[Senate Hearing 106-911]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 106-911

   EPA'S CLEAN AIR BUDGET AND THE CORPS OF ENGINEERS' WETLANDS BUDGET

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
        CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 28, 2000

                               __________

  Printed for the use of the Committee on Environment and Public Works


                    U.S. GOVERNMENT PRINTING OFFICE
68-416 cc                   WASHINGTON: 2001
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
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                                 20402




               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

               one hundred sixth congress, second session
                   BOB SMITH, New Hampshire, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
JAMES M. INHOFE, Oklahoma            DANIEL PATRICK MOYNIHAN, New York
CRAIG THOMAS, Wyoming                FRANK R. LAUTENBERG, New Jersey
CHRISTOPHER S. BOND, Missouri        HARRY REID, Nevada
GEORGE V. VOINOVICH, Ohio            BOB GRAHAM, Florida
MICHAEL D. CRAPO, Idaho              JOSEPH I. LIEBERMAN, Connecticut
ROBERT F. BENNETT, Utah              BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas          RON WYDEN, Oregon
LINCOLN CHAFEE, Rhode Island
                      Dave Conover, Staff Director
                  Tom Sliter, Minority Staff Director
                                 ------                                

  Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear 
                                 Safety

               JAMES M. INHOFE, North Carolina, Chairman

GEORGE V. VOINOVICH, Ohio            BOB GRAHAM, Florida
ROBERT E. BENNETT, Utah              JOSEPH I. LIEBERMAN, Connecticut
KAY BAILEY HUTCHISON, Texas          BARBARA BOXER, California

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

                             MARCH 28, 2000
                           OPENING STATEMENTS

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1
Smith, Hon. Bob, U.S. Senator from the State of New Hampshire....    15
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...    12

                               WITNESSES

Davis, Michael, Deputy Assistant Secretary of the Army (Civil 
  Works), U.S. Army Corps of Engineers...........................     5
    Prepared statement...........................................    34
Perciasepe, Robert, Assistant Administrator for Air and 
  Radiation, U.S. Environmental Protection Agency................     2
    Prepared statement...........................................    28
    Responses to additional questions from Senator Inhofe........    31

                                 (iii)

  

 
   EPA'S CLEAN AIR BUDGET AND THE CORPS OF ENGINEERS' WETLANDS BUDGET

                              ----------                              


                        TUESDAY, MARCH 28, 2000


                                   U.S. Senate,    
Subcommittee on Clean Air, Wetlands, Private Property      
                                    and Nuclear Safety,    
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m. in 
room 406, Senate Dirksen Building, Hon. James M. Inhofe 
(chairman of the subcommittee) presiding.
    Present: Senators Inhofe, Voinovich, and Smith [ex 
officio].

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. I will call the meeting to order, right on 
time.
    Today's subcommittee hearing will look at the 
Administration's budget for both EPA's Air Office and the Army 
Corps' Wetlands Program. I am very concerned about the budget 
for both offices and their priorities for next year.
    In the Air Program, I notice that you have once again 
requested funding for the Clean Air Partnership Trust Fund. I 
think last year when we talked about that, we referred to it as 
a ``slush fund.'' We decided that it was not a good program, so 
we disagreed with that at that time. I see it is coming back 
now.
    Maybe you can address this in your opening statement, Mr. 
Perciasepe. Perhaps we have received information that we didn't 
have before, but if we did, my staff has not given it to me. I 
understand you are dropping it down now from $100 million to 
$85 million, which doesn't really have any bearing on it. If 
it's a program that's not justified at $100 million, it 
wouldn't be justified at $85 million.
    I am also concerned that there are some areas that are not 
funded. I can't find new resources in the budget to help with 
the permitting necessary for the new sulfur rule, which was 
promised last year during the discussions on the proposals.
    There are important studies on ethanol which were 
recommended by the Blue Ribbon Panel last year, but not funded, 
even though just last week Carol Browner announced support for 
a new ethanol mandate. I think that, once again, the Agency is 
moving forward with a political agenda without having first 
studied the science to support it.
    On wetlands, this month the Corps announced a new 
replacement Permit for the No. 26 Nationwide Permits. We held a 
hearing on this subject almost 3 years ago, and I am concerned 
that the Corps has not adequately budgeted for the new permit 
process. They certainly haven't requested enough funds to cover 
additional individuals' permits. We'll have some questions 
about that during question and answer time.
    Last year, the House Appropriations required the Corps to 
conduct a workload study in relation to Nationwide Permit 
changes. I am shocked that the new permit regulations were 
released before the workload study was completed and released. 
Now, maybe it's been completed; but if it's been completed, we 
haven't seen it yet.
    So we have two witnesses today, Bob Perciasepe, the 
Assistant Administrator for EPA's Air Office, and Michael 
Davis, Deputy Assistant Secretary of the Army Corps. I intend 
to get to these issues and priorities during the course of the 
question and answer period.
    You look different this time, Mr. Davis, from the last time 
you appeared.
    Mr. Davis. It's probably the beard, sir.
    Senator Inhofe. The beard. That's it, yes.
    Why don't we start, Mr. Perciasepe, with you? I enjoyed 
being with you yesterday in San Antonio, and here we are back 
in Washington.

STATEMENT OF ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR FOR AIR 
      AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

    Mr. Perciasepe. It's the modern era. Two hundred years ago, 
it would have taken us months to do that trip.
    Senator Inhofe. That's right.
    Mr. Perciasepe. Somehow, maybe that slower lifestyle would 
have been a little easier on all of us, although I understand 
from historical records that travel was rigorous.
    Let me just say thank you for the invitation today, Mr. 
Chairman, and let me do a couple things in my opening 
statement: first, give you a few highlights of some of the 
successes of the Clean Air Act since 1990, and then focus on 
the budget priorities of this year.
    Since 1990, when Congress enacted the amendments to the 
Clean Air Act with overwhelming support, we as a country have 
achieved unprecedented success in the air quality area, and 
we've done this not only with rulemakings, but with voluntary 
measures, with market mechanisms, with partnerships with the 
States, and with stakeholder negotiation processes.
    The EPA recently conducted a study that was authorized by 
Congress under section 812 of the Clean Air Act, to look 
prospectively at the costs and benefits that we might see from 
some of the improvements, and we projected out to 2010. In our 
central estimate of benefits going out to 2010, it is about $83 
billion a year, and that exceeds the projected costs by about 
four to one.
    This is on top of the fact that over the last several 
decades, the gross domestic product of the United States has 
gone up 114 percent; the U.S. population has gone up by 31 
percent; vehicle miles traveled every day has gone up 127 
percent; and the aggregate pollutants that we are all concerned 
about have gone down 31 percent. So it is clear that we have 
made tremendous clean air progress, that it is cost-beneficial, 
and it is done while we are continuing to grow the U.S. 
economy.
    Some specific examples of those successes are the Acid Rain 
Program, which has reduced emissions by 22 percent, or 3.5 
million tons, and reduced acidity in the eastern part of the 
United States by up to 25 percent. Working on a global scale, 
we have reduced the emissions of stratospheric ozone-depleting 
substances and CFCs. We have reduced air toxics, using the 
maximum available control technology standards, by over 1.5 
million tons. And our cities are cleaner. This is where people 
live, and most of the cities in the United States have cleaner 
air now than they did 10 years ago.
    Two of the big reasons for this success are cleaner cars 
and cleaner fuels, both in terms of the congressionally 
authorized car emission standards in 1990, and the reformulated 
gasoline program. We have had substantial reductions in the 
pollution in our Nation's cities. And as you know, last 
December we promulgated the second phase of those air quality 
standards and gasoline changes, called Tier II, in low-sulfur 
gasoline.
    EPA's voluntary climate programs have also been making 
significant progress and return on their investment. For every 
dollar that we spend on our voluntary programs, consumers have 
invested $15. Private sector and consumers have invested more 
than $15 million in new, efficient technologies, and businesses 
and consumers have saved over $70 in greenhouse gas--that's for 
each Federal dollar of investment--and half a ton of emissions.
    Our study also showed tremendous health benefits from these 
reductions between now and 2010. I won't go through everything 
in great detail here because I know that we have a short period 
of time, but there are 23,000 fewer incidences of mortality; 
20,000 fewer cases of chronic bronchitis; 47,000 fewer cases of 
acute bronchitis; 22,000 fewer respiratory-related hospital 
admissions. I have submitted the rest of this for the record.
    If we funded the voluntary climate programs at the 
President's request, by 2010 we would have an additional $35 
billion in energy savings to families and businesses in the 
United States.
    Moving to our priorities for this year, we are going to 
continue working on the large trucks and buses and diesel fuel 
in the same manner that we tried to work with the automobile 
industry and the fuel industry last year on light duty 
vehicles. We are starting implementation of Phase II of the 
Acid Rain Program. We are going to continue with the Air Toxics 
Program under the MACT standards. We are going to work on Yucca 
Mountain, the nuclear waste disposal site in Nevada. A year and 
a half ago we did certify the Waste Isolation Pilot Plant in 
New Mexico, and it is now receiving high-level radioactive 
waste.
    We are going to continue to carry out the voluntary 
programs under the Climate Change Technology Initiative, both 
in terms of industry and consumer products, but also on 
vehicles. We work very closely with the automobile industry on 
the vehicle program, and we have the EnergyStar program where 
we work very closely with industry and manufacturers.
    In the 2001 budget, you have already mentioned in your 
opening comments at least a couple of the items that we'll talk 
about today. Our air budget does increase in the President's 
budget request to Congress. One of the items that you've 
mentioned is the $85 million for the Clean Air Partnership 
Fund. This is a fund that we want to help fund, and it is fully 
authorized under section 103 of the Clean Air Act.
    The idea with the Clean Air Partnership Fund is to provide 
funding to State and local governments and air quality 
management districts so that they can work in partnership with 
businesses and industry in their area to look at innovative 
ways to solve more than one problem at once. One of the 
problems we have is that many of the regulations or programs 
that were laid out by Congress in the Clean Air Act focus on 
one pollutant at a time. We know that there are strategies that 
can be more holistic in their approach. So we would like to use 
those funds to demonstrate those at the local level. We want to 
leverage the original funds by having matching funds. In 
leveraging, we want to have public involvement and provide 
examples that we could then replicate across the country, and 
perhaps even provide ideas that go into the process that you 
have been working on in terms, Mr. Chairman, of reauthorization 
or amendments to the Clean Air Act.
    On the climate change front, we are asking for almost a 
doubling in the funds to expand the partnership efforts with 
businesses and organizations and consumers.
    I think I'll stop there; those were the larger increases. 
The remainder of the funding is to target some key areas, like 
air toxics and implementation of the existing rules and to 
continue to implement the 1-hour ozone National Ambient Air 
Quality Standard, and do some of the preparatory work that will 
be needed in the future for new standards, like continuing to 
maintain and provide funds for States to operate the PM 
monitors and things of that nature.
    So I am going to stop there, Mr. Chairman.
    Senator Inhofe. I neglected to mention when we opened up 
that we're going to have 5-minute opening statements. If you 
want to go longer, that's all right. Your entire statement will 
be made a part of the record.
    You know, when Mr. Davis is through I would like to have 
you elaborate a little bit more because we had requested 
information on specifics on this Clean Air Partnership Trust 
Fund. I don't like these open-ended amounts that go in without 
knowing specifically what types of programs. It's all well and 
good to say that ``we're going to get local matches,'' but I 
want to know, local matches for what? What are the programs? 
How much is going to be spent? What are the expectations? And I 
don't think we've received any of that. You might want to 
address that when Mr. Davis completes his opening statement.
    Mr. Davis?

 STATEMENT OF MICHAEL DAVIS, DEPUTY ASSISTANT SECRETARY OF THE 
        ARMY (CIVIL WORKS), U.S. ARMY CORPS OF ENGINEERS

    Mr. Davis. Mr. Chairman, thank you for the opportunity to 
provide testimony on the Army Regulatory Program budget and 
recent regulatory program initiatives. I am Michael Davis, 
Deputy Assistant Secretary of the Army.
    In my complete statement, which I have submitted for the 
record, I provided an overview of the regulatory program; 
current levels of performance; recent regulatory initiatives, 
and the regulatory program budget. I will summarize my comments 
in each of these areas.
    During fiscal year 1999, the Army regulatory program 
provided written authorization to over 90,000 activities, the 
most in any year. Over 90 percent of these actions were 
authorized in less than 60 days. This work is accomplished by 
approximately 1,100 highly skilled and dedicated regulatory 
staff members nationwide.
    The Section 404 Program is a vital part of our Nation's 
overall effort to protect, restore, and preserve our water 
resources. The overarching statutory goal of the program is to 
protect the waters of the United States, including wetlands. 
Over the past 28 years the Army Corps of Engineers has 
prevented the destruction of hundreds of thousands of acres of 
wetlands and the degradation of thousands of miles of rivers 
and streams. This has reduced property damage and loss of life 
from flooding and protected fish and wildlife habitat and water 
quality, all vital to the Nation's economy and overall health.
    From a good public policy and investment perspective, the 
Section 404 Program has been a success. For example, the 
program has played a key role in reducing the loss of wetlands 
from over 400,000 acres per year in the mid-1970's to 
approximately 100,000 acres a year in the mid-1990's.
    While the program stems the loss of wetlands and other 
aquatic resources, it has done so in a manner that minimizes 
unnecessary regulatory burdens on those who must apply for 
permits. Administering the Army Regulatory Program in a fair, 
flexible, and effective manner has been a priority of the 
Administration since 1993.
    The Corps received an average of 74,500 Section 404 permit 
requests each year from fiscal year 1996 to fiscal year 1999. 
Of those requests, 84 percent were authorized through a general 
permit; only 6.7 percent of all permit applications were 
subject to the more detailed standard individual permit 
evaluation that requires impact avoidance and compensation.
    Because of the program's effectiveness in avoiding and 
compensating for impacts, only three-tenths of 1 percent of all 
Section 404 requests were denied.
    From fiscal year 1996 to fiscal year 1999, the average time 
to reach a decision on individual permits was 107 days. 
Decisions for general permits were reached in only 14 days.
    The general permit program is an important part of the 
overall regulatory program. By providing a screening mechanism, 
it allows the Corps to set priorities and focus its resources 
on those activities with potential for greater environmental 
impacts.
    Before I discuss the new Nationwide Permits, I think it is 
important to review the legal requirements of all general 
permits, as found in Section 404(e) of the Clean Water Act.
    First, general permits must be for a category of 
activities.
    Second, general permits may not result in more than minimal 
impacts, either individually or cumulatively.
    And finally, general permits may be issued only after an 
opportunity for public notice and comment, and are valid for no 
more than 5 years.
    The most widely used general permits are the Nationwide 
Permits. Of the over 40 Nationwide Permits, Nationwide Permit 
No. 26 was used the most, by permitting a wide variety of 
activities in specific waters, such as headwaters and isolated 
waters. Nationwide Permit No. 26 also engendered considerable 
controversy and was the subject of litigation by the 
environmental community, who argued that it did not meet the 
statutory requirements of the Clean Water Act.
    As our scientific understanding of the importance of 
headwater systems and isolated wetlands improved, we became 
concerned that from a national perspective, activities 
authorized by Nationwide Permit No. 26 might, in fact, have 
more than minimal adverse impacts on the aquatic environment. 
The concern was that Nationwide Permit No. 26 authorized too 
many projects in the headwaters and isolated waters, increasing 
the frequency of flooding, destroying viable fish and wildlife 
habitat, and impairing water quality.
    Many continued to question the legality of Nationwide 
Permit No. 26, casting doubt and uncertainty on the entire 
nationwide permit program. In a 1995 report, the National 
Academy of Sciences questioned the scientific validity of 
Nationwide Permit No. 26. The President's 1993 Wetlands Plan 
called for a review of Nationwide Permit No. 26. In addition, 
this Administration has been unequivocal in its promotion of 
the wise and sustainable use of our floodplains. Every year 
lives are needlessly lost, and the Nation spends over $4 
billion paying for flood damages. In 1996, the Army modified 
Nationwide Permit No. 26 and reduced the maximum allowable 
impacts from 10 acres to 3. The Army also committed to further 
improving protection by replacing Nationwide Permit No. 26 with 
more environmentally benign activity-based nationwide permits.
    In this regard, on March 7, 2000, as you indicated, after 
several opportunities for public comment, the Corps issued five 
new nationwide permits and modified six existing nationwide 
permits. The new and modified nationwide permits will become 
effective June 7th, 2000, and these permits substantially 
improve environmental protection, while allowing those 
activities that are truly minor to go forward with little or no 
review.
    Under the new nationwide permits, only those activities 
involving less than one-half acre of impacts will be allowed. 
In addition, to further reduce adverse impacts from flooding 
caused by development in the floodplain, we have also added a 
permit condition that prohibits the use of most of the 
nationwide permits in much of the hundred-year floodplain. We 
have also added a condition that prohibits the use of the 
nationwide permits in critical resource waters, such as 
critical habitat for endangered species, and wild and scenic 
rivers.
    As we developed the new nationwide permits, we not only 
considered the need to improve environmental protection, but we 
also considered the effect of such changes on Corps workload 
and the regulated public. Based on our review, we are confident 
that the final changes made on March 7th are needed and 
justified by the increased environmental protection.
    While the Corps' workload will in fact increase some, we 
predict that over 80 percent of all Section 404 activities will 
continue to be covered by general permits.
    Now I am going to turn just for a moment to the 
administrative appeals process.
    On March 9, 1999, we published a final rule establishing an 
administrative appeal process for permit denials and declined 
permits. That rule became effective on August 6th, 1999. To 
date we have evaluated 12 requests for appeals of denied 
permits. One has been sustained, one remanded back to the 
District, and ten are pending. In the fiscal year 2000 
appropriations for the Corps Regulatory Program, the Congress 
provided funds to administer an appeals process for 
jurisdictional terminations, and I am pleased to note that the 
final rule for this part of the appeals process will be 
published in The Federal Register today.
    Regulatory appropriations have increased over the last 10 
years, from $64.5 million in fiscal year 1990 to $117 million 
in fiscal year 2000. The President's budget request for the 
Army Regulatory Program for fiscal year 2001 is $125 million. 
Program funding increases have, for the most part, covered only 
the normal year-to-year labor costs, along with some 
programmatic initiatives and special studies. Increases in the 
regulatory program budget were necessary to cover the cost of 
additional staff, and also to respond to an increasing need to 
improve environmental protection and develop programmatic tools 
to improve overall performance.
    The regulatory program 2001 funding request of $125 million 
is necessary to ensure that we continue to provide effective 
regulation of the Nation's wetlands and waterways. 
Approximately $5 million of this amount is needed to help 
address increases in workload.
    In conclusion, Mr. Chairman, the Nation's aquatic resources 
are vital to our environmental and economic health. Our rivers, 
lakes, and wetlands are the lifeblood of our great landscapes. 
They support the fish and wildlife that we catch, hunt, and 
watch. They provide us with water, an essential component for 
all living things. The Army regulatory program plays an 
important role in protecting these resources for today and for 
future generations. Through the Army regulatory program we are 
committed to serving the public in a fair and reasonable 
manner, while ensuring the protection of the aquatic 
environment, as required by laws and regulations.
    We will continue to pursue the important initiatives that I 
have discussed today. Our regional and nationwide general 
permits program will continue to be evaluated for opportunities 
to improve both environmental protection and performance. We 
have established a full administrative appeals process that 
will allow the public to challenge permit decisions and 
jurisdictional terminations without costly, time-consuming 
litigation.
    The President's budget request is needed to help maintain 
this level of commitment and service.
    Thank you, Mr. Chairman, for the opportunity to provide 
this statement today.
    Senator Inhofe. Thank you. I hope you will convey to my 
good friend, Dr. Westphal, that I share his concern and his 
grief over OSU losing in the final 8.
    Mr. Davis. I will pass that on. He would be with you today, 
except he is testifying at a hearing as we speak.
    Senator Inhofe. I see.
    Mr. Perciasepe, we ended up talking about the Clean Air 
Partnership Trust. Did you want to add anything in terms of 
specifics that we are going to be getting concerning that?
    Mr. Perciasepe. On the Clean Air Partnership Fund?
    Senator Inhofe. Yes.
    Mr. Perciasepe. Well, first, just a tiny bit on the history 
of this. A year and a half ago, when I first started working on 
the Air Program, we at EPA--and I think it was widely 
distributed. EPA received a report from the State Air 
Directors, a group called STAPPA/ALAPCO, State and Local Air 
Directors. Their report to EPA proposed ideas for looking at 
pollution reduction at the State and local level, looking at 
more than one pollutant at a time as opposed to one pollutant 
at a time. It was in part from those kinds of discussions that 
this idea was derived.
    Now, we made a commitment to the State and local 
governments that we would design the program with them, and 
we've done a little bit of those consultations, but we have a 
little bit of a ``chicken and egg'' here. We've done enough 
consultations where I could lay out that, ``We have some 
general criteria that we would like to use.'' We haven't 
enacted regulations on how we would distribute the grant funds, 
but it would require some kind of matching or leveraging: if a 
locality wanted to use some of the funds to set up a local 
revolving loan fund to provide low-interest loans to people, 
for instance, in a brownfields location, that they can deal 
with innovative technologies and solve their air quality 
problems at the same time, that that would be something we 
would want to do.
    We have done some of this work, and I think we have and can 
provide these outlines that we've done already, but we could 
certainly get together with these folks and do a little bit 
further refining on it. But again, I want to find the right 
balance between completely defining it on my own at the EPA and 
being accused of not consulting with the people who are going 
to use the funds. That's the dilemma.
    Senator Inhofe. I see that.
    Last year, during the gasoline sulfur debate, the Agency 
promised that they would provide the needed resources to get 
the refiners' permits approved quickly so that they could make 
the equipment changes to meet the deadlines that were out 
there. I am concerned that the budget didn't include any 
additional resources, either in funds or employees, to assist 
in this. How are you going to ensure that the permits are 
processed quickly without additional resources?
    Mr. Perciasepe. We are diverting some of our existing funds 
toward the work that EPA needs to do to provide the information 
to allow the permitting processes to go more smoothly at the 
State level. We have folks working on identifying in advance 
the array of technology options that would be available for the 
kinds of emission control devices that you would want to have 
associated with whatever--the types of equipment that we 
envision being utilized for desulfurization, and there is a 
number of technologies, as you know, being developed. In fact, 
a draft of that work is currently being reviewed by some people 
at the State level and some people in the industry.
    Senator Inhofe. Well, if you are diverting, first, where 
are you diverting them from? And then quantify this diversion.
    Mr. Perciasepe. Well, we can certainly provide some 
quantification of this for the record.
    [Information follows:]

    There are no changes in the fiscal year 2001 budget request 
to support new source permitting changes that may result from 
the desulfurization requirements of the Tier Two rule. When the 
Agency took comments on the proposed rule, states did not 
identify an inability to meet the permitting schedule with 
their current assistance levels. In fact, states with some of 
the largest number of sources subject to Tier Two have 
indicated that all their permitting could be completed rather 
quickly, even as quickly as 6 months.
    The Agency expects that the rule will require changes to 
only small parts of each of the 115 refineries nation-wide. 
These permit changes will occur over a 3-5 year period and will 
be assimilated into the base permit review load of the states 
affected. Therefore, states did not identify a need for 
additional funding assistance when they provided comment on the 
rule.
    EPA is taking a number of steps all of which should help 
ensure that permit review and issuance is done as quickly as 
possible in order for refineries to meet the Tier II 
requirements. For example, we have formed an EPA Tier II 
permits team of experts to help states facilitate Tier II 
permitting. This includes representatives from each of the 
Regions where refineries are located, as well as across EPA. 
Another example is the development of best available control 
technology (BACT) guidance that will be available for public 
review in the next week or two. This will assist permitting 
authorities by letting them know what EPA would likely accept 
as best available control technology for emission units that 
are subject to the New Source Review Program. That being said, 
this guidance would not preclude any specific state permitting 
decisions that would be made due to new information or site 
specific information that arises during the public comment 
period. A third example is that EPA will be conducting outreach 
efforts to states, refineries and communities where 
environmental justice concerns are raised.

    Mr. Perciasepe. But we have a budget allocation for work on 
Title 5 permitting issues, and we have a staff in both the 
regions and in our office in North Carolina who do this; this 
is the work that they do. What we've told them is that over 
this coming year, they have to do some of this developmental 
work.
    The more that we can do up front to define what needs to be 
done in the permitting process, the less work will need to be 
done on a permit-by-permit basis.
    Senator Inhofe. OK.
    Yesterday we briefly touched on this in your presentation 
and my presentation down in San Antonio, but with the 
Administration coming out with the program that announced the 
MTBE principles--which includes replacing the oxygenate mandate 
with renewable mandate nationwide--would it require that all 
gasoline have at least 1.2 renewable, which means ethanol, 
because it's an ethanol mandate that they came out with? This 
would require significant new resources at each refinery and 
for the distribution system across the country.
    Have you conducted any studies to determine what the cost 
of implementing this nationwide mandate would be? Because we're 
going from those that were just out of attainment, to all 
refineries across the country. I don't know what kind of 
studies you've had to determine how much money that's going to 
be, for industry.
    Mr. Perciasepe. OK. First of all, let me try to be clear 
about what we're proposing. We're not proposing that in all the 
reformulated gasoline areas--of which there are, I think, 10 or 
11 cities in the country that are required to receive 
reformulated gasoline, and it's areas from New England all the 
way to California--that the 2 percent by weight oxygenate 
requirement be replaced in those areas with this 1.2 percent by 
volume minimum requirement for renewable fuels.
    Incidentally, 2 percent by weight volume for ethanol would 
be about 5.5 percent by volume. That's the way that would work 
out. But the idea behind that proposal is that when Congress 
and the executive branch agreed on this reformulated gasoline 
program back in 1990, and put the oxygenate requirement in the 
statute, they had a number of objectives in mind. One was air 
quality, but other ones were using domestic supplies of energy 
to help in our transportation energy supply. And in order to 
maintain that, you want to maintain the amount that's currently 
in there, and that's about 1.2 percent, give or take a tenth of 
a percent, by volume of ethanol. On a national basis--we're 
suggesting that we hold that, so if we're already using 1.2 
percent of our gasoline as blended with ethanol, then we would 
suggest that you start by just holding that. There would be no 
cost to holding that minimal existing level, because you can 
average it across the country and across times of year. We're 
not talking about having every refinery and every gallon of 
gasoline have 1.2 percent----
    Senator Inhofe. But there are some areas where there is no 
ethanol.
    Mr. Perciasepe. That is correct.
    Senator Inhofe. And under this new rule, this would mandate 
that ethanol replace something else.
    Mr. Perciasepe. Well, if we reduce MTBE, which was the main 
purpose of the----
    Senator Inhofe. Reduce it, or eliminate it?
    Mr. Perciasepe. We're asking for the authority to do one of 
those two things, and that will require a followup rulemaking 
and analysis of the final determination of that. But under any 
of those scenarios, we use about 4.5 billion gallons a year of 
MTBE, or methyl-tertiary butyl ether, in our Nation's gasoline. 
And if we eliminate that--let's just say eliminate that--then 
you're talking about filling a volume of 4.5 billion gallons of 
fuel, and there are a number of options to fill that volume. 
One of the options is ethanol, because it has good octane. One 
of the options might be iso-octane; another option might be 
alkalates; and there are other options----
    Senator Inhofe. The last two that you mentioned are very 
heavy in toxics.
    Mr. Perciasepe. Say that again?
    Senator Inhofe. The last two that you mentioned are very 
heavy in terms of toxics. I thought we were not----
    Mr. Perciasepe. Well, I'm not sure about that. It would be 
the aromatics that would cause more of a toxics problem, and 
that would be the benzenes, the toluenes, the xylenes. There 
are some companies that would be looking at some of those, but 
our view would be that you would want to maintain the existing 
benefits that we have achieved, including the toxics benefits. 
That's one of the principles that we put out. I know the 
committee has been looking at ways to put that in legislation, 
and we're obviously willing to work with you on that.
    So if you sort of look at this as taking the reformulated 
gasoline program and making it more flexible so that as we 
phase down MTBE, refiners will have flexibility in how they 
meet those performance standards of the Air Quality Program and 
are not beholden to the 2 percent oxygenate requirement in 
every reformulated gasoline area. At the same time, we 
recognize the broader objectives of the oxygenate requirement 
and start with the existing use of renewable fuels and grow it 
over a decade, providing the long lead time necessary for that, 
and not prescribe the geographic areas or the time of year that 
that would have to be done, giving additional flexibility----
    Senator Inhofe. Well, it sounds like there is going to have 
to be a lot to be done if you carry on with this announced plan 
that came out of the EPA last week. Now, in this budget do you 
have funds to have a comprehensive study for all this stuff 
that we're talking about on which substitutions to use, what is 
going to be required, what the cost is going to be? Because 
when I looked at this, when I first saw it--actually, you were 
kind enough to call me up and give me a ``heads up'' on it, but 
it's just an ethanol mandate, nationwide.
    Mr. Perciasepe. Well, I can't say that it's not, but I can 
say that we're suggesting that it start where we already are. 
So you start where there is very little cost, and you allow it 
to grow gradually over 10 years. We can do the analysis, and 
would want to do the analysis, on how to make that happen. The 
idea is to not force-feed one kind of product into all the 
reformulated gasoline areas. The idea is that in the 
reformulated gasoline areas where we need to meet the air 
quality goals, that we provide some flexibility to the refining 
industry on how they make their recipes to meet those 
objectives, but also maintain the gains that we've made on 
renewable fuels in the country, to capture what we've got, and 
then grow it over a 10-year period, which will reduce the costs 
substantially, and not prescribe how it be distributed, but 
allow that to happen in a national averaging or annual 
averaging-type program.
    Senator Inhofe. I guess it was last year that the EPA's 
Blue Ribbon Committee had a recommendation that addressed this, 
and I will read a quote out of it.
    It says, ``EPA and others should accelerate ongoing 
research efforts into the inhalation and ingestion health 
effects, air emission, transformation byproducts, and 
environmental behavior of all oxygenates and other components 
likely to increase in the absence of MTBE. This should include 
research on ethanol, alkalates''--which you were talking 
about--``and aromatics, as well as gasoline compositions 
containing those components.''
    Now, that was about a year ago, I guess, wasn't it, that 
they----
    Mr. Perciasepe. Last fall, I think last September. We knew 
what they were going to recommend in the August timeframe, but 
I think the report was published in September.
    Senator Inhofe. Well, did the EPA conduct all of this 
research before coming out with the mandate?
    Mr. Perciasepe. First of all, we're not doing a rule or 
unilaterally proposing a mandate. What we're suggesting is a 
legislative framework to essentially replace the reformulated 
gasoline framework that is in the existing Clean Air Act, and 
still try to achieve all the objectives that were in the 
legislative history.
    Senator Inhofe. But that legislative timeline----
    Mr. Perciasepe. That first of all will require legislation, 
and then it will require analysis and rulemaking. Under Clean 
Air Act, Section 211, EPA has been working with industry, and 
we have a $15 million research program underway looking at 
inhalation and other paths of exposure for conventional 
gasoline and gasoline with MTBE, ethanol, and other oxygenates. 
So we have a process underway now with the refining industry, 
using authority that requires them to do that analysis. We 
don't have that in our budget.
    Senator Inhofe. Well, you say you have a legislative 
framework. These have timelines on them. My concern is that 
within this framework, you're going to have the resources 
recommended by the Blue Ribbon Committee, and I want to make 
sure that the research is in and the results are in prior to 
the time that anything is mandated.
    Senator Voinovich, what we're talking about is the recent 
mandate that came to take out MTBEs and replace them--I think 
with ethanol, although he's talking about other substances, 
too.
    When the Blue Ribbon Committee had suggested they do 
extensive research on this, it seems to me--and it still seems 
to me--that we have the cart before the horse on this.
    Senator Voinovich, did you want to make an opening 
statement or anything, or just join in the questions here?
    Senator Voinovich. Well, I would like to make an opening 
statement.
    Senator Inhofe. You are recognized.

        OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 
              U.S. SENATOR FROM THE STATE OF OHIO

    Senator Voinovich. I would like to communicate a few things 
to the Department.
    First of all, I want to thank you, Mr. Chairman, for 
conducting this hearing. As you know, the EPA is requesting an 
$832.8 million air program, which is a 39 percent increase over 
fiscal year 2000. We face limited budgets at all levels of 
Government and it is important that we use our limited 
resources wisely. As I mentioned to Administrator Browner, who 
was here last month, I am concerned that the Administration is 
proposing new initiatives while some of our environmental needs 
are currently going unmet. As we consider the last budget of 
this Administration, I am concerned that instead of building on 
their previous initiatives and giving priority to unmet needs, 
the Administration is proposing new initiatives, such as the 
Clean Air Partnership Fund.
    This Administration, in my opinion, should not be proposing 
new initiatives that it is not going to be around to implement. 
Instead, it should be thinking about consolidation and putting 
money into existing programs. For example, it appears that EPA 
has a lot of work to do to meet its statutory requirement to 
complete maximum achievable control technology standards to 
reduce hazardous air pollutants. If these standards are not 
completed on time, it is up to the States to do it.
    When I was Mayor and Governor, in my last year we 
concentrated on finishing what we started rather than beginning 
new initiatives to pass on to the next Administration. I 
strongly believe that our challenge in the new millennium is to 
work harder and smarter and do more with less. We need to 
prioritize so that we spend our resources in a way that best 
protects the environment and the health of our citizens.
    I note that once again EPA has asked for an increase in 
funding for particulate matter research to advance the 
scientific understanding of the health effects of particulate 
matter. EPA is requesting $65 million, an increase of $3 
million over fiscal year 2000, $9 million over fiscal year 
1999, and EPA has received $118 million over the last 2 years 
to study particulate matter.
    I am not opposed to this research. I think it's terrific. 
But the thing that bothers me--and maybe it gets back to the 
point that the Chairman was making--and that is that this 
research work should have been done before we went forward with 
the proposed regulations in terms of particulate matter. 
Because of the fact that the research work wasn't done, 
lawsuits were filed; a Federal Court of Appeals has ruled that 
even though the Environmental Protection Agency had the right 
to do this, they didn't have the scientific backup for it, and 
we can't continue to do things like this.
    That's why Senator Breaux and I are going to be introducing 
a bill in the next few days that is going to require the EPA to 
conduct risk assessment and cost-benefit analysis when 
promulgating new rules under the Clean Air Act. The bill 
includes the same risk assessment and cost-benefits that we put 
into the Safe Drinking Water Act, which was passed in 1996 or 
1997 and was signed by the President with a great deal of 
enthusiasm. Under our bill, EPA would be required to conduct an 
analysis of risk, cost, and benefits of alternative standards, 
while providing the Agency with flexibility in making the final 
regulatory decision. It's a common-sense approach that I think 
says, ``If it's good enough to protect the water we drink, then 
it should be good enough to protect the air we breathe.''
    It will also help us avoid some of the legal and 
legislative wrangling that has occurred with respect to how we 
achieve clean air. There is no question that we have to do more 
science and research and cost-benefit and risk assessment to 
make sure that when we are doing things, they can be justified; 
and not just because some wind is blowing across the Agency.
    Last but not least, Mr. Perciasepe, I worked very hard to 
bring my State into attainment on the current air standards. 
There was one area of the State, prior to my leaving, that had 
achieved it but hadn't been designated, and that was the 
Cincinnati area. Now, it's been almost 3 years or 4 years since 
that issue has been resolved. I understand that now everything 
has been met; now they have extended the comment period again.
    I just want you to know that the businesspeople in that 
community, who have been very responsible in bringing it into 
attainment, are very upset about this. It is hurting them from 
an economic point of view because they haven't reached the 
attainment of the current standards, and I'd like your Agency 
to get on with it, get it over with, and get them their 
designation of attainment.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Voinovich follows:]
 Statement of Hon. George V. Voinovich, U.S. Senator from the State of 
                                  Ohio
    Mr. Chairman, thank you for conducting this hearing today on the 
Administration's FY 2001 budget for EPA's air programs and the Army 
Corps of Engineers' wetlands programs.
    Overall, EPA is requesting $832.8 million for air programs a 39 
percent increase from FY 2000. We face limited budgets at all levels of 
government and it is important that we use our limited resources 
wisely.
    As I mentioned when Administrator Browner was here last month, I am 
concerned that the Administration is proposing new initiatives when 
some of our current environmental needs are going unmet. As we consider 
the last budget of this Administration, I am concerned that instead of 
building on their previous initiatives and giving priority to unmet 
needs, the Administration is proposing new initiatives such as the 
Clean Air Partnership Fund.
    This Administration should not be proposing new initiatives that it 
is not going to be around to implement. Instead it should be thinking 
about consolidation and putting money into existing programs. For 
example, it appears that EPA has a lot of work to do to meet its 
statutory requirement to complete Maximum Achievable Control Technology 
(MACT) standards to reduce hazardous air pollutants. If these standards 
are not complete on time, it is up to the states to do it. When I was 
Mayor and Governor, in my last year we concentrated on finishing what 
we had started rather than beginning new initiatives to pass on to the 
next Administration.
    I strongly believe our challenge in the new millennium is to work 
harder and smarter and do more with less. We need to prioritize so we 
spend our resources in a way that best protects the environment and the 
health of our citizens.
    I noted that once again EPA has asked for an increase in funding 
for particulate matter research to "advance the scientific 
understanding of the health effects of particulate matter." EPA is 
requesting $65 million an increase of $3 million over FY 2000 and $9 
million over FY 1999. EPA has received $118 million over the last two 
years to study particulate matter.
    I am not opposed to research funding. In fact, I believe it is 
essential in order to make judgments based on sound scientific 
evidence. What does concern me is moving forward with regulatory 
decisions before the science is available to back it up. It's no secret 
that I have concerns that EPA moved ahead with the PM2.5 
standards without fully knowing the health effects of PM2.5.
    Last year, a federal appeals court remanded the new ozone and 
particulate matter standards, saying that EPA needed to justify why 
those levels were set. The court did not say that EPA couldn't set the 
standards at those levels, but they asked for further explanation of 
how those standards were chosen.
    I may sound like a broken record when I say this, but it warrants 
being stated again: environmental regulations need to be based on sound 
science. These decisions should clearly take risks and costs into 
account to ensure that we are targeting our limited resources on real 
risk. EPA can't keep coming back to Congress and asking for more and 
more money without telling us and the American taxpayers that the money 
being spent is going toward the real problems that exist. We need to 
know the science that goes into a rule BEFORE a rule is finalized.
    That is why Senator Breaux and I will introduce a bill in the next 
few days that will require EPA to conduct risk assessment and cost-
benefit analysis when promulgating new rules under the Clean Air Act.
    The Voinovich-Breaux bill includes the same risk assessment and 
cost-benefit analysis provisions that are in the Safe Drinking Water 
Act, which passed with broad bipartisan support and was signed into law 
by this Administration. In fact, I was pleased to attend the 
President's bill-signing ceremony along with Administrator Browner and 
environmental groups when these reforms were signed into law. This 
cooperative effort on drinking water is notable because it showed that 
a law could include commonsense reforms that make government more 
accountable based on public awareness of risks, costs and benefits. I 
believe it set a key precedent for reform of environmental regulations.
    Under our bill, EPA would be required to conduct an analysis of 
risks, costs and benefits of alternative standards, while providing the 
Agency with flexibility in making final regulatory decisions. This bill 
is a commonsense approach that merely addresses the obvious: if it's 
good enough to protect the water we drink, then it should be good 
enough to protect the air that we breathe. It will also help us avoid 
some of the legal and legislative wrangling that has occurred with 
respect to how we achieve clean air.
    And while you are here Mr. Perciasepe, I want to reiterate my hope 
that EPA will act quickly to redesignate Cincinnati as in attainment of 
the 1-hour standard. The Greater Cincinnati community has worked 
together, through a variety of coordinated programs, to improve the 
quality of Ohio's air. Cincinnati has demonstrated attainment for four 
consecutive years and has met all relevant criteria for redesignation.
    The Greater Cincinnati Chamber of Commerce tells me that businesses 
have asked them whether Cincinnati is in attainment, and when they've 
said no, Cincinnati has been crossed off the list as a potential place 
to locate. This is unjustly hurting Cincinnati's opportunity for 
economic growth, when Cincinnati is indeed meeting the standard. Any 
delays in finalizing this rule will only serve to exacerbate the 
problem.
    I realize that EPA has extended the comment period on the proposed 
redesignation rule, but I want you to know that I'm continuing to watch 
this and I hope it will be resolved expeditiously. While litigation 
continues on the 8-hour ozone standard, this should have no bearing on 
the merits of whether Cincinnati has attained the current 1-hour 
standard.
    Thank you Mr. Chairman. I look forward to today's hearing.
    Senator Inhofe. Thank you, Senator Voinovich. The things 
that you brought up are what I've been talking about for the 
last 20 minutes, prior to your getting here, and I am very much 
concerned.
    We have been joined by Senator Smith, the Chairman of the 
parent committee.
    Is there any opening statement you would like to make, 
Senator Smith?

             OPENING STATEMENT OF HON. BOB SMITH, 
          U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE

    Senator Smith. Thank you, Mr. Chairman. Thank you also for 
your leadership in holding the hearing this morning on the 
Clean Air Act budget.
    The full committee began the budget process last month at a 
hearing with Administrator Browner on the overall budget 
proposal for the year 2001, and at that time I requested that 
each subcommittee chairman followup with some detailed 
oversight in each of the areas. This is helpful, and I commend 
you, Mr. Chairman, for doing that.
    I think this will be helpful in providing information that 
we need to make informed decisions about the funding of the 
EPA. As you know, other programs--including another one that 
you and I serve on, Mr. Chairman, the Armed Services 
Committee--has to submit its budget to us for review, and I 
think EPA should do likewise. I think it's better than using 
the ``rifle bore'' approach on each individual piece of 
legislation that comes at us.
    But I am especially interested in the Army Corps of 
Engineers budget because since the last hearing on the Corps 
budget, they released a major final rule which modifies the 
nationwide permits for wetlands. The rule replaces Nationwide 
Permit No. 26, which covered development in headwaters and 
isolated wetlands, and the new nationwide permit rule expands 
the Federal permitting process for construction and development 
in wetlands and floodplains.
    There is disagreement about whether changes to the rule 
were needed, but I think we all agree that the new rule will 
increase the number of individual permit applications, and thus 
increase the workload of the Corps. It is that workload 
increase that we're concerned about. The Corps has an 
obligation to process those permits, which properly protect the 
environment, expeditiously so as not to hold up other 
beneficial projects.
    [The prepared statement of Senator Smith follows:]
    Statement of Hon. Bob Smith, U.S. Senator from the State of New 
                               Hampshire
    Good Morning. I would like to thank Senator Inhofe for his 
leadership in holding this hearing today on EPA's proposed budget for 
Clean Air Act programs. I am pleased to participate in the 
subcommittees hearings to take an even closer look at specific programs 
of the respective budgets.
    The full committee began the budget oversight process last month at 
a hearing with Administrator Browner on EPA's overall budget proposal 
for fiscal year 2001. I asked each of the subcommittee chairmen to 
follow up with detailed oversight hearings on each of the Agency's 
specific programs. I commend Senator Inhofe for doing that today. I 
think that his hearing will be very helpful in providing the 
information that we need as the authorizing Committee to make informed 
decisions about funding for EPA.
    I am especially interested in the Army Corps of Engineer's budget 
because since the last hearing on the Corps budget, they released a 
major final rule which modifies nationwide permits for wetlands.
    My interest is driven by the great ecological benefit wetlands play 
in the State of New Hampshire. We have a vast amount and wide variety 
of wetlands. These range from tidal marshes, mud flats, freshwater 
swamps, bogs and wet meadows. These wetlands serve an important role in 
filtering pollutants, providing wildlife habitat, and helping with 
flood control.
    The State of New Hampshire first recognized wetlands as a valuable 
resource in 1967 when it began to regulate coastal wetlands. The State 
has amended the law to allow more streamlined permitting while still 
protecting the environment. I am concerned about the impact that the 
Corps' new rule will have on New Hampshire's wetlands and its 
successful program.
    The Army Corps of Engineers released its final rule to modify the 
nationwide permits on March 9, 2000. The rule replaces the Nationwide 
Permit 26 which covered development in headwaters and isolated 
wetlands. The new nationwide permit rule expands the federal permitting 
process for construction and development in wetlands and flood plains. 
There is disagreement about whether changes to the rule were needed, 
but I think all agree that the new rule will greatly increase the 
number of individual permit applications and thus increase the Corps 
workload.
    It is that workload increase that is so important to me. The Corps 
has an obligation to process those permits which properly protect the 
environment expeditiously so not to hold up beneficial projects because 
of a lack of staff or resources.
    I look forward to hearing the testimony and response to questions 
on what the estimated costs and resource demands this rule will place 
on the Corps districts and division commanders. Thank you.
    Senator Inhofe. Thank you, Mr. Chairman.
    Senator Voinovich, why don't we start with your questions? 
I have already had a number of questions.
    I would, Mr. Perciasepe, like to know when the studies that 
we have been talking about will be completed, so maybe during 
the course of these questions you can bring that out.
    Mr. Perciasepe. I can tell you before that, I don't have 
the detail on all those studies of that $15 million research 
program that we have underway now with industry under Clean Air 
Act, Section 211. I will provide it right away; I won't even 
wait for your letter. We will try to get the information to 
you.
    [Information to be supplied follows:]
    
    
    
    
    Senator Inhofe. Senator Voinovich?
    Senator Voinovich. I want to comment on a GAO study, Mr. 
Perciasepe, that was conducted that reviewed the fiscal year 
2000 performance plan of the EPA, and that GAO review indicated 
that ``little improvement in providing details on goals and 
strategies that cut across Agency lines''--and I think that 
``strategies'' is the key word. Last Friday, Senator Thompson 
had a hearing in Governmental Affairs about rising oil prices, 
and your Agency is working or has finalized a number of 
regulations that affect our energy in this country: new source 
review standards, the Tier II low sulfur gasoline, diesel fuel 
standards, the NOx SIP call, ozone and particulate matter--I 
don't whether MTBE is involved in that also--but basically what 
the GAO report said is that the EPA has not coordinated their 
programs with other agencies that have a role to play in the 
area in which they are working.
    The question I have is, how much coordination is going on 
between the EPA and the Department of Energy, and the 
Department of Defense? Defense is concerned that we are 
becoming too reliant on foreign oil, so we have a national 
concern there. Commerce, I am sure, is interested in the impact 
it is having on commerce.
    It appears so often that the left hand doesn't know what 
the right hand is doing. We have another situation that the 
Chairman of this committee and I are familiar with; we have a 
proposal that will be coming up here one of these days in terms 
of the Florida Everglades. The EPA is very much involved in 
that. At the same time, there is a massive controversy brewing 
in Florida over the use of Homestead Air Force Base in terms of 
whether it's going to become a big regional facility and what 
impact that is going to have on Florida and on the Everglades.
    You just wonder to yourself, does anybody ever sit down 
from these agencies in the same room and start to talk about 
some of these problems to determine how they can reconcile some 
of the competing differences, to come up with some policies 
that make sense?
    I would like you to comment on that. It just seems that 
each agency is doing their own thing.
    Conformity is another one. Same problem with that.
    So I would like your reaction to that. How often do you get 
together and talk about some of these things?
    Mr. Perciasepe. Thank you, Senator.
    The interagency process that we go through on all of these 
rulemakings is fairly significant. On the sulfur in gasoline 
rule that was on your list, we spent an extensive amount of 
time with the Department of Energy and the Department of 
Defense, particularly in part due to the Chairman's request to 
look at the effect on, for instance, aviation fuel that would 
be available for the Defense Department.
    So I had a very specific process with the Defense 
Department on that rule in terms of the availability of those 
types of fuels. We had a technical expert at the Department of 
Energy help us design the flexible mechanisms in the Tier II 
low sulfur gasoline rule. In fact, during the regular comment 
period they made some very tough comments on our rulemaking, at 
which time I myself, personally, working with the Deputy 
Secretary and others in the Department, worked on a process to 
reconcile those differences that we had, and came out with a 
final rule that the Department of Energy was supportive of and 
comfortable with.
    So we meet with them in advance of a rulemaking process and 
we let them comment, and we work out our differences, because 
in the final analysis we have to get all of our actions, 
whether they be EPA or Department of Transportation or others, 
through an interagency review process that ultimately takes 
place in the Office of Management and Budget.
    But we try not to just rely on that as a failsafe. We try 
to spend a lot of time with other agencies because they have 
technical expertise that will augment the work that we're 
doing.
    So the answer is, ``Yes, we spend quite a bit of time with 
them.'' I could go on about the conformity and the time I spend 
with Ken Wykle of at the Federal Highway Administration, but 
I'll stop there.
    Senator Voinovich. The thing I would like is this: We've 
got the GAO report. What is the Agency's reaction to that GAO 
report.
    Mr. Perciasepe. I have to say I'm not 100 percent familiar 
with that, particularly with relation to these air programs, 
but I can tell you from my own personal experience that what I 
spend a significant amount of my time doing coordinating with 
other agencies.
    Senator Inhofe. Senator Smith?
    Senator Smith. Thank you, Mr. Chairman. I missed your 
questions; I hope I'm not repeating something here.
    Mr. Davis, on the 20 percent increase in individual permit 
applications, how does this translate into your workload at the 
Corps?
    Mr. Davis. First, Mr. Chairman, we're not certain that it's 
actually going to be 20 percent. We have a pretty rough 
estimate at this time. We're analyzing that. We do know that 
the workload will increase; we'll have more individual permits 
as a result of the actions we took on March 7th, the new 
nationwide permits. So at the end of the day we are going to 
have more individual permits; we know that.
    But also, it is important to note that there are other 
workload savings pieces of the overall package. It is very 
important to look at this as a package. For some of the 
nationwide permits that we modified, we actually expanded the 
use of those permits. Utility crossings is one that is widely 
used throughout this country when people put in gas lines and 
power lines and other things. We broadened the applicability of 
some of those permits.
    Also, we are replacing Nationwide Permit No. 26, which was 
limited in its use to headwater areas and isolated areas. The 
new replacement permits do not have that restriction, so the 
geographic coverage of the new permits is broader than what we 
used to have under Nationwide Permit No. 26. So there is also 
some workload savings, if you will. The preconstruction 
notification process, where we coordinate with agencies, is 
much more streamlined now under this proposal.
    But you're right, at the end of the day there are going to 
be more individual permits. Exactly how many, we're not 
certain. It could be as many as 20 percent, and that's fairly 
substantial, but we think that the environmental benefits that 
we're getting from this, the increased protection of our 
floodplains that we're getting from this, justify these 
increases in workload.
    Senator Smith. Does your budget cover all the costs?
    Mr. Davis. Perhaps not. We're not certain at this point. 
Again, it's going to take some time to implement this program, 
see exactly how it works out in the real world. For example, we 
have gradually ratcheted down Nationwide Permit No. 26 from 
1977 through the mid-1980's, when we changed it. In 1977 there 
was no acreage limit on Nationwide Permit No. 26. You could 
have literally filled 40 or 50 acres of isolated water under 
Nationwide Permit No. 26. In 1985, we changed that to 10 acres. 
In 1986 we changed it to 3 acres. Each time we've done that, 
we've seen developers--who are very sophisticated and very good 
at what they do--design their projects around these acreage 
thresholds. We think to a large extent that that will continue 
to happen, but those things are hard to predict precisely, so 
we don't know.
    We have about $5 million proposed in the President's $125 
million request for the regulatory program that will go toward 
some of these increases in workload.
    Senator Smith. So you say perhaps, or not. And the private 
sector picks it up if you don't.
    Mr. Davis. Right--well, I don't think the private sector 
will pick it up. I think that we'll be able to make some 
adjustments within our program. We have some flexibility. If 
things----
    Senator Smith. Well, what will be the increased cost to the 
private sector under the rule?
    Mr. Davis. We have some rough and preliminary estimates 
from a report that was done by the Institute for Water 
Resources that indicates that it is about $32 million.
    Senator Smith. One other point that I want to make. The 
processing time on these individual permits versus the general 
permitting, how much is that going to be increased? Can you 
handle the delay? That's my point.
    Mr. Davis. I think the current average time is about 107 
days for the individual permits. It will probably go up a 
little bit, but our thoughts were that if it goes up to 120 
days or 130 days, again, we think that's justified based on the 
environmental benefits that we're getting, and perhaps most 
importantly, the floodplain benefits that we're getting here. 
One of our big policy objectives here was to discourage 
development in the floodplains. Every year this country pays 
about $4 billion to $5 billion for flood damages because of 
development in the hundred-year floodplain. We believe that it 
is not appropriate to allow things to occur in the floodplain 
without some additional review that is afforded by the 
individual permit process.
    Senator Smith. Well, with all of these new individual 
permits, have you looked at the economic impact on State and 
local facilities--for example, water management districts, 
transportation agencies, and so forth--in terms of the economic 
effects on these agencies with these new rules?
    Mr. Davis. We haven't specifically targeted any of those 
agencies. We have generally thought about the economic impacts, 
and we think nationally that they're acceptable and that we 
will be able to continue to make adjustments in the program. If 
there are unintended consequences in one particular sector, if 
the public is unfairly harmed by this, and we can make some 
adjustments without diminishing our environmental objectives, 
then we will do that. And we have some flexibility, I think, to 
do that.
    Senator Inhofe. Let me followup on that.
    Mr. Davis, you said on March 6th of this year that the 
Corps would need an additional $6 million to implement the new 
nationwide regulations, isn't that correct?
    Mr. Davis. The preliminary analyses that we have from the 
Institute for Water Resources report suggest, based on their 
assumptions, that it would take about $6 million. But let me--
--
    Senator Inhofe. Let me follow through with this, because I 
want to get to this chart over here.
    The President's budget has $8 million. However, $5 million 
of the $8 million is not on that chart; that's something else--
$5 million of the $8 million is for cost of living increases. 
This is according to our interpretation of your budget. That 
leaves $3 million. According to the budget information, for 
further development--$3 million is supposed to be for further 
development of watershed management plans, special area 
management plans such as watersheds in Orange County, South 
Florida, etc., and it doesn't sound like--if you take that $3 
million out, what is left toward the budget you've created by 
the nationwide permit changes? The math ends up zero. What am I 
overlooking here?
    Mr. Davis. The $5 million that we talk about--there is an 
$8 million increase proposed, you're absolutely right, from 
$117 million to $125 million. Of that, $5 million we are 
proposing to put toward maintaining the current level of 
performance and some additional increases in workload. We 
anticipated when we put the budget together that there would be 
some continued increases in workload, and part of that $5 
million will go toward that. We would have some flexibility, I 
think, if the workload exceeded our estimates, that we could 
use some of that $3 million that we have programmed for other 
things, as well. We do have flexibility within the regulatory 
account to move things around--for example, from our 
enforcement account to our permit evaluation account--to pick 
up some of this if we had to.
    I am not certain that we're going to have to do this yet. I 
think we need to see how this plays out, and then make some 
adjustments once we have some information.
    Senator Inhofe. How much is the cost of living increase in 
your budget?
    Mr. Davis. It's probably about $2 million to $3 million, 
I'm guessing.
    Senator Inhofe. OK. That's not the figure that I have.
    Let's go to this chart up here. At our last wetlands 
hearing 3 years ago, we asked you to start keeping track of the 
length of time it takes for the Corps to review and act on an 
individual permit. I know you kept track on the periods between 
the time of application--why don't you go up there and point to 
this--the time of application is deemed complete, and the time 
it is approved. But the period of time--that's 127 days--the 
period of time that I'm concerned about is the period from 
which it is submitted to the time it is approved.
    Now, we had asked for that information. Do you have that 
information for us?
    Mr. Davis. Mr. Chairman, I don't believe we have that 
information.
    Senator Inhofe. All right. That's a good, honest answer. 
Let's get it.
    One last question, Mr. Perciasepe. I understand that you 
have requested 19 new employees to work on global climate 
issues. Does this mean that the Administration is going to be 
sending the Kyoto Treaty to the Senate before the next fiscal 
year?
    Mr. Perciasepe. No.
    Senator Inhofe. What are these guys going to be doing?
    Mr. Perciasepe. Remember, those are for next year, not this 
year.
    Senator Inhofe. All right, are they going to be submitting 
the treaty to the Senate next year?
    Mr. Perciasepe. Maybe President Gore will, but----
    [Laughter.]
    Senator Inhofe. What are they needed for? What are they 
going to be doing?
    Mr. Perciasepe. We have a voluntary program that we've been 
running at about a little over $100 million a year. We've 
requested every year an increase to that because of the return 
on investment that I mentioned earlier, and the potential for 
energy savings and pollution reduction.
    We have asked for that increase again, which is the 
majority of the increase in the budget that Senator Voinovich 
mentioned earlier in his opening comments, and there were 
additional FTE related to that. We also have been doing a 
reorganization in the Agency to get the climate change programs 
together in one location so that we don't have different things 
going on at different times and that we can coordinate them.
    Senator Inhofe. Well, it seems to me--and there are a lot 
of accusations around--that the Administration, through 
Executive Orders, through anything other than a legitimate 
path, is going to implement as much of the Kyoto Treaty as they 
can. I think this is something that we all believe they are 
attempting to do. As you well know, there's not a chance in the 
world that that treaty would be ratified. We even passed a 
resolution--I believe it passed without any dissenting votes; 
there may have been one--that said that unless you come back 
with something where the developing nations and the developed 
nations are treated equally, then we're not going to ratify it. 
So it's not going to be ratified, and it seems to me that 
you're beefing up to see what all can be done without our 
ratification of the treaty.
    You know, we have this conference of parties that we go to; 
once you sign the treaty, you can still go to the conference of 
parties. And yet never once on the agenda, last fall or this 
coming fall on the proposed agenda, is the discussion of 
developing nations on the agenda.
    So for the record I would like to have you tell me in as 
much detail as you can on these 19 new employees, specifically 
what they are going to do.
    Mr. Perciasepe. Certainly, and we can do that for the 
record. I can lay out what they are going to work on.
    [Information to be supplied follows:]

    EPA's strategy to help achieve these additional 
environmental and economic benefits is to expand its existing 
programs where additional benefits can be achieved cost 
effectively to businesses and consumers and to launch new 
initiatives targeted at areas of opportunity that EPA has not 
addressed. With additional FTE, EPA will pursue new goals 
through 2010, beginning by expanding in key areas.
    The Buildings Sector represents one of EPA's largest areas 
of potential, and at the same time is one of its most 
successful. In the buildings sector, EPA will expand upon the 
successful Energy Star partnerships (including ENERGY STAR 
Labeling and the ENERGY STAR Buildings Program). EPA will work 
toward the goal of offsetting about 35 percent of the growth in 
greenhouse gas emissions above 1990 levels that is expected to 
occur between 1990 and 2010 in this sector through promoting 
energy efficiency and enhancing the use of clean energy 
sources.
    The Transportation Sector (cars, trucks, aircraft, marine) 
accounts for almost one third of the U.S. carbon dioxide 
emissions and represents one of the fastest growing sectors for 
greenhouse gas emissions. In the transportation area, EPA will 
accelerate its part in the Partnership for a New Generation of 
Vehicles and expand efforts to promote strategies to reduce 
vehicle miles traveled (VMT).
    In the Industry Sector, EPA will expand its existing 
partnerships with the goals of: (1) doubling the rate of energy 
and resource efficiency improvements in industry between now 
and 2010 (working with DOE), (2) cost-effectively returning 
emissions of methane to 1990 levels or below by 2010, and (3) 
cost-effectively limiting emissions of the more potent 
greenhouse gases (HFCs, PFCs, SF6).

    Mr. Perciasepe. Let me say, and I said this at my 
confirmation hearing before you and I'll say it now again, we 
are not implementing the Kyoto Treaty; we will not do that 
until it is submitted to the Senate and ratified by the Senate. 
We do take seriously the charge of that resolution you 
mentioned: getting meaningful participation of the developing 
nations. We have efforts underway to provide ideas and 
technical assistance and to work with developing nations in a 
bilateral and multilateral way through the State Department. 
EPA does provide technical assistance in many of those. But 
those are not designed to implement the treaty. They are 
designed to develop and cultivate the exact eventuality that 
the Senate is looking for, and that is developing the capacity 
in those parts of the world for the implementation of something 
like the Protocol.
    We also participate in discussions of how this would be 
implemented, so that when we do present it to the Senate, we 
can give you a reasonable amount of information as to what the 
consequences are and how it will be implemented in terms of the 
mechanics and the mechanisms. We are trying to protect the 
country's interests in terms of how anybody would design on an 
international scale the implementing mechanisms that we can 
then bring to you and be able to explain it to you and have a 
good discussion about it at that time.
    So we are not developing any domestic implementation 
mechanisms that are related to the Kyoto Treaty, and I wanted 
to make sure that you understand that.
    Senator Inhofe. Senator Voinovich?
    Senator Voinovich. This is for you, Mr. Davis, and I'm 
sorry that I wasn't here to hear your testimony.
    Are you familiar with the fact that the National 
Association of Counties had a study done by the University of 
California?
    Mr. Davis. Yes, sir.
    Senator Voinovich. And a couple of things that I'd like you 
to comment about. One is that in that study it said that in a 
typical year, about 3,400 acres of wetlands are impacted by the 
nationwide permit, and that in order to mitigate the impacts on 
wetlands, that over 13,000 acres of mitigation occurred; that 
is, you are impacting on 3,400 acres, and in order to 
compensate for that they have required some 13,000 acres of new 
wetlands to compensate for that.
    And you alluded to this a little bit in answering one of 
the questions here. The first question is, what's broken with 
the system now? I mean, those seem to be pretty good numbers, 
unless the wetlands being taken were of such significance that 
you really had to quadruple the number of acres to compensate 
for the loss of those. That's one thing.
    The other is the studies indicating that--this gets back to 
Senator Inhofe's comments--you're talking about $6 million per 
year in order to implement the new system; they claim it will 
be $20 million to the Agency to take care of it. The Agency 
says that it will be approximately $20 million a year in 
increased costs to the regulated community; the study comes 
back and says that it's going to be $300 million, which is a 
pretty large number and very different from the one that you've 
talked about.
    Could you shed some light on that study in regard to your 
opinion about its validity?
    Mr. Davis. Yes, sir. I'm glad you asked the question. I 
think it's a very good question.
    First of all, we do not agree with the NACO report. They 
picked 98 projects out of a universe of hundreds of thousands 
of projects, picked them out and focused on 98 projects 
versus--in our view, we looked at all the data in the entire 
data base for all the regulatory actions. So it was a complete 
evaluation of everything that is in the data base, hundreds of 
thousands of things, versus picking 98 very large developments.
    Something is broken, though, and I think perhaps a way to 
articulate what's broken is to look at the problem that Doris 
Wilson has up in Louisville, Kentucky. Doris Wilson lived in 
her house for 20 years, and there was a little wetland, a 
little less than three acres, in her neighborhood, and it was 
doing a pretty effective job of keeping her neighborhood and 
her home from being flooded.
    A developer came in under a nationwide permit, filled in 
that three acres, and almost immediately Doris Wilson's home 
was flooded. I think that's a good example that we've seen 
around the country of what was broken.
    Also, I think it is important in regard to NACO. I had the 
opportunity about 2 weeks ago to have about 25 or 30 NACO 
community representatives--not Washington types like us--come 
in to me. I actually thought they were coming in to me to give 
me a hard time about the nationwide permits. Like a lot of 
things on my calendar, I don't know exactly what the subject is 
until right before the meeting. But in this case, the came in, 
and what they were doing is coming in to congratulate us for 
having the courage in doing what we're doing. These were people 
who had communities that had been flooded; and frankly, they 
were pretty appalled at what NACO did with their report. That 
report was not sanctioned by much of the membership of NACO; it 
was done by a relatively small committee within NACO, and it 
certainly didn't reflect widely the feelings of NACO members. 
Again, I heard these 20 or 25 community representatives--county 
commissioners and mayors--come to me and say, ``This is 
important. We ought to discourage development in the 
floodplain. We think this is good public policy.''
    Senator Voinovich. Well, that may be an anecdotal 
situation. The issue is, what's your response to the fact that 
where they have had wetlands used, that they have quadrupled 
the number of acres to create additional wetlands?
    Mr. Davis. Again, that was looking at that very small 
subset. I don't know--I'm not in a position to question the 
numbers that you gave, of this essentially 3-1 or 4-1 ratio. 
Typically, the ratio is about 2-1. For every acre that is 
impacted, there is about 1.5 to 2 acres offset somewhere else. 
I'm not sure how they got the 4-to-1, but again, I suspect it's 
because of the 98 or so projects that they kind of hand-picked 
and looked at, and it's possible that they could have had that 
ratio there.
    I think the bigger question is, does it really work? Is 
this compensation working? What you have is a pure acreage 
analysis here, and not a real functional assessment about 
whether or not you are replicating or replacing the functions 
that have been lost to that development--the flood attenuation 
functions, the water quality functions, the habitat functions. 
We know in many cases that you don't get these things back, 
particularly when you're using creation and enhancement. 
Sometimes it simply doesn't work.
    Senator Voinovich. It was pointed out to me that this study 
that they did, which was May 1997 through 1998--I'm sorry--the 
Corps authorized 8,790 activities under the Nationwide Permit 
No. 26, about 7,500 a year, which impacted 3,000-some acres of 
wetlands. So this indicates that it's more than what you think 
it is.
    You are saying to me also today that this study that was 
done by NACO is not supported by its membership, that it's not 
the official position of NACO in regard to this new permitting 
process?
    Mr. Davis. I'm not certain if it's the official position of 
NACO. What I was suggesting, Senator, is that I know there is a 
substantial part of the membership of NACO who came to me and 
were surprised that that report was released. It was released 
by the relatively small committee that did it without vetting 
throughout the membership of NACO. And these 25 or 30 NACO 
representatives--again, community leaders, mayors, councilmen, 
others--felt that what we were doing was very important. This 
was a very geographically diverse group.
    Senator Voinovich. I will look into that.
    I still would like from you, No. 1, an explanation of why 
the current system is broken and not working and why you need 
the new permit system, OK? I am genuinely interested in that.
    And second of all, I would like to know your evaluation of 
the study's impact in terms of costs. Are you representing that 
this would be just another additional $20 million as a result 
of these new permits?
    Mr. Davis. No. I think the preliminary indications that we 
have are that it's actually about a $32 million cost to the 
public. I believe NACO was saying that it was $300 million, and 
we're saying about $32 million, based on the assumption----
    Senator Voinovich. And they're also saying, in terms of 
your own budget, in order to give you the capacity to make sure 
that the numbers aren't 2 years of permitting, you need to have 
more people to handle it, and they claim that it would require 
more staffing on your part. And again, I would like your input 
on that.
    Mr. Davis. I think it will require some more staffing--do 
you want that now, or do you want something for the record?
    Senator Voinovich. I'd like to have it for the record, if 
you will.
    Mr. Davis. Sure.
    Senator Voinovich. If you have the answer now, fine.
    Mr. Davis. Well, we do think it will increase our workload 
some, and we anticipate that it will perhaps take some 
additional funding, but we don't believe it's $34 million 
additional funding for the Corps that NACO has represented in 
their report.
    There are really two basic reasons why we needed to make 
the change that we made. You weren't here when I outlined the 
basic legal requirements for general permits. There are three 
basic requirements, but two of them are very important. One is 
that general permits have to be for categories of activities, 
and the second one is, no general permit can result in more 
than minimal impacts, either individually or cumulatively.
    We have been challenged on Nationwide Permit No. 26, and 
quite frankly, we are probably not going to win that challenge, 
because Nationwide Permit No. 26 was not a category of 
activities permit. It didn't really comply with the plain words 
of the law, quite frankly. So we had a real legal problem that 
we were trying to avoid here, and I think we have fixed that. 
But we also had an environmental problem. Nationwide Permit No. 
26 was formulated in the 1970's, when we didn't understand the 
importance of headwater systems, the importance of isolated 
systems. We now know--it is verified by the National Academy of 
Sciences in a 1995 report--that these systems are very, very 
important and integral parts of the overall watershed.
    So those are the two basic reasons why we made the change.
    Senator Inhofe. I would say, Senator Voinovich, that we 
talked about some of these estimates before, back when we had 
the ambient air fight; it was actually before you were a Member 
of this body. The EPA had anticipated it would cost $6 billion 
a year, then the President's Board of Economic Advisors said it 
would cost $60 billion a year, then the Research Foundation 
said it would cost between $120 billion and $150 billion a 
year. And I would remind you folks that when we're talking 
about NACO, the one who did this report for NACO was from 
President Clinton's Board of Advisors during that time.
    Senator Smith, do you have any further questions?
    Senator Smith. No further questions, Mr. Chairman??
    Senator Inhofe. All right.
    I am going to end on a positive note, Mr. Perciasepe. When 
we had the new source review hearing in Ohio, during the 
hearing I was pleased to hear that your stakeholder process has 
been very good, and you had nothing but good comments from the 
stakeholders at that hearing. I would like to ask you where you 
are in that process, and do you anticipate working just as 
aggressively with the stakeholders from this point forward as 
you have in the past?
    Mr. Perciasepe. Yes, we do. And I agree that the 
stakeholder process has been very helpful in terms of 
identifying improvements to the new source review program. On 
the other hand, I sometimes think these stakeholders are 
addicted to having these meetings.
    But at any rate, they have been helpful. We are having some 
more during the course of the month, and we're going to have to 
be able to start to narrow some of the differences down to some 
concrete proposals sometime between now and the summer, which I 
plan to do. It's probably going to require some of my own 
personal involvement with some of these discussions, as well.
    Senator Inhofe. How do you structure those when you have 
those meetings? Who is invited?
    Mr. Perciasepe. There are a lot of different groups. We 
have actually used the State air directors to help soundboard 
some of the stakeholders as well, because the State air 
directors are on the front line of having to implement a lot of 
these programs. Their interactions on a more day-to-day basis 
are often very helpful to looking at how the program should be 
continued.
    So we have used both our own staff to have these 
discussions; we've met with individual stakeholder groups; 
we've had a couple general sessions with all of them together, 
one of which I participated in, looking at this broader idea of 
a sector-based approach; and we've asked the State air 
directors to do some meetings, as well, and provide us with 
input.
    We are getting to the point where we have to sort of ``fish 
or cut bait'' on some of these discussions, so we will 
undoubtedly be having more conversations about that as the year 
goes on.
    Senator Inhofe. Senator Voinovich, do you have any further 
questions?
    Senator Voinovich. No, I haven't.
    Senator Inhofe. All right.
    Well, thank you both, very much, for coming, and we have 
asked a number of questions to answer for the record, and we 
will be looking forward to getting those.
    I would say, Mr. Davis, that we do want to get the answer 
to what is asked on this chart up here. That timeframe between 
the submission of the application to the Corps and the 
application is deemed complete, we had asked for that 3 years 
ago, so we'll expect that in our fall hearing, to have that, if 
not before that, to get something for the record.
    There will be other questions. The record will remain open. 
There are other members who have questions whose staff is here 
representing them today.
    Senator Inhofe. We are adjourned.
    [Whereupon, at 10:47 a.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
Statement of Robert Perciasepe, Assistant Administrator, Office of Air 
          and Radiation, U.S. Environmental Protection Agency
    Senator Inhofe and members of the subcommittee, I am pleased to be 
here today to present the accomplishments of our air and radiation 
programs, describe the future outlook for those programs, and discuss 
the Clinton-Gore Administration's fiscal year 2001 budget request for 
these programs. I would also like to take this opportunity to thank you 
and the Committee for working with us toward our collective goal of 
protecting public health and the environment.
    First, I will highlight the impressive health and environmental 
results that the Clean Air Act is achieving as well as discuss the 
solid progress we are making through our voluntary climate change and 
indoor air programs.
    In 1990, Congress passed the Clean Air Act Amendments with 
overwhelming support, setting ambitious air pollution reduction goals. 
Since then, we have achieved unprecedented success in cleaning our 
nation's air and protecting public health. We have achieved these 
successes through rulemakings, voluntary measures, market mechanisms, 
state partnerships, and stakeholder negotiations.
    In November 1999, EPA submitted a new Report to Congress which 
estimates the benefits and costs of the 1990 Amendments. There are 
significant uncertainties associated with any benefit-cost analysis of 
clean air programs, requiring scores of methodological decisions and 
assumptions. Many of the uncertainties involved in this study are the 
subject of continuing discussion within the economic and policy 
analysis communities and within the Administration. Reflecting many key 
uncertainties, the new study estimates that the year 2010 Title I 
through V benefits which can be expressed in dollar terms may range 
from $240 billion more than costs to $1 billion less than costs. 
However, the Primary Central estimate in the study shows net benefits 
of $83 billion, indicating that the benefits of the 1990 Amendments 
exceed the costs by 4 to 1. As President Clinton himself stated when it 
was released: ``This report further demonstrates that public health and 
environmental benefits can be achieved along with economic benefits and 
this Administration will continue to work aggressively to protect the 
air we breathe, the water we drink, and the land on which we live.''
    From 1970 to 1997, U.S. Gross Domestic Product has grown by 114 
percent, the U.S. population by 31 percent, and the number of miles 
traveled by on-road vehicles (VMT) by 127 percent. Yet, the aggregate 
emissions of criteria pollutants--ozone precursors, particulate matter, 
carbon monoxide, sulfur dioxide and lead--are down 31 percent. 
Emissions are down significantly for each of these pollutants except 
for nitrogen oxides (NOx), which are up somewhat. Lead emissions have 
been cut 98 percent. Most of these declines in emissions can be 
attributed to implementation of the Clean Air Act.
    A few prominent examples of Clean Air Act successes since 1990 
include the following:
      In the Acid Rain Program, electric utilities have cut 
sulfur dioxide (SO2) emissions by 22 percent or 3.5 million 
tons and have cut rainfall acidity in the East by up to 25 percent. 
When Title IV is fully implemented in 2010, EPA's study projects that 
SO2 and NOx reductions will provide substantial health 
benefits (mostly from a reduction in annual cases of premature 
mortality). Acid Rain control will also produce significant benefits in 
terms of improved visibility, lowered surface water acidity, and less 
damage to high elevation forests and materials.
      The U.S. and other developed countries have phased out 
production of many of the chemicals most harmful to the stratospheric 
ozone layer, including CFCs. We have estimated that once completed, the 
worldwide phaseout will prevent approximately 295 million skin cancers 
in the U.S. through 2075.
      We have issued air toxics rules, or MACT Standards, that 
we believe will cut industrial air toxics by 1.5 million tons a year, 8 
times the amount achieved in the previous 20 years.
      The air in our cities is cleaner than it has been in a 
long time. Nationally, average air quality levels have improved for all 
five of six common pollutants subject to air quality standards. There 
have been dramatic cuts in the number of areas violating these 
standards.
      Our cars and fuels are cleaner. The average new car is 40 
percent cleaner (in terms of emissions) than in 1990; over 30 percent 
of the nation's gasoline is now reformulated gasoline.
      In December 1999, we set the tightest emissions standards 
ever for cars, gasoline and the first standards that apply equally to 
sport utility vehicles (SUVs) and minivans. The projected costs to meet 
these standards, about $100 for cars, $200 for light-duty trucks, and 
two cents per gallon of gas, are far outweighed by the projected public 
health benefits. Estimated benefits include the long term yearly 
avoidance of premature deaths, cases of bronchitis, and significant 
numbers of hospital visits, lost work days, and multiple respiratory 
ailments (especially affecting children).
    Through EPA's voluntary climate change programs, the American 
people have enjoyed a significant return on their investment. For every 
dollar spent by EPA on its voluntary energy efficiency programs, the 
private sector and consumers have invested more than $15 in new more 
efficient technologies; businesses and consumers have saved over $70; 
and greenhouse gases have been reduced by more than half a ton of 
carbon equivalent.
    As you can see, we have made impressive progress. Based on EPA's 
findings in the November study, we believe that the health benefits 
from reductions in ground-level ozone, particulate matter, and 
associated pollutants (especially from reductions in SO2 
emissions) achieved under the 1990 Clean Air Act Amendments will 
continue to grow. For example, the study's Primary Central Estimate of 
benefits for the year 2010 is:
      23,000 fewer incidences of premature mortality,
      20,000 fewer cases of chronic bronchitis and 47,000 cases 
of acute bronchitis,
      22,000 fewer respiratory related hospital admissions, 
42,000 fewer cardiovascular hospital admissions, and 4,800 fewer 
emergency room visits for asthma,
      91,000 fewer incidence-days of shortness of breath and 
1,700,000 fewer asthma attacks, and
      4,100,000 fewer lost work days and 31,000,000 fewer days 
with restricted activity due to air pollution-related illness.
    With respect to climate change, if the EPA programs were funded at 
the President's request, we can deliver sizeable additional benefits 
across the U.S. By 2010, we estimate that we can realize:
      an additional 335 million metric tons of carbon 
equivalent of cumulative reductions in greenhouse gas emissions;
      an additional $35 billion in energy savings to families 
and businesses, and
      an additional 850,000 tons of NOx emissions reductions.
    To achieve these benefits, we must aggressively pursue our 
programs. Will Rogers once said, ``Even if you're on the right track, 
you'll get run over if you just sit there.'' To keep pace with 
increasing VMTs, economic growth, etc., there's still more work that 
needs to be done.
    But before I move on to the discussion of the fiscal year 2001 
Budget Request, I'd like to give you a few highlights of our agenda for 
fiscal year 2000 which is already well under way.
    We continue to work on attaining the existing air quality 
standards, especially the 1-hour ozone standard. We are also laying the 
groundwork for our new standards the 8-hour ozone standard, the 
PM2.5 standard, and our regional haze program. We work with 
the Office of Research and Development and others to reduce the 
uncertainties associated with air pollution science.
    We also intend to propose more stringent standards for large trucks 
and buses. As we did with the recent rule for cars, SUVs, and minivans, 
we will consider these vehicles in conjunction with their fuels as a 
system. These standards could become effective in 2007.
    While the Acid Rain Program has gotten off to a great start in 
reducing SO2 and NOx emissions, Phase II of the Program only 
began this year. It is essential that we maintain sufficient funding if 
we are to realize the full emission reductions of 10 million tons in 
SO2 and 2 million tons in NOx by 2010.
    While industries have made great strides in reducing the large 
quantities of toxic air pollutants, we still need to keep moving 
forward with issuing MACT standards for the additional major sources. 
We also are beginning the early stages of implementing the second phase 
of the air toxics program, targeting specific problems for evaluation 
such as elevated risks in urban areas, deposition of air toxics into 
the Great Lakes, mercury emissions, and residual risks from already 
controlled sources. We are also moving beyond stationary sources to 
focus on potential increased controls for air toxics from mobile 
sources. We expect to finalize a rule on mobile air toxics in December 
2000.
    In our radiation programs, we are finalizing environmental 
radiation protection standards for the Yucca Mountain radioactive waste 
disposal site in Nevada. In 1998, we certified that the Waste Isolation 
Pilot Plant in New Mexico complies with EPA's safety standards for 
radioactive waste. Radioactive waste is now being shipped to the WIPP.
    In our indoor air programs, much of our effort is focused on the 
government-wide asthma initiative to better educate and inform parents 
and children about asthma. We specifically focus on indoor triggers of 
asthma like environmental tobacco smoke.
    We are actively carrying out the voluntary programs that are part 
of the President's Climate Change Technology Initiative (CCTI). Along 
with the CCTI programs which include EPA's contribution in the 
Partnership for a New Generation of Vehicles (a multi-agency research 
effort to produce highly fuel-efficient vehicles), we continue to 
explore strategies that lead to both criteria pollutant reductions and 
greenhouse gas reductions. We have learned that our voluntary programs 
like Energy Star are successful in helping reduce both greenhouse gases 
and conventional pollutants. And this can often work both ways--smart 
measures to reduce SO2 or NOx can often reduce greenhouse 
gases as a byproduct.
    All this leads me into describing our request for fiscal year 2001. 
The Office of Air and Radiation is requesting a total of $831 million. 
Of that total, $308 million is for grants to states, tribes and 
localities. $523 million is for the operating programs.
    A highlight of our request is the Clean Air Partnership Fund. We 
proposed the Fund for the first time last year and we still believe it 
provides an innovative, yet common sense, approach for speeding 
reductions in pollution. The President's Budget requests $85 million 
for the Partnership Fund. The Fund will support demonstration projects 
by cities, states and tribes that (1) control multiple air pollution 
problems simultaneously; (2) leverage the original Federal funds; (3) 
facilitate meaningful public involvement, and (4) provide examples that 
can be replicated across the country. By stimulating innovative 
technology and policies, the Clean Air Partnership Fund will help 
communities provide clean, healthful air to local citizens.
    To address global warming we are requesting $227 million. We are 
proposing an increase of $124 million over the fiscal year 2000 enacted 
budget for the third year of the Climate Change Technology Initiative. 
Under this budget, EPA will expand its partnership efforts with 
businesses, organizations, and consumers to achieve greenhouse gas 
reductions by taking advantage of the many opportunities to reduce 
pollution and energy bills by fostering energy efficient programs, 
products, technologies, and cost-effective renewable energy. As a 
result of work already under way, EPA efforts with fiscal year 2001 
funding are projected to:
      reduce greenhouse gas emissions annually by over 66 
million metric tons of
      carbon equivalent, offsetting about 20 percent of the 
growth in greenhouse gas emissions above 1990 levels;
      reduce other forms of pollution, including reducing NOx 
emissions by about 170,000 tons;
      reduce U.S. energy consumption from projected levels by 
more than 70 billion kilowatt hours, providing $9 billion in energy 
bill savings to consumers and businesses that use energy-efficient 
products; and
      contribute to developing a new generation of efficient 
and low-polluting cars and trucks.
    The opportunity to save on our nation's $500 billion annual energy 
bill over the next decade while reducing air pollution is tremendous. 
The opportunity to reduce greenhouse gas emissions is also large. We 
currently expect that more than half of the nation's greenhouse gas 
emissions in 2010 will come from equipment that will be purchased over 
the next 10 years. We shouldn't forego this opportunity by not funding 
expanded energy efficiency programs.
    For air toxics, we are requesting $23 million, an increase of $6.6 
million over fiscal year 2000 operating plan levels, to address the 
final round of MACT standards by the May 2002 ``hammer date''--the date 
by which states must determine controls for such sources if EPA has not 
acted.
    The request for the Montreal Protocol Fund totals $21 million, an 
increase of $9 million over the fiscal year 2000 enacted level. The 
funding to the Protocol is dedicated to paying our dues to the fund and 
to reduce accumulated arrearage.
    To strengthen our relationships with our state and tribal partners, 
this budget provides $215 million in state and tribal grants to help 
implement solutions to air pollution problems locally. Of these 
resources, a $5 million increase will be targeted to regional planning 
bodies to combat the problem of regional haze one of the most obvious 
effects of air pollution. Additionally, $8 million is provided to our 
state and tribal partners to design, implement, and maintain radon 
programs.
    In late February, Administrator Browner went before the Committee 
on Environment and Public Works and talked about the Agency's budget as 
a whole. One of the things she talked about was the magnitude of 
special projects that Congress ``earmarked'' in EPA's budget. For our 
office that amount totaled over $17 million. Without going into the 
validity of each individual project, I believe that the earmarks do 
direct money away from the Agency's core programs.
    These are the highlights of our fiscal year 2001 request and of our 
accomplishments since the passage of the Clean Air Act Amendments. By 
providing our children, our sensitive populations, our native 
populations and our community as a whole with cleaner air, both indoors 
and outdoors and improved quality of life, this budget maintains the 
Administration's dedication to the protection of public health and the 
environment. It ensures that the Environmental Protection Agency will 
continue the impressive progress of the past decade in cleaning our 
nation's air.
    I look forward to discussing with you now, or as the year 
progresses, our budget request specifically or any of our policy 
positions. Thank you.
                                 ______
                                 
  Responses by Robert Perciasepe to Additional Questions from Senator 
                                 Inhofe
    Question 1. Last year a U.S. appeals court remanded the 8-hour 
ozone standards and the PM2.5 standard saying that EPA 
needed to provide further justification for these standards. You are 
seeking an appeal to the Supreme Court. In the meantime, is your Agency 
putting together the analysis to justify these standards? If so, how 
much is being requested specifically for that purpose? Please explain 
in detail what steps will be taken. Will you be conducting further 
scientific study? Will you conduct more modeling?
    Response. EPA is waiting for the decision from the U.S. Supreme 
Court before deciding how to address the issues remanded by the U.S. 
Circuit Court of Appeals for the District of Columbia that were 
presented on appeal to the Supreme Court. Thus, it is premature to say 
whether any further modeling, analysis, or scientific study will be 
considered by EPA in responding to any final remand that may come from 
either court.
    Notwithstanding the ongoing litigation of the 1997 PM and ozone 
NAAQS, EPA is now engaged in the next periodic review of the PM 
criteria and standards, evaluating new scientific information available 
since the last review of the PM criteria, with a final decision planned 
for July 2002. EPA also plans to initiate the next periodic review of 
the ozone criteria and standards later this year, with a call for 
scientific papers available since the last review of the ozone criteria 
and the preparation of a development plan for the criteria and 
standards review that will be submitted to the Clean Air Scientific 
Advisory Committee for review.

    Question 2. EPA has received $118 million over the last 2 years to 
study PM2.5 and is seeking an additional $65 million. Please 
detail the studies that have been conducted or are ongoing and what 
conclusions have been made so far.
    Response. The U.S. Congress, in the fiscal year 1998 appropriation, 
directed the EPA to arrange for an independent study by the U.S. 
National Academy of Sciences, National Research Council (NRC) to 
develop priorities for a comprehensive PM research plan, develop a near 
and long-term PM research program, and develop a plan to monitor 
research progress over the next 5 years. Based on evaluation of the 
state of the science, the identification of research needs, and an 
inventory of current research activities, the NRC developed a set of 
recommendations for PM research (Research Priorities for Airborne 
Particulate Matter, Immediate Priorities and a Long-Range Research 
Portfolio, issued in March 1998, and an update, Research Priorities for 
Airborne Particulate Matter: Evaluating Research Progress and Updating 
the Portfolio, issued in August 1999.). The EPA has moved aggressively 
to develop and implement a PM research program that is focused on 
addressing the research recommendations provided by the NRC.
    PM research spending in fiscal year 2001, as with spending in 
fiscal year 1998 through fiscal year 2000, will be well aligned with 
the recommendations of the NRC Committee on Research Priorities for 
Airborne Particulate Matter. This includes research characterizing 
emissions sources; air quality model development and testing; human 
exposure assessment; dosimetry; research aimed at understanding 
characteristics of PM producing toxicity; toxicity effects of PM and 
gaseous copollutants; research to identify susceptible subpopulations; 
mechanisms of toxicity; analysis of measurement uncertainties; control 
methods; and Air Quality Criteria Document development. The research is 
being conducted both at EPA research laboratories and centers, and 
through competitively awarded PM research centers and through the 
investigator-initiated Science to Achieve Results (STAR) program.
    The EPA research activities are fully described in the Particulate 
Matter Research Activities (PMRA) web site, which is publicly available 
at: http://www.PMRA.org. The EPA has worked with other Federal, State, 
and international research agencies and the private sector to compile 
relevant research activities into the PMRA web site. The site is user-
friendly and can be searched by NRC research topic, by organization, by 
investigator, and by keywords. More than 350 projects are described in 
this website, with more than 160 sponsored by the EPA.
    Peer-reviewed research results are brought into the regulatory 
decisionmaking process on a 5-year review cycle through development of 
an Air Quality Criteria Document (AQCD). The AQCD compiles and 
characterizes the research findings and draws conclusions as to the 
interpretation of the data. An independent group of experts, the Clean 
Air Scientific Advisory Committee (CASAC), reviews the criteria 
document to ensure appropriate data interpretation. Development of the 
next PM AQCD is underway, with initial drafts having been reviewed in 
public workshops. The EPA anticipates CASAC review of the AQCD late in 
calendar year 2000 or early in 2001, at which time conclusions on the 
research results will be available.

    Question 3. On March 3 a Federal appeals court upheld most aspects 
of your NOx SIP call rule. While further appeals of this decision may 
be filed, it is likely that your Agency will consider how to move 
forward with implementation. The North American Electric Reliability 
Council (NERC) and the East Central Area Reliability Council (ECAR) 
recently released reports concluding that the May 2003 compliance 
deadline poses a potential threat to reliability. Given the delay of 
the implementation due to litigation and the time it will take states 
to submit their SIPs and issue rules, is EPA willing to consider 
extending the schedule to take into account state rulemaking needs and 
to ensure electricity reliability?
    Response. In response to a motion from industry, on August 30, 
2000, the U.S. Court of Appeals for the D.C. Circuit extended the 
deadline for compliance of the NOx SIP Call until May 2004. The Agency 
has not yet decided whether to seek review of this decision. However, 
EPA still believes that its analyses support the conclusion that 
compliance by May 1, 2003 would not have threatened electric 
reliability. Both the report by the North American Reliability Council 
(NERC) and the East Central Area Reliability Council (ECAR) 
acknowledged that the greatest concern regarding reliability occurs in 
the summer months. Furthermore, both reports acknowledged that emission 
controls in response to the NOx SIP Call would not be installed during 
these summer months. Rather they would be installed during the spring 
and fall when electrical demand is the least. Therefore, we believe 
that the NOx SIP Call will neither cause nor exacerbate summertime 
electric reliability problems.
    In most scenarios analyzed by NERC, no reliability problems were 
expected to occur. The scenarios where NERC and ECAR projected 
reliability problems used a number of very conservative assumptions 
regarding the installation of emission controls. For instance, they 
assumed that far more controls would need to be installed than EPA 
believes will be needed. They also assumed that the average time a unit 
needs to be taken off-line is much greater than has been seen in 
installations to date.
    Finally, in response to concerns that have been raised regarding 
electric reliability, EPA established a compliance supplement pool 
which created an extra 200,000 allowances that could be used in the 
first two years of the program if any units were not able to install 
controls in a timely manner. EPA is confident that this would be 
sufficient to address any possible reliability concerns. The compliance 
supplement pool was not considered in either NERC's or ECAR's studies.

    Question 4. The VA-HUD conference report on EPA's appropriations 
for fiscal year 2000 noted the long-held EPA linkage between the SIP 
call and the section 126 petition rule and stated:

    While the conferees' primary concern is in ensuring that these 
    matters are soon resolved in the interest of air quality 
    enhancements for all states, the conferees encourage EPA to retain 
    the linkage and refrain from implementing the section 126 
    regulation until the NOx SIP call litigation is complete.

    What action has EPA taken up to March 3 and what actions will EPA 
take now to carry out this linkage meaningfully and to work with the 
States representing both sides of the issue, including the court, if 
necessary, to develop a fair and equitable plan to establish a new and 
reasonable compliance deadline under the NOx SIP Call rule and the 
Section 126 rule that does not punish the States who utilized the 
judicial relief opportunities afforded by Congress in the Clean Air 
Act, while also working to resolve these air quality issues as 
contemplated by the Act equitably for the public good?
    Response. Originally, in a final rule on the section 126 petitions 
that was issued on April 30, 1999, EPA had established a mechanism for 
granting the petitions that was linked to the NOx SIP call deadlines. 
The EPA determined which petitions were technically approvable, but 
deferred granting the petitions (which would trigger control 
requirements and a 3-year compliance deadline) as long as States and 
EPA stayed on track to meet the NOx SIP Call requirements. Although the 
Clean Air Act (CAA) did not explicitly contemplate such a linkage, EPA 
felt it was appropriate at that time because the NOx SIP Call had 
explicit and expeditious deadlines for SIP submissions and emissions 
reductions. Thus, EPA had a reasonable expectation that the emissions 
reductions needed to mitigate the NOx transport would be achieved 
through SIP revisions by the same date that the reductions would be 
required under section 126, if the petitions were approved. Section 126 
of the CAA gives downwind petitioning States the right to relief from 
significant interstate transport of air pollution and requires that the 
relief be provided no later than 3 years from the time that EPA 
determines that the upwind sources are significantly contributing to 
nonattainment problems in the petitioning States. In this case, EPA 
ensured that under either the section 126 requirements or the NOx SIP 
call emissions controls would be in place by May 1, 2003.
    On May 25, 1999, in response to petitions by several States, the 
U.S. Court of Appeals for the D.C. Circuit issued a stay of the NOx SIP 
Call submission deadline. Because there was no longer a certain and 
expeditious schedule for States to submit SIPs complying with the NOx 
SIP Call, EPA no longer had a basis for deferring granting the 
approvable section 126 petitions. The stay of the NOx SIP call did not 
provide a basis for depriving the petitioning States of the relief to 
which the CAA entitles them under the independent section 126 
provision. In addition, last year the U.S. Court of Appeals for the 
D.C. Circuit, denied requests from litigants to stay the section 126 
action. Thus, in a rule published on January 18, 2000, EPA granted the 
approvable petitions from the downwind States. Under this rule, large 
utilities and large industrial boilers and turbines in the States 
covered by the petitions must reduce their NOx emissions by May 1, 
2003. The January 18, 2000 section 126 rule still gives States the 
option of preempting the section 126 remedy and selecting a different 
set of controls to address the NOx transport from the State. The 
section 126 rule provides that if a State submits, and EPA gives final 
approval to, a SIP revision meeting the full NOx SIP Call requirements, 
as were established in the October 27, 1998 rule and amended in the 
March 2, 2000 technical amendment, including the original May 1, 2003 
compliance deadline, the section 126 requirements would automatically 
be revoked for sources in that State. The EPA has already received full 
NOx SIPs from several States that require the necessary reductions by 
May 1, 2003. The EPA is aware that a number of other States are also 
expecting to submit SIPs which, upon approval, would satisfy the 
conditions for withdrawing the section 126 requirements. EPA will work 
with each interested state on a case-by-case basis to determine whether 
the section 126 remedy can be lifted in that state.
    With regard to the NOx SIP call, on March 3, 2000, the U.S. Court 
of Appeals for the D.C. Circuit upheld the NOx SIP call on all major 
issues, but vacated and remanded four narrow issues to EPA for further 
consideration. The EPA is conducting a rulemaking on the remanded 
issues. On June 22, 2000, the Court lifted the stay of the NOx SIP call 
submission deadline and determined that the SIPs would be due October 
30, 2000. On August 30, 2000, in response to a motion from industry, 
the court extended the NOx SIP call compliance deadline until May 2004 
so that the court's May 1999 stay of the NOx SIP Call would not 
decrease the time sources would have to comply.
                               __________
Statement of Michael Davis, Deputy Assistant Secretary of the Army for 
                              Civil Works
Introduction
    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to provide testimony on the President's fiscal year 2001 
budget request for the Army Regulatory Program and recent regulatory 
program initiatives. I am Michael L. Davis, Deputy Assistant Secretary 
of the Army for Civil Works. As the Deputy Assistant Secretary 
responsible for Civil Works Policy and Legislation, I am directly 
involved in the regulatory initiatives of the Army Corps of Engineers. 
The Army has full responsibility for the administration of the 
regulatory programs implementing Sections 9 and 10 of the Rivers and 
Harbors Act of 1899 and primary responsibility, along with the 
Environmental Protection Agency, for implementing Section 404 of the 
Clean Water Act (CWA).
    In this statement I will provide a short overview of the regulatory 
program and current levels of performance. I will also discuss recent 
high priority regulatory initiatives involving changes to the Army 
nationwide permit program and the establishment of an administrative 
appeals process. I will conclude with an overview of the regulatory 
budget.
Army Regulatory Program
    The cost for operating the Army regulatory program over the last 10 
years has risen steadily. This increase has come about as changes in 
law and policy have resulted in the need for new initiatives to 
maintain and improve levels of environmental protection and service to 
the regulated public. During fiscal year 1999, the Army Regulatory 
Program provided written authorization for over 90,000 activities, the 
most in any year. Over 90 percent of all those actions were authorized 
in less than 60 days, a remarkable accomplishment. The performance 
statistics cited in the remainder of this testimony reflect only a 
portion of this work, which is accomplished by approximately 1,100 
regulatory staff members nationwide. These highly skilled and dedicated 
men and women are responsible for the thousands of permitting and 
enforcement decisions made each year.
CWA Section 404 Program Performance
    The CWA Section 404 program is a vital part of the Nation's overall 
effort to protect, restore, and preserve our water resources. The 
overarching statutory goal of the Section 404 program is to protect the 
waters of the United States, including wetlands. Over the past 28 years 
the Army Corps of Engineers has prevented the destruction of hundreds 
of thousands of acres of wetlands and the degradation of thousands of 
miles of rivers and streams. This has reduced property damage and loss 
of lives from flooding and protected fish and wildlife habitat and 
water quality--all vital to the Nation's economy and overall health. 
From a good public policy and investment perspective, the Section 404 
program has been a success. For example, the Section 404 program played 
a key role in reducing wetlands losses from over 400,000 acres per year 
in the mid-1970's to approximately 100,000 acres a year in the mid-
1990's.
    While the program helps stem the loss of wetlands and other aquatic 
resources, it does so in a manner that minimizes the unnecessary 
regulatory burdens on those that must apply for permits. Administering 
the Army Regulatory Program in a fair, flexible and effective manner 
has been a priority of the Administration since 1993. In short, permit 
applicants receive a timely and professional response from the Corps. 
As with any program of this nature there will be a few exceptions--but 
these are truly the exception to the tens of thousands of regulatory 
actions that are handled smoothly each year.
    The graphics provided throughout this statement highlight the 
operation and performance of the CWA Section 404 program. As shown in 
Figure 1, the Corps received an average of 74,500 Section 404 permit 
requests per year from fiscal year 1996 to fiscal year 1999. Of those 
requests, 84.4 percent were authorized through a general permit. Only 
6.7 percent of all permit applications were subject to the more 
detailed individual permit evaluation, through which impacts are 
avoided and compensated. Because of our effectiveness in avoiding and 
mitigating impacts, only 3 tenths of a percent of all Section 404 
requests were denied. Finally, it should be noted that thousands of 
additional actions requiring authorization by Section 404 were allowed 
to proceed under the authority of general permits that do not require 
any notification to the Corps.
                                figure 1


    The number of days required to evaluate requests for standard 
individual permits and general permits are provided in Figure 2. From 
fiscal year 1996 to fiscal year 1999, decisions for standard individual 
Section 404 permits took an average of 107 days, with decisions for 
general permits averaging only 14 days. As Figure 1 demonstrates, the 
general permit program is an important part of the overall regulatory 
program. By providing a screening mechanism for activities with minimal 
adverse effects, general permits allow the Corps to focus its 
priorities and resources on those activities with the potential for 
greater environmental impacts. Those activities that are truly minor 
are allowed to go forward with little or no review by the Corps while a 
relatively few are subject to a more thorough individual review.
                                figure 2


General Permits
    Section 404(e) of the CWA provides the Secretary of the Army the 
authority to issue general permits subject to the following 
requirements:
      General permits must be for a category of activities;
      General permits may not result in more than minimal 
impacts either individually or cumulatively; and
      General permits may be issued only after an opportunity 
for public notice and comment and are valid for no more than 5 years.
    Since the addition of Section 404(e) in 1977, the Army has used the 
general permit program to authorize hundreds of thousands of activities 
nationwide. These general permits have been issued on a nationwide 
basis (Nationwide Permits), on a Corps district basis (regional general 
permits), and on a programmatic basis. As noted in Figure 1 above, the 
general permit program continues to be an integral part of the Army 
Regulatory Program--authorizing over 80 percent of all CWA Section 404 
activities.
Recent Nationwide Permit Revisions
    The most widely used general permits are the Nationwide Permits 
(NWPs) issued by the Corps headquarters in consultation with my office 
and other agencies. Of the nearly 40 NWPs, Nationwide Permit 26 (NWP 
26) was used the most by permitting a wide variety of activities in 
specific waters (i.e., headwaters and isolated waters). NWP 26 also 
engendered considerable controversy and was the subject of litigation 
by the environmental community who argued that it did not meet the 
statutory requirements of CWA Section 404(e) discussed above.
    In 1977, the Corps issued the first NWP 26 and authorized unlimited 
discharges of dredged or fill materials into non-tidal rivers, streams 
and their impoundments including isolated wetlands and adjacent 
wetlands that were located in the headwaters of river systems. The term 
``headwaters'' was administratively defined, as the point on a non-
tidal stream above which the average annual flow is less than 5 cubic 
feet per second. In 1986, the Corps issued a revised NWP 26, which 
authorized impacts up to 10 acres and required that the Corps be 
notified of proposed discharges greater than one acre.
    As our scientific understanding of the importance of headwater 
systems and isolated wetlands improved, we became concerned that, from 
a national perspective, some of these activities authorized by NWP 26 
probably had more than minimal adverse impacts on the aquatic 
environment. The concern was that NWP 26 authorized too many projects 
in the headwaters and isolated waters, increasing the frequency of 
flooding, destroying valuable fish and wildlife habitat and impairing 
water quality. Further, many continued to question the legality of NWP 
26--casting doubt and uncertainty on the entire nationwide permit 
program.
    The validity of the underlying basis for NWP 26 was questioned by 
the National Academy of Sciences in a study undertaken at the direction 
of Congress. In the part of its 1995 report that addressed NWP 26, the 
Academy concluded that ``The scientific basis for policies that 
attribute less importance to headwater areas and isolated waters than 
to other wetlands is weak.'' The enormity of environmental resources at 
risk was highlighted by 1995 data from the Corps, which showed that 
over 25 percent of all permitted wetland losses were the result of NWP 
26. Over 80 percent of all wetland losses associated with general 
permits were the result of NWP 26.
    The President's 1993 Wetlands Plan called for a review of NWP 26 
and the 1998 Clean Water Action Plan promoted increased wetlands 
protection through more effective avoidance and compensation of 
impacts. Further, the Administration has been unequivocal in its 
promotion of the wise and sustainable use of our floodplains. Every 
year lives are needlessly lost and the Nation spends over $4 billion 
paying for flood damages.
    In 1996, the Army again modified NWP 26 and reduced the maximum 
allowable impacts from 10 acres to three. The Army also committed to 
further improving environmental protection by replacing NWP 26 with 
more environmentally appropriate activity based NWPs. In this regard, 
on March 7, 2000, after several opportunities for public comment, the 
Corps issued five new permits and modified five existing NWPs. The new 
and modified NWPs will become effective June 7, 2000. NWP 26 will 
remain in effect until then. These permits substantially improve 
environmental protection while allowing those activities that are truly 
minor to go forward with little or no review.
    Under the new NWP program only those activities involving less than 
one-half acre of impacts will be allowed under a NWP. In addition, any 
activity involving more than one-tenth acre of impacts requires the 
notification of the Corps. To reduce adverse impacts from flooding 
caused by development in the floodplain, we have also added a permit 
condition that prohibits the use of most of the NWPs in much of the 
100-year floodplain. We have also added a condition that prohibits the 
use of the NWPs in ``critical resource waters'' (e.g., critical habitat 
for endangered species and wild and scenic rivers). Not all changes, 
however, have resulted in restrictions on the use of NWPs. For example, 
unlike NWP 26, the use of the new NWPs is not limited to the headwaters 
and isolated waters. In addition, the scope of certain NWPs such as NWP 
12 for utility crossings has been expanded to increase their utility 
and applicability.
    As we developed the new NWPs we not only considered the need to 
improve environmental protection, we also considered the effect of such 
changes on the Corps workload and the regulated public. Based on our 
review, we are confident that the final changes made on March 7, 2000, 
are needed and justified by the increased environmental protection. 
Further, these changes substantially increase the legal sustainability 
of the NWP program and consequently provide the regulated public much 
greater certainty. There is no denying that the Corps workload will 
increase as a result of these changes. Our preliminary estimates 
indicate that the number of individual permit applications may 
increase, perhaps on the order of 20 percent. Notwithstanding this 
estimate, the Corps predicts that the vast majority, over 85 percent, 
of Section 404 activities will continue to be covered by general 
permits.
    In short, while the Corps Section 404 workload will increase and 
without some additional funding program performance may be diminished, 
we believe that cleaner water, healthier habitat, and reduced damages 
from flooding are worth the costs.
Administrative Appeals
    As stated above, we strive to administer the regulatory program in 
a fair and flexible manner--eliminating unnecessary regulatory delays 
and costs. I believe that overall we have been very successful. Most 
permit applicants receive a permit in a timely manner. The environment 
is protected through the regulatory program's avoid, minimize, and 
compensate sequencing policy. As with any program, improvements can be 
made. In the case of Section 404 we should continue to improve the 
protection of important aquatic resources and continue to look for ways 
to improve responsiveness to the public. We are committed to both of 
these objectives.
    In the 1993 President's Wetlands Plan, the Administration made a 
commitment to develop an administrative appeal process for those permit 
applicants that believe they received unfair or adverse permitting 
decisions. The Wetlands Plan called for an administrative process to 
provide landowners an opportunity for a hearing by higher level 
decision-makers, without the need for resorting to costly and time 
consuming lawsuits. On July 19, 1995, the Corps published a proposed 
administrative appeal process. After evaluating and addressing the 
issues raised in comments submitted in response to the proposed rule, 
the Corps, on March 9, 1999, published a final rule establishing an 
administrative appeal process for permit denials and declined 
individual permits. That rule became effective on August 6, 1999. In 
the rule the Corps noted that due to budget constraints, it was 
delaying publication of an administrative appeal process for 
jurisdictional determinations.
    The fiscal year 2000 Energy and Water Appropriations Act provided 
funds to administer an appeals process for jurisdictional 
determinations. I am pleased to note that the final rule for this last 
part of the appeals process will be published today. This rule 
establishes a one step administrative appeal process for jurisdictional 
determinations.
    To date we have evaluated 12 request for appeals of denied permits. 
One has been sustained, one remanded back to the district and ten are 
pending. Our workload estimates indicate that approximately 150 permit 
denials and 5,000 wetland delineations will be appealed annually. One 
full time equivalent (FTE) in each of the eight Corps division offices 
has been provided to serve as division level review officers for these 
cases. The Corps estimates that operation of the appeal program will 
require an expenditure of approximately $5 million per year. The appeal 
of jurisdictional determinations will be managed by the Corps division 
appeals review officers, but an additional 38 FTEs will be added to 
support the participation of Corps district staff.
Regulatory Budget Overview
    As shown in Figure 3, regulatory appropriations have increased over 
the last 10 years, from $64.5 million in fiscal year 1990 to $117 
million for fiscal year 2000. The President's budget request for the 
Army Regulatory Program for fiscal year 2001 is $125 million. Program 
funding increases have for the most part covered only the normal year 
to year labor costs, along with some programmatic initiatives and 
special studies. In 1990, regulatory funding supported a national staff 
of 945 individuals. The fiscal year 2000 regulatory appropriation will 
support a national field presence of approximately 1,100 regulatory 
personnel. This is a modest 14 per cent increase in staffing over 10 
years. Increases in the regulatory budget also reflect an increasing 
need to improve environmental protection and to develop programmatic 
tools to improve overall performance.
                                figure 3


    The Army Regulatory Program fiscal year 2001 funding request of 
$125 million is necessary to ensure that we continue to provide 
effective and equitable regulation in the Nation's wetlands and 
waterways. Approximately $5 million of this amount is needed to help 
address increases in workload and normal increases in cost due to 
inflation. Other program management efforts will also continue as in 
past years, including specialized training of Corps personnel and 
technical assistance to Corps districts from the Corps Waterways 
Experiment Station (WES). Generally, from $500,000 to $1 million is 
allocated to WES each year for technical assistance with complex and 
sensitive permit cases. In addition, similar funding amounts may be 
allocated to other Corps labs (Civil Engineering Research Laboratory 
and the Institute for Water Resources) to address special program 
management issues. These include; studies of mitigation banking 
practices; improvements to automated data systems for tracking program 
workload and wetland impact data, and an assessment of environmental 
impacts resulting from nationwide permits.
    The budget request for fiscal year 2001 includes an identified 
increase of $3 million for further development of specialized tools and 
studies to protect better the aquatic environment in sensitive areas. 
These studies are variously called watershed studies, SAMPs (Special 
Area Management Plans), or other similar designations. In these cases, 
the Corps in cooperation with federal, tribal, state, and local 
agencies analyze the functions of aquatic ecosystems in a specific 
geographic areas. The agencies then work together toward issuing 
regional general permits for development in some of the moderate to 
lower value aquatic areas. The advantage to this approach is that the 
higher value aquatic ecosystems can be identified, mapped and generally 
avoided (or subject to a more thorough evaluation if development is 
proposed). In addition, lower value or moderate value aquatic 
ecosystems can be subject to authorization quickly by regional general 
permits, with mitigation specified, which will improve degraded or lost 
portions of the aquatic ecosystems in the watershed. The products from 
these studies provide better predictability for the regulated public, 
and better, more focussed protection of the aquatic environment.
Conclusion
    The Nation's aquatic resources are vital to our environmental and 
economic health. Our rivers, lakes, and wetlands are the lifeblood of 
our great landscapes. They support the fish and wildlife that we catch, 
hunt, and watch. They provide us with water--an essential component of 
all living things. The Army Regulatory Program plays an important role 
in protecting these resources for today and for future generations.
    Through the Army Regulatory Program we are committed to serving the 
public in a fair and reasonable manner while ensuring the protection of 
the aquatic environment as required by laws and regulations. We will 
continue to pursue the important initiatives described above. Our 
regional and nationwide general permits program will continue to be 
evaluated for opportunities to improve both environmental protection 
and performance. We have established a full administrative appeals 
process that will allow the public to challenge permit decisions and 
jurisdiction determinations without costly, time-consuming litigation. 
The President's budget request is needed to help maintain this level of 
commitment and service.
    Thank you for the opportunity to provide this testimony on behalf 
of the Army, I will be pleased to answer any questions you or other 
subcommittee members may have.


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