuring
the latest control technology is used to meet Federal multi-pollutant
emissions standards and we have much to gain through its deployment. As
an EPA analysis of the engineering factors affecting the installation
of pollution control technology notes, the labor requirements needed to
retrofit flue gas desulphurization systems generally referred to as
scrubbers to remove SO<INF>2</INF> for a 500 MW<INF>e</INF> utility
include approximately 150,000 boilermaker man-hours. Similarly, a
retrofit of SCR NOx control technology of 500 MW<INF>e</INF> requires
as much as 350,000 man-hours of construction labor, with 40-50 percent
of that amount available for boilermakers. However, the vast majority
of our man-hours are generated providing maintenance, renovations, and
upgrades to existing coal-fired electric utilities. Too often, under
the status-quo this work is being put off, delayed, or abandoned.
The legislation before the Committee today would provide great
benefits to our union, as well a number of other AFL-CIO affiliates in
the energy and construction sectors. It requires $52 billion in
investment to meet air quality standards, a significant portion of
which will be paid in wages to Boilermakers and other union craftsman.
We believe it provides a clear path forward for new plant construction,
sets standards that are both technologically feasible and no doubt
within the current labor capacity. We encourage the committee to
support the Inhofe-Voinovich bill.
Some would prefer to maintain existing Clean Air Act authorities to
wring additional emissions reductions out of existing facilities. This
``command and control'' approach relies on litigation-heavy, case-by-
case analysis, such as the New Source Review (NSR) program. While NSR
can produce successes in some cases, it is too often cumbersome and
slow as it applies to existing sources. We support the provisions of
the Clear Skies bill for addressing these issues.
The Boilermakers are aware of the balancing act that must be
undertaken in developing environmental policy. However, we believe this
legislation achieves a significant balance in that it provides a
protective approach on clean air that maintains the competitiveness of
our industrial facilities, keeping Boilermakers and other union
member's work from being outsourced. By ensuring a continued role for
coal in our energy-mix and providing greater regulatory certainty, this
legislation will promote stable energy prices that are necessary for
the economic growth that creates good paying manufacturing and
industrial jobs.
I know we all agree that America's workers are the most productive
in the world. However, they are forced to succeed under tremendous
competitive disadvantages resulting from several factors, including
unfair tax and trade policies, foreign subsidies, and health care costs
not assumed by overseas producers. In addition, American manufacturers
spend relatively more on pollution control than foreign competitors.
Regulatory policies that delay efficiency improvements or that might
lead to fuel-switching from coal to natural gas would only exacerbate
our problems keeping good paying manufacturing jobs here at home.
The Boilermakers Union supports the expansion of the Acid Rain
Program ``cap and trade'' system for SOx to NO<INF>2</INF> and mercury
as suggested under this legislation because it sets predictable
deadlines that are achievable with current technology. Also, rather
than proceeding case-by-case, they apply to all regulated facilities
simultaneously. Under current law, our work often comes in fits and
starts. This legislation will encourage a more steady work load for our
members.
Our union is committed to ensuring the safety of the facilities
where our members and thousands of others work. It is a major and
ongoing concern. Workplace safety is a cornerstone of the Boilermaker's
National Joint Apprenticeship Program, and our members work together
with our employers to limit workplace injury and promote efficient
operations. Reasonable and consistent rules are needed to encourage
repair and maintenance of power plants, and protect worker safety. Too
often, important work is delayed due to the uncertainty of the
regulatory and permitting process. Power-generating facilities operate
most efficiently when they undertake repair and replacement projects on
a regular basis. The varying interpretations of the requirements of NSR
often forces facilities to delay maintenance work for 12 to 36 months
while they await EPA approval.
Further, the threat of litigation too often acts as a deterrent to
capital investments that create work and maintain safe facilities for
our members. Boilers operate under high temperatures and pressures with
superheater tubes exposed to flue gases at temperatures as high as
2,000 degrees and pressure around 3,000 lbs./square inch and must be
maintained in order to be safe for workers. While NSR can present
obstacles to maintenance and repair, Clear Skies does not.
The good news about Clear Skies is that the program sets
expectations that can be met with feasible technological applications.
Our members training and expertise at installing pollution control
technology is unmatched. However, applications that have not been
tested across all fuel types and under actual operating conditions and
for which there are no guarantees should not be the basis of clean air
policy.
S. 131 also will prevent the litigation and delay associated with
U.S. EPA rulemaking proceedings. The bill's approach to mercury
emissions will avoid the need for a controversial EPA mercury rule,
while ensuring the use of cost-effective emissions trading as the means
to achieve a significant reduction of emissions. We specifically
support the use of a ``co-benefits'' approach for the first phase of a
mercury control program to enable more accurate measurements of the
mercury control capabilities of existing technologies, and to allow
time for advanced mercury-specific control technologies to mature in
time to meet the final 2018 mercury cap.
Further, the caps, timetables, and incentives of the Clear Skies
Act will result in high emissions reductions goals through the
application of clean air technology, as opposed to fuel-switching.
Sections 455 and 475 provide for early action reduction credits to
encourage NOx and mercury reductions, respectively, through the
application of technology, as opposed to fuel-switching. Certainly, the
Boilermakers and the members of the United Mine Workers of America will
realize significant benefits from the provisions, but the implications
of widespread fuel-switching to costly natural gas would be devastating
across the manufacturing sector. An important benefit of this
legislation is that it will foster reliable and affordable electricity
generated from coal. More than one-half of our nation's electrical
output is generated by coal. Reducing the use coal in our energy supply
mix would inevitably result in increased demand in natural gas, a
fundamental change in energy policy that raises important concerns
about natural gas availability and cost.
The current regulatory framework has resulted in most new power
generation facilities being gas-fired. With demand for natural gas
spiking, and prices increasingly volatile, continuing down this path
will have a devastating impact on American workers, as firms look to
move operations overseas for cheaper natural gas prices. Under S. 131,
any new coal plants will be included under the emissions cap and the
clear path forward with regard to emission reductions requirements
allows our employers improved investment planning, which contributes to
reliable and affordable electricity generated from coal.
Our union also recognizes the needs of states and localities to
comply with U.S. EPA's new 8-hour ozone and fine particulate standards.
The deadlines for compliance with these standards are approaching, and
states are beginning to prepare State Implementation Plans. Computer
modeling by U.S. EPA demonstrates that the reductions proposed by S.
131 would allow many states and localities to meet the new ozone and
PM<INF>2.5</INF> standards in a timely manner. Some areas, however, may
not be able to demonstrate attainment with the new standards. For this
reason, some states advocate adjustment of the bill's final compliance
deadlines for sulfur and nitrogen oxides. While we support the
timetables established under S. 131, we note that reasonable
adjustments of these final deadlines would not, in our judgment, raise
issues about the availability of skilled labor to install and operate
emission controls.
In conclusion, our union believes that among the greatest
challenges this distinguished body is faced with is maintaining the
competitiveness of American manufacturing in the global marketplace.
Since its peak in 1998, the United States has lost more than 3 million
manufacturing jobs. There is a palpable anxiety among working-families
across the country. The International Brotherhood of Boilermakers is
committed to providing the highly skilled labor necessary to power the
American economy. We believe the legislation proposed by Senators
Inhofe and Voinovich, S. 131 sets our electric-generating facilities on
a path forward toward an affordable, stable, domestically produced
energy supply. I know our members look forward to continuing our role
in this important debate.
______
Responses by Abraham Breehey to Additional Questions
from Senator Voinovich
Question 1. You state in your testimony that steady employment is
needed instead of peaks and falls and that Clear Skies provides for
this for at least 15 years. However, some claim that Clear skies does
no more than existing law--meaning your should have this environment
already. What effect has regulatory uncertainty had on workers?
Response. Due to the nature of the work our members perform, our
man-hour rates are often cyclical--with peak seasons coming in the
spring and fall. However, the permitting and regulatory process of New
Source Review often prevents accurate planning and often delays
anticipated work. The lack of clarity and case-by-case evaluation of
what constitutes routine maintenance, repair, or replacement has forced
industry to delay work for Boilermakers for as long as year. This
creates difficulties in planning the deployment of our workforce, much
of which often travels significant distances when the need arises.
Question 2. Last week, Basin Electric CEO Ron Harper provided a
specific example of how the New Source Review program has prevented an
improvement at one of their units that would reduce energy use and
emissions. You also talk about the NSR program as a roadblock for
plants to put on pollution control technology--and as a roadblock to
worker safety improvements. Do you have any examples of how NSR has
prevented such improvements? Please provide additional thoughts on why
NSR needs to be reformed.
Response. Regretfully, it is difficult to identify a specific
project simply because this is not a matter our employers are anxious
to share with us. Our concerns are verified by anecdotal evidence, such
as that provided by Mr. Harper, and we do not believe the case he
points to is unique. Further, one opinion expressed in the debate over
New Source Review is that only work performed by regular plant
maintenance personnel should be considered ``routine,'' and that any
work performed by outside contractors should be considered ``non-
routine.'' Our members are often called upon to supplement and
complement the regular plant work force during planned outages. If the
industry attempts to reduce its reliance on services from our members,
their standard of living will be directly and adversely impacted.
______
Responses by Abraham Breehey to Additional Questions
from Senator Lautenberg
Question 1. The Acid Rain program's cap and trade approach has
been very successful. Would this bill's cap and trade system be as
protective of public health as that program?
Response. While my experience relates mainly to the impact of the
multi-pollutant cap and trade systems on our workforce, as opposed to
the public health benefits, it is my understanding the expansion of the
Acid Rain programs cap and trade approach will bring public health
benefits. Since the Acid Rain program began, EPA has reported the
largest emitting sources actually reduced emissions the fastest. The
more a facility can reduce the more tradable credits it can generate.
This is bound to have significant public health benefits.
Question 2. As someone who came out of the corporate world, I can
appreciate the importance of making sound investments sound investments
in new technologies. Is the cap and trade system in Clear Skies as cost
effective at reducing pollution as other approaches?
Response. The incentives created through a cap and trade system
will be applied on a national basis with clear and specific compliance
deadlines. Contrasted with the resource-intensive and uncertain
litigation that results from the new source review program, cap and
trade is a cost effective approach. Creating a market for emissions
through the creation of tradable credits ensures that those who can
most efficiently reduce emissions will do so.
Question 3. Clear Skies proposes giving many industries a free pass
when it comes to reducing hazardous air pollutants--some of them known
to cause cancer. What impacts do you foresee from this drastic retreat
from Clean Air Act protections?
Response. We have a number of Boilermaker locals with members who
work at facilities eligible for the ``opt-in'' provisions of S. 131.
The ability of these employers to participate the market based trading
system will provide financial incentives for additional emission
reductions where they can most cost-effectively be achieved.
It is far from a ``free pass.'' In order to receive relief from the
maximum achievable control technology standard (MACT) for boilers about
which the question is asking, the facility must first ``opt in'' to the
stringent requirements of the Clear Skies Act. To do so means to put a
cap in place that would require the same types of control technologies
or process improvements that the MACT standard likely would require. In
addition, the boiler MACT has a risk-based alternative; meaning that
existing law will not cover each and every hazardous air pollutant, as
some opponents of S. 131 imply. Ironically, while the NRDC witness at
the hearing argued against granting relief from boiler MACT, the same
organization has sued to stop the boiler rule from even going into
effect.
Question 4. My entire home State of New Jersey was recently
declared ``out of attainment'' for nitrogen oxides, which help form
ozone and damage lungs--especially of kids. Do you believe this bill
will improve New Jersey's air quality?
Response. The 70 percent reductions in NOx and SO<INF>2</INF>
called for under S. 131 will indeed improve New Jersey's air quality.
Further, states are free to go beyond the minimum Federal standards
with their own programs, just as New Jersey has done.
__________
Statement of John Cook, Vice President and Managing Director, Eastern
U.S. Conservation Region, the Nature Conservancy
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to provide written testimony for the Committee on the
effects of air pollution on ecosystem health. The Nature Conservancy
applauds your interest in this matter and your efforts to find
solutions to improve air quality in the United States. The Conservancy
has a growing interest in solving the critical, globally significant
problem that acid rain and other air-borne pollutants pose to
biological diversity and the ecosystem processes on which it depends. I
am pleased to present the Conservancy's views on this important topic.
The Nature Conservancy is dedicated to preserving the plants,
animals and natural communities that represent the diversity of life on
Earth by protecting the lands and waters they need to survive. The
Conservancy has more than one million individual members and programs
in all 50 states and in 27 nations. To date, we have been responsible
for conserving more than 14.5 million acres in the United States, and
more than 83.5 million acres internationally. The Conservancy itself
owns more than 1,340 preserves in the United States--the largest
private system of nature sanctuaries in the world. Our conservation
work is grounded in sound science, strong partnerships with other
landowners, and tangible results at local places.
In the eastern United States we are working to conserve such
spectacular and irreplaceable natural treasures as the Adirondacks, the
Chesapeake Bay, the Northern Forest, and the Appalachian Mountains.
These places are within driving distance of many millions of citizens,
who benefit from the wilderness, drinking water, wildlife, timber land,
fisheries, natural areas, and recreational opportunities that they
provide. Atmospheric deposition threatens the health and long-term
sustainability of every one of these places.
BACKGROUND
The atmospheric deposition of acidifying pollutants, in particular
nitrogen and sulfur (also known as acid rain), and toxic airborne
pollutants--especially mercury and ozone, are among the most pervasive
and severe threats to The Nature Conservancy's conservation goals in
the eastern United States. Although the Clean Air Act and other
regulations and programs have achieved notable success in controlling
these emissions, and will continue to do so as the law is phased-in,
the level of pollution allowed under the Clean Air Act remains too high
and will continue to harm plants and animals. For over a century we
have been aware of the damage caused by that acid rain. Acid rain
results in decreased forest health, as it can reduce tree growth and
increase susceptibility to diseases, pests or even damage from cold
weather. Acid rain also has toxic effects in the aquatic world.
Increased acidity in water has been fatal to fish and other aquatic
species, particularly in landscapes like the Adirondacks that contain
soils that are poorly suited for absorbing the increased acidity.
Recently there has been increasing concern over the multiple
impacts that excess nitrogen is having on our environment. In 2003, the
journal BioScience publishes a special section detailing the magnitude
and severity of the problem throughout the continental United States.
Of particular concern is that as nitrogen moves through ecosystems it
causes multiple effects on the ecosystem, referred to as the ``nitrogen
cascade'' (Galloway et al. 2003). For example, Aber et al. (2003)
concluded that nitrogen deposition has altered the nitrogen status of
northeastern forests. Not only does it have negative impacts on forest
health, this deposition ultimately contributes to excess nutrient
loading of estuaries as it ``cascades'' from upland deposition through
forest soils and water to its eventual release into coastal estuarine
systems (Driscoll et al. 2003). According to a National Oceanic and
Atmospheric Administration study in 1999, 61 percent of the 23
estuaries examined in the Northeast were classified as moderately to
severely degraded by nutrient over-enrichment. Such enrichment has been
shown to lead to multiple environmental problems for estuarine
ecosystems. Ecological problems associated with nitrogen deposition
have also been identified in the west (e.g., Fenn et al., 2003a,b).
When combined with sulfur, nitrogen has contributed to the
acidification of soils and surface waters as mentioned above, as well
as increasing the availability of potentially toxic aluminum, and the
long-term loss of some critical available nutrients in the soil.
Consequently, nitrogen deposition, whether by itself, or in combination
with sulfur, is having profound effects on ecosystems in this region
and others.
Mercury is a neurotoxin that accumulates in the food chain and is
particularly damaging to higher-level consumers, such as loons. In
humans, high mercury levels may result in neurological damage,
including altered behavioral patterns known as the ``mad hatter''
disease. Human health concerns due to high mercury levels in many
Adirondack lacks continue to result in fishing restrictions. Lower down
in the food web, the flathead minnow has been documented to suffer
reduced reproductive success with higher mercury contamination
(Hammerschmidt et al., 2002). In larger fish that prey on minnows
(e.g., walleye), similar impacts to reproduction have been documented
(Lastif et al., 2001). Similarly, recent information on another top-
level fish predator--the Common loon--indicates that changes in loon
behavior and decreased reproductive success contribute to declining
loon populations as a consequence of high mercury concentrations.
Finally, ground level-ozone, is formed when nitrogen oxides and
volatile organic compounds combine in the presence of high temperatures
and sunlight. Although technically not transported by atmospheric
deposition, it is an important secondary pollutant inextricably linked
to this issue. Ozone directly harms plants, causing lesions on leaves
and altered cellular function. This has lead to altered composition and
structure in early successional species (Barbo et al. 1998), and
concern for a number of plant species in federally protected areas (NPS
2003). A great concern is that the effects of ground-level ozone
ultimately alter the ability of plants to perform one of the most basic
and essential of all ecological processes--photosynthesis. The net
effect is a decrease in vitality and increased susceptibility to
diseases and severe weather events, both environmental conditions that
appear to be on the increase.
ADIRONDACKS
The Adirondacks probably exhibit the most severe ecological impacts
from acidic deposition of any region in North America (Driscoll et al.,
2003a, b). This large forested area with over 2770 lakes, covering six-
million acres in northern NY, has served as the ``canary in a coal
mine'' for acid rain in the United States due to the highly sensitive
soils and significant deposition rates. Studies of 1,469 Adirondack
lakes show that nearly half (41 percent) are acidic (i.e., pH below
5.5), with the acidic condition in the vast majority of these impacted
lakes (81 percent) directly attributable to atmospheric deposition. In
addition to the chronic acidification described above, spring acidity
peaks occur on a large percentage of Adirondack streams and lakes. The
peaks are caused by the spring runoff of highly acidic water that has
accumulated in the snow pack during the winter. The spring acidity
peaks can result in spikes of acidification that are lethal to fish and
change invertebrate communities--completely altering aquatic species
composition and structure even in some highly protected, remote
locations.
Research shows that there has been a cumulative effect of
atmospheric deposition on watersheds. Calcium--an essential element for
healthy forests--has been depleted from the soil. In many acidified
watersheds the calcium levels are at or below the thresholds known to
cause dieback and reproductive failure of sugar maple and red spruce
trees. Another effect of acidified watersheds is the mobilization of
aluminum out of the soil and into the water, where it is toxic--and in
many cases lethal--to fish, plants and other organisms.
Mercury, another pollutant of atmospheric deposition, is also
impacting the Adirondacks. At least 30 lakes--including remote
wilderness lakes--have fish species considered unsafe for women and
children to eat because of elevated mercury levels (13 were added to
this list in the summer of 2004). Recent studies from the Adirondack
Cooperative Loon Program show that 17 percent of the loons sampled have
blood mercury levels that are high enough to alter behavior, resulting
in the decreased reproductive success of loon populations.
CENTRAL APPALACHIAN MOUNTAINS
The Central Appalachian Mountain region is exposed to acidic
deposition levels that are among the highest in the United States. The
National Acid Precipitation Assessment Program (NAPAP) identified this
area and the Adirondacks as the two regions of the country most
affected by acidic deposition (Baker et al. 1991). Unfortunately, the
places in the Central Appalachian region most susceptible to these
pollutants also contain the highest levels of biodiversity and
sometimes are already under protected status. Susceptibility to acidic
deposition in this region is determined by bedrock type, and the
region's ridges are commonly associated with base-poor bedrock types
that provide little acid-neutralizing capacity. Most of these ridges
and streams are associated with public lands, including national
forests, designated Wilderness areas, and the Shenandoah National Park.
Stream surveys and long-term monitoring stations have shown that at
least one-third of the landscape associated with the mountain ridges
have been harmed by acidic deposition, as indicated by high
concentrations of sulfur and acidity in streams and loss of aquatic
biota.
Modeling conducted for the Southern Appalachian Mountain
Initiative, a multi-state, multi-stakeholder assessment, indicated that
prospective reductions of acid-precursor emissions will be insufficient
to prevent further acidification of sensitive streams and soils
associated with forested mountain watersheds in this region (Sullivan
et al. 2002). Trend analysis indicates that streams in this region have
yet to show signs of recovery, and has the highest likelihood of
further acidification in the eastern and northern United States
(Stoddard et al. 2003).
CHESAPEAKE BAY
The Chesapeake Bay is the largest estuary in the contiguous United
States, and is extremely susceptible to atmospherically deposited
pollutants (EPA 2004). While not especially vulnerable to
acidification, atmospherically deposited nitrogen plays a significant
role in the nutrient cycling of the Chesapeake Bay--as in other
estuaries (NOAA 2004). Current estimates of the percent contribution of
atmospherically deposited nitrogen to the Chesapeake Bay are 20-32
percent--although such estimates are known to vary considerably due to
small sample sizes, complexities of seasonal variation, and other
factors (Sheeder et al. 2002).
While nitrogen is a naturally occurring nutrient in the Chesapeake
Bay, excessive additions of nitrogen have aided in the degradation of
important habitat in what remains the most productive estuary in the
world. Such nutrification results in algal blooms that reduce water
clarity, diminishing the capacity for sunlight to penetrate to the Bay
floor. Submerged aquatic vegetation (SAV) is unable to persist in these
low-light conditions, resulting in loss of sediment holding functions
and creating a positive feedback loop for increasingly turbid water.
Additionally, algae-decomposing bacteria consume dissolved oxygen,
leading to zones of anoxia (oxygen-poor regions) that are unable to
support estuarine biota. The Chesapeake Bay Program recognizes that
addressing atmospheric sources of nitrogen is a key strategy to Bay
restoration.
RECOMMENDATIONS
The National Research Council of the National Academies of Science
published ``Air Quality Management in the United States'' in January
2004. It called for a more thorough consideration of the impacts to
ecosystem health in the design of air pollution control strategies.
Specifically, the report's recommendation for improved air quality was
to:
Enhance protection of ecosystems and other aspects of public
welfare. Many of the programs and actions undertaken in
response to the Clean Air act have focused almost entirely on
the protection of human health. Further efforts are needed to
protect ecosystems and other aspects of public welfare.
Specifically:
Although mandated by the CAA, the protection of ecosystems
affected by air pollution has not received appropriate
attention in the implementation of the act. A research and
monitoring program is needed that can quantify the effects of
air pollution on the structure and functions of ecosystems.
That information can be used to establish realistic and
protective goals, standards, and implementation strategies for
ecosystem protection.
The Nature Conservancy agrees with this and other recommendations
in the report. The Conservancy would like to work with the Committee,
with private industry and other interested parties to improve our
understanding of the ecosystem level effects of atmospheric deposition
and to incorporate ecosystem health concerns in setting appropriate
standards in clean air policy and in the development of multi-emissions
legislation.
CONCLUSION
The Nature Conservancy is continuing its efforts to study the
effects of atmospheric deposition on globally significant ecosystems.
We look forward to working with the Committee staff and others in the
public and private sector on the issue of atmospheric deposition Thank
you for the opportunity to provide testimony on this important matter.
selected supporting literature
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E. Martin, R. A. Hallett, and J. L. Stoddard. 2003. Is Nitrogen
Deposition Altering the Nitrogen Status of Northeastern Forests?
BioScience 53: 375-389.
Baker, L.A., A.T. Herlihy, P.R. Kaufmann, and J.M. Eilers. 1991a.
Acidic lakes and streams in the United States: the role of acidic
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Barbo, D.N., A.H. Chappelka, G.L. Somers, M.S. Miller-Goodman, and K.
Stolte. 1998. Diversity of an early successional plant community as
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Clarke, D. Hope, D. A. Jaffe, S. Copeland, L. Geiser, H.M. Rueth,
and J.O. Sickman. 2003a. Nitrogen Emissions, Deposition, and
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Neitlich. 2003b. Ecological effects of Nitrogen Deposition in the
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__________
Statement of Large Public Power Council
The Large Public Power Council (LPPC) appreciates the opportunity
to submit the following written statement in support of Clear Skies Act
of 2005 (S. 131). LPPC has been a long-time supporter of passing
comprehensive multi-pollutant control legislation for the power sector.
We were the first industry group to endorse the Administration's
original Clear Skies proposal with our letter to President Bush in
September 2002 and our support remains strong. LPPC believes the time
to act is now. The passage of the 2005 version of the Clear Skies Act
will achieve not only a 70 percent reduction in power plant emissions,
but also can improve air quality faster, with greater environmental
certainty, and more cost effectively than continued regulation under
current law.
LPPC is an association of 24 of the largest public power systems in
the United States. LPPC members directly or indirectly provide
reliable, affordably priced electricity to most of the 40 million
customers served by public power. We own and operate over 44,000
megawatts of generation and approximately 26,000 circuit miles of
transmission lines. LPPC member utilities and public power agencies are
located in states and territories representing every region of the
country. In addition, member utilities own and operate a diverse
portfolio of fossil, nuclear, hydropower, and other renewable energy
sources that reflect the national energy mix.
All LPPC members are committed to environmental excellence and
among the 24 LPPC member utilities we have some supporting more
environmentally stringent provisions and others suggesting a narrower
scope. LPPC looks forward to helping to shape revisions to the Clean
Air Act.
Stringent Emissions Reductions. If enacted into law, Clear Skies
would be the most ambitious pollution control program ever established
to reduce power plant emissions. The administration's proposal would
cut SO<INF>2</INF> emissions by 73 percent (from 11.2 to 3 million
tons), NOx emissions by 67 percent (from 5.1 to 1.7 million tons) and
mercury emissions by 69 percent (from 48 to 15 tons) from 2000 levels.
Clear Skies' reductions would build upon the reductions in
SO<INF>2</INF> and NOx that the power sector has achieved to comply
with the acid rain and NOx SIP-call programs (43 percent reduction in
SO<INF>2</INF> and 45 percent reduction in NOx from 1990 levels). What
is especially impressive about the Clear Skies reduction targets is the
long-term improvement in environmental performance achieved by the
power industry. After full implementation of Clear Skies, fossil-fired
power plants will achieve 76 percent reduction in NOx and 83 percent
reduction in SO<INF>2</INF> from 1980 levels. Moreover, the power
industry will achieve these reductions while fossil-fueled electricity
production will have more than double during the same period (1980 to
2020). This means that, on average, for every unit of electricity
generated from fossil fuels, the emissions after implementation of
Clear Skies will be less than one tenth of the emissions for generating
the same unit of electricity in 1980. (See Figure 1.)
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Environmental Certainty. The Clear Skies Act provides absolute
environmental certainty. If enacted into law, the emissions reductions
are locked in today by statute. Specifically, Clear Skies establishes
emissions caps guaranteeing that power plants will not exceed the total
allotted levels for each air pollutant. Moreover, Clear Skies contains
specific compliance dates when those emissions caps begin to apply and
when the power plant reductions must be achieved.
The Clear Skies reductions are rock solid. Since the emissions caps
and compliance deadlines are set by statute, they cannot be disputed,
delayed or otherwise legally challenged in court. Similarly, Clear
Skies contains other provisions to assure full and timely achievement
of the mandated emissions reductions. One such provision is an absolute
statutory prohibition against any legal challenge of the annual
allowance allocations--which is a key component of the emissions
trading program. Specifically, Clear Skies expressly bars anyone from
legally challenging in court EPA's calculation of allowance allocations
and the determination of any values used in such calculations. Another
provision is the use of default allowance reconciliation procedures,
which apply if EPA fails to promulgate the core rules for allocating,
tracking, and trading allowances by the time that the reduction
obligations take effect. These default procedures establish a fallback
statutory framework for ensuring full implementation and compliance
with the Clear Skies reduction requirements even if EPA has not yet
promulgated sufficient implementing regulations.
Key Tool for Achieving Clean Air Goals. The targets and time
schedules set forth in the bill for reducing NOx, SO<INF>2</INF>, and
mercury are ambitious, but appear appropriate to achieve the health and
environmental goals established under the Clean Air Act. This is
confirmed by the enormous air quality improvements that will result
from implementation of the Clear Skies control program. The facts of
Clear Skies tell a very positive story.
The best way to measure the air quality benefits resulting from
Clear Skies is to evaluate its contribution to attaining the new
ambient air quality standards for fine particles and ozone. These air
quality standards are ``the Clean Air Act bedrock measure of public
health protection.'' Measured by this yardstick, Clear Skies does
extraordinary well.\1\ Specifically, the Clear Skies reductions, in
combination with existing control programs, are projected to reduce
dramatically the number of areas currently not meeting the new air
quality standards for fine particles and ozone. EPA modeling indicates:
---------------------------------------------------------------------------
\1\ Note that the above projections are not entirely due to Clear
Skies, but also benefit from emission reductions from other Clean Air
Act programs such as the off-road diesel rule.
---------------------------------------------------------------------------
<bullet> Eastern state fine particle non-attainment counties are
projected to decline from 114 currently, to 27 in 2010, to 8 in 2020
(93 percent reduction).
<bullet> Eastern state 8-hour ozone non-attainment counties are
projected to decline from 268 currently, to 44 in 2010, to 20 in 2020
(92 percent reduction).
Areas that are still non-attainment in 2020 are also much closer to
attainment. In areas where EPA projects to be in nonattainment
notwithstanding implementation of the Clear Skies program, Clear Skies
still plays a crucial role in attaining the air quality standards. The
air quality improvements (particularly, reductions in regional air
pollution transport) achieved by Clear Skies will better position
States in developing effective local air pollution control strategies
for attaining the air quality standards as expeditiously as possible.
Clear Skies was never intended to be the nation's sole control strategy
for attaining the new standards--particularly since it addresses only
one sector and source of emissions out of many in the economy.
New Paradigm for Cleaner Air. The Clear Skies legislation
establishes a new paradigm for bringing cleaner air, sooner, at a lower
cost. This new paradigm is essential to assure that the stringent
emission reductions required under Clear Skies levels are technically
and economically feasible, as well as consistent with objectives to
ensure adequate supplies of reasonably priced power. One essential
element of this new paradigm is the use of emissions trading systems
for achieving the reductions at the lowest possible cost to industry
and the communities we serve. To this end, careful attention must be
given to the methodology for distributing NOx, SO<INF>2</INF>, and
mercury allowances to electric generating units. LPPC supports the
Clear Skies methodology for allocating allowances to only those units
subject to the multi-pollutant reduction requirements. We strongly
oppose other legislative proposals to distribute allowances through any
type of allowance auction system. Although different allowance
allocation methodologies may be appropriate for different pollutants,
whatever methodology adopted must result in an equitable allocation of
the control obligations to those generating facilities.
Another key component of a new air regulatory paradigm is a
coordinated emission reduction strategy. Under existing law, the
electric power sector currently faces emissions control requirements
that are duplicative, contradictory, costly and overly complex. Such a
regulatory scheme poses significant planning problems and makes it very
difficult to formulate an efficient strategy for meeting future air
regulatory control requirements, many of which require long
construction cycles and large capital expenditures. The failure to
improve planning certainty not only creates great investment risks, but
could threaten the reliability and affordability of our nation's
electric supply.
LPPC is ready to work with the Senate Environment and Public Works
Committee and other Members of Congress in developing a new regulatory
paradigm that achieves superior environmental results in a more
efficient and cost-effective manner. Key elements of this new paradigm
include reform of new source review, elimination of redundant air
regulatory requirements, and a period of regulatory certainty going
forward for the power generation sector.
In conclusion, LPPC appreciates the Committee's leadership on this
important environmental initiative and stands ready to establish a new
paradigm for bringing cleaner air, sooner, at a lower cost. The time to
pass multi-pollutant control legislation is now. Passage of such
legislation will ensure clean air for our nation and do so while
protecting the economic well being of our communities and providing an
adequate supply of reliable and affordable energy.
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Statement of Hon. Christine Todd Whitman, Administrator, U.S.
Evironmental Protection Agency, April 8, 2003
I. INTRODUCTION
Thank you, Mr. Chairman and Members of the Committee for the
opportunity to speak with you today about the Clear Skies Act of 2003.
Based on one of the most successful programs created by the Clean Air
Act, Clear Skies is a proposal to substantially reduce emissions of the
three most harmful pollutants from power generation--and to do so in a
way that is much faster and more efficient than under current law. As
President Bush said in the State of the Union Address, Clear Skies will
advance our goal of ``promot[ing] energy independence for our country,
while dramatically improving our environment.'' The Administration is
committed to working with this Subcommittee and Congress to pass
legislation this year. The widespread support for multi-pollutant
legislation to reduce power plant emissions is a strong indicator that
the time for action on this critical issue is now. Failure to enact
Clear Skies this year will delay important public health and
environmental benefits.
This country should be very proud of the progress we have already
made in cleaning up our air. Since the Clean Air Act was first enacted
in 1970, we have reduced emissions of the six primary air pollutants by
25 percent. During the same time period, the economy has grown
significantly--the Gross Domestic Product increased 160 percent;
vehicle miles traveled increased 150 percent; energy consumption
increased 40 percent; and the U.S. population increased 35 percent.
Although we have made much progress since 1970, we still face major
air quality challenges in many parts of the country. Clear Skies is the
most important next step we can take to address these challenges and
achieve healthy air and a clean environment for all Americans. Clear
Skies would make great strides toward solving our remaining air quality
problems in a way that also advances national energy security and
promotes economic growth. It would reduce power plant emissions of
SO<INF>2</INF>, NOx and mercury by approximately 70 percent from
today's levels and do it faster, with more certainty, and at less cost
to American consumers than would current law. Last year's EPA estimates
project that, over the next decade, all the programs of the existing
Clean Air Act would reduce power plant emissions of SO<INF>2</INF> and
NOx by approximately 23 million tons. Over the same time period, Clear
Skies would reduce emissions of these same pollutants by 58 million
tons--a reduction of 35 million tons of pollution that will not be
achieved under current law\1\.
When fully implemented, Clear Skies would prolong thousands of
lives each year, providing billions of dollars in economic benefits,
save millions of dollars in health care costs, and increase by millions
the number of people living in areas that meet our new, more stringent
health-based national air quality standards. Clear Skies would also
virtually eliminate chronic acidity in northeastern lakes, reduce
nitrogen loading in coastal waters, and help restore visibility in our
national parks.
The Clean Air Act has been, and continues to be, a vehicle for
great progress in improving the health and welfare of the American
people. The Clear Skies Act substantially expands one of the most
successful Clean Air Act programs--the Acid Rain Program--and reduces
the need to rely on complex and less efficient programs. The result
would be significant nationwide human health and environmental
benefits; certainty for industry, states and citizens; energy security;
and continuing low costs to consumers.
II. CLEAR SKIES PROVIDES SIGNIFICANT BENEFITS
The heart of Clear Skies is a proven cap-and-trade approach to
emissions reductions. Mandatory caps restrict total emissions and
decline over time. Clear Skies would continue the existing national
cap-and-trade program for SO<INF>2</INF>, but dramatically reduce the
cap from 9 million to 3 million tons. Clear Skies would also use a
national cap-and-trade program for mercury that would reduce emissions
from the current level of about 48 tons to a cap of 15 tons, and would
employ two regional cap-and-trade programs for NOx to reduce emissions
from current levels of 5 million tons to 1.7 million tons. The specific
caps and their timing are set forth in Table 1.
Table 1. Clear Skies Emission Reductions Timetable
Although national in scope, Clear Skies recognizes and adjusts for
important regional differences in both the nature of air pollution and
the relative importance of emissions from power generation. The eastern
half of the country needs reductions in NOx emissions to help meet the
ozone and fine particle standards, which generally are not an issue in
the western half of the county (with the exception of California, which
does not have significant emissions from existing coal-fired power
plants). The western half of the country needs NOx reductions primarily
to reduce the regional haze that mars scenic vistas in our national
parks and wilderness areas, and the nitrogen deposition that harms
fragile forests. Recognizing these regional differences, Clear Skies
would establish two trading zones for NOx emissions and prohibit
trading between the zones to ensure that the critical health-driven
goals in the East are achieved.
Clear Skies also recognizes the special visibility protection
measures that have been developed by states participating in the
Western Regional Air Partnership (WRAP). Clear Skies would essentially
codify the WRAP's separate SO<INF>2</INF> backstop cap-and-trade
program, which would come into effect only if the WRAP states did not
meet their 2018 SO<INF>2</INF> emissions targets.
Finally, Clear Skies requires tough, technology-based new source
standards on all new power generation projects and maintains special
protections for national parks and wilderness areas when sources locate
within 50 km of ``Class I'' national parks and wilderness areas.
Significant Public Health and Environmental Benefits
The public health and environmental benefits of Clear Skies present
compelling reasons for its immediate passage. EPA projects that, by
2010, reductions in fine particle and ozone levels under Clear Skies
would result in billions of dollars in health and visibility benefits
nationwide each year, including as many as 6,400 prolonged lives. Using
an alternative methodology, 3,800 lives would be prolonged by 2010.
Under EPA's base methodology for calculating benefits, Americans would
experience significant benefits each year by 2020, including:
<bullet> 12,000 fewer premature deaths (7,000 under an alternative
analysis),
<bullet> 11,900 fewer visits to hospitals and emergency rooms for
cardiovascular and respiratory symptoms,
<bullet> 370,000 fewer days with asthma attacks, and
<bullet> 2 million fewer lost work days.
Using the alternative methodology, by 2020 Americans would
experience 7,000 fewer premature deaths each year.
Methodologies do not exist to quantify or monetize all the benefits
of Clear Skies. Still, it is clear that the benefits far exceed the
costs. EPA estimates that the health benefits we can quantify under
Clear Skies are worth $93 billion annually by 2020--substantially
greater than the annual costs of approximately $6.5 billion. An
alternative approach projects annual health benefits of $11 billion,
still significantly outweighing the costs. The Agency estimates an
additional $3 billion in benefits from improving visibility at select
National Parks and Wilderness Areas. These estimates do not include the
many additional benefits that cannot currently be monetized but are
likely to be significant, such as human health benefits from reduced
risk of mercury emissions, and ecological benefits from improvements in
the health of our forests, lakes, and coastal waters.
Clear Skies would achieve most of these benefits by dramatically
reducing fine particle pollution caused by SO<INF>2</INF> and NOx
emissions, which is a year-round problem. Of the many air pollutants
regulated by EPA, fine particle pollution is perhaps the greatest
threat to public health. Hundreds of studies in the peer reviewed
literature have found that these microscopic particles can reach the
deepest regions of the lungs. Exposure to fine particles is associated
with premature death, as well as asthma attacks, chronic bronchitis,
decreased lung function, and respiratory disease. Exposure is also
associated with aggravation of heart and lung disease, leading to
increased hospitalizations, emergency room and doctor visits, and use
of medication.
By reducing NOx emissions, Clear Skies also would reduce ozone
pollution in the eastern part of the country and help keep ozone levels
low in the western portion of the country. Ozone (smog) is a
significant health concern, particularly for children and people with
asthma and other respiratory diseases who are active outdoors in the
summertime. Ozone can exacerbate respiratory symptoms, such as coughing
and pain when breathing deeply, as well as transient reductions in lung
function and inflammation of the lung. Ozone has also been associated
with increased hospitalizations and emergency room visits for
respiratory causes. Repeated exposure over time may permanently damage
lung tissue.
Current estimates indicate that more than 350 counties fail to meet
the health-based fine particle and ozone standards. As a result, 45
percent of all Americans live in counties where monitored air was
unhealthy at times because of high levels of fine particles and
ozone.\2\ Clear Skies, in combination with existing control programs,
would dramatically reduce that number, as shown in Figure 1. In areas
where attainment is not projected, Clear Skies would assist those areas
in addressing the air quality problems. Even counties currently
measuring attainment would benefit from the reductions under Clear
Skies. Throughout the West, Clear Skies would hold emissions from power
plants in check, preserving clean air in high-growth areas and
preventing degradation of the environment, even as population and
electricity demand increase.
[See Attached Figure 1, Widespread Attainment with Fine Particle
and Ozone Standards]
Clear Skies would also reduce mercury emissions from power plants.
EPA is required to regulate mercury because EPA determined that mercury
emissions from power plants pose an otherwise unaddressed significant
risk to health and the environment, and because control options to
reduce this risk are available. Mercury, a potent toxin, can cause
permanent damage to the brain and nervous system, particularly in
developing fetuses when ingested in sufficient quantities. People are
exposed to mercury mainly through eating fish contaminated with
methylmercury.
Mercury is released into the environment from many sources. Mercury
emissions are a complex atmospheric pollutant transported over local,
regional, national, and global geographic scales. EPA estimates that 60
percent of the mercury falling on the U.S. is coming from current man-
made sources. Power generation remains the largest man-made source of
mercury emissions in the United States. In 1999, coal-fired power
plants emitted 48 tons of mercury (approximately 37 percent of man-made
total). These sources also contribute 1 percent of mercury to the
global pool.
Mercury that ends up in fish may originate as emissions to the air.
Mercury emissions are later converted into methylmercury by bacteria.
Methylmercury accumulates through the food chain: fish that eat other
fish can accumulate high levels of methylmercury. EPA has determined
that children born to women who may have been exposed to high levels
may be at some increased risk of potential adverse health effects.
Prenatal exposure to such levels of methylmercury may cause
developmental delays and cognitive impairment in children. Clear Skies
will require a 69 percent reduction of mercury emissions from power
plants.
In addition to substantial human health benefits, Clear Skies would
also deliver numerous environmental benefits. For example, under Clear
Skies, we project that 10 million fewer pounds of nitrogen would enter
the Chesapeake Bay annually by 2020, reducing potential for water
quality problems such as algae blooms and fish kills. In fact, the
Chesapeake Bay States, including NY, VA, MD, PA, DE, WV and DC,
recently agreed to incorporate the nitrogen reductions that would
result from Clear Skies legislation as part of their overall plan to
reduce nutrient loadings to the Bay. Clear Skies would also accelerate
the recovery process of acidic lakes, virtually eliminating chronic
acidity in many Northeastern lakes. For decades fish in the Adirondacks
have been decimated by acid rain, making many lakes completely
incapable of supporting populations of fish such as trout and
smallmouth bass. The Acid Rain Program has allowed some of these lakes
and the surrounding forests to begin to recover; Clear Skies would
achieve additional needed reductions. Clear Skies would also help other
ecosystems suffering from the effects of acid deposition by preventing
further deterioration of Southeastern streams. Finally, Clear Skies
would improve visibility across the country, particularly in our
treasured national parks and wilderness areas.
Clear Skies is designed to ensure that these public health and
environmental benefits are achieved and maintained. By relying on
mandatory caps, Clear Skies would ensure that total power plant
emissions of SO<INF>2</INF>, NOx and mercury would not increase over
time. This is a distinct advantage over traditional command-and-control
regulatory methods that establish source-specific emission rates but
which allow total emissions to increase over time. Like the Acid Rain
Program, Clear Skies would have much higher levels of accountability
and transparency than most other regulatory programs. Sources would be
required to continuously monitor and report all emissions, ensuring
accurate and complete emissions data. If power plants emit more than
allowed, financial penalties are automatically levied--without the need
for an enforcement action. More importantly, every ton emitted over the
allowed amount would have to be offset in the following year, ensuring
no net environmental harm. This high level of environmental assurance
is rare in existing programs; Clear Skies would make it a hallmark of
the next generation of environmental protection.
Reasonable Costs and Energy Security for Consumers and Industry
The President directed us to design Clear Skies to meet both our
environmental and our energy goals. Under Clear Skies, electricity
prices are expected to remain at or below current levels over the next
decade. Our extensive economic modeling of the power industry looked at
a broad array of factors to gauge the effects of Clear Skies on the
energy industry--and they all show that cleaner air and energy security
can go hand-in-hand.
Clear Skies would maintain energy diversity. With Clear Skies, coal
production for power generation would be able to grow by almost 10
percent from 2000 to 2020 while air emissions are significantly
reduced. EPA's extensive economic modeling for Clear Skies demonstrates
that the proposal's emission reductions would be achieved primarily
through retrofitting controls on existing plants. Clear Skies's
timeframe and certainty enable the power sector to meet aggressive
emission reduction targets without fuel switching. This is important
not only to power generators and their consumers who want to continue
to rely on our most abundant, reliable, affordable and domestically
secure source of energy, but also to other consumers and industries
whose livelihoods could be hurt by a rise in natural gas prices. Our
analysis shows that Clear Skies would not cause a significant increase
in natural gas prices.
Under Clear Skies by 2010, about three-fourths of U.S. coal-fired
generation is projected to come from units with billions of dollars of
investment in advanced SO<INF>2</INF> and/or NOx control equipment
(such as scrubbers and Selective Catalytic Reduction, which also
substantially reduce mercury emissions). In 2020, the percentage is
projected to rise to 85 percent. Cost effective strategies and
technologies for the control of sulfur dioxide and nitrogen oxides
emissions exist now, and--thanks in good part to the Clear Skies
market-based system--improved methods for these pollutants, and for
mercury, are expected to become increasingly cost-efficient over the
next several years. In fact, the Institute of Clean Air Companies
forecasts that the U.S. markets for most technology sectors will remain
fairly strong, adding momentum to the air pollution control technology
industry. We expect that the Clear Skies Act will provide great
benefits to American jobs in the engineering and construction
industries.
One of the key reasons Clear Skies would be cost-effective is its
reliance on cap-and-trade programs. Like the Acid Rain Program upon
which it is based, Clear Skies would give industry flexibility in how
to achieve the needed emission reductions, which allows industry to
make the most cost-effective reductions and pass those savings on to
consumers. Power plants would be allowed to choose the pollution
reduction strategy that best meets their needs (e.g., installing
pollution control equipment, switching to lower sulfur coals, buying
excess allowances from plants that have reduced their emissions beyond
required levels). Like the Acid Rain program, Clear Skies includes
banking provisions, enabling companies to save unused allowances for
future use. Banking creates a tangible, quantifiable, economic
incentive to decrease emissions beyond allowable levels, which EPA
projects will result in significant early benefits due to over-
compliance in the initial years, particularly for SO<INF>2</INF>. It
also leads to gradual emissions reductions over time, and therefore a
less disruptive transition to tighter emission controls needed to
address lingering problems. Based on past experience under the Acid
Rain Program, by placing a monetary value on avoided emissions, Clear
Skies would stimulate technological innovation, including efficiency
improvements in control technology, and encourage early reductions.
Assistance to State and Local Governments
Under the current Clean Air Act, state and local governments face
the daunting task of meeting the new fine particle and ozone standards.
Clear Skies would substantially reduce that burden. By making enormous
strides toward attainment of the fine particle and ozone standards,
Clear Skies would assist state and local governments in meeting their
obligation under the Clean Air Act to bring areas into attainment with
these health-based standards, and provide Americans with cleaner air.
Clear Skies' assistance to states goes beyond ensuring that power
plants will reduce their emissions. Clear Skies relies on a common-
sense principle--if a local air quality problem will be solved in a
reasonable timeframe by the required regional reductions in power plant
emissions, we should not require local areas to adopt local measures.
Under Clear Skies, areas that are projected to meet the ozone and fine
particles standards by 2015 as a result of Clear Skies would have a
legal deadline of 2015 for meeting these standards (i.e., will have an
attainment date of 2015). These areas would be designated
``transitional'' areas, instead of ``nonattainment'' or ``attainment,''
and would not have to adopt local measures (except as necessary to
qualify for transitional status). They would have reduced air quality
planning obligations and would not have to administer more complex
programs, such as transportation conformity, nonattainment New Source
Review, or locally based progress or technology requirements in most
circumstances.
III. IMPROVING THE CLEAN AIR ACT WITH CLEAR SKIES
Clear Skies would improve the Clean Air Act in a number of ways. It
would build on the proven portions of the Clean Air Act--like the
national ambient air quality standards and the Acid Rain Program--and
reduce reliance on complex, less efficient requirements like New Source
Review for existing sources. The mandatory emissions caps at the heart
of Clear Skies guarantee that reductions will be achieved and
maintained over time. In contrast, uncertainties with respect to
regulatory development, litigation, and implementation time make it
difficult to estimate how quickly and effectively current regulations
would be implemented under the current Clean Air Act. The level of
SO<INF>2</INF> and NOx reductions we expect over the next decade with
Clear Skies legislation could not be achieved under the existing Act.
After that, we know that Clear Skies would achieve significant
reductions, while both the timing and level of reductions under the
current Clean Air Act are unclear.
Early Reductions
One of the major reasons we need Clear Skies now is that adoption
of Clear Skies would provide greater protection over the next decade
than the traditional regulatory path. The Clear Skies Act will result
in significant over-compliance in the early years, particularly for
SO<INF>2</INF>, because sources are allowed to bank excess emissions
reductions. For reasons described below, our analyses indicate that the
cumulative SO<INF>2</INF> and NOx emissions reductions achieved by
Clear Skies over the next decade would not be achieved in the same
timeframe under the current Clean Air Act. Last year's EPA estimates
project that power plants would emit 35 million fewer tons of NOx and
SO<INF>2</INF> over the next decade under Clear Skies than they would
under the current Clean Air Act--this more than doubles the reductions
otherwise expected and would ensure significantly larger human health
and environmental benefits. Our analysis suggests that the amount of
pollution controls that the industry will have to install under Clear
Skies over the next decade will stretch the limits of available labor
and other construction resources, but can in fact be accomplished while
maintaining energy reliability and continuing the downward trend in
electricity prices.
Legislation Now Is Better than Regulation Followed by Years of
Litigation
Even if Clear Skies is not passed by Congress, power plants will be
required to reduce their emissions of SO<INF>2</INF>, NOx and mercury.
There is no more cost effective way than Clear Skies to meet the
requirements of the current Clean Air Act or to achieve our public
health and environmental goals. We know that, absent new legislation,
EPA and the states will need to take a number of regulatory actions,
although it is unclear now when the requirements will come into effect
or what their control levels will be.
Clear Skies has several benefits over the regulatory scheme that
will otherwise confront power generators. Clear Skies is designed to go
into effect immediately upon enactment. Power plants would immediately
understand their obligations to reduce pollution and would be rewarded
for early action. As a result, public health and environmental benefits
would begin immediately. Given Clear Skies' design, it is unlikely that
litigation could delay the program (particularly since Congress would
decide the two most controversial issues--the magnitude and timing of
reductions). In contrast, under the current Clean Air Act, power plants
would not know what their obligations would be until after EPA and
states started and completed numerous rulemakings.
Past experience suggests that litigation delays on the regulatory
path are likely. Our experience with two cap-and-trade programs--the
legislatively created Acid Rain Trading Program and the
administratively created NOx SIP Call--illustrates the benefits of
achieving our public health and environmental goals with legislation
rather than relying solely on existing regulatory authority.
Though we project a great deal of benefits will arise from
implementation of the NOx SIP call, the journey has been difficult and
is not yet over. The NOx SIP call was designed to reduce ozone-forming
emissions by one million tons across the eastern United States. The
rulemaking was based on consultations begun in 1995 among states,
industry, EPA, and nongovernmental organizations. A Federal rule was
finalized in 1998. As a result of litigation, one state was dropped and
the 2003 compliance deadline was moved back for most states. Most
states are required to comply in 2004, although two states will have
until 2005 or later. Meanwhile, sources in these states continue to
contribute to Eastern smog problems. Although the courts have largely
upheld the NOx SIP Call, the litigation is not completely over.
Industry and state challenges to the rules have made planning for
pollution control installations difficult, raised costs to industry and
consumers, and delayed health and environmental benefits.
In contrast, reductions from the Acid Rain Program began soon after
it passed (even before EPA finalized implementing regulations). There
were few legal challenges to the small number of rules EPA had to
issue--and none of the challenges delayed implementation of the
program. The results of the program have been dramatic--and
unprecedented. Compliance has been nearly 100 percent. Reductions in
power plant SO<INF>2</INF> emissions were larger and earlier than
required, providing earlier human health and environmental benefits.
Now, in the ninth year of the program, we know that the greatest
SO<INF>2</INF> emissions reductions were achieved in the highest
SO<INF>2</INF>-emitting states; acid deposition dramatically decreased
over large areas of the eastern United States in the areas where they
were most critically needed; trading did not cause geographic shifting
of emissions or increases in localized pollution (hot spots); and the
human health and environmental benefits were delivered broadly. The
compliance flexibility and allowance trading has reduced compliance
costs by 75 percent from initial EPA estimates.
[See 2001 Acid Rain Program Progress Report submitted for the
record.]
It is clear from this example that existing regulatory tools often
take considerable time to achieve significant results, and can be
subject to additional years of litigation before significant emissions
reductions are achieved. Under this scenario, there are few incentives
to reduce emissions until rules are final and litigation is complete,
posing potentially significant delays in achieving human health and
environmental benefits.
The Clean Air Act contains several provisions under which EPA will
be required to impose further emission controls on power plants in
order to allow states to meet the new national ambient air quality
standards (NAAQS) for PM<INF>2.5</INF> and ozone. For example, Section
126 of the Clean Air Act provides a petition process that states can
use to force EPA to issue regulations to reduce emissions of
SO<INF>2</INF> and NOx from upwind sources, including power plants. A
number of states have indicated that they intend to submit Section 126
petitions in the near future. However, compared to Clear Skies, this
approach will almost certainly involve years of litigation and
uncertainty about reduction targets and timetables.
Additional reductions are required from power plants through the
regional haze rule's BART (Best Available Retrofit Technology)
requirements and forthcoming mercury MACT (maximum achievable control
technology) requirements. EPA is required to propose by the end of 2003
a MACT standard for utility mercury emissions that must be met, plant-
by-plant, by every coal-fired utility with unit capacity above 25
megawatts. EPA is required to finalize this rule by the end of 2004.
The Act generally gives sources 3 years within which to comply with
MACT standards. This compliance obligation could be delayed by a court
if EPA's rule is challenged.
Because these regulations will be the product of separate Federal,
state and judicial processes, comparable health and environmental
protection is likely to cost more under the current Clean Air Act than
under Clear Skies. EPA estimates that a comprehensive, integrated
approach relying on cap-and-trade programs could reduce costs by one
fourth as compared to the regulatory approach achieving comparable
emission reductions. These cost savings would be passed on to the
public through lower electricity prices and greater profitability to
investors and owners of electric generation.
New Source Review
Some have suggested that Clear Skies is an attempt to undermine the
Clean Air Act. This is simply not true. To achieve the next generation
of environmental progress, we must build on the successful provisions
in laws that have served us well--and learn from those provisions that
have not served us well, or have had only limited success. New Source
Review (NSR) is an example of a program that EPA and stakeholders have
long recognized is not working well.
There is a misconception that the principle goal of the NSR program
is to reduce emissions from power plants. This is simply incorrect.
Reducing emissions from power plants is the principle goal of Clear
Skies. The NSR program is triggered only when facilities emitting large
amounts of air pollution are built, and when modifications at these
facilities result in significant increases in air pollution. The NSR
program is not designed to result in nationwide reductions of air
pollution from power plants. When it comes to reducing harmful air
emissions from power plants, Clear Skies would accomplish more than
NSR.
Clear Skies would significantly modify the NSR program for power
plants, but contain some important backstops. We expect that existing
power plants would not have to go through NSR for modifications. New
sources would no longer have to go through the entire NSR process, but
some aspects of the process would still apply. Although we believe that
with a tight cap on emissions, new sources will always install good
controls, we did not want to run the risk that a new source would be
uncontrolled. Therefore, as a backstop, Clear Skies would require all
new power plants to meet New Source Performance Standards that are set
in the statute.
In addition, new power generators locating within 50 km of a Class
I area (e.g., national parks or wilderness areas) would still be
subject to the current NSR requirements for the protection of those
areas. Finally, new power plants will also have to meet the current NSR
requirements that they will not cause or contribute to a violation of
the national ambient air quality standards.
IV. WINDOW OF OPPORTUNITY
Because of the lessons learned over the last decade, there is
increasing support for legislation such as Clear Skies that would
significantly reduce and cap power plant emissions and create a market-
based system to minimize control costs. From environmental groups to
coal companies, there is increasing broad-based support demonstrating
that multipollutant legislation is a preferable path to cleaner air.
Such an approach would address an array of air pollution concerns
associated with power generation--including fine particles, smog,
mercury deposition, acid rain, nitrogen deposition, and visibility
impairment--at lower cost and with more certainty than currently
allowed by the Clean Air Act.
The Acid Rain Program is widely accepted as one of the most
effective air pollution programs ever adopted and has consequently
attracted worldwide attention and emulation. The Program's track record
has encouraged Congress to consider broader applications of cap-and-
trade programs to address multiple air pollutants. The common elements
of the proposals considered by Congress are mandatory caps on emissions
of multiple pollutants from the power generation sector, implemented
through allowance trading programs modeled after the Acid Rain Program.
There is no better time for Congress to be considering
multipollutant legislation. President Bush has indicated that Clear
Skies is his top environmental priority. The number of proposals being
considered by Congress also indicates a consensus behind the basic idea
of a multipollutant cap-and-trade approach. The Large Public Power
Council, Edison Electric Institute, Adirondack Council, and numerous
individual utilities have all expressed support for the scope and
framework of Clear Skies. If legislation passes quickly, we will begin
achieving emissions reductions and related health benefits now.
Congress needs to act now so that we do not lose a decade's worth of
health and environmental benefits from reducing fine PM pollution,
smog, acid deposition, nitrogen deposition, and regional haze. Further,
as EPA continues to implement additional forthcoming regulations under
the existing framework of the Act, the likelihood of our ability to
pursue an integrated program diminishes--and with it diminish the
numerous advantages that I have delineated today of an approach like
Clear Skies.
Legislation is also needed now to help states with their air
quality planning and provide incentives for industry innovation, which,
in turn, would lower costs and emissions. Such incentives are
particularly compelling this year as we approach the task of reducing
mercury emissions from the power industry. If designed correctly,
legislation could provide the incentive that spurs technological
innovation. When stringent yet flexible mechanisms exist, substantial
technological improvements and steady reductions in control costs can
be expected to follow.
Congress obviously has much to consider as it weighs Clear Skies
and other multipollutant proposals this year. We anticipate and welcome
a rigorous and healthy debate on these issues.
NOTES
\1\ Except where otherwise noted, the projected emission levels,
costs and benefits in this testimony are all based on analyses of the
Clear Skies Act of 2002 conducted in 2002. EPA is currently analyzing
the Clear Skies Act of 2003 using updated modeling assumptions and
other updated information. We expect that the new analyses will be very
similar to the 2002 analyses, but specific projections will likely
change somewhat.
\2\ These numbers are based on the most current monitoring data
available to EPA. It is more current than the data that was available
at the time that EPA conducted its analyses last year of the Clear
Skies Act of 2002. The newer data confirms that we have serious air
quality problems in many counties, but it shows improvement--fewer
counties violating the ozone and fine particle standards. As a result,
compared to last year's analyses, the new analyses may show less
residual non-attainment (counties out of attainment in 2010 and 2020).
Statement of Hon. Kyle E. McSlarrow, Deputy Secretary, U.S. Department
of Energy, May 8, 2003
Mr. Chairman, I am pleased to appear before you today to discuss
the Administration's National Energy Policy and to discuss why we think
Clear Skies is a critical component of the President's strategy to
confront our energy and environmental challenges.
Though it is often overlooked, the President's National Energy
Policy directed the Administrator of the Environmental Protection
Agency to work with Congress to propose legislation that would
establish a flexible, market-based program to significantly reduce and
cap emissions of sulfur dioxide, nitrogen oxide, and mercury from
electric power generators. The President's National Energy Policy
concluded that, as our energy needs grow, additional innovations would
be necessary to continue improving our environmental conditions. The
success of the Clean Air Act Acid Rain program in promoting innovation
and emission reductions is well known--especially by Members of this
committee--and served as the template for the Clear Skies legislation
now before this Committee.
We are pleased that the Senate is now considering a comprehensive
energy bill reported out of the Senate Energy committee, and commend
Chairman Domenici and the members of his committee for acting so
swiftly. And, we commend you, Mr. Chairman, and this committee for
moving aggressively to consider the Clear Skies legislation.
INTRODUCTION AND OUTLOOK
Over the past century, we have witnessed the power of energy to
drive global economic development. In the 1970s, we learned firsthand
how energy shortages and resulting high prices can compromise economic
growth and the quality of life to which Americans have grown
accustomed. Clearly, the availability of reliable, affordable energy is
critical to sustained economic growth.
We have a series of long-term energy challenges that require action
now. These challenges are present along the entire energy continuum,
affecting crude oil, refinery products, natural gas, electricity
generation and transmission, the environment, and economic growth.
The Nation's Power Industry
To understand the need for Clear Skies, it is important to
understand the current make-up of the Nation's electric power industry.
The U.S. power-generating sector remains the envy of the world. On any
given day, approximately 5,000 generating plants can make available up
to 900,000 megawatts of electricity for virtually every home and
business in the country. Fossil fuels supply about 70 percent of the
Nation's requirements for electricity generation. Coal, alone, accounts
for more than 50 percent of the electricity Americans consume.
Primarily because of the power sector's use of abundant supplies of
American coal and natural gas, consumers in the United States benefit
from some of the lowest cost electricity of any free market economy.
U.S. Electricity Generation by Fuel
America's economic progress and global competitiveness have
benefited greatly from this low cost electricity. Electricity is an
essential part of America's modern economy. While the Nation has made
dramatic progress in ``decoupling'' overall energy consumption from
economic growth, increased economic activity remains closely linked to
the availability of affordable electric power--and is likely to remain
so well into the future.
The Nation's demand for electricity is projected to grow
significantly over the next 22 years. Between now and 2025, the United
States will likely have to add between 446,000 and 656,000 megawatts of
new generating capacity to meet growing demand. This is equivalent to
adding the entire power generation sectors of Germany and Japan,
combined, to the U.S. power grid. Concurrent with this dramatic--and
capital intensive--expansion of the Nation's power fleet, power
generators will also be called upon to make new investments in
pollution control technologies to meet tightening environmental
standards. Over the past 25 years, America's electricity utility
industry has invested billions of dollars in advanced technologies to
improve the quality of our air. Each year, a substantial portion of
normal plant operations costs--again amounting to several billions of
dollars a year--are associated with operating installed technologies
that reduce air emissions.
The investment has returned dividends. By installing new
technologies to capture tiny particles of fly ash, the power industry
has significantly improved air quality by dramatically reducing
particulate matter. The power industry has also installed sulfur
dioxide controls on more than 90,000 megawatts of capacity as part of a
successful effort that has cut SO<INF>2</INF> emissions substantially
since 1970. Most of the nation's coal-fired plants have also installed
nitrogen oxide controls that have helped make initial NOx reductions.
In short, advanced technology--given the time to mature and be
deployed--can be effective.
Technological improvements have permitted the Nation's power sector
to continue generating relatively low cost power and, at the same time,
use the energy resources America has in most abundance. America's use
of coal, for example, has actually tripled since 1970 even as our air
has become cleaner. Advanced technology also offers a pathway toward
the prospects of achieving even greater reductions in air pollutants in
the future.
At this point, let me review long-term energy trends--with a focus
on natural gas and coal--which should help illustrate our challenges.
My comments here are based on analyses prepared by the Department of
Energy's independent analytical arm, the Energy Information
Administration, in its Annual Energy Outlook 2003 (AEO 2003). All
statistics are based on EIA's reference case scenario for the year
2025, which assumes current laws and regulations, including the Eastern
U.S. ozone SIP call, but not future regulations, such as those to
implement the new Clean Air Act ozone and particulate matter standards
or the mercury MACT standard. The reference case also assumes continued
improvement in energy consuming and producing technologies, consistent
with historic trends.
Natural Gas Trends
The natural gas share of electricity generation is projected to
increase from 17 percent in 2001 to 30 percent in 2025. By 2025, total
natural gas consumption is expected to increase to almost 35 trillion
cubic feet, which will amount to 26 percent of U.S. delivered energy
consumption. Industrial consumption--the largest natural gas-consuming
sector--is expected to increase by 3.4 trillion cubic feet over the
forecast, driven primarily by economic growth. Combined consumption in
the residential and commercial sectors is projected to increase by 2.6
trillion cubic feet between 2001 and 2025, driven by increasing
population and healthy economic growth, and accompanied by gradually
rising prices in real terms. Natural gas remains the overwhelming
choice for home heating throughout the forecast period. Natural gas
consumption in the generation sector doubles by 2025 due to lower
capital costs, higher efficiencies, lower construction lead times, and
lower emissions.
In the short term, domestic natural gas prices are expected to
remain high in 2003 and are at risk for significant volatility through
at least the next 12 to 18 months. EIA estimates that the current
natural gas storage level is the lowest on record for this point in the
annual cycle. As long as temperatures remain at or below normal this
summer, natural gas storage levels should rise sharply over the coming
months. But if this summer is hotter than normal, natural gas prices
would jump as cooling demand would compete with the need to build
storage inventories. A large rebound in the economy, poor results from
the ongoing increase in natural gas drilling, or a continued tight oil
market might also spur volatility.
On that note, drilling for natural gas expected to increase
substantially, but a fourth U.S. LNG terminal is expected to open this
year at Cove Point, Maryland, and a Kern River Pipeline extension from
the Rockies to the West Coast opened earlier this month--greatly
increasing the capacity to move gas from a key producing area. In 2004,
declining oil prices should ease natural gas prices, and strong natural
gas drilling should increase productive capacity through the end of the
year.
Domestic gas production is expected to increase more slowly than
consumption over the long-term forecast, rising from 19.4 trillion
cubic feet in 2001 to 26.8 trillion cubic feet in 2025. The national
average wellhead price is projected to reach $3.90 per thousand cubic
feet, in 2001 dollars, by 2025.
Increased U.S. natural gas production through 2025 is projected to
come primarily from unconventional sources and from Alaska.
Unconventional gas production increases by 4.1 trillion cubic feet over
the forecast period--more than any other source, largely because of
expanded tight sandstone gas production in the Rocky Mountain region.
Annual production from unconventional sources is expected to account
for 36 percent of production in 2025, compared to 28 percent today. An
Alaska natural gas pipeline is projected to begin flowing gas to the
lower 48 States in 2021, reaching 4.5 billion cubic feet per day in
2023, with further expansion beginning in 2025. In 2025, total Alaskan
gas production is projected to be 2.6 trillion cubic feet.
Conventional onshore non-associated production is projected to
increase by 1.2 trillion cubic feet over the forecast, driven by
technological improvements and rising natural gas prices. However, its
share of total production declines from 34 percent in 2001 to 29
percent by 2025. Non-associated offshore production adds 560 billion
cubic feet, with increased drilling activity in deep waters; however,
its share of total U.S. production declines from 22 percent in 2001 to
18 percent by 2025. Associated dissolved production declines by 800
billion cubic feet, consistent with a projected decline in crude oil
production. Lower 48 associated-dissolved natural gas is projected to
account for 8 percent of U.S. natural gas production in 2025, compared
with 15 percent in 2001.
A key question facing producers and policymakers today is whether
natural gas resources in the mature onshore lower 48 States have been
exploited to a point at which lower discoveries per well eliminate the
possibility of increasing--or even maintaining--current production
levels at reasonable cost. Depletion has been counterbalanced
historically by improvements in technology that have allowed gas
resources to be discovered more efficiently and developed less
expensively, have extended the economic life of existing fields, and
have allowed natural gas to be produced from resources that previously
were too costly to develop. In EIA's projection, technological progress
for both conventional and unconventional recovery is expected to
continue to enhance exploration and reduce costs. However, there is a
significant debate within the industry itself as to whether this will
occur.
The difference between U.S. natural gas production and consumption
is net imports. Net imports of natural gas, primarily from Canada, are
projected to increase from 3.6 trillion cubic feet in 2001 to 7.8
trillion cubic feet in 2025. Net imports contributed 16 percent to
total natural gas supply in 2001, compared to an expected 22 percent in
2025. Almost half of the increase in U.S. imports is expected to come
from liquefied natural gas (LNG). By 2025, EIA expects expansion at the
four existing terminals and construction of three new LNG terminals.
Growth in pipeline imports from Canada partly depends on the
completion of the MacKenzie Delta pipeline, which is expected to be
completed in 2016 and expanded in 2023. Net imports from Canada are
projected to provide 15 percent of total U.S. supply in 2025, about the
same as in 2001. Mexico is projected to go from a net importer of U.S.
natural gas to a net exporter in 2020, as an LNG facility begins
operating in Baja California, Mexico, in 2019, predominantly serving
the California market. By 2025, the United States is expected to import
about 350 billion cubic feet of natural gas from Mexico per year.
Coal Trends
The share of electricity generated from coal is projected to
decline from 52 percent in 2001 to 47 percent in 2025 as a more
competitive electricity industry invests in less capital-intensive and
more efficient natural gas generation technologies. Nonetheless, coal
remains the primary fuel for electricity generation through 2025, and
EIA projects that 74 gigawatts of new coal-fired generating capacity
will be constructed between 2001 and 2025.
EIA's analysis here does not incorporate a projection of several
Clean Air Act programs that could have a significant impact on the use
of coal such as the mercury MACT. Although this rule has not been
proposed, based on requirements of the Clean Air Act it is designed to
require the control of mercury on a source by source basis by the end
of 2007, which could be very costly and cause an even greater decline
in the share of electricity generated by coal.
EIA projects growing domestic consumption over the forecast
horizon, and projects a simultaneous reduction in real coal prices to
generators by approximately 12 percent by 2025. Average annual coal
consumption is projected to increase by 1.3 percent per year between
2001 and 2025. As domestic coal demand grows, U.S. coal production is
projected to increase at an average rate of 1.0 percent per year.
The decline in prices is driven by the expectation of continued
improvements in labor productivity, and the continued market expansion
of western coal, which has a lower minemouth price than eastern coals.
As western production makes further inroads into markets traditionally
supplied by eastern coal, the average heat content of the coals
produced and consumed will drop as well, reflecting the lower thermal
content per ton of western than eastern coals.
PRESIDENT BUSH'S NATIONAL ENERGY POLICY
We long ago ceased to fully provide for our petroleum needs
domestically, and though most of our current natural gas demand can be
met with North American production, the trend here is also toward a
greater share for imported natural gas. And coal, our most abundant
energy resource, is actually projected to reduce its percentage share
of electricity generation.
We are often at the mercy of events and decisions over which we
have often limited--and sometimes no--control. When winters and summers
are mild; when all refineries or pipelines are online; when supply from
abroad is abundant and reliable; when prices are reasonable, we do not
feel this dependency. However, when almost any one of these factors
breaks down, markets react instantly, and we face the higher prices and
volatility that have become by now an almost certain cyclical
phenomenon.
These trends are a concern.
President Bush recognized that to prevent these problems from
becoming a permanent, recurring feature of American life, we needed a
long-term plan for energy security that would promote reliable,
affordable and environmentally sound energy for the future.
President Bush's National Energy Policy, released in May, 2001,
reflected a few, fundamental principles. First, we need to maintain a
diversity of fuels from a multiplicity of sources. Second, we should
seek opportunities for increased investment, trade, exploration and
development, which are increasing every year, far beyond the
traditional markets of the last 50 years. And third, we should focus on
research and development on initiatives that seek long-term solutions
to our energy challenges, as we have done with energy efficiency,
renewables, hydrogen, fusion, and nuclear energy, as well as the
recently announced zero-emission FutureGen coal project.
While these initiatives hold enormous promise for the future, we
recognize the need for immediate actions to address the nation's
growing energy demand. Clear Skies figures prominently on this list.
I'd like to mention just a few of the actions currently underway,
particularly those focused on ensuring adequate supplies of natural gas
and electricity.
To increase and diversify domestic supplies of natural gas, the
Administration, among other actions, has streamlined the process by
which permits are granted for important energy projects, such as
pipelines and refineries, and accelerated the leasing of non-restricted
Federal lands where environmentally appropriate.
The Administration is encouraging new gas well investment by
allowing for access to high quality resources and growth in pipeline
delivery capability. We recognize that recoverable resources tend to be
more difficult to develop and produce because the U.S. is a mature
producing area. This increases ultimate supply costs, which requires
ever increasing prices to be economically viable. A number of
locations, such as portions of the Rocky Mountain area and the eastern
Gulf of Mexico, are currently unavailable to exploration and
development even though they are expected to contain substantial
volumes of recoverable natural gas.
Interstate pipelines have been expanding delivery capacity, but
additional expansions are needed to satisfy expected market growth. In
2002, 54 interstate pipeline projects were completed, adding about 12.8
billion cubic feet of capacity per day throughout the U.S., and
proposals for expansions in 2003 through 2005 have been announced for a
number of pipelines. The gas pipeline network has grown extensively
over the past decade to meet the increasing demand for gas and to
accommodate diversified gas sources. Regulatory lags in obtaining
authorization for expansions of pipeline capacity are being addressed
by initiatives at the Federal Energy Regulatory Commission (FERC) aimed
at streamlining this approval process.
The Administration also strongly supports the construction of a
commercially viable Alaska natural gas pipeline as a critical part of
our energy security portfolio.
The National Energy Policy also highlighted the growing need for
attention to the nation's electricity markets and infrastructure. The
Administration's overarching goal is to ensure that Americans have
abundant, affordable, clean and secure electricity supplies, and we
strongly believe that Clear Skies is a key component of meeting this
goal, as is a comprehensive energy bill that includes a sound
electricity title to modernize our Nation's antiquated wholesale
electricity laws.
The Administration believes that there really is only one viable
policy choice: we must complete the transition to effective competition
in wholesale power markets.
Well-functioning markets will, we believe, lead to lower costs for
consumers and businesses. But there is more than simply the benefit of
lower prices. A well-functioning market brings its own rewards. As
confidence is gained that the system is reliable and capable of coping
with high-demand for electricity, there will increasingly be less need
for restrictive and prescriptive regulation. And that is the point when
much-needed investment is likely to be attracted--investment in new
technologies, and in improved generation and transmission facilities
that produce additional energy and environmental benefits.
When the opposite is true--when uncertainty reigns, when
reliability is questioned, when prices seem detached from market
forces--investment vanishes.
The present uncertainty in the wholesale electricity market is not
simply affected by policy choices that center on transmission assets
and market designs. The uncertainty extends to the generation of
electricity itself. That is why it is important to provide greater
regulatory certainty about the kinds of investment choices that the
generating industry will have to make over the next two decades.
We believe that the President's Clear Skies proposal does just
that.
S. 485 CLEAR SKIES ACT OF 2003
In 2000, 39 percent of the total energy consumed in the U.S. was
for power generation. Since 1975, total U.S. energy use has grown by
about 1.1 percent per year, while GDP and electricity consumption have
grown by nearly 3 percent per year. We project future electricity
growth to be somewhat less, below 2 percent per year, but it is clear
that electricity is either the fuel of choice or fuel of necessity for
many applications.
Our electric power is among the lowest in cost of any free market
society. Low cost electricity is part of America's competitive edge in
international markets. Cheap power translates to prosperity and
available resources to overcome problems in many areas unrelated to
energy but essential to our quality of life. A major reason that
electricity in the U.S. is relatively inexpensive is that roughly one-
half of our generation comes from coal.
S. 485, the Clear Skies Act of 2003, is a multi-pollutant, market-
based cap and trade program that will reduce power plant emissions of
sulfur dioxide (SO<INF>2</INF>), nitrogen oxides (NOx) and mercury by
approximately 70 percent from today's levels--and do it faster, with
more certainty, and at less cost to American consumers than would
current law.
Flexibility of compliance choices, maintenance of fuel diversity,
and the cost savings passed on to consumers through lower electricity
prices are among the benefits of the approach taken in Clear Skies,
particularly when compared with other proposals that support more
stringent targets, shorter compliance periods, or command and control
regulatory approaches. The cap-and-trade system of emission reductions
used in S. 485 should translate into reduced impacts on fuel markets--
in particular, coal and gas--than equivalent emission reductions
achieved through other approaches.
The Clear Skies Act substantially expands one of the most
successful Clean Air Act programs--the Acid Rain Program--and reduces
the need to rely on complex and less efficient programs. Power plants
would be allowed to choose the pollution reduction strategy that best
meets their needs (e.g., installing pollution control equipment,
switching to lower sulfur or mercury coals, buying excess allowances
from plants that have reduced their emissions beyond required levels).
And like the Acid Rain program, Clear Skies includes banking
provisions, enabling companies to save unused allowances for future
use. The result would be significant nationwide human health and
environmental benefits; certainty for industry, states and citizens;
energy security; and continuing low costs to consumers.
S. 485 establishes a coordinated timeline for control of major
emissions that provides adequate time to attract investment funds and
avoids premature retirement of working capital. The patchwork of
existing and soon-to-be-implemented regulations under the Clean Air
Act, coupled with the delays bred by continuous litigation over them,
has created enormous uncertainty for utilities, co-ops, and municipal
generators. This uncertainty has curtailed investments in technology
that would reduce emissions at existing plants and prevented numerous
new facilities from coming online. Clear Skies provides industry with
the time needed to attract capital necessary to reduce emissions
without jeopardizing energy security.
ENERGY IMPACTS OF CLEAR SKIES
It is difficult to quantify what the cost or energy impacts will be
if multipollutant legislation is not enacted. The EIA ``baseline''
includes all future legislation and regulations that have been
specified, but does not include regulations that have not yet been
promulgated. We know that in the absence of S. 485, mercury regulations
will be promulgated by December 2004. But we do not know what those
regulations will require; that knowledge will come only after a lengthy
rulemaking process. We can anticipate that additional reductions in
SO<INF>2</INF> and NOx will be required to attain ambient air quality
standards for fine particulate matter. But we do not know what those
regulations will be. We can anticipate additional regulations to reduce
regional haze, but again, we do not know what those regulations will
require.
What we should be concerned with is this: uncertainty, delay, and
litigation are not likely to produce greater environmental benefits;
they instead are likely to lead to more costly solutions, and they risk
affecting the energy fuel mix in ways that are unwarranted and
unforeseen.
Although we have not contrasted Clear Skies to this unknown
regulatory future, we have compared it to a future predicated on
current control programs. Under Clear Skies, natural gas consumption,
which is projected to increase from 23 to 35 trillion cubic feet of gas
in our baseline projection to 2025, increases to 36 trillion cubic feet
per year in 2025. However, we do not project that a significant change
in natural gas supply is needed due to the implementation of Clear
Skies. Wellhead natural gas prices follow the baseline pattern, after
decreasing from the unusually high prices that occurred in 2001.
Clear Skies helps maintain coal as an important fuel source,
thereby avoiding excessive pressure on natural gas prices. In our
baseline projection, coal consumption would increase about 38 percent
through 2025. Under S. 485, we project approximately a 26 percent
increase.
EIA projects that electricity prices will be lower throughout the
projection period than in 2001, for both the baseline scenario and
under S. 485. The effect of the emission reductions is roughly a 0.3
cent per kilowatt-hour price increase above the baseline in 2025.
One of the concerns we have is in the ever-increasing reliance on
natural gas for generation of electricity. As I have noted previously,
this is primarily a function of efficiency and costs, but because our
marginal supply of natural gas will increasingly come from imported LNG
we should be concerned that we not place too much stress on natural gas
supply by forcing a level of fuel switching from coal to gas that leads
to higher volatility and higher prices. Natural gas supply as a low-
cost and reliable source of electricity is not automatic--one has only
to witness the winters of 2000-2001, and 2002-2003 to see the point.
In both the near and long term, the price of a commodity like
natural gas is determined by the interaction of supply and demand.
However, the determinants of supply and demand in the near term can be
quite different than the factors that determine prices in the long
term. In the near term, factors such as weather related increases in
demand, storage levels, productive capacity at the wellhead, and
disruptions in supply lines can be paramount because of the difficulty
of quickly increasing the number of producing wells. Long-term market
conditions, however, depend more on such factors as:
<bullet> The ability of markets to respond to price increases with
adequate investments in new wells;
<bullet> Continuing availability of alternative fuels for
generation;
<bullet> A viable market for imported gas;
<bullet> The continued development of new technologies; and
<bullet> Emissions reductions required under future regulation
The difference in what affects natural gas prices in the near term
versus long term has important policy implications. We have to
recognize that in the short run it is hard to do much about natural gas
supply. From the time natural gas prices spike, the industry rule of
thumb is that it takes 6-18 months for production to increase. And,
unlike oil, there is currently no large international spot market in
liquefied natural gas to moderate gas supply scarcity.
The elasticity of natural gas demand plays a significant role in
price volatility. Because many users cannot switch to alternative fuels
quickly, demand tends to be more inelastic in the short run. Inelastic
demand means that small changes in demand lead to significantly higher
prices than under less inelastic demand. Demand becomes less elastic as
electric generators or industrial users lose their ability to switch to
another fuel or as any user loses the ability to reduce consumption in
response to higher prices.
It is, therefore, critically important that we maintain a balanced
diversity of fuels to provide low-cost and abundant electricity. And
the key to this is that we not assume that all policy objectives can
simply be achieved with unlimited reliance on natural gas.
THE ROLE OF RESEARCH
One of DOE's fundamental missions is the advancement of energy-
related technology. I would be remiss if I did not emphasize again that
the projections I have presented today assume only a continuation of
historic trends in technology evolution. We have the ability to change
those trends through dramatic technology improvements. We intend to do
exactly that.
The President has launched a suite of relevant technology
initiatives: FreedomCAR and the Hydrogen Fuel Initiative (the hydrogen/
fuel cell vehicle and infrastructure program), FutureGen (a program to
develop a zero-emission coal-based power plant, coproducing low-cost
hydrogen and sequestering CO<INF>2</INF>), and fusion electric power
plants. Success in these areas will dramatically change the energy,
economic, and environmental future of the Nation.
The future role of coal in our energy mix may also be highly
sensitive to the success we have in our program to improve Integrated
Gasification Combined Cycle (IGCC) technology, an inherently clean way
to produce power from coal. This technology has already been
demonstrated at commercial scale, but additional support is being
provided by DOE to enhance its efficiency, reduce technological risk,
and drive down capital costs. In addition, as I mentioned earlier, we
are also pursuing R&D targeted specifically on one of the tougher
challenges in Clear Skies--mercury control.
CONCLUSION
In conclusion, we believe that Clears Skies, which provides a range
of benefits--improved health, cleaner air, and economic efficiency--is
the best approach to address our dual energy and environmental
challenges. Clear Skies avoids the more serious economic consequences
of other approaches to cleaner air and provides market-based
flexibility to the energy sector. Clear Skies, combined with our many
other efforts to develop new, reliable, and secure sources of energy,
will deliver significant environmental protection. It will help us to
achieve our national goal of abundant, affordable, and clean sources of
energy by maintaining fuel diversity and by providing greater
regulatory certainty.
__________
Statement of Jeffrey Holmstead, Assistant Administrator, U.S.
Environmental Protection Agency, July 8, 2003
I. INTRODUCTION
Thank you, Mr. Chairman and Members of the Committee for the
opportunity to speak with you today about the Clear Skies Act of 2003.
Based on one of the most successful programs created by the Clean Air
Act, Clear Skies is a proposal to substantially reduce emissions of the
three most harmful pollutants from power generation--and to do so in a
way that is much faster and more efficient than under current law.
As President Bush said in the State of the Union Address, Clear
Skies will advance our goal of ``promot[ing] energy independence for
our country, while dramatically improving our environment.'' The
Administration is committed to working with this Subcommittee and
Congress to pass legislation this year. The widespread support for
multi-pollutant legislation to reduce power plant emissions is a strong
indicator that the time for action on this critical issue is now.
Failure to enact Clear Skies this year will delay important public
health and environmental benefits.
This country should be very proud of the progress we have already
made in cleaning up our air. According to the Environmental Protection
Agency's (EPA) first Draft Report on the Environment, since the Clean
Air Act was first enacted in 1970, total national emissions of the six
most common air pollutants have been reduced 25 percent. Remarkably,
this improvement in national air quality has occurred even while,
during the same 30-year period, the U.S. Gross Domestic Product
increased 161 percent, energy consumption increased 42 percent, and
vehicle miles traveled increased 149 percent.
Although we have made much progress since 1970, we still face major
air quality challenges in many parts of the country. Clear Skies is the
most important next step we can take to address these challenges and
achieve healthy air and a clean environment for all Americans. Clear
Skies would make great strides toward solving our remaining air quality
problems in a way that also advances national energy security and
promotes economic growth. It would reduce power plant emissions of
sulfur dioxide (SO<INF>2</INF>), nitrogen oxides (NOx) and mercury by
approximately 70 percent from today's levels and do it faster, with
more certainty, and at less cost to American consumers than would
current law. With Clear Skies, power plants would emit far less over
the next decade than they would under the current Clean Air Act.
Because of the innovative cap-and-trade approach used in Clear Skies,
power plants would have an incentive to start reducing emissions as
soon as Clear Skies is passed, resulting in emissions reductions more
quickly than required.
EPA recently updated our analyses of Clear Skies using the most
recent air quality data, population census information, and modeling
techniques. This modeling represents the most sophisticated,
comprehensive, detailed national modeling EPA has ever produced. These
analyses reaffirm that Clear Skies would greatly reduce air pollution
from power plants while ensuring a reliable, affordable supply of
electricity.
When fully implemented, Clear Skies would deliver tens of billions
of dollars in annual health benefits, prolong thousands of lives and
prevent millions of illnesses each year, provide billions of dollars of
economic benefits, and save millions of dollars in health care costs.
The added benefit of Clear Skies would virtually assure attainment of
the new ozone and particulate matter standards for much of this
country, providing air that meets the new, more protective health-based
national air quality standards to millions of people. Achieving the
national standards has been a problem that has plagued our nation's
communities for decades. Clear Skies would also virtually eliminate
chronic acidity in northeastern lakes, reduce nitrogen loading in
coastal waters, and help restore visibility in our national parks and
wilderness areas.
The Clean Air Act has been, and continues to be, a vehicle for
great progress in improving the health and welfare of the American
people. The Clear Skies Act substantially expands one of the most
successful Clean Air Act programs--the Acid Rain Program--and reduces
the need to rely on complex and less efficient programs. The result
would be significant nationwide human health and environmental
benefits; certainty for industry, states and citizens; energy security;
and continuing low costs to consumers.
II. CLEAR SKIES PROVIDES SIGNIFICANT BENEFITS
The heart of Clear Skies is a proven cap-and-trade approach to
emissions reductions. Mandatory caps restrict total emissions and
decline over time. When fully implemented, Clear Skies would result in
a 70 percent reduction in emissions of SO<INF>2</INF>, NOx and mercury
from today's levels. Clear Skies would continue the existing national
cap-and-trade program for SO<INF>2</INF>, but dramatically reduce the
cap from 9 million to 3 million tons. Clear Skies would also use a
national cap-and-trade program for mercury that would reduce emissions
from the current level of about 48 tons to a cap of 15 tons, and would
employ two regional cap-and-trade programs for NOx to reduce emissions
from current levels of 5 million tons to 1.7 million tons.
Although national in scope, Clear Skies recognizes and adjusts for
important regional differences in both the nature of air pollution and
the relative importance of emissions from power generation. The eastern
half of the country needs reductions in NOx emissions to help meet the
ozone and fine particle standards, which generally are not a regional
issue in the western half of the county (with the exception of
California, which does not have significant emissions from existing
coal-fired power plants). The western half of the country needs NOx
reductions primarily to reduce the regional haze that mars scenic
vistas in our national parks and wilderness areas, and the nitrogen
deposition that harms fragile forests. Recognizing these regional
differences, Clear Skies would establish two trading zones for NOx
emissions and prohibit trading between the zones to ensure that the
critical health-driven goals in the East are achieved.
Clear Skies also recognizes the special visibility protection
measures that have been developed by states participating in the
Western Regional Air Partnership (WRAP). Clear Skies would essentially
codify the WRAP's separate SO<INF>2</INF> backstop cap-and-trade
program, which would come into effect only if the WRAP states did not
meet their 2018 SO<INF>2</INF> emissions targets.
Finally, Clear Skies requires tough, technology-based new source
standards on all new power generation projects and maintains special
protections for national parks and wilderness areas when sources locate
within 50 km of ``Class I'' national parks and wilderness areas.
Significant Public Health and Environmental Benefits
The public health and environmental benefits of Clear Skies present
compelling reasons for its immediate passage. EPA's new analysis
projects that, by 2010, reductions in fine particle and ozone levels
under Clear Skies would result in billions of dollars in health and
visibility benefits nationwide each year, including prolonging as many
as 7,900 lives annually. Using an alternative methodology, Clear Skies
would prolong 4,700 lives annually by 2010. EPA's base methodology for
calculating benefits shows that Americans would experience significant
health benefits each year by 2020, including:
<bullet> 14,100 fewer premature deaths;
<bullet> 8,800 fewer cases of chronic bronchitis;
<bullet> 23,000 fewer non-fatal heart attacks;
<bullet> 30,000 fewer visits to hospitals and emergency rooms for
cardiovascular and respiratory symptoms, including asthma attacks; and
<bullet> 12.5 million fewer days with respiratory illnesses and
symptoms.
Using an alternative methodology, by 2020 Americans would
experience 8,400 fewer premature deaths each year.
We have not developed methodologies for quantifying or monetizing
all the expected benefits of Clear Skies. Still, under all of our
analytical approaches, it is clear that the benefits far exceed the
costs. EPA estimates that the monetized value of the health benefits we
can quantify under Clear Skies would be $110 billion annually by 2020--
substantially greater than the projected annual costs of approximately
$6.3 billion. An alternative approach projects annual health benefits
of $21 billion, still significantly outweighing the costs. The Agency
estimates an additional $3 billion in benefits from improving
visibility at select national parks and wilderness areas. These
estimates do not include the many additional benefits that cannot
currently be monetized but are likely to be significant, such as human
health benefits from reduced risk of mercury emissions, and ecological
benefits from improvements in the health of our forests, lakes, and
coastal waters.
Clear Skies would achieve most of these benefits by dramatically
reducing fine particle pollution caused by SO<INF>2</INF> and NOx
emissions, which is a year-round problem. Of the many air pollutants
regulated by EPA, fine particle pollution is perhaps the greatest
threat to public health. Hundreds of studies in the peer-reviewed
literature have found that these microscopic particles can reach the
deepest regions of the lungs. Exposure to fine particles is associated
with premature death, as well as asthma attacks, chronic bronchitis,
decreased lung function, and respiratory disease. Exposure is also
associated with aggravation of heart and lung disease, leading to
increased hospitalizations, emergency room and doctor visits, and use
of medication.
By reducing NOx emissions, Clear Skies also would reduce ozone
pollution in the eastern part of the country and help keep ozone levels
low in the western portion of the country. Ozone (smog) is a
significant health concern, particularly for children and people with
asthma and other respiratory diseases who are active outdoors in the
summertime. Ozone can exacerbate respiratory symptoms, such as coughing
and pain when breathing deeply, as well as transient reductions in lung
function and inflammation of the lung. Ozone has also been associated
with increased hospitalizations and emergency room visits for
respiratory causes. Repeated exposure over time may permanently damage
lung tissue.
Clear Skies would help move us from a situation where nearly every
major urban area is projected to be out of attainment with the ozone
and fine particle standards, to a scenario where only a few major
cities would continue to have nonattainment problems. Based on current
data (1999-2001 data), 129 counties nationwide (114 counties in the
East) currently exceed the fine particle standard and 290 counties
nationwide (268 counties in the East) currently exceed the new ozone
standard. As a result, 45 percent of all Americans live in counties
where monitored air was unhealthy at times because of high levels of
fine particles and ozone. Clear Skies would dramatically reduce that
number. By 2020, the combination of Clear Skies, EPA's proposed rule to
decrease emissions from nonroad diesel engines, and other existing
state and Federal control programs, such as pollution controls for cars
and trucks, would bring all but 18 counties nationwide (including only
8 counties in the East) into attainment with the fine particle
standards and all but 27 counties nationwide (including only 20
counties in the East) into attainment with the ozone standards. Even in
the few areas that would not attain the standards, Clear Skies would
significantly improve air quality. This would make it easier for state
and local areas to achieve the new ozone and fine particle standards.
Throughout the West, Clear Skies would hold emissions from power plants
in check, preserving clean air in high-growth areas and preventing
degradation of the environment, even as population and electricity
demand increase.
[See Attached Figures 1 and 2, Attainment with Fine Particle and
Ozone Standards]
Clear Skies would also reduce mercury emissions from power plants.
EPA is required to regulate mercury because EPA determined that mercury
emissions from power plants pose an otherwise unaddressed significant
risk to health and the environment, and because control options to
reduce this risk are available. Mercury, a potent toxin, can cause
permanent damage to the brain and nervous system, particularly in
developing fetuses when ingested in sufficient quantities. People are
exposed to mercury mainly through eating fish contaminated with
methylmercury.
Mercury is released into the environment from many sources. Mercury
emissions are a complex atmospheric pollutant transported over local,
regional, national, and global geographic scales. EPA estimates that 60
percent of the mercury falling on the U.S. is coming from current man-
made sources. Power generation remains the largest man-made source of
mercury emissions in the United States. In 1999, coal-fired power
plants emitted 48 tons of mercury (approximately 37 percent of man-made
total). These sources also contribute 1 percent of mercury to the
global pool.
Mercury that ends up in fish may originate as emissions to the air.
Mercury emissions are later converted into methylmercury by bacteria.
Methylmercury accumulates through the food chain: fish that eat other
fish can accumulate high levels of methylmercury. EPA has determined
that children born to women who may have been exposed to high levels
may be at some increased risk of potential adverse health effects.
Prenatal exposure to such levels of methylmercury may cause
developmental delays and cognitive impairment in children. Clear Skies
will require a 69 percent reduction of mercury emissions from power
plants.
In addition to substantial human health benefits, Clear Skies would
also deliver numerous environmental benefits. Nitrogen loads to the
Chesapeake Bay and other nitrogen sensitive estuaries would be reduced,
reducing potential for water quality problems such as algae blooms and
fish kills. In fact, the Chesapeake Bay States, including NY, VA, MD,
PA, DE, WV and DC, recently agreed to incorporate the nitrogen
reductions that would result from Clear Skies legislation as part of
their overall plan to reduce nutrient loadings to the Bay. Clear Skies
would also accelerate the recovery process of acidic lakes, eliminating
chronic acidity in all but 1 percent of Northeastern lakes by 2030. For
decades fish in the Adirondacks have been decimated by acid rain,
making many lakes completely incapable of supporting populations of
fish such as trout and smallmouth bass. The Acid Rain Program has
allowed some of these lakes and the surrounding forests to begin to
recover; Clear Skies would eliminate chronic acidity in Adirondack
region lakes by 2030. Clear Skies would also help other ecosystems
suffering from the effects of acid deposition by preventing further
deterioration of Southeastern streams. Finally, Clear Skies would
improve visibility across the country, particularly in our treasured
national parks and wilderness areas, resulting in improvements of
approximately two to seven miles in visual range in many areas. For
example, in the Southeast, Clear Skies would improve the visual range
by two to four miles.
Clear Skies is designed to ensure that these public health and
environmental benefits are achieved and maintained. By relying on
mandatory caps, Clear Skies would ensure that total power plant
emissions of SO<INF>2</INF>, NOx and mercury would not increase over
time. This is a distinct advantage over traditional command-and-control
regulatory methods that establish source-specific emission rates but
which allow total emissions to increase over time. Like the Acid Rain
Program, Clear Skies would have much higher levels of accountability
and transparency than most other regulatory programs. Sources would be
required to continuously monitor and report all emissions, ensuring
accurate and complete emissions data. If power plants emit more than
allowed, financial penalties are automatically levied--without the need
for an enforcement action. More importantly, every ton emitted over the
allowed amount would have to be offset in the following year, ensuring
no net environmental harm. This high level of environmental assurance
is rare in existing programs; Clear Skies would make it a hallmark of
the next generation of environmental protection.
Reasonable Costs and Energy Security for Consumers and Industry
The President directed us to design Clear Skies to meet both our
environmental and our energy goals. Under Clear Skies, electricity
prices are not expected to be significantly impacted. Our extensive
economic modeling of the power industry looked at a broad array of
factors to gauge the effects of Clear Skies on the energy industry--and
they all show that cleaner air and energy security can go hand-in-hand.
Clear Skies would maintain energy diversity. With Clear Skies, coal
production for power generation would be able to grow by 10 percent
from 2000 to 2020 while air emissions are significantly reduced. EPA's
extensive economic modeling for Clear Skies demonstrates that the
proposal's emission reductions would be achieved primarily through
retrofitting controls on existing plants. Clear Skies's timeframe and
certainty enable the power sector to meet aggressive emission reduction
targets without fuel switching. This is important not only to power
generators and their consumers who want to continue to rely on our most
abundant, reliable, affordable and domestically secure source of
energy, but also to other consumers and industries whose livelihoods
could be hurt by a rise in natural gas prices. Our analysis shows that
Clear Skies would have little effect on natural gas prices.
Under Clear Skies by 2010, more than two-thirds of U.S. coal-fired
generation is projected to come from units with billions of dollars of
investment in advanced SO<INF>2</INF> and/or NOx control equipment
(such as scrubbers and Selective Catalytic Reduction, which also
substantially reduce mercury emissions). In 2020, the percentage is
projected to rise to over 80 percent. Cost effective strategies and
technologies for the control of sulfur dioxide and nitrogen oxides
emissions exist now, and--thanks in good part to the Clear Skies
market-based system--improved methods for these pollutants, and for
mercury, are expected to become increasingly cost-efficient over the
next several years. In fact, the Institute of Clean Air Companies
forecasts that the U.S. markets for most technology sectors will remain
fairly strong, adding momentum to the air pollution control technology
industry. We expect that the Clear Skies Act will provide great
benefits to American jobs in the engineering and construction
industries.
One of the key reasons Clear Skies would be cost-effective is its
reliance on cap-and-trade programs. Like the Acid Rain Program upon
which it is based, Clear Skies would give industry flexibility in how
to achieve the needed emission reductions, which allows industry to
make the most cost-effective reductions and pass those savings on to
consumers. Power plants would be allowed to choose the pollution
reduction strategy that best meets their needs (e.g., installing
pollution control equipment, switching to lower sulfur coals, buying
excess allowances from plants that have reduced their emissions beyond
required levels). Like the Acid Rain program, Clear Skies includes
banking provisions, enabling companies to save unused allowances for
future use. Banking creates a tangible, quantifiable, economic
incentive to decrease emissions beyond allowable levels, which EPA
projects will result in significant early benefits due to over-
compliance in the initial years, particularly for SO<INF>2</INF>. It
also leads to gradual emissions reductions over time, and therefore a
less disruptive transition to tighter emission controls needed to
address lingering problems. Based on past experience under the Acid
Rain Program, by placing a monetary value on avoided emissions, Clear
Skies would stimulate technological innovation, including efficiency
improvements in control technology, and encourage early reductions.
EPA's models, however, do not predict this technological
innovation. The updated analyses show that mercury control costs would
be higher than were estimated last year. We are still in the early
stages of understanding how different technologies will affect mercury
emissions from power plants because mercury is not currently regulated
in the power sector. There is an ongoing dynamic research process
sponsored by EPA, the Department of Energy (DOE), the Electric Power
Research Institute (EPRI), and vendors specifically aimed at furthering
our understanding of mercury control, with new data being made
available on a continuous basis.
Over the last year, both EPA and DOE's Energy Information Agency
(EIA) used updated information to reassess what mercury emissions
levels would be in 2010 after installation of NOx and SO<INF>2</INF>
controls necessary to meet the Clear Skies' SO<INF>2</INF> and NOx caps
(NOx and SO<INF>2</INF> control equipment also reduce some mercury
emissions--i.e., ``cobenefit'' reductions). Due to differences in
assumptions and models, the Administration estimates that these mercury
emissions would range from 34 to 46 tons. EIA's and EPA's updated
analyses estimate the incremental cost now of complying with the 2010
cap to be $650 to $750 million per year.
A key feature of understanding this cost is the Clear Skies' safety
valve provision that sets a maximum cost of $35,000 per pound of
mercury emissions. The safety valve is designed to minimize
unanticipated market volatility and provide more market information
that industry can rely on for compliance decisions. The updated
modeling projects that the safety valve provision would be triggered if
technology does not improve in the future (the modeling does not
include any assumptions about how technology will improve). If the
safety valve is triggered, EPA will borrow allowances from the
following year's auction to make more allowances available at the
safety valve price. The future year cap is reduced by the borrowed
amount, and the emissions reductions are ultimately achieved.
EPA believes that, as technology develops, the cost of mercury
controls will decrease. If it does not, the new analyses project
greater mercury emissions in 2020 than did the 2002 analyses due to the
triggering of the safety valve.
Assistance to State and Local Governments
Under the current Clean Air Act, state and local governments face
the daunting task of meeting the new fine particle and ozone standards.
Clear Skies would substantially reduce that burden. By making enormous
strides toward attainment of the fine particle and ozone standards,
Clear Skies would assist state and local governments in meeting their
obligation under the Clean Air Act to bring areas into attainment with
these health-based standards, and provide Americans with cleaner air.
As noted previously, the combination of Clear Skies, EPA's proposed
rule to decrease emissions from nonroad diesel engines, and other
existing state and Federal control programs--such as pollution controls
for cars and trucks--would, by 2020, bring all but 18 counties
nationwide (including only 8 counties in the East) into attainment with
the fine particle standards and all but 27 counties nationwide
(including only 20 counties in the East) into attainment with the ozone
standards. Even in the few areas that would not attain the standards,
Clear Skies would significantly improve air quality. This would make it
easier for state and local areas to reach the ozone and fine particle
standards.
Clear Skies' assistance to states goes beyond ensuring that power
plants will reduce their emissions. Clear Skies relies on a common-
sense principle--if a local air quality problem will be solved in a
reasonable timeframe by the required regional reductions in power plant
emissions, we should not require local areas to adopt local measures.
Under Clear Skies, areas that are projected to meet the ozone and fine
particles standards by 2015 as a result of Clear Skies would have a
legal deadline of 2015 for meeting these standards (i.e., will have an
attainment date of 2015). These areas would be designated
``transitional'' areas, instead of ``nonattainment'' or ``attainment,''
and would not have to adopt local measures (except as necessary to
qualify for transitional status). They would have reduced air quality
planning obligations and would not have to administer more complex
programs, such as transportation conformity, nonattainment New Source
Review, or locally based progress or technology requirements in most
circumstances.
III. IMPROVING THE CLEAN AIR ACT WITH CLEAR SKIES
Clear Skies would improve the Clean Air Act in a number of ways. It
would build on the proven portions of the Clean Air Act--like the
national ambient air quality standards and the Acid Rain Program--and
reduce reliance on complex, less efficient requirements like New Source
Review for existing sources. The mandatory emissions caps at the heart
of Clear Skies guarantee that reductions will be achieved and
maintained over time. In contrast, uncertainties with respect to
regulatory development, litigation, and implementation time make it
difficult to estimate how quickly and effectively current regulations
would be implemented under the current Clean Air Act. The level of
SO<INF>2</INF> and NOx reductions we expect by 2010 with Clear Skies
legislation would not be achieved under the existing Act. After that,
we know that Clear Skies would achieve significant reductions, while
both the timing and level of reductions under the current Clean Air Act
are unclear.
Early Reductions
One of the major reasons we need Clear Skies now is that adoption
of Clear Skies would provide greater protection over the next decade
than the traditional regulatory path. The Clear Skies Act will result
in significant over-compliance in the early years, particularly for
SO<INF>2</INF>, because sources are allowed to bank excess emissions
reductions. Because of the incentives provided by the cap-and-trade
approach used in Clear Skies, power plants would start reducing
emissions almost as soon as Clear Skies is passed. Without Clear Skies,
EPA and the states will have to go through regulatory processes to put
the necessary emission control programs in place. These regulatory
processes take years and are subject to litigation--and power plants
would have no incentive to reduce emissions before the outcome of those
regulatory processes were known.
As a result, emission reductions under Clear Skies would start
years earlier than under the current regulatory approach. Clear Skies'
emissions reductions would cost less since EPA does not have statutory
authority under the current Clean Air Act to design an integrated
program that is as cost-effective as Clear Skies. Every year that
emissions reductions are delayed, we delay the health and environmental
benefits that would be achieved if Clear Skies were to become law.
Our analysis suggests that the amount of pollution controls that
the industry will have to install under Clear Skies over the next
decade will stretch the limits of available labor and other
construction resources, but can in fact be accomplished while
maintaining energy reliability and continuing competitive electricity
prices.
Legislation Now Is Better than Regulation Followed by Years of
Litigation
Even if Clear Skies is not passed by Congress, power plants will be
required to reduce their emissions of SO<INF>2</INF>, NOx and mercury.
There is no more cost-effective way than Clear Skies to meet the
requirements of the current Clean Air Act or to achieve our public
health and environmental goals. We know that, absent new legislation,
EPA and the states will need to take a number of regulatory actions,
although it is unclear now when the requirements will come into effect
or what their control levels will be.
Clear Skies has several benefits over the regulatory scheme that
will otherwise confront power generators. Clear Skies provides
regulatory certainty and lays out the timeframes necessary for managers
to design a cost effective strategy tailored to both their current
budgets and future plans. Clear Skies is designed to go into effect
immediately upon enactment. Power plants would immediately understand
their obligations to reduce pollution and would be rewarded for early
action. As a result, public health and environmental benefits would
begin immediately and result in emissions reductions more quickly than
required. Given Clear Skies' design, it is unlikely that litigation
could delay the program (particularly since Congress would decide the
two most controversial issues--the magnitude and timing of reductions).
In contrast, under the current Clean Air Act, power plants would not
know what their obligations would be until after EPA and states started
and completed numerous rulemakings.
Past experience suggests that litigation delays on the regulatory
path are likely. Our experience with two cap-and-trade programs--the
legislatively created Acid Rain Trading Program and the
administratively created NOx SIP Call--illustrates the benefits of
achieving our public health and environmental goals with legislation
rather than relying solely on existing regulatory authority.
Though we project a great deal of benefits will arise from
implementation of the NOx SIP call, the journey down the regulatory
path has been difficult and is not yet over. The NOx SIP call was
designed to reduce ozone-forming emissions by one million tons across
the eastern United States. The rulemaking was based on consultations
begun in 1995 among states, industry, EPA, and nongovernmental
organizations. A Federal rule was finalized in 1998. As a result of
litigation, one state was dropped and the 2003 compliance deadline was
moved back for most states. Most states are required to comply in 2004,
although two states will have until 2005 or later. Meanwhile, sources
in these states continue to contribute to Eastern smog problems.
Although the courts have largely upheld the NOx SIP Call, the
litigation is not completely over. Industry and state challenges to the
rules have made planning for pollution control installations difficult,
raised costs to industry and consumers, and delayed health and
environmental benefits.
In contrast, reductions from the Acid Rain Program began soon after
it passed (even before EPA finalized implementing regulations). There
were few legal challenges to the small number of rules EPA had to
issue--and none of the challenges delayed implementation of the
program. The results of the program have been dramatic--and
unprecedented. Compliance has been nearly 100 percent. Reductions in
power plant SO<INF>2</INF> emissions were larger and earlier than
required, providing earlier human health and environmental benefits.
Now, in the ninth year of the program, we know that the greatest
SO<INF>2</INF> emissions reductions were achieved in the highest
SO<INF>2</INF>-emitting states; acid deposition dramatically decreased
over large areas of the eastern United States in the areas where they
were most critically needed; trading did not cause geographic shifting
of emissions or increases in localized pollution (hot spots); and the
human health and environmental benefits were delivered broadly. The
compliance flexibility and allowance trading has reduced compliance
costs by 75 percent from initial EPA estimates.
[See 2001 Acid Rain Program Progress Report submitted for the
record.]
It is clear from this example that existing regulatory tools often
take considerable time to achieve significant results, and can be
subject to additional years of litigation before significant emissions
reductions are achieved. Under this scenario, there are few incentives
to reduce emissions until rules are final and litigation is complete,
posing potentially significant delays in achieving human health and
environmental benefits.
The Clean Air Act contains several provisions under which EPA will
be required to impose further emission controls on power plants in
order to enable states to meet the new national ambient air quality
standards (NAAQS) for PM<INF>2.5</INF> and ozone. For example, Section
126 of the Clean Air Act provides a petition process that states can
use to force EPA to issue regulations to reduce emissions of
SO<INF>2</INF> and NOx from upwind sources, including power plants. A
number of states have indicated that they intend to submit Section 126
petitions in the near future. However, compared to Clear Skies, this
approach will almost certainly involve years of litigation and
uncertainty about reduction targets and timetables.
Additional reductions are required from power plants through the
regional haze rule's BART (Best Available Retrofit Technology)
requirements and forthcoming mercury MACT (maximum achievable control
technology) requirements. EPA is required to propose by the end of 2003
a MACT standard for utility mercury emissions that must be met, plant-
by-plant, by every coal-fired utility with unit capacity above 25
megawatts. EPA is required to finalize this rule by the end of 2004.
The Act generally gives sources 3 years within which to comply with
MACT standards. This compliance obligation could be delayed by a court
if EPA's rule is challenged.
Because these regulations will be the product of separate Federal,
state and judicial processes, comparable health and environmental
protection is likely to cost more under the current Clean Air Act than
under Clear Skies. EPA estimates that a comprehensive, integrated
approach relying on cap-and-trade programs could reduce costs by one-
fourth as compared to the regulatory approach achieving comparable
emission reductions. These cost savings would be passed on to the
public through lower electricity prices and greater profitability to
investors and owners of electric generation.
New Source Review
Some have suggested that Clear Skies is an attempt to undermine the
Clean Air Act. This is simply not true. To achieve the next generation
of environmental progress, we must build on the successful provisions
in laws that have served us well--and learn from those provisions that
have not served us well, or have had only limited success. New Source
Review (NSR) is an example of a program that EPA and stakeholders have
long recognized is not working well.
There is a misconception that the principal goal of the NSR program
is to reduce emissions from power plants. This is simply incorrect.
Reducing emissions from power plants is the principal goal of Clear
Skies. The NSR program is triggered only when facilities emitting large
amounts of air pollution are built, and when modifications at these
facilities result in significant increases in air pollution. The NSR
program is not designed to result in nationwide reductions of air
pollution from power plants. When it comes to reducing harmful air
emissions from power plants, Clear Skies would accomplish more than
NSR. Figure 3 illustrates how the coordinated reductions that result
from Clear Skies would improve air quality in the air shed that affects
the Great Smoky Mountains National Park. In our estimate, such
significant regional improvements could not be obtained in this
timeframe under the NSR framework.
Clear Skies would significantly modify the NSR program for power
plants, but contain some important backstops. We expect that existing
power plants would not have to go through NSR for modifications. New
sources would no longer have to go through the entire NSR process, but
some aspects of the process would still apply. Although we believe that
with a tight cap on emissions, new sources will always install good
controls, we did not want to run the risk that a new source would be
uncontrolled. Therefore, as a backstop, Clear Skies would require all
new power plants to meet New Source Performance Standards (NSPS) that
are set in the statute at levels significantly more stringent than
current NSPS levels.
In addition, new power generators locating within 50 km of a Class
I area (e.g., national parks or wilderness areas) would still be
subject to the current NSR requirements for the protection of those
areas. Finally, new power plants will also have to meet the current NSR
requirements that they will not cause or contribute to a violation of
the national ambient air quality standards.
IV. WINDOW OF OPPORTUNITY
Because of the lessons learned over the last decade, there is
increasing support for legislation such as Clear Skies that would
significantly reduce and cap power plant emissions and create a market-
based system to minimize control costs. From environmental groups to
coal companies, there is increasing broad-based support demonstrating
that multipollutant legislation is a preferable path to cleaner air.
Such an approach would address an array of air pollution concerns
associated with power generation--including fine particles, smog,
mercury deposition, acid rain, nitrogen deposition, and visibility
impairment--at lower cost and with more certainty than currently
allowed by the Clean Air Act.
There is no better time for Congress to be considering
multipollutant legislation. President Bush has indicated that Clear
Skies is his top environmental priority. The number of proposals being
considered by Congress also indicates a consensus behind the basic idea
of a multipollutant cap-and-trade approach. Organizations including the
National Governors Association, U.S. Conference of Mayors, National
Association of Counties, Large Public Power Council, Edison Electric
Institute, Adirondack Council, and numerous individual utilities have
all expressed support for the scope and framework of Clear Skies. If
legislation passes quickly, we will begin achieving emissions
reductions and related health benefits now, not years from now.
Congress needs to act now so that we do not lose a decade's worth of
health and environmental benefits from reducing fine PM pollution,
smog, acid deposition, nitrogen deposition, and regional haze. Further,
as EPA continues to implement additional forthcoming regulations under
the existing framework of the Act, the likelihood of our ability to
pursue an integrated program diminishes--and with it diminish the
numerous advantages that I have delineated today of an approach like
Clear Skies.
Legislation is also needed now to help states with their air
quality planning and provide incentives for industry innovation, which,
in turn, would lower costs and emissions. Such incentives are
particularly compelling this year as we approach the task of reducing
mercury emissions from the power industry. If designed correctly,
legislation could provide the incentive that spurs technological
innovation. When stringent yet flexible mechanisms exist, substantial
technological improvements and steady reductions in control costs can
be expected to follow.
I hope this Congress will concur that there is no better time to
pass this important legislation. Every day that passes represents a
lost opportunity to reduce emissions and reap human health and
environmental benefits. The ``regulatory window'' is open now, allowing
Congress to pass Clear Skies, based on a proven program, before EPA and
the states must embark on a more complex and expensive traditional
regulatory process. Clear Skies provides a balanced approach that our
nation needs for meeting clean air goals, while safeguarding our
economy and promoting energy security. In short, Clear Skies is a clear
win for the American people.
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