[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
 ACCOMPLISHMENTS OF THE CLEAN AIR ACT, AS AMENDED BY THE CLEAN AIR ACT 
                           AMENDMENTS OF 1990
=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 1, 2002

                               __________

                           Serial No. 107-106

                               __________

       Printed for the use of the Committee on Energy and Commerce








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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
RICHARD BURR, North Carolina         BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
GREG GANSKE, Iowa                    BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           TOM SAWYER, Ohio
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES ``CHIP'' PICKERING,          GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
TOM DAVIS, Virginia                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland     LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky

                  David V. Marventano, Staff Director
                   James D. Barnette, General Counsel
      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______


                 Subcommittee on Energy and Air Quality

                      JOE BARTON, Texas, Chairman

CHRISTOPHER COX, California          RICK BOUCHER, Virginia
  Vice Chairman                      RALPH M. HALL, Texas
RICHARD BURR, North Carolina         TOM SAWYER, Ohio
ED WHITFIELD, Kentucky               ALBERT R. WYNN, Maryland
GREG GANSKE, Iowa                    MICHAEL F. DOYLE, Pennsylvania
CHARLIE NORWOOD, Georgia             CHRISTOPHER JOHN, Louisiana
JOHN SHIMKUS, Illinois               HENRY A. WAXMAN, California
HEATHER WILSON, New Mexico           EDWARD J. MARKEY, Massachusetts
JOHN SHADEGG, Arizona                BART GORDON, Tennessee
CHARLES ``CHIP'' PICKERING,          BOBBY L. RUSH, Illinois
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
STEVE BUYER, Indiana                 JOHN D. DINGELL, Michigan
GEORGE RADANOVICH, California          (Ex Officio)
MARY BONO, California
GREG WALDEN, Oregon
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)












                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Driesen, David M., Associate Professor, Syracuse University 
      College of Law.............................................    97
    Goffman, Joseph, Attorney, Global and Regional Air Program, 
      Environmental Defense......................................    65
    Goldstein, Bernard D., Dean, School of Public Health, 
      University of Pittsburgh...................................    61
    Holmstead, Jeffery, Assistant Administrator for Air and 
      Radiation, Environmental Protection Agency.................    17
    Krupnick, Alan, Senior Fellow and Director, Quality for the 
      Environment Division, Resources for the Future.............    84
    Lents, James, Environmental Policy, Atmospheric Processes and 
      Modeling Laboratory, University of California at Riverside.    76
Material submitted for the record:
    Holmstead, Jeffery, Assistant Administrator for Air and 
      Radiation, Environmental Protection Agency, responses for 
      the record.................................................   103

                                 (iii)













 ACCOMPLISHMENTS OF THE CLEAN AIR ACT, AS AMENDED BY THE CLEAN AIR ACT 
                           AMENDMENTS OF 1990

                              ----------                              


                        WESDNESDAY, MAY 1, 2002

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2123, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Burr, Whitfield, 
Ganske, Shimkus, Pickering, Bryant, Buyer, Radanovich, Tauzin 
(ex officio), Boucher, Hall, Sawyer, Wynn, Doyle, Waxman, 
Markey, McCarthy, Barrett, Luther, and Dingell (ex officio).
    Staff present: Bob Meyers, majority counsel; Joseph Stanko, 
majority counsel; Andy Black, policy coordinator; Hollyn Kidd, 
legislative clerk; and Michael L. Goo, minority counsel.
    Mr. Barton. The subcommittee will come to order. The Chair 
has been informed that Congressman Boucher is on his way. So we 
are going to begin. The Chair would recognize himself for an 
opening statement.
    Today we begin the Energy and Air Quality Subcommittee's 
examination of the Clean Air Act issues with a look at the 
accomplishments of that important environmental legislation.
    I participated in the 1990 amendments, had several 
amendments added to the bill, and voted for the final package. 
Today I am chairman of the subcommittee with jurisdiction over 
the Clean Air Act. I also spent, several years ago, 4 years as 
chairman of the Oversight and Investigations Subcommittee of 
this Energy and Commerce Committee. During my tenure as 
chairman of Oversight and Investigations, we held many hearings 
on the Clean Air Act--I believe the number was 19--and how it 
was being implemented at the time. Those hearings clearly 
showed that the Clean Air Act was working to improve air 
quality.
    That is why I am very surprised when I see recent public 
opinion polls that show that over 60 percent of Americans think 
that the Nation's air quality is getting worse, not better. 
Nothing could be further from the truth. The air quality in our 
nation is considerably cleaner today than it was in 1990.
    Nationally, the year 2000 average air quality levels were 
the best in the last 20 years for all six criteria of 
pollutants, lead, nitrogen dioxide, sulfur dioxide, particulate 
matter, carbon monoxide, and ozone. In fact, according to the 
most recent EPA figures, between 1970 and 2000, total emissions 
of the six criteria for air pollutants decreased 29 percent.
    During that same time, gross domestic product increased 150 
percent, energy consumption increased 45 percent, vehicle miles 
traveled increased 143 percent, and the United States 
population increased 36 percent. This is quite an achievement.
    Since 1990, an unprecedented number of cities have met the 
national ambient air quality standards. More than two-thirds of 
the areas designated as nonattainment following the 1990 
amendments are now in attainment and have air quality that meet 
or surpass the data that is required for them to meet those 
standards.
    These include: Forty-one of the 43 carbon monoxide areas 
are now in attainment; 69 of the 85 coarse particulate matter 
areas are now in attainment; and 71 of the 101 1 hour ozone 
areas are now in attainment.
    As one of the authors of some of the 1990 air quality 
amendments, I am pleased to see that we achieved the results 
that we have. I want to congratulate the numerous committee 
members on both sides of the aisle who participated in the 1990 
reauthorization.
    I hope that our panel of experts today can help inform the 
60 percent of the Americans who think that air quality has 
decreased just what the facts are.
    This is just the first in a series of hearings in what 
should be a bipartisan examination of the Clean air Act. After 
we finish looking at where we have come, we can next turn to 
where we should go. It is my hope that this discussion can be 
calm, cooperative, and constructive. Just as in H.R. 4, the 
energy bill that we passed in this committee last August and in 
other legislation, it is my intent to work with members on both 
sides of the aisle on a fair review process.
    Neither Chairman Tauzin of the full committee nor I have 
made any firm decision about what this subcommittee will 
legislate on, on this issue in this Congress. If it is the will 
of the subcommittee members to roll up our sleeves and work 
together, legislating remains an option, although time is 
drawing short. At a minimum, I want to build a fact-based 
record which can be used at the appropriate time to draft 
legislation to improve the Clean Air Act Amendments of 1990.
    With that, I would recognize my distinguished ranking 
member, Mr. Boucher, for an opening statement.
    Mr. Boucher. Thank you very much, Mr. Chairman. I want to 
commend you for scheduling the hearing this morning for the 
purpose of examining the benefits that have been realized 
through application of the Clean Air Act and the amendments to 
that act in 1990.
    As the chairman indicated, this is the first in a series of 
hearings that the subcommittee will conduct on matters relating 
to air quality across the nation. In 1990 major changes and 
additions were made to the Clean Air Act. These amendments 
included the creation of the acid rain program and significant 
changes to the control of criteria pollutants.
    Since enactment of the Clean Air Act and the 1990 
amendments, the Nation has made significant progress in 
reducing pollutant emissions and in improving air quality, at 
the same time that the Nation's economy and energy use 
generally have expanded.
    From 1970 to 1999, the gross domestic product of the United 
States increased by 158 percent. During this same period of 
time, electricity use increased by 148 percent. Despite the 
increases in energy consumption, our Nation's air today is much 
cleaner than it was in 1970.
    During the past 30 years, sensible environmental 
regulations, primarily the environmental standards enacted by 
the Clean Air Act and the 1990 amendments, along with new 
technology and voluntary actions by the Nation's industry have 
led to a significant reduction in emissions. Sulfur dioxide 
emissions have declined by 39 percent. Particulate matter 
levels have fallen by 75 percent. Airborne lead levels are down 
by 98 percent, and volatile organic compound levels have 
decreased by 42 percent.
    During the past 3 decades, coal use has increased by 195 
percent, while the total emissions per ton of coal consumed 
have decreased by almost 70 percent. Particulate matter levels 
from coal based utilities decreased 84 percent between 1970 and 
1998. Our Nation's air has been getting cleaner while coal use 
by electric utilities has steadily increased. These 
improvements in air quality have been largely due to the 
success of the Clean Air Act and the amendments adopted in 
1990.
    The witnesses testifying before the subcommittee today 
bring a large amount of knowledge to our discussion of the 
Nation's air quality needs, of the development of the Clean Air 
Act and subsequent amendments, and the Act's implementation, 
and I look forward to hearing from each of them regarding the 
progress we have made in improving air quality over the last 30 
years.
    I particularly look forward to hearing about the successes 
of the market based cap and trade strategy under the Title IV 
acid rain program and to the overall reduction that has 
occurred in criteria and hazardous air pollutants.
    Mr. Chairman, I commend you for beginning this 
subcommittee's inquiry into the successes of the Clean Air Act 
with today's hearings, and I look forward to the subsequent 
hearings and to working with you as we begin to consider 
changes that could usefully be made in the Nation's clean air 
laws. Thank you, Mr. Chairman.
    Mr. Barton. I thank the gentleman from Virginia. I would 
recognize the gentleman from Illinois, the vice chairman, for a 
3-minute opening statement.
    Mr. Shimkus. Thank you, Mr. Chairman. I am delighted to be 
here this morning, and thank you for holding this hearing.
    What we will hear today is how successful the Clean Air Act 
has been. We will hear how the Act cut thousands of tons of 
pollution. We will hear that this has been a net positive for 
our country. Others will say it has not done enough and that we 
need to do more.
    I wanted to bring a copy of a recent St. Louis Post 
Dispatch where on the same front page it had on the top of the 
fold ``Individual from EPA quits because of business 
influence.'' Then on the bottom of the page, it had ``Primcorp 
refinery closes because of high sulfur rules'' and a picture of 
workers leaving to be unemployed in the future. That is true 
for all of central and southern Illinois.
    The net has been anything but positive of the Clean Air 
Act. In an area of the country where unemployment rates 
generally held around 10 percent, the Clean Air Act caused the 
loss of over 5,000 mining jobs alone, not to mention the other 
jobs that were lost as a result of the slow downturn in the 
mining industry.
    Congress has just now begun to realize that we can burn 
coal using clean coal technologies that will result in less 
pollution. Utilizing these technologies will be a win-win for 
all in American, especially in southern Illinois. But if we are 
really concerned about clean air and want to take steps here in 
Congress to improve clean air, we have the opportunity to do so 
next week.
    This committee passed by a large bipartisan vote 
legislation to move forward on sending nuclear waste to Yucca 
Mountain. This legislation will be on the floor next week and, 
if signed into law, will keep the nuclear energy as an 
important part of our Nation's energy portfolio, and a 
diversified energy portfolio is a key to energy independence 
and energy stability.
    Nuclear energy is the cleanest form of energy we have. For 
example, nuclear generated electricity in Illinois, which gets 
almost half of our electricity from nuclear power, avoided the 
emissions of 26.65 million metric tons of carbon, 488,000 tons 
of sulfur dioxide, and 226,000 tons of nitrogen oxide in 2000 
alone.
    If other States were to get only 25 percent of their 
electricity from nuclear power, we would have met all the goals 
of the Clean Air Act sooner. It seems odd to me that those who 
claim to be most concerned about the quality of our air are 
those that are most opposed to nuclear power.
    Congress will also have the opportunity soon to pass an 
historic energy bill that will increase domestic production of 
energy sources and also provide for a cleaner environment. The 
Senate version of the energy bill amends the Clean Air Act by 
creating a renewable fuel standard for gasoline that will 
result in the use of 5 billion gallons of renewable fuel. 
Despite what renewable energy critics may say, this single 
provision will result in over 5 billion less gallons of 
imported oil being burned, thereby reducing the amount of 
carbon and sulfur in our air.
    The Clean Air Act has done some good, and yet there is 
still more we can do, but we must take into account the effect 
Federal environmental regulations have on jobs. I have said the 
same thing with regard to trade. I have stood up for workers in 
my district, if I felt trade laws unfairly hurt them, and I 
consider myself a free trader. I will stand up for workers in 
my district who are unfairly hurt because of strict 
environmental regulations. To be honest, southern Illinois 
cannot handle another Clean Air Act like the one currently in 
place.
    Thank you, Mr. Chairman. I yield back no time.
    Mr. Barton. We thank the gentleman. We recognize the 
distinguished gentleman from California, Mr. Waxman, for a 3 
minute opening statement.
    Mr. Waxman. Mr. Chairman, 20 years ago this week the Energy 
and Commerce Committee met in this room to debate amendments to 
the Clean Air Act. In reflecting about that time, I realize 
that only five members from 1982 are still on the committee, 
John Dingell, Billy Tauzin, Ed Markey, Ralph Hall, and myself.
    A lot has changed in the world, in Congress, and on this 
committee. This room certainly did not have the fancy 
technology we have today, and Chairman Tauzin was a junior 
Democrat then. But no matter how long you follow congress, 
there are some things that do not change.
    Twenty years ago industry was fighting to relax the Clean 
Air Act and, just like they are today, industry lobbyists 
argued that relaxing clean air rules was key to jobs and 
economic growth. At the time, we were debating legislation 
promoted by President Reagan that would have weakened, some say 
even gutted, the Clean Air Act, because it would have doubled 
the pollution allowed from cars and trucks and relaxed 
requirements for nearly all industrial sources of air 
pollution.
    We defeated those efforts, and guess what happened. None of 
the dire predictions from industry about economic catastrophe 
came true. Since then, our gross domestic product has doubled. 
Our population increased by a third, and vehicles miles 
traveled have doubled, while air pollution in the United States 
has decreased by 30 percent.
    Twelve years ago, we were debating the Clean Air Act 
amendments of 1990 in this room. Only nine members of the 
committee who participated in that debate are still here. Once 
again, the arguments were familiar. Ford Motor Company 
testified that ``We just do not have the technology to comply 
with the first tier of new tailpipe standards in the 1990 
amendments, not even with technology on the horizon.''
    Mobil Corporation opposed the new Clean Air Act 
requirements for reformulated gasoline, writing that ``The 
technology to meet these standards simply does not exist 
today'' and predicting major supply disruptions.
    The chemical industry said that achieving the required 
phaseout of CFCs and other ozone depleting chemicals would 
cause severe economic and social disruption and the Air 
Conditioning and Refrigeration Institute testified that it was 
certain that we would see shutdowns of refrigeration equipment 
in supermarkets; we would see shutdowns of chiller machines 
which cool our large office buildings, our hotels, our 
hospitals. But once again, industry was spectacularly wrong.
    Once the 1990 law was enacted, industry showed it could 
meet the new standards ahead of time and at costs far below 
industry's previous estimates. Now industry is repeating itself 
again. Led by Haley Barbour, a lobbyist for Southern Company 
and the former head of the Republican party, industry is 
claiming that we need to relax the Clean Air Act to maintain 
economic growth.
    Industry is also making a surreal argument that could only 
be heard here in Washington, DC. They claim that we must weaken 
the Clean Air Act in order to reduce air pollution.
    Mr. Barton. Approximately how much longer?
    Mr. Waxman. I only have another paragraph. And as in 1982, 
the administration is once again taking its cues from industry. 
While industry lobbyists are asked what they would do if they 
were Il Duce, environmental groups, the States and the public 
are shut out of the process.
    Three months after taking office, the President abandoned 
his campaign pledge to reduce CO2 emissions, while 
others in his administration launched a plan to undermine new 
source review, one of the most fundamental clean air 
protections in our law.
    As we begin our debate today on these assaults on the Clean 
Air Act, I urge my colleagues to remember what happened in this 
room 10 and 20 years ago. Twice before, we stood up to industry 
claims and fought to provide clean air to all Americans. We 
were right, and industry was consistently wrong. Now is the 
time to stand up and fight again. Thank you very much, Mr. 
Chairman.
    Mr. Barton. I thank the gentleman from California. The 
gentleman from Kentucky, Mr. Whitfield, is recognized for a 3-
minute opening statement.
    Mr. Whitfield. Mr. Chairman, thank you very much, and as we 
embark on these hearings on the Clean Air Act and, hopefully, 
for reauthorization next year, I think it is important that we 
try to look at facts surrounding the Clean Air Act. It is one 
of those issues that it is politically charged, and a lot of 
times very loose statements are made without a basis in fact.
    I would also recommend to those people interested in this 
issue two books: One, Greg Easterbrook who is an environmental 
reporter for the New York Times wrote a book a few years ago, 
``A Moment on the Earth'' in which he goes into great detail 
about some of the myths relating to carbon dioxide and global 
warming and so forth. Then another book written by a scientist, 
Bjorn Lamborg, from one of the Scandinavian countries who was 
one of the strongest environmentalist activists, and he is a 
professor. He wrote a book called ``The Skeptical 
Environmentalist,'' and the New York Times wrote a detailed 
analysis of this book.
    The thing that he stresses in this book is that it is very 
important that we approach these issues with an open mind in 
order to avoid big and costly mistakes. I would just like to 
emphasize once again that this is one of those issues where it 
is very easy to make all sorts of statements.
    Even the models being used to project global warming by the 
Environmental Panel on Climate Change, and others, recognize 
that those models are not really accurate and that it is going 
to be many years before they are truly accurate. But I would 
recommend that those people interested in this issue read these 
two books, because I do think they give a more balanced 
approach to what you normally read on these issues, because 
generally you read publications totally biased the other way.
    So I look forward to these hearings, Mr. Chairman. I look 
forward to our panels today as we embark on this important 
work.
    Mr. Barton. I thank the distinguished gentleman from 
Kentucky. I would recognize the gentleman from Ohio, Mr. 
Sawyer, for a 3-minute opening statement.
    Mr. Sawyer. Thank you, Mr. Chairman, and thank you for 
holding this hearing. As a consequence of the 1970 Clean Air 
Act and the 1990 amendments, this country has made enormous 
progress in improving the quality of air, and I am sure we will 
hear about that today.
    Sometimes it is difficult to measure the benefits of the 
work that we do in Congress, but the Clean Air Act is a clear 
example of the public good that can come from legislation. 
Overall levels of pollution have dropped some 29 percent since 
the Act. Cars in the 2004 model year will be 99 percent cleaner 
than those produced in 1970.
    Far from crippling the performance of American cars, 
electronic engine management systems have multiplied 
performance, multiplied efficiency in the use of fuel, and 
multiplied our capacity to achieve a cleaner environment. Quite 
simply, we benefit from the Clean Air Act with every breath we 
take.
    The Clean Air Act demonstrates that this country can 
achieve the ambitious environmental objectives that it sets for 
itself. That is why I am disappointed in the direction that we 
appear to be heading today. The President wants to reduce the 
ratio of greenhouse gas emissions to economic growth over the 
next 10 years by 17.5 percent.
    That sounds impressive, but what it really means is that 
the U.S. would still increase the overall amount of greenhouse 
gases at the same rate that we are today. The President's 17.5 
percent target is the same as the 17.4 percent reduction that 
the U.S. experienced form 1990 to 2000. The plan almost 
guarantees that we will have much higher emissions of 
greenhouse gases in 10 years, and we will have done little to 
address the serious problem of global warming.
    We have the technology to develop practical proposals to 
reduce greenhouse emissions, and we should develop the 
political will to do it. It would be a legacy to rival that of 
the original Clean Air Act that we are celebrating. Given that 
the U.S. emits almost a quarter of the world's greenhouse 
gases, we cannot afford to be indifferent to global warming. 
Ultimately, it would be far cheaper to include greenhouse gas 
controls as a part of a multi-pollutant bill than to leave 
carbon dioxide controls until later.
    Despite its many achievements, the Clean Air Act can be 
improved, and I am glad that the President's plan recognizes 
the benefits of a cap and trade program. The acid rain cap and 
trade program contained in the 1990 amendments has been 
remarkably successful. If they are designed correctly, these 
kinds of programs offer great promise to improve our air 
quality, even more than existing programs.
    Astonishingly, the administration has yet to produce 
detailed evidence to back up its claim that the Clear Skies 
Initiative will increase air quality and improve public health. 
I have a sign on the wall of my office that says ``Without 
data, you are just another opinion.'' At this point, we are 
largely without data. I hope that the witnesses today can begin 
to fill in the gaps left while we await the administration's 
explanations.
    Thank you, Mr. Chairman. I yield back.
    Mr. Barton. Thank the gentleman from Ohio. I would 
recognize the gentleman from Iowa, Mr. Ganske, for a 3-minute 
opening statement.
    Mr. Ganske. Thank you, Mr. Chairman. A few year ago, I was 
on a surgical mission to Lima, Peru, and I experienced the 
worst air pollution that I have ever seen in my life. During 
traffic hours, you could barely see four blocks.
    I am told that part of the reason is that the cars and 
buses in California that can no longer meet clean air standards 
are put on ships and shipped down the coast and end up in 
cities in South America. Lima, Peru is one of them.
    Contrast that with Cedar Rapids, Iowa, where you can follow 
a city bus. The entire city fleet of buses in Cedar Rapids, 
Iowa, runs on soy diesel fuel, and the black clouds of smoke 
which are a standard part of bus transit in most cities are no 
longer there. You don't see choking and coughing from the 
motorists that are following those buses or the pedestrians on 
the sidewalk.
    Mr. Chairman, renewable energy, be it from wind turbines, 
solar panels, or hydroelectric dams, is very kind to our air 
quality. I would be remiss if I did not take this opportunity 
again to champion the benefits of renewable sources of energy 
as part of a comprehensive energy portfolio for our nation.
    I also know that our current economy does not run on 
windmills alone, and I look forward to examination of the 
achievements and challenges facing the Clean Air Act for the 
future.
    I want to again thank all the witnesses for joining us here 
today and offering their insights, Mr. Chairman. I yield back.
    Mr. Barton. I thank the gentleman from Iowa. We would 
recognize the distinguished ranking member of the full 
committee, Mr. Dingell, for a 5-minute opening statement, if he 
wishes to give an opening statement.
    Mr. Dingell. Mr. Chairman, I thank you, and I thank you for 
holding this hearing.
    Mr. Chairman, I can think of few matters on which this 
committee has expended more time and more effort and undergone 
more misery than we did on the Clean Air Act. It is appropriate 
to examine whether the fruits of this long period of hard work 
have been borne out in reality. For that reason, this hearing 
is important.
    I think you will find that the very hard work we did in 
1970, 1977, and 1990 has resulted in, and will continue to 
result in, great strides toward cleaner air, while at the same 
time providing for economic progress.
    The record of this committee with regard to that is a 
remarkable one of having created balanced legislation, jobs 
opportunity, a good economy, and also the cleanest air in the 
industrial world. The record, I think, speaks for itself.
    Mr. Chairman, the Clean Air Act has always been in the 
forefront of environmental laws. It touches the lives of all of 
our citizens and calls for steep sacrifices from virtually 
every sector of this economy. The consensus we forged in 1970 
and again in 1990 reflects the delicate balance between many 
competing concerns and interests. It is no way easy to achieve, 
and anyone who believes that the change in this area will come 
easily should reflect back carefully on the long hours that we 
spent in this very room prior to final passage of the 1990 
amendments.
    I am pleased to hear success stories relative to the Clean 
Air Act. I am pleased the legislation we passed into law has 
resulted in cleaner air for all Americans, and that in a time 
of increasing prosperity.
    Since 1990, emissions of sulfur dioxide have fallen by 24 
percent. Emissions of lead have fallen by 50 percent. Emissions 
of volatile organic compounds have fallen by 16 percent, and 
the emissions of carbon monoxide have fallen by 41 percent. 
This is a record of which we can be proud, especially in a time 
of great economic and population growth.
    The automobile industry, in particular, has made much 
progress. Cars today are 96 percent cleaner than the 
uncontrolled vehicles from 30 years ago, and for some 
pollutants, more than 99 percent cleaner. Today's cars emit 
fewer pollutants traveling at 55 miles an hour than a 1970 car 
emitted engine off, sitting in a driveway, and with 
implementation of Tier II standards required by the 1990 Act, 
emissions from cars and light trucks will be reduced by another 
80 percent from today's clean vehicles.
    Before we decide to amend the Act, we should be certain 
that change is needed, and we should be absolutely certain that 
the air will be cleaner than when we began, and we should be 
sure that the ruinous alteration of our industrial base will 
not accompany such change.
    I cannot support any other result. I think we should know 
beyond question the solutions that we will undertake will 
result in a better, simpler policy than already exists under 
the Clean Air Act, and we should be sure that they will result 
in forward, not backward, movement toward the cleaner and 
healthier air that the Nation wants.
    To undo these provisions without knowing the ultimate 
outcome is to risk simultaneously the welfare of our citizens 
and the strength of our economy.
    Despite the distinguished panel of witnesses that will 
shortly appear, we all know of numerous success stories that 
will not be heard today. The record on this issue will be thus 
necessarily incomplete, and before we begin to claim that we 
have examined the question of what has been accomplished since 
1990, we should hear from many others on many other topics that 
these witnesses are not necessarily going to be able to address 
today.
    The clean air amendments of 1990 nearly doubled the size of 
the existing Act, and they included three new complete titles 
addressing important topics, such as acid rain, permitting, and 
stratospheric ozone. Two out of the three of these titles will 
necessarily remain relatively unexamined in this proceeding, as 
will many other 1990 provisions, including those relating to 
fuels and mobile sources from which important success stories 
can easily be gleaned by any discerning onlooker.
    Moreover, no administrative law experts will appear to tell 
us how our laws have fared in courts. No witness will appear on 
behalf of State and local authorities. We will not hear from 
the automobile industry nor from the petroleum industry, nor 
from the electrical utility industry.
    They and many others each have a story to tell. Each have 
accomplishments. Each have problems. Each have concerns. Each 
have worries, and each have many positive aspects. Each has a 
story of substantial accomplishment under the Clean Air Act. We 
need to give them all a chance to tell it in appropriate future 
hearings.
    There is much to examine and much to learn as we review the 
Clean Air Act accomplishments that have occurred over the past 
decade. I look forward to the testimony of witnesses today and 
those to come.
    I do thank you, Mr. Chairman.
    Mr. Barton. Thank you, the gentleman from Michigan. The 
Chair would like to welcome back to the committee the 
distinguished former member from California and of this 
committee, the Honorable Carlos Morehead. We are glad to have 
him back. You can tell, he has not been a member the last 
several years. He came in on the minority side. He doesn't 
realize that, as a Republican, he can now come in over on the 
majority side. Mr. Hall and Mr. Boucher say he switched. But we 
do welcome you, Carlos. We are glad to have you back.
    We would now like to welcome Mr. Buyer for a 3-minute 
opening statement. He passes.
    We would go to Mr. Markey of Massachusetts for a 3-minute 
opening statement.
    Mr. Markey. Thank you, Mr. Chairman, very much. It is so 
good to see Carlos back here again, and I have very many 
memories, happy memories of recognizing him on this side of the 
aisle.
    It is a coincidence today, I know, that this hearing is 
being held on Asthma Awareness Day, and the same day that the 
American Lung Association reports that 142 million Americans 
are breathing unhealthy amounts of ozone.
    Mr. Barton. Would the gentleman yield?
    Mr. Markey. I would be glad to.
    Mr. Barton. We will start your clock again. I want the 
record to show that Congressman Joe Barton is the original 
sponsor of Asthma Awareness Day on the Hill, along with Mr. 
Kennedy when he finally got into the Congress. You know, I am 
such an evil guy, but I am the original sponsor of the Asthma 
Awareness Day up here on the Hill.
    Mr. Markey. Start that clock again. I am going to start it 
all over again. Thank you.
    No one is more aware than you are, Mr. Chairman, of the 
necessity of clean air than the almost 25 million asthmatic 
Americans. Over the past two decades, the number of people with 
asthma has doubled, and the number of asthma deaths has 
tripled. In 2000 alone, asthma cost our country $12.7 billion, 
double the amount in 1990. Eight million children have asthma 
in the United States. Now over the last couple of months, there 
is the first scientifically demonstrated link between ozone and 
the development of asthma in children. However, isn't the only 
concern.
    Another recent study involving 500,000 adults in 156 cities 
nationwide has linked air pollution with an increased chance of 
developing lung cancer or cardiopulmonary disease. It is as if 
the people living in the most polluted cities are constantly 
exposed to secondhand smoke.
    The Centers for Disease Control estimates that outdoor 
pollution contributes to 50,000 to 120,000 premature deaths and 
$40-$50 billion worth of health care costs.
    Now I know the Bush Administration is an anti-technology 
administration, and they absolutely do not believe in America's 
ability to improve its technology. They don't think we can make 
automobiles more efficient, and they lobby against that. They 
don't believe that we can make refrigerators or air 
conditioners more efficient, and they lobby against that. They 
say it would be too hard for our country to make progress in 
those areas.
    They say it is too hard to make progress in making 
utilities burn fuel, fossil fuels, and they know that our 
country can't make the progress on those technologies, and they 
don't want to burden our country any longer. We have made all 
the technological progress that we can, they say. But I believe 
they are wrong.
    I think they continue to live in the past. Because of the 
anti-technology bias of the Bush Administration, I am afraid 
that our country is looking more to its past than it is to its 
future, and that is a shame.
    A good example is the New Source Review of pollutants. That 
is when you take an old plant, completely redesign it, like 
taking old grandma's house, putting on two new wings, putting 
in a swimming pool, a tennis court, and still wanting to all it 
the old house. Who does that for a house? They say, come over 
to my new house. But the utility industry, after putting on the 
two new wings and the swimming pool, says it's still an old 
utility. No, don't put us under any new regulations.
    In fact, NSR really should stand for ``New Source of 
Respiratory Illness.'' That is what NSR is in this modern world 
with all of the new information which we have. Teddy Roosevelt 
is now being cited by President Bush in his Clear Skies 
proposal. It makes you wonder what he is thinking, because like 
the 8 million children suffering from asthma, Teddy Roosevelt--
--
    Mr. Barton. Can you sum it up in the next 45 seconds?
    Mr. Markey. Teddy Roosevelt had asthma, and his parents 
used to take him out into the country where he, in fact, 
developed his love of the environment and clean air. If Teddy 
Roosevelt were alive today, he would not be supporting the 
Clean Skies proposal, because he knows that President Bush's 
Clean Skies proposal means dirtier lungs for 8 million 
children, and more in our country who already have asthma.
    If it was going to be an updated slogan from Roosevelt for 
this administration, it would have to be altered to say ``Speak 
softly, and carry a big inhaler'' because that is the message 
that they are sending to 25 million people, including 8 million 
children who suffer from asthma in our country.
    If we continue to allow this to happen, then we are just 
going to have those Midwestern utilities blowing smoke into the 
lungs of millions of people, and it is just wrong, and I hope 
that today's hearing begins to illuminate the real problem that 
this administration has in dealing with the role that 
technology can play in making our country healthier. Thank you, 
Mr. Chairman.
    Mr. Barton. I thank the gentleman from Massachusetts. We 
recognize the gentleman from Pennsylvania, Mr. Doyle, for a 3-
minute opening statement.
    Mr. Doyle. Mr. Chairman, I want to thank you for holding 
this hearing today so that we can begin to examine this 
important subject. While we tackle many vital issues here in 
the committee, there are few as meaningful to all Americans as 
the air we all breathe; and while it is certainly as important 
as any issue we will examine, it is perhaps predictable that it 
is one of the most complex.
    At least one fact seems inarguable. Since the Clean Air Act 
was established, our air has become significantly cleaner. This 
seems to be true, regardless of some media reports or 
conventional witness to the contrary, and I hope that we will 
today hear some detailed testimony attesting to this fact.
    Obviously, this is extremely good news and points out what 
an important landmark piece of legislation the Clean Air Act 
was, back when it was first enacted, and how vital it remains 
today. I think all of us can agree that cleaner air is a 
laudable goal for many reasons.
    It improves everyone's health, both in the short term and 
the long term. By improving the public's health, we also reduce 
the cost of health care and health insurance in both the public 
and private arenas. Clean air also increases our ability to 
enjoy our natural resources. So, clearly, for the benefit of 
public health and environment, there is a vested public 
interest in maintaining and actually improving the quality of 
our air.
    In my district, and in the areas surrounding it through 
western Pennsylvania, we have struggled with the issues 
surrounding clean air and the implementation of efforts to 
achieve it for many years. As someone who has spent his entire 
life in Pittsburgh, I know that the people there value clean 
air as much as anyone, and the Clean Air Act has helped us to 
make great progress in improving our air quality.
    Our area was one that labored to create an effective State 
implementation plan that has now been in place for many years. 
It has not always been an easy process, by any means, but it 
was a necessary process that has achieved significant results 
as we have moved from a moderate nonattainment status to 
attainment status.
    Now, Mr. Chairman, I think we find ourselves at something 
of a crossroads, not just in Pittsburgh but throughout the 
Nation, as there are many important questions that need to be 
answered with regard to the future of our mutual efforts to 
maintain and increase air quality.
    Part of the reason for this has been that it has always 
been difficult to find effective means for quantifying the 
progress that has been made. It can also be difficult to 
adequately demonstrate the problem spots that exist and the 
actual sources of those problems.
    For these reasons and others, there has been substantial 
controversy in recent years surrounding EPA's effort to 
promulgate new standards related to clean air, such as those 
dealing with ozone and particulate matter. I have always been 
one of those that feels strongly that we should proceed when 
the science behind the decisions have been effectively 
demonstrated and adequately verified, and I truly hope that any 
endeavors we undertake will meet those standards.
    As we know, the President has recently begun to outline his 
Clean Skies initiative, and this is one of the ideas that 
deserves careful examination. I trust that the administration 
will work with members of this committee and others as they 
strive to detail the finer points of the rather broad framework 
that has so far been articulated.
    In addition, there is an ongoing review being conducted by 
EPA with regard to New Source Review requirements and their 
implementation. It is crucial that we determine whether the New 
Source Review requirements have proven effective, whether they 
are being enforced in a consistent manner, and how they will 
affect our Nation's efforts to stabilize our energy supply in 
the long term.
    Mr. Barton. The gentleman's time----
    Mr. Doyle. Mr. Chairman, thank you for holding this hearing 
today, and I yield back the balance of my time.
    Mr. Barton. We thank the gentleman. The Chair would now 
recognize the distinguished gentleman from Rockwall, Texas, Mr. 
Hall, for a 3-minute opening statement.
    Mr. Hall. Mr. Chairman, thank you very much. Of course, 
today's hearing marks the, I guess, first official act of this 
committee to reauthorize the Clean Air Act. If the past is any 
indicator of the future, then this is going to be a long and an 
arduous endeavor.
    Estimates on how long it took to reauthorize the Act the 
last time which resulted in the 1990 amendments--I'm not sure, 
but I have heard my friend, John Dingell, say it took 13 years, 
and I wouldn't attempt to quarrel with the dean of the House, 
who was then and is now intimately involved in this Act.
    I know, as we approached it then, there is only four or 
five of us, I think, on this committee that were on it at that 
time, but that was my first year in Congress, and I must say, I 
was smarter then than I have ever been since. It has gradually 
gone the other way, but the problems are the same.
    I well remember that Mr. Waxman, who was, and still is, a 
leading member and a very intelligent member and represents his 
people well--We had problems with Mr. Waxman and Mr. Dingell 
getting together on a lot of these things. You know, on the 
tailpipe emissions, for example, we were just logged there and 
deadlocked and couldn't turn and go either way.
    I think we asked these two fine men to go in a room 
adjacent here and not to come out until they had an answer to 
the tailpipe emissions. Mr. Dingell had the automobile makers 
and workers in his district, and Mr. Waxman had the freeways. 
It just turned out that I had the stationary problems called 
stripper wells. You can guess which one came out the worst out 
of that meeting.
    Stripper wells were under attack, and I was running from 
what they called ``R to R'' then. That is from Reagan to 
Rostenkowski, to see which one would give me the best deal, and 
about four or five of us from Texas were working with both of 
them.
    Mr. Chairman, from the standpoint of humor, as I walked 
into the White House, Mr. Reagan asked me what would it take to 
get you to vote with my set of rules on clean air, and I said, 
well, I've got a brother that always wanted to be a Federal 
judge. He said, well, that should be no problem. He turned to 
Jim Baker and the Vice President, George Bush then, and said 
can you get Ralph's brother confirmed? I said, well, wait just 
a minute, Mr. President, he is not a lawyer.
    After that, Reagan and I were friends. He would see me in a 
crowd and come over to shake hands with me and say how is your 
brother. He couldn't think of my name 9 times out of 10, but he 
knew I had a brother that wasn't a lawyer, and he liked that. 
But it got to be who could offer me, for my vote on that time, 
the most exception for stripper wells.
    That is not what a lot of you guys hope they are, the type 
wells you think, but they are small wells by the smallest of 
all independents that find the energy and then sell it to the 
majors. But that was very, very important to me.
    I know that some of the statistics that these men must 
remember, and Carlos Morehead remembers that one of the 
statistics that they argued for passing the Act as it was 
introduced, and it was a very punishing Act to a lot of 
industrial thrust at that time----
    Mr. Barton. The gentleman is going to have to tell this 
story quickly.
    Mr. Hall. I will try to be quick with it. One of the 
statistics was that--I don't know who furnished this statistic, 
but it always amused me, because they said they had made a 
national survey, and 82 percent of the people liked clean air. 
That meant 18 percent didn't care if it stayed dirty. I thought 
it was a pretty lousy statistic myself.
    Mr. Barton. Those were people in bars in east Texas.
    Mr. Hall. I guess so. Didn't know the difference. But in 
spite of the chairman interrupting me, I want to compliment him 
on recognizing that this is important for members to be brought 
up to date, and that long ago we did work together here. There 
was a lot of give and take. I think we passed the best Act we 
could pass under the circumstances, but we need to be mindful 
of the effects of polluted air on human health.
    I don't support punishing people with asthma, and I don't 
think----
    Mr. Barton. You are going to get me in trouble. I have 
stopped Mr. Markey and Mr. Waxman.
    Mr. Hall. And I don't think the President of the United 
States supports anybody punishing those who have asthma. I 
think we should support measures to reduce them. However, we 
need to be mindful of the cost of achieving these reductions 
and be certain whatever emission reduction regime we implement 
is the most cost effective available and supported by credible 
science.
    I think there is a line you can hew there and respect both 
sides. Mr. Chairman, with that, if I can't have another 15 
minutes, I will yield back the balance of my time.
    Mr. Barton. We do have a committee rule, though, that all 
members that were on the committee in 1982 have to stay on the 
committee until we reauthorize this Act, no matter how long it 
takes. So that means Mr. Dingell and Mr. Waxman, Mr. Markey and 
Mr. Tauzin are going to be around, unless you work with us to 
help reauthorize it very quickly.
    Mr. Hall. We are all three willing to stay here 13 years. I 
know I am.
    Mr. Barton. The Chair would recognize the full committee 
chairman, Mr. Tauzin, for a 5-minute opening statement.
    Chairman Tauzin. Thank you, Mr. Chairman. I do hope you are 
all around here for another reauthorization 13 years from now.
    Let me first commend you for leading off the Clean Air 
hearings with an examination of the accomplishments of the 
existing Clean Air Act and its provisions. I was, obviously, as 
you pointed out, around in 1990 when we went through an 
incredible markup process that lasted not only days and weeks 
and months, but I remember it ended about 4 o'clock in the 
morning in this very room when we finally came to agreement.
    We should all be proud, I think, of what was accomplished 
in 1990 and thereafter, both Democrats and Republicans, because 
I think our work helped improve the lives of many Americans, 
and we will hear about that today.
    Regardless of whatever anybody thinks about new or revised 
Clean Air Act programs or proposals, I think we can all agree 
that what was done in 1990 has advanced the cause of cleaner 
air for all Americans very dramatically, and I think the 
biggest decision that helped us do that was the decision to cap 
and trade, literally to count on the industry that know best 
how to run their own systems to figure out how best to achieve 
the results we wanted, as long as they achieved them and to 
trade the benefits of their successful programs where it made 
sense to do so, and to take economic benefit, if you will, from 
their successes in cleaning the air.
    The results have been rather dramatic. I want to mention a 
couple of them. The acid rain program, for example, is now in 
its eighth year. The first phase of that program saw annual 
SO2 emissions drop by nearly 5 million tons from the 
1980 levels. Those reductions were an average of 25 percent 
below the required emission levels, resulting in a much earlier 
achievement of human health and environmental benefits that we 
sought in the program.
    The 2001 SO2 emissions were more than 6.7 
million tons below the 1980 levels, and they were achieved at a 
much lower cost than anybody thought. The early estimates were 
that it would cost about $5.7 billion per year. We have got the 
numbers now. It ends up being about a $1 billion to $1.5 
billion per year full implementation cost.
    Clearly, again the cap and trade system works. It was the 
combination of the best in our program, saying that you got to 
achieve good results and, nevertheless, the best in the private 
sector saying figure out how best to do it; just get there, and 
get there sooner, if you can, because it is in your economic 
benefit to do it.
    Again, Mr. Chairman, I want to thank you for starting the 
hearings at this good look at the accomplishments of the Act, 
because I fully believe that if we understand what went right 
from the 1990 Act, we can figure out how to make it even 
better. Thank you, Mr. Chairman.
    [The prepared statement of Hon. W.J. ``Billy'' Tauzin 
follows:]
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce
    Let me commend you Chairman Barton for leading off your clean air 
hearings with this examination of the accomplishments of the Clean Air 
Act.
    Under the Clean Air Act, our nation's air has been getting cleaner, 
significantly cleaner in many instances--and that is something the 
Members who participated in the 1990 Amendments, whether Republican or 
Democrat--should all be equally proud of. Our work has helped to 
improve the lives of so many Americans, particularly children, as we'll 
hear today.
    Regardless of one's view about new or revised Clean Air Act 
programs, we all can agree that existing programs have cleaned the air 
and provided us with implementation information critical to the debate 
going forward.
    Consider, for example, EPA's Acid Rain program. This has been a 
resounding success, at a much lower cost than first expected. The 
centerpiece of the program is an innovative, market-based ``cap-and-
trade'' approach to achieve a nearly 50% reduction in SO2 emissions 
from 1980 levels.
    The results of the program have been dramatic--and unprecedented. 
Compliance with the Acid Rain Program began in 1995 and is now in its 
eighth year. From 1995-1999, the first phase of the Acid Rain Program, 
annual SO2 emissions dropped by nearly 5 million tons from 1980 levels. 
These significant reductions were an average of 25% below required 
emission levels, resulting in earlier achievement of the human health 
and environmental benefits we sought with the program. In 2001, the SO2 
emissions were more than 6.7 million tons below 1980 levels.
    These emissions reductions have been achieved at a much lower cost 
than anyone expected. In 1990, EPA projected the full cost of the Acid 
Rain program would be about $5.7 billion per year. Recent estimates of 
annualized cost of compliance are in the range of $1 to 1.5 billion per 
year at full implementation. Clearly, emission cap-and-trade programs 
can achieve cost effective environmental results.
    Again, I commend you Chairman Barton for beginning these Clean Air 
hearings. I know that through such considered examination as we will 
see today, this Subcommittee's work on this vital issue will add to its 
history of bipartisan accomplishments, such as the recent H.R. 4 energy 
bill.
    Thank you, and I look forward to hearing from our witness panels.

    Mr. Barton. I thank the gentleman from Louisiana. We would 
recognize the gentleman from Maryland, Mr. Wynn, for a 3-minute 
opening statement.
    Mr. Wynn. Thank you, Mr. Chairman. I will submit.
    Mr. Barton. Are any of the members present which have not 
had an opportunity to give an opening statement? Seeing none, 
the Chair would ask unanimous consent that all members not 
present have the requisite number of days to put their opening 
statement in the record in its entirety at the appropriate 
point in the record. Hearing no objection, so ordered.
    [The prepared statement of Hon. Bill Luther follows:]
 Prepared Statement of Hon. Bill Luther, a Representative in Congress 
                      from the State of Minnesota
    Thank you Mr. Chairman for holding this hearing today. The Clean 
Air Act has stood the test of time over the past 30 years and has 
proven to be one of the most successful and far reaching environmental 
programs ever enacted by Congress. I believe we should be looking for 
ways to improve and strengthen public health protections under this 
historic legislation. I am therefore deeply troubled by reports that 
the Administration is proposing to eliminate many pollution-control 
provisions that have been so effective in protecting American families 
from deadly pollutants linked to lung cancer and heart disease.
    The White House proposal calls for an ``emissions-trading'' plan 
that, if enacted, would result in the first backward step in the 
federal government's 30 plus year battle against air pollution. By 
shifting the focus to total emissions across the nation, the approach 
avoids individual power plants that are largely responsible for the 
most serious local pollution problems. Any rational approach to 
combating air pollution must be able to identify the specific 
facilities that have contributed to significant declines in regional 
air quality.
    Also, of particular concern to me are reports that the 
Administration is considering easing standards under the New Source 
Review Program. This Clean Air Act provision requires power plants to 
install the most-up-to-date pollution control equipment when they 
upgrade or expand existing coal-fired facilities. Any relaxation of NSR 
standards, especially for facilities already ``grandfathered'' under 
the Clean Air Act, would almost certainly result in a decline in 
national air quality.
    As this debate continues, I would like to recall the elder 
President Bush's statement before signing the Clean Air Act Amendments 
of 1990. He stated, ``Every American expects and deserves to breathe 
clean air. And as, president, it is my mission to guarantee it for this 
generation and for the generations to come.'' I think the former 
President had it right then and I would urge this committee to proceed 
extremely cautiously when considering any efforts that would result in 
weakening this historic legislation that has been so effective in 
protecting families from harmful pollutants. Thank you.

    Mr. Barton. I would now like to welcome our first witness. 
We have the Honorable Jeffery Holmstead, who is the Assistant 
Administrator for Air and Radiation at the Environmental 
Protection Agency.
    You are welcome to the subcommittee. Your statement is in 
the record in its entirety. We would ask that you elaborate on 
it in 7 minutes.

STATEMENT OF JEFFERY HOLMSTEAD, ASSISTANT ADMINISTRATOR FOR AIR 
      AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

    Mr. Holmstead. Thank you, Mr. Chairman, and thank you for 
inviting me to be here this morning. I have to say, I have 
enjoyed this very much. I would be happy to give some of my 
time to Mr. Hall. I would have been happy to listen to him.
    Mr. Barton. Don't humor him.
    Mr. Holmstead. I was told that the focus of this morning's 
hearing would be on the progress that we have made under the 
Clean Air Act, and that is what I am here to talk about. I 
couldn't resist, though, just one plug about the Clear Skies 
Act, and I look forward very much to having the opportunity to 
talk with you more about that.
    I was distressed that Mr. Markey is probably not as well 
educated by us as he could be, because I know there has been 
some media reports and a lot of ``to-ing and fro-ing'' about 
what that would accomplish, and I think it is fair for all of 
us to talk about whether that is too stringent or not stringent 
enough, but the idea that it somehow undercuts the Clean Air 
Act and fails to protect people is not really credible.
    I would invite Mr. Markey or anyone else to talk to any of 
the hundreds of people in my office who worked on that or the 
people around the country who implement the Clean Air Act. The 
one thing we can say with some certainty is it would get 
substantially greater reductions in air pollution much sooner, 
much faster, than we will be able to accomplish under the 
current Clean Air Act.
    So with that, I will move along to other thing, but I look 
forward to telling you more about what we are trying to 
accomplish with our proposal, and we look forward to working 
with you on that.
    Many of you have already noted the impressive progress we 
have made and, in fact, you stole some of my statistics. But if 
I can just show one slide, if we can figure out how to use your 
new high tech system here. This really tells the story that 
many of you have tried to tell this morning. All of these lines 
going up show U.S. growth since 1970, population by more than a 
third, energy use by about 45 percent, vehicle miles traveled 
by 145 percent, and the Gross Domestic Product by 160 percent. 
This growth is really quite dramatic.
    While we were experiencing this growth, emissions of the 6 
primary pollutants regulated under the Clean Air Act were 
dropping by nearly 30 percent from 1970 to 2000, and we can say 
categorically that air quality has improved substantially 
throughout the country.
    This success was made possible by American ingenuity, 
spurred in large part by legislation that has continued to 
recognize the importance of healthy air, most recently in 1990 
when many of the members in this room worked with others to 
enact the Clean Air Act amendments of 1990 which gave us 
important new tools for addressing the major air pollution 
problems facing the country.
    The 1990 amendments grew out of a proposal by President 
George Herbert Walker Bush that was passed with overwhelming 
bipartisan support in both the House and the Senate. As many of 
you have mentioned, some of you were quite involved in that Act 
and in setting goals for reducing air pollution, goals that we 
are still striving to meet today.
    The current Clean Air Act is, by far, the most 
comprehensive piece of regulatory legislation that we have in 
this country, rivaled only by the Internal Revenue Code. It 
created literally hundreds of State and Federal programs that 
help us to take aim at air pollution on many fronts.
    These programs, as you know, include first and foremost, 
the national ambient air quality standards to protect public 
health and the environment from six key pollutants. It also 
includes national emissions standards for motor vehicles, 
technology and performance based standards for industry 
emissions of toxic air pollutants, specialized programs, as 
many of you have mentioned, to reduce environmental damage such 
as regional haze and acid rain, and programs as well designed 
to protect the stratospheric ozone layer.
    As we have worked with these programs at the agency over 
the years, we have learned that it takes a variety of tools to 
successfully improve air quality, tools ranging from 
performance standards for motor vehicles to market based 
programs like the acid rain trading program, and to 
nonregulatory, voluntary programs that have helped us get 
substantial reductions in emissions and in energy use.
    Our successes are remarkable and, in fact, it would take me 
hours to go through them all. I promise not to do that, but I 
do want to highlight just a few. One of our most important 
accomplishments is helping States to meet the national ambient 
air quality standards. Although the Clean Air Act gives States 
the primary responsibility for meeting these health based 
standards, most can't do it without EPA's help.
    EPA assists States both by providing guidance and by 
issuing the types of regulation that States cannot, such as 
national motor vehicle emission limits. Under the 1990 
amendments, States have made tremendous progress toward 
cleaning the air in their dirtiest cities. For example, as 
several of you have mentioned, of the 43 areas designated in 
1990 as nonattainment for carbon monoxide, 41 of those 43 have 
clean air today.
    A second important accomplishment and one that has played a 
key role in our States' clean air success is our progress in 
reducing motor vehicle pollution. Again, as Mr. Sawyer said, 
since the 1970's EPA has issued increasingly stringent tailpipe 
emissions for cars, and by the 2004 model year cars that are 
sold in that year will be 98 percent cleaner than cars built 
when the Clean Air Act was passed.
    Starting that same model year, 2004, SUVs, minivans and 
pick-up trucks will have to begin meeting the same stringent 
emission standards as cars. In addition, in 2007, diesel engine 
manufacturers must install devices similar to catalytic 
converters for the first time, and we are also requiring sulfur 
reductions in fuels.
    Combined, these rules will take tremendous steps toward 
protecting public health, avoiding more than 600,000 asthma 
attacks every year and nearly 13,000 premature deaths.
    The 1990 amendments also called on EPA to make major 
reductions in the primary pollutants that cause acid rain, 
including sulfur dioxide or SO2. We have done that, 
using a program that has become an environmental showpiece, the 
acid rain trading program. Under this market based cap and 
trade program, SO2 emissions avoided have monetary 
value, which creates a powerful incentive for emission 
reduction.
    In the program's first 5 years, as Mr. Tauzin mentioned, 
SO2 emissions dropped an average of 25 percent 
further than required by law. As a result, rainfall in the 
eastern United States is as much as 25 percent less acidic. 
Some sensitive lakes and streams in New England are showing 
signs of recovery.
    Now again, just a side note, a minor plug for the Clear 
Skies Act: With the additional reductions in SO2 and 
mercury, we would resolve the acid rain problem in the 
northeast. Our scientists are telling us that the reductions 
are sufficient enough that the lakes and streams and forests in 
the northeastern United States would return back to their 
natural state.
    Now I would like to show this other graph that highlights 
something that Mr. Tauzin mentioned, the kind of efficiency 
that we get out of a cap and trade program. Compliance with 
this program is effectively 100 percent. Unlike any other 
program, we don't have armies of lawyers and inspectors. Each 
of these plants has a continuous emissions monitor. We know 
exactly what their emissions are, and we see every year that 
they are in compliance.
    We have not brought a single enforcement action, because of 
the way it works. It also, as this graph shows, has turned out 
to be much less expensive than anyone predicted. Estimates in 
1990 ranged from $5.5 billion to $7 billion a year. You will 
see that a few years later GAO did a study suggesting they were 
more in the neighborhood of $2 billion to $3 billion, based on 
industry data as well as our own estimates, that it is 
somewhere between $1 billion and $1.5 billion.
    Now one other thing I would like to point out that people 
don't focus on because it is not nearly as controversial, and 
that is the success that we have achieved through nonregulatory 
programs. Let me just show you that even President Bush has 
gotten involved, posing for a poster encouraging parents to 
help strike out asthma by pledging to keep their homes smoke 
free.
    The potential environmental and financial benefits of 
voluntary programs like these is enormous. Take the EnergyStar 
program, for example. One statistic that I like to use is that 
Americans spend right now about $1 billion a year just to power 
televisions and VCRs, but if all of our TVs and VCRs were 
EnergyStar products, meeting this voluntary standard that we 
have set would save about half of that total, about $500 
million a year.
    In the Environmental Protection Agency, we will continue to 
use our entire suite of tools, and we will look for new ones as 
we face future air quality challenges. One of the most 
important challenges on the immediate horizon, and perhaps the 
most important public health challenge that we deal with in the 
Air Office, is reducing fine particle emissions.
    Last month we cleared the last legal hurdle to implementing 
new standards for fine particles, often known as 
PM2.5. These are critical standards. The health 
risks posed by fine particle pollution are the greatest of any 
air pollutant we regulate today. Fine particles are linked to a 
number of serious health problems, including chronic 
bronchitis, heart attacks, and premature death in people with 
heart and lung diseases.
    Based on preliminary data, it appears that approximately 
130 U.S. counties did not meet the fine particle standards, and 
many of these areas will have difficulty meeting the standard 
without significant regional pollution reductions.
    We are just beginning to develop our implementation 
strategy for PM2.5, a strategy that is likely to 
include a nationwide rule to reduce emissions of SO2 
and NOX from power plants, one of the largest 
sources of these pollutants, and we anticipate that yet again 
we will receive petitions from upwind States seeking additional 
controls on downwind sources.
    We believe the best approach, and the one that will help 
the most areas meet these standards, is the President's Clear 
Skies initiative, a market-based cap and trade program 
patterned after the successful acid rain program. Clear Skies 
will dramatically reduce power plant emissions of nitrogen 
oxide, sulfur dioxides, and mercury, protecting public health, 
improving visibility, and virtually eliminating acid rain.
    Over the life of the Clean Air Act, EPA has learned a great 
deal about how to pick the best tools for addressing our air 
pollution challenges. Our experience tells us the Clear Skies 
plan is the single most important step we can take to improve 
air quality quickly and efficiently.
    As I mentioned, I look forward to talking more about that 
on some future occasion, and I would be delighted to answer any 
questions that you may have.
    [The prepared statement of Jeffery Holmstead follows:]
   Prepared Statement of Jeffrey Holmstead, Assistant Administrator, 
   Office of Air and Radiation, U.S. Environmental Protection Agency
                            i. introduction
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity today to testify on our nation's successes under the Clean 
Air Act and the work that remains to be done to achieve clean, 
healthful air throughout America.
    More than a dozen years ago, President George Herbert Walker Bush 
proposed an Administration bill that became the foundation of the Clean 
Air Act Amendments of 1990. The final legislation passed both the House 
and Senate with overwhelming bipartisan support, and set challenging 
goals for reducing air pollution that we are still striving to meet 
today. The former president, in a Smithsonian exhibit on the 
presidency, names the 1990 Amendments as one of the three 
accomplishments of which he is most proud.
    And indeed, the 1990 amendments have achieved impressive health and 
environmental benefits. Since the legislation was enacted, this nation 
has made great progress in reducing acid rain, meeting health-based air 
quality standards, protecting the stratospheric ozone layer, and 
cutting toxic air pollution. Yet we still face major challenges to 
achieve healthful air, a cleaner environment, and clear skies for all 
Americans.
    In my statement today, I will describe the results we've achieved 
through Clean Air Act programs enacted to protect public health and 
environmental quality. I will discuss the tools used to achieve 
results--what worked and why. One of the most important lessons from 
the 1990 amendments is how powerful a tool cap-and-trade programs can 
be for protecting health and the environment. Finally, I will talk 
about remaining air quality challenges that we face today and our 
future direction.
                     ii. progress toward clean air
    Our progress on cleaning up the air demonstrates that strong 
economic growth and a cleaner environment can go hand-in-hand. Since 
the basic structure of today's Clean Air Act was enacted in 1970, we 
have reduced emissions of six key air pollutants by 30 percent. At the 
same time, the economy has grown substantially. The Gross Domestic 
Product increased 160%; vehicle miles traveled increased 145%; energy 
consumption increased 45%; and the U.S. population increased 35%. This 
success story was made possible by American ingenuity spurred in large 
part by legislation that recognized the importance of a clean 
environment.
    Our strong economy has helped us provide cleaner air, which has 
provided important public health and environmental benefits that far 
outweigh the costs. For example, lead levels in ambient air are 98% 
lower than in 1970, greatly reducing the number of children with IQs 
below 70 as a result of dirty air. The benefits from the programs in 
the 1990 Amendments alone are impressive. A peer-reviewed EPA study 
estimates that upon full implementation in 2010, the Clean Air Act 
programs signed into law by former President Bush will avoid tens of 
thousands of premature deaths, tens of thousands of cases of acute and 
chronic bronchitis, tens of thousands of respiratory-related and 
cardiovascular hospital admissions, and millions of lost work days, 
among other benefits.
    To appreciate how far we have come in reducing air pollution, it is 
instructive to remember where we were before the 1990 amendments. Acid 
rain essentially was unchecked, causing damage to aquatic life, 
forests, buildings and monuments, as well as visibility degradation and 
health risks from sulfate and nitrate particles. There was growing 
concern about the increasing damage to the stratospheric ozone layer, 
which, among other things, protects us from skin cancer and cataracts. 
In 1990, photochemical smog, which can impair lung function, cause 
chest pain and coughing, and worsen respiratory diseases and asthma, 
exceeded healthy levels in 98 metropolitan areas. Many cities did not 
meet the national air quality standards for the pollutant carbon 
monoxide, which can aggravate angina (heart pain), and also for 
particulate matter, which is linked to premature death, aggravation of 
pre-existing respiratory ailments, and reductions in lung capacity. The 
millions of tons of hazardous air pollutants emitted annually in the 
United States were largely unregulated at the federal level. Many of 
these pollutants have the potential to cause cancer or other serious 
health effects such as nervous system damage.1Since then, the 1990 
Amendments have enabled us to substantially reduce each of the major 
air pollution problems that faced the United States:

 Annual sulfur dioxide emissions, which react to form acid rain 
        and contribute to fine particle formation, have been cut by 
        more than 6.7 million tons, and rainfall in the eastern U.S. is 
        as much as 25 percent less acidic.
 Production of the most harmful ozone-depleting chemicals has 
        ceased in the U.S. and--provided the U.S. and the world 
        community maintain the commitment to planned protection 
        efforts--the stratospheric ozone layer is projected to recover 
        by the mid 21st century.
 Ground-level ozone pollution, particulate matter, and carbon 
        monoxide pollution have all been reduced significantly, 
        producing dramatic decreases in the number of areas in 
        nonattainment.
 Rules issued since 1990 are expected to reduce toxic emissions 
        from industry by nearly 1.5 million tons a year--a dozen times 
        the reductions achieved in the previous 20 years. Other rules 
        for vehicles and fuels will reduce toxics by an additional 
        500,000 tons a year by 2020.
Reducing Acid Rain
    The 1990 Amendments created the Acid Rain Program, calling for 
major reductions in electric generating facilities' emissions of sulfur 
dioxide (SO2) and nitrogen oxides (NOX), the 
primary pollutants that cause acid rain. The Acid Rain Program has been 
a resounding success, and at a much lower cost than first expected. The 
centerpiece of the program is an innovative, market-based ``cap-and-
trade'' approach to achieve a nearly 50% reduction in SO2 
emissions from 1980 levels.
    The results of the program have been dramatic--and unprecedented. 
Compliance with the Acid Rain Program began in 1995 and is now in its 
eighth year. From 1995-1999, the first phase of the Acid Rain Program, 
annual SO2 emissions from the largest, highest-emitting 
sources dropped by nearly 5 million tons from 1980 levels. These 
significant reductions were an average of 25% below required emission 
levels, resulting in earlier achievement of human health and 
environmental benefits.
    In 2001, the SO2 emissions from power generation were 
more than 6.7 million tons below 1980 levels. NOX emissions 
have been reduced by 1.5 million tons from 1990 levels by a more 
traditional rate-based program (about 3 million tons lower than 
projected growth). Because the NOX component of the program 
is rate-based, however, there is no guarantee that NOX 
emissions will stay at these low levels; without a NOX cap, 
emissions will increase as power generation increases.
    Through the hard work of several federal agencies that maintain 
interagency environmental monitoring networks (e.g., the National 
Oceanic and Atmospheric Administration, United States Geological 
Survey, U.S. Forest Service, National Park Service and EPA)--we know 
that these emissions reductions are delivering impressive environmental 
results. Due to the drop in SO2 emissions, rainfall acidity 
in the eastern United States has dramatically improved, measuring up to 
25% less acidic. As a consequence, some sensitive lakes and stream in 
New England are showing the first signs of recovery. Further, ambient 
sulfate concentrations have been reduced, leading to improved air 
quality and public health, with fewer respiratory illnesses such as 
asthma and chronic bronchitis. Moreover, the air is clearer, 
particularly in areas where some of our most scenic vistas are found, 
such as the Shenandoah National Park.
    These emissions reductions and environmental results have been 
achieved at a much lower cost than anyone expected. In 1990, EPA 
projected the full cost of implementation of the SO2 
emission reductions would be about $5.7 billion per year (1997 
dollars). In 1994, GAO projected the cost at $2.3 billion per year 
(1997 dollars). Recent estimates of annualized cost of compliance are 
in the range of $1 to 1.5 billion per year at full implementation.
    The cost-effectiveness of the program is tied to the design 
features of the innovative cap-and-trade approach. The Acid Rain 
Program was designed to provide certainty that emissions reductions 
would be achieved and sustained while at the same time allowing 
unprecedented flexibility in how to achieve the needed emission 
reductions. This stimulates the use of a variety of emission reduction 
options, such as fuel switching, installation of control equipment, use 
of efficiency measures and renewables, and trading among sources. 
Because the market system places a monetary value on avoided emissions, 
compliance has stimulated tremendous technological innovation, 
including efficiency improvements in control technology.
    When the Acid Rain Program was designed in the early 1990s, some 
were concerned about the potential effect of emissions trading on local 
air quality. Now, in the eighth year of the program, we know that 
flexibility under the Acid Rain Program has not adversely affected 
attainment of air quality standards. Independent analyses of the 
program demonstrate that trading has not created ``hotspots,'' or 
increases in localized pollution. In fact, the greatest SO2 
emissions reductions were achieved in the highest SO2-
emitting states, acid deposition decreased and, consistent with 
projections, the environmental benefits were delivered in the areas 
where they were most critically needed.
    The environmental integrity of the Acid Rain Program also can be 
traced to design features of the approach. The program was developed 
with unprecedented levels of accountability and transparency. Sources 
must continuously monitor and report all emissions, ensuring accurate 
and complete emissions information. All data are publicly available on 
the internet, providing complete transparency and the public assurance 
necessary for program legitimacy. Remarkably, sources have registered 
nearly 100% compliance.
    Because of the unprecedented success of the Acid Rain Program, it 
has served as the model for numerous additional programs to reduce 
emissions cost-effectively in this country and around the world, 
including the President's recently proposed Clear Skies Initiative.
Meeting Health-Based Air Quality Standards
Overview
    The air in our nation is considerably cleaner than in 1990. Under 
the Act, EPA has set health-based national ambient air quality 
standards (NAAQS) for six common pollutants. Nationally, the 2000 
average air quality levels were the best in the last 20 years for all 
six pollutants--lead, nitrogen dioxide, sulfur dioxide, particulate 
matter, carbon monoxide and ozone.
    Since 1990, an unprecedented number of cities have met the health-
based national ambient air quality standards. In fact, more than two-
thirds of the areas designated as nonattainment following the 1990 
amendments now have air quality meeting those standards based on 1998-
2000 data, including:

 41 of the 43 carbon monoxide areas
 69 of the 85 coarse particulate matter (PM10) areas
 71 of the 101 ozone areas (one-hour standard)
    While air quality improved, the economy showed robust economic 
growth, increasing 37 percent between 1990 and 2000.
    In 1997, based on updated scientific information, EPA set a new 
standard for fine particles and a revised, 8-hour standard for ozone 
that is more stringent than the one-hour standard. We have made great 
progress working with states to get monitoring systems in place for 
fine particulate matter, or PM2.5. Many areas across the 
eastern U.S. and in California appear to have pollution levels 
exceeding the 1997 standards.
    For the other common pollutants, only a few areas remain in 
nonattainment. The remaining lead and sulfur dioxide nonattainment 
areas in the country are the result of localized point sources for 
which action on an individual basis is being taken. Since 1998, all 
cities have met the air quality standard for nitrogen dioxide.
Ongoing work to combat ozone pollution
    The Clean Air Act gives states the primary responsibility for 
meeting national air quality standards by developing and implementing 
state implementation plans (SIPs). EPA assists states by providing 
guidance, setting national emissions limits for sources such as motor 
vehicles, and requiring control of upwind sources that contribute to 
downwind problems in other states.
    During the past two years we have reached a major milestone in 
cleaning up smog in many of our nation's largest cities. In the 
Northeast, Midwest and South, states have completed plans for attaining 
the 1-hour ozone standard in all of the metropolitan areas that have 
pollution levels considered serious or severe under the Act. EPA has 
fully approved all but one of these plans. The approved plans are for 
New York City, Springfield, Mass., Greater Connecticut, Baltimore, 
Philadelphia, Milwaukee, Chicago, Houston and the District of Columbia. 
EPA has proposed approval of Atlanta's attainment plan. In the near 
future, we expect to see additional control measures for New York City, 
Baltimore, Philadelphia and Houston as the states fulfill commitments 
in their attainment plans.
    Houston's ozone attainment plan was developed by the Texas Natural 
Resources Conservation Commission in partnership with the Mayor of 
Houston, stakeholders and EPA's Region 6 office. Approved by EPA in 
October 2001, the plan includes many ambitious and innovative measures. 
These include a cap-and-trade program setting some of the nation's most 
stringent limits on NOX emissions from industry, a fund to 
accelerate use of cleaner off-road and on-road diesel engines, cleaner 
diesel fuel, and voluntary measures to reduce transportation emissions. 
The plan also contains an enforceable commitment to adopt newly 
emerging strategies needed to cover an estimated shortfall in emissions 
reductions needed for attainment by the end of 2007. Under a consent 
decree, the state, in conjunction with industry and academia, is 
conducting an accelerated review of ozone formation in Houston's skies 
to consider whether adjustments in the SIP are needed.
    Interstate transport of ozone and NOX, an ozone 
precursor, is a major contributor to the ozone nonattainment problems 
across the eastern United States. No state can solve this problem on 
its own.
    As a result, EPA has issued two complementary rules--the 
NOX SIP Call and the Section 126 rule--in a combined 
Federal/state action to reduce interstate ozone transport. The effect 
of the two rules together is to require NOX reductions in 19 
states and the District of Columbia. EPA anticipates that full 
implementation of these rules will reduce total ozone-season 
NOX emissions from power plants and large industrial sources 
by approximately one million tons by the 2007 ozone season. This is 
essential for many of the remaining ozone nonattainment areas to meet 
the one-hour standard, and will greatly reduce the number of areas 
exceeding the more-stringent 8-hour standard.
    The NOX SIP Call, which sets emissions budgets for 
states, and the Section 126 rule, which applies directly to power 
plants and large industrial sources, both allow for implementation 
through a market-based cap-and-trade program that allows facilities to 
choose the most cost-effective means of reducing their pollution. All 
of the states subject to the NOX SIP Call plan to use the 
cap-and-trade approach.
    EPA's reliance on existing CAA authorities for addressing ozone 
transport is working, but three major lawsuits by some states and 
corporations have delayed implementation. EPA issued the original 
NOX SIP call rule in 1998. Both the SIP Call and the 
subsequent Section 126 Rule set a May 2003 compliance date. However, 
one court ruling delayed the NOX SIP call compliance date 
until May 31, 2004. A second court ruling stopped the compliance clock 
for electricity generators subject to the Section 126 Rule while EPA 
responded to concerns the court raised with heat input (fossil-fuel-
use) projections for electricity generators, which EPA used in 
calculating emissions budgets for the two rules. As a result, the two 
rules were no longer synchronized.
    Administrator Whitman on April 23 signed a rule once again 
harmonizing the compliance dates of the two rules at May 31, 2004. This 
will facilitate withdrawal of the federal Section 126 program in states 
that meet the requirements of the SIP Call Rule, and help to avoid 
potential overlap of the two programs. The Administrator also signed a 
notice that explains EPA's decision to retain the original heat input 
projections. In a separate action, EPA recently issued a proposed 
``phase II'' rule responding to other issues from court decisions on 
the SIP call and Section 126 rules.
Cutting Transportation Emissions
    In general, transportation sources contribute roughly half of the 
overall pollution in our air. The contribution, however, can vary 
significantly from pollutant to pollutant and from city to city. Note 
that when I refer to transportation sources I mean all highway motor 
vehicles as well as diverse types of off-road vehicles and engines. 
They are major sources of four pollutants, contributing 56 percent of 
the total U.S. emissions of NOX, 77 percent of CO, 47 
percent of VOCs, and 25 percent of the PM.
Cleaner Vehicles
    Cars being built today are well over 90 percent cleaner than cars 
built in 1970. This is a result of a series of emission control 
programs implemented by EPA through nationally applicable regulations. 
Since the first tailpipe standards took effect in the 1970's, there 
have been increasingly more stringent standards; most recently Tier 1 
in the mid-90's; the National Low Emission Vehicle (NLEV) Program, 
which is in effect today; and Tier 2 standards set to take effect 
beginning with the 2004 model year. In the Tier 2 standards and most 
other national vehicles and fuels rules issued since 1990, EPA has 
provided compliance flexibility through emissions averaging and trading 
systems.
    Tier 2 will take a major step toward reconciling passenger vehicles 
with clean air. For the first time it holds SUVs, minivans and pick-up 
trucks to the same emission requirements as autos. Tier 2 is also fuel 
neutral, which means that gasoline, diesel and alternative fueled 
vehicles all must meet the same set of standards. Tier 2 is cost 
effective and its benefits to public health are large--by 2020, over 
two million tons of NOX emissions avoided per year, 4,000 
premature deaths prevented annually and tens of thousands of 
respiratory illnesses prevented.
    Most large trucks and buses are powered by diesel engines. They can 
emit high levels of NOX and PM. Although cars were regulated 
first, diesel truck and bus manufacturers have had to comply with a 
series of increasingly more stringent standards beginning in the late 
1980's. This Administration has affirmed and is supporting a major new 
program that has recently been established to protect public health and 
the environment while ensuring that diesel trucks and buses remain a 
viable and important part of the Nation's economy. Called the Clean 
Diesel Program, it begins in 2007, when the makers of diesel engines 
will for the first time install devices like catalytic converters on 
new trucks and buses to meet the emission performance standards. The 
environmental benefits of this program will be substantial. When these 
cleaner vehicles have replaced the current fleet, 2.6 million tons of 
NOX emissions will be avoided every year, 8,000 premature 
deaths prevented annually, and 23,000 cases of bronchitis and 360,000 
asthma attacks. These health benefits far outweigh the cost to produce 
the cleaner engines and fuels.
    The Clean Diesel Program will reduce emissions only from newly 
produced engines. But there are millions of older diesel trucks, buses 
and off-road equipment in use today, many of which spew noxious, black 
soot from their exhaust pipes. EPA has therefore initiated, in 
cooperation with manufacturers of diesel emission control systems, a 
major new voluntary initiative to install cost effective emission 
control equipment on older diesels. Through this innovative program, 
the Diesel Retrofit Program, the Agency to date has obtained 
commitments from businesses and municipalities that own fleets of 
trucks or buses to retrofit 75,000 vehicles with devices that will 
reduce exhaust emissions.
    Of course, motorists share responsibility to maintain their 
vehicles properly. Inspection and maintenance (I/M) programs, currently 
operating in 56 metropolitan areas, are meant to identify polluting 
vehicles and lead to their repair. Today many states are re-structuring 
their I/M programs to efficiently incorporate the capabilities of so-
called ``onboard diagnostic (OBD) systems'' that use the vehicle's 
onboard computer to speed the testing process, provide specific 
information to the technician to help get repairs done correctly, and 
maintain or improve the air quality benefits of an I/M program.
Cleaner Fuels
    Let me now switch from cleaner vehicles to cleaner fuels. The first 
effort to address an environmental problem linked to fuel was the 
multi-year effort to phase down and eventually eliminate lead in 
gasoline. That successful action was followed by other programs to 
require oil refiners to produce cleaner gasoline. In the late 1980's 
refiners began to reduce the evaporation rate of gasoline nationwide 
during the summer months.
    The 1990 amendments to the Clean Air Act established several new 
clean fuel programs. Much of the nation's progress on carbon monoxide 
can be attributed to the wintertime oxygenated fuels program, which 
began in 1992 in 30 cities. The 1990 amendments also established the 
reformulated gasoline (RFG) program, which was designed to serve 
several goals, including improving air quality and extending the 
gasoline supply through the use of oxygenates. Today, roughly 35 
percent of this country's gasoline consumption is cleaner-burning RFG. 
The emission reductions which can be attributed to the RFG program are 
equivalent to taking 16 million cars off the road.
    In two of the programs I mentioned earlier, Tier 2 and the 2007 
Clean Diesel Program, EPA recognized the efficiencies of addressing 
vehicles and fuels as a system when establishing an emissions control 
program. Thus, in addition to setting strict exhaust emission standards 
for the vehicles and engines, we also required that cleaner, low sulfur 
gasoline and diesel fuel be available to enable those emission 
standards to be achieved. Sulfur is similar to lead in that it degrades 
the effectiveness of a catalytic converter. This lower sulfur gasoline 
will reduce emissions from all gasoline-powered highway vehicles, not 
just those meeting the tighter vehicle emissions standards. The Tier 2 
and diesel regulations provide sufficient time for refiners to make the 
necessary modifications to their facilities before the low sulfur fuel 
is required. EPA has included a number of provisions that provide 
additional flexibility to refiners, particularly small refiners.
Off-Road Engines
    As emissions from highway vehicles are reduced, the potential for 
reductions from other sources must be evaluated. Therefore, in 1990 
Congress gave EPA new authority to set emission limits for off-road 
engines and equipment. As a result, EPA has adopted emission control 
programs for the following off-road equipment: locomotives, marine 
vessels, outboard recreational boats, and small gasoline engines used 
in lawn and garden equipment.
    The next major category of mobile source emissions to be addressed 
is large diesel engines used in construction, mining, airport and 
agricultural equipment. Even though modest emission requirements are in 
place for this equipment, EPA currently estimates that by 2020 the 
category will contribute over 10 percent of the total NOX 
emissions inventory in a typical metropolitan area and 8 percent of the 
PM emissions. One of the major issues that needs to be considered is 
the potential need to lower the sulfur levels in off-road diesel fuel 
to enable new exhaust control technology to be utilized on future 
engines. As we found with highway vehicles, this approach of 
comprehensively looking at the engines and fuel as a system is 
appropriate here as well. EPA currently is working on a draft proposed 
rulemaking.
Protecting the Stratospheric Ozone Layer
    EPA's Stratospheric Ozone Protection Program has played a landmark 
role in addressing one of the most pressing environmental issues of our 
time--the depletion of the ozone layer. We can say with certainty and 
pride that our effort in the United States to protect the ozone layer 
is on track toward unqualified success. With the successful worldwide 
phaseout of ozone depleting substances, EPA estimates that 6.3 million 
U.S. lives will have been saved from fatal cases of skin cancer between 
1990 and 2165, and that up to 300 million cases on non-fatal skin 
cancer and approximately 30 million incidences of cataracts will have 
been avoided.
    To date, international cooperation to implement the Montreal 
Protocol on Substances that Deplete the Ozone Layer has led to global 
reductions in the production and use of ozone depleting substances 
(ODS), the results of which we can already see. Developed country 
production of CFCs, methyl chloroform, and carbon tetrachloride 
essentially ended, except for limited exemptions permitted under the 
Montreal Protocol, thus avoiding emissions of 400,000 metric tons of 
ODS. Developing countries as a whole are ahead of schedule in reducing 
their production, use, and emissions of ODS.
    If the world community stays the course, we can expect to see the 
ozone layer recover in approximately 50 years. The prospect of 
identifying and solving a global environmental problem of this 
magnitude, within the span of a single lifetime, is nothing short of 
amazing. Let me tell you about the success we have had here and abroad.
    Here at home, the U.S. is doing its part to ensure the recovery of 
the ozone layer. Working closely with industry, EPA has used a 
combination of regulatory, market based (i.e., a cap-and-trade system 
among manufacturers), and voluntary approaches to phase out the most 
harmful ozone depleting substances (ODSs). And we're doing so more 
efficiently than either EPA or industry originally anticipated. The ODS 
phaseout for Class I substances was implemented 4-6 years faster, 
included 13 more chemicals, and cost 30 percent less than was predicted 
at the time the 1990 Clean Air Act Amendments were enacted.
    The U.S. has not only ``taken care of business'' at home but has 
also played a key leadership role internationally. Through the 
Multilateral Fund set up under Presidents Reagan and Bush, the U.S. has 
led the effort toward long term agreements to dismantle more than two-
thirds of developing country CFC production capacity and eliminate 
virtually all of developing country halon production capacity. Sales of 
US technologies, such as recycling, air conditioning, and refrigeration 
equipment and about $80 million per year of sales of alternatives to 
ozone depleting substances have played an important role in this 
worldwide progress. While the final closing of related facilities 
depends on continued funding, we are confident that through continued 
U.S. involvement and investment in this area we will be able to fulfill 
our international obligations and keep recovery of the ozone layer 
within our sights.
    With continued worldwide vigilance, full recovery of the ozone 
layer is predicted to occur in 50 years. In the near term, however, 
exposure to UV radiation and the subsequent health effects of increased 
incidences of skin cancer and cataracts continues to be a very real 
problem. One American dies every hour from skin cancer and a mere one 
to two blistering sunburns can double one's chances of developing 
melanoma later on in life. With this knowledge, EPA created the SunWise 
Schools Program to teach children and their caregivers about sun 
safety. EPA expects to reach children in 17,000 U.S. schools by 2005.
    We are proud of these achievements, but the job is not yet done. We 
have important work ahead of us such as the upcoming domestic phase 
outs of chemicals like methyl bromide (MBr) and hydrochloroflurocarbons 
(HCFC) while ensuring that sufficient amounts are available for 
critical and essential uses. The budget includes $10 million in EPA 
funding to help replenish the multilateral fund. Without a mechanism 
for facilitating developing country commitments to phaseout ozone 
depleting substances, we jeopardize recovery of the ozone layer, 
investments already made by U.S. industry in alternative technologies, 
and indeed the lives and health of Americans.
Reducing Risks from Air Toxics
    Toxic air pollutants are pollutants known or suspected to present a 
threat of adverse human health effects such as cancer or birth defects, 
or adverse environmental effects. In order to control emissions of 
these pollutants, EPA since 1990 has issued 53 pollution standards 
affecting 89 industrial categories such as chemical plants, dry 
cleaners, coke ovens, and petroleum refineries. When fully implemented, 
these standards will eliminate nearly 1.5 million tons of air toxics 
and 2.5 million tons of particulate matter and smog-causing volatile 
organic compounds.
    By contrast, in the preceding twenty years only seven hazardous air 
pollutant standards, eliminating 125,000 tons of toxics, had been put 
in place. Congress directed EPA to issue technology- and performance-
based standards on a source category basis to ensure that major sources 
of air toxics are well controlled. In essence these standards create a 
level playing field by requiring all major sources to achieve the level 
of control already being achieved by the better performing sources in 
each category.
    The result is that we are reducing the large quantities of toxic 
air pollutants released into our air, in the aggregate and around 
industrial sources in populated areas. We will achieve additional 
reductions as we complete standards for more categories of major 
pollution sources. This approach is achieving substantial reductions in 
air toxics, but we recognize that it is not perfect; a drawback is that 
it focuses on the quantity of emissions while toxic pollutants vary 
substantially in the risk they pose. Congress gave EPA greater 
flexibility to target the greatest risks in the second phase of the air 
toxics program outlined in the 1990 amendments.
    We are now in the early stages of implementing this second phase of 
the air toxics program, targeting particular problems such as elevated 
risks in urban areas, deposition of air toxics into the Great Lakes, 
and residual risks from already controlled sources. The underlying goal 
of this program is to improve air quality at the local, regional, and 
national levels while minimizing cost and reducing unnecessary burden 
on states and the regulated community. Achievement of this goal would 
ultimately result in reduced public risk from exposure to air toxics or 
other environmental threats.
    Virtually all of the transportation-related control programs I 
discussed earlier reduce toxic emissions as well as emissions of NAAQS 
pollutants or their precursors. For example, compared to 1990 levels, 
the programs we have in place today for highway vehicles, including 
Tier 2 and the 2007 diesel rule, will reduce emissions of four gaseous 
toxic pollutants by about 350,000 tons by 2020, a 75 percent reduction. 
Diesel particulate matter (PM) from highway vehicles will be reduced by 
220,000 tons over the same time frame, for a 94% reduction.
Improving Visibility in our National Parks and Wilderness Areas
    Having lived a good portion of my life within sight of the Front 
Range, within an hour of Rocky Mountain National Park, I have a 
personal appreciation for the importance of protecting the beautiful 
vistas of our great land from visibility degradation.
    Haze, created by fine particles and other pollutants, often 
degrades visibility across broad regions and obscures views in our best 
known and most treasured natural areas such as the Grand Canyon, 
Yosemite, Yellowstone, Mount Rainier, Shenandoah, the Great Smokies, 
Acadia, and the Everglades. Despite improvements in recent years in 
some areas, visibility remains significantly impaired. In eastern 
parks, average visual range has decreased from 90 miles (natural 
conditions) to 15-25 miles, and on some days, visibility is less than 
10 miles. In the West, visual range has decreased from 140 miles to 35-
90 miles. Visibility for the worst days in the West is similar to days 
with the best visibility in the East.
    In July 1999, EPA published a long awaited regional haze rule that 
calls for long-term protection of and improvement in visibility in 156 
national parks and wilderness areas across the country. Because haze is 
a regional problem, EPA has encouraged states and tribes to work 
together in multi-state planning organizations to develop potential 
regional strategies for the future. Five of these regional planning 
organizations are now operational. EPA will be working closely with 
these organizations to provide guidance during this process, just as it 
did with the many states and tribes involved in the Grand Canyon 
Visibility Transport Commission.
    Over the next several years, states are required to establish goals 
for improving visibility in each of these 156 areas and adopt emission 
reduction strategies for the period extending to 2018. States have 
flexibility to set these goals based upon certain factors, but as part 
of the process, they must consider the rate of progress needed to reach 
natural visibility conditions in 60 years. To assist in evaluating 
regional strategies and tracking progress over time, we have continued 
to work with the states and federal land managers to expand our 
visibility and fine particle monitoring network to 110 of these areas. 
One of these regional planning organizations is the Western Regional 
Air Partnership, or WRAP. The regional haze rule specifically takes 
into account the WRAP's efforts to develop and carry out a strategy for 
improving visibility in 16 scenic areas in the western United States. 
Currently, EPA is proposing to approve, and to incorporate into the 
regional haze rule, an element of this strategy that addresses 
stationary sources of sulfur dioxide. The WRAP's innovative approach 
establishes regional sulfur dioxide emissions targets, gives Western 
sources the opportunity to meet these targets through voluntary 
measures, and provides for an enforceable backstop emissions trading 
program that will ensure that the targets are met if the voluntary 
measures do not succeed.
    EPA is moving forward to issue process guidelines for states to 
follow in implementing the Act's requirement for ``best available 
retrofit technology,'' or BART, at certain older facilities that have 
been grandfathered from new source requirements under the Act. These 
older facilities emit large amounts, in the millions of tons, of 
visibility-impairing pollutants. For many, cost-effective control 
measures are available. EPA proposed these BART guidelines in July 2001 
and we are looking to finalize them later this year. These guidelines 
will help States identify facilities subject to BART, and available 
methods for reducing their emissions.
                         iii. tools for success
    This history of clean-air success in concert with strong economic 
growth has been achieved through extensive stakeholder consultation, 
partnership with states, and use of a combination of tools that fit the 
range of air quality problems we face. Among these tools are national 
health-based standards, emissions limits, information, trading and 
economic incentives, voluntary programs, and hybrid approaches.
    Most of these tools and approaches were regarded as innovative in 
1990 when the Clean Air Act Amendments were passed, but today these are 
part of EPA's normal way of doing business. Today we are continuing to 
learn from experience and to improve air quality through regulatory and 
non-regulatory strategies. Three areas of emphasis include stakeholder 
consultation, market-based approaches and non-regulatory approaches.
Regulatory Tools
Increased Stakeholder Consultation
    Perhaps the most visible of the new approaches adopted following 
the 1990 amendments is the early and continuing use of consultation as 
we develop regulations. Since then, the Agency has dramatically 
expanded its interaction with stakeholders. Consensus is not always 
attainable, of course. But the time and effort we put into 
communication and consensus-building pays off in better rules, and 
often in smoother implementation.
    One of the first examples of stakeholder involvement was the Acid 
Rain Advisory Committee, an intensive seven-month effort with 
stakeholders immediately after the 1990 Amendments that helped shape 
the rules for the successful acid rain program. This positive 
experience led to establishment of the Clean Air Act Advisory 
Committee, a standing group of several dozen experts from industry, the 
environmental community, states, academia and elsewhere. We seek the 
advisory committee's insights frequently.
    EPA also establishes stakeholder advisory committees to advise us 
on specific air program issues as they develop. One example is a 
diverse stakeholder committee currently reviewing questions concerning 
our recently issued rule to reduce levels of sulfur in diesel fuel.
    In addition to these formal processes, we have also engaged 
stakeholders in substantive, early discussions on many significant 
rulemakings long before they reach the proposal stage--for example, in 
developing rules to control emissions from heavy-duty trucks and buses. 
The National Low Emission Vehicle Program is another example of what 
can be achieved through consensus building with stakeholders when 
incentives for agreement exist.
Trading and Market-based Regulatory Programs
    The second major reason for clean-air success over the years has 
been EPA's pioneering use of innovative, market-based regulatory 
approaches. EPA is proud of our increasing reliance on market-based 
tools, particularly cap and trade programs, to cut compliance costs, 
promote technology innovation and achieve early and extra environmental 
benefits.
    Perhaps the most important lesson from implementing the 1990 
amendments is how powerful a tool cap and trade programs can be for 
protecting health and the environment. When the acid rain legislation 
was under development, the proposal for a cap-and-trade approach was 
new, untested, and met with much skepticism. Many questioned whether it 
would deliver the promised environmental protection, whether the 
trading system would operate as advertised, and whether costs would be 
reasonable. Today, it is clear that the answer is a resounding ``yes.''
    The acid rain trading program, because it was properly designed, 
has demonstrated many advantages relative to a command-and-control 
approach. The acid rain cap and trade program achieved reductions at 
two-thirds the estimated cost of achieving the same reductions without 
trading. The cap and automatic penalties for noncompliance ensure that 
the environmental goal is achieved and maintained. Trading and banking 
have allowed companies flexibility to choose compliance options and 
minimize costs. In 1990 EPA estimated that the price of an 
SO2 allowance (representing one ton of reduction) would be 
$625 in 2000 (in 2000 dollars) and some in the utility industry 
speculated that the price could be much greater, in the range of 
$1,500. In fact, the actual price of SO2 allowances in 2000 
was $150. The cap-and-trade system has created financial incentives for 
electricity generators to look for new and low-cost ways to reduce 
emissions, and to do so earlier than required by law. As mentioned 
above, reductions in the early years averaged 25 percent below the 
required cap, resulting in early health and environmental benefits. The 
program has high accountability and transparency; electricity 
generators must have continuous emissions monitors to prove they have 
sufficient allowances to match their actual emissions. The cap-and-
trade system also has other advantages: The acid rain program enjoys 
nearly 100 percent compliance and only takes 75 EPA employees to run, 
and avoids lengthy permit reviews.
    As I have mentioned, EPA is using this now-proven approach to 
address other significant problems such as regional ozone transport, 
and believes this approach should be the cornerstone of an integrated 
multi-pollutant approach toward future reductions in power plant 
emissions.
    Beyond these flagship programs, EPA also continues to apply market 
principles more generally to find innovative ways to achieve more 
environmental protection at less cost. We have had great success with 
the emission trading program to protect stratospheric ozone, and we 
have provided averaging, banking, and trading opportunities in many 
national air rules for such industries as vehicle manufacturers and 
fuel refiners. Emissions averaging is also incorporated in national air 
toxics emissions standards for refineries, chemical plants, aluminum 
production, wood furniture and other sectors that use paints and 
coatings. We also have used other methods, including multiple 
compliance options, to help provide flexibility in air toxics rules.
    In addition to providing flexibility in national rules through 
trading and other means, EPA is working with states to promote other 
flexible approaches to help achieve national air quality standards for 
smog, particulates and other criteria pollutants. These approaches--
including broader use of trading programs and voluntary measures in 
State Implementation Plans--are becoming valuable alternatives in many 
areas where conventional approaches are reaching the limits of what can 
be achieved.
Improvements in Analytical Tools
    Since 1990 we also have seen improvements in analytical tools that 
enhance our ability to analyze the benefits, costs and cost 
effectiveness of potential strategies to reduce air pollution. These 
tools help inform our policy and regulatory decisions.
    These improvements have been achieved through dramatic increases in 
the quality and comprehensiveness of data used as inputs to our 
analyses and the speed and accuracy of the modeling systems used to 
analyze those data. Specific examples of these improved data sets and 
modeling tools include a new integrated criteria pollutant and 
hazardous air pollutant emissions inventory system called the National 
Emission Inventory (NEI); a significantly expanded fine particle 
monitoring network; a new, third-generation air quality modeling system 
called Models-3 which incorporates the new Community Multiscale Air 
Quality (CMAQ) model capable of integrated assessment of changes in 
tropospheric ozone, acid deposition, particulate matter, and visibility 
across the coterminous 48-states; and an integrated health effects and 
economic valuation modeling system called the Criteria Air Pollutant 
Modeling System (CAPMS).
    EPA analyses have also benefitted greatly from major strides in the 
public health and economic literatures related to estimating the 
effects of air quality improvements. Important examples include the 
Health Effects Institute (HEI) re-analysis of key PM mortality 
epidemiological studies and the development of dozens of new studies 
estimating the economic value of reductions in risk of premature 
mortality. All of these represent just a few examples of the many 
improvements in relevant literature, information systems, and 
analytical technologies achieved by EPA and our partners since 1990.
Non-Regulatory Tools
    One important lesson we've learned over the last 12 years is how 
much environmental protection we can accomplish without regulating. 
We've had great success by giving people the information they need, 
working with them, and helping them work with each other to address 
pollution problems in their communities and businesses. EPA has a 
number of information-based or voluntary programs authorized by the 
Clean Air Act or funded through Clean Air Act grants.
    EPA has developed several partnership programs with industry that 
were either explicitly laid out in the President's National Energy 
Policy, or are otherwise consistent with the policy direction therein. 
These include several new Energy Star efforts, Climate Leaders, the 
Combined Heat and Power Partnership, the Green Power Partnership, and 
Commuter Choice Leadership Initiative. Other voluntary partnerships 
with nonprofit organizations have fueled effective public outreach 
programs such as Tools for Schools, the Smoke Free Homes Pledge, and 
the ``Fish Out of Water'' asthma ad campaign.
Energy Star and Related Partnerships
    In many cases, EPA has found that voluntary, information-based 
approaches are most effective when carried out in partnership with 
industries. Perhaps the most impressive example of this is the Energy 
Star program, which offers businesses and consumers energy-efficient 
solutions that save money while protecting the environment for future 
generations. The Energy Star program establishes national definitions 
for efficient products, homes and buildings that qualify to use the 
widely recognized Energy Star logo. It has succeeded in creating a 
national platform for efforts by manufacturers, governments and other 
partners to increase energy efficiency. In 2001 alone, the Energy Star 
program reduced energy consumption by 80 billion kilowatt hours, offset 
more than 10,000 megawatts of peak power, prevented 140,000 tons of 
nitrogen oxides emissions, and reduced greenhouse gas emissions by more 
than 16 million metric tons of carbon equivalent--the same as 
eliminating the emissions of 10 million cars. American businesses and 
consumers, with the help of Energy Star, are saving about $5 billion a 
year on their energy bills.
    Building on our experience with Energy Star, we are now developing 
a series of additional partnership programs to provide significant 
energy savings and reduce emissions of NOX, VOCs, and 
greenhouse gases. The first of these is the Climate Leaders program, a 
government-business partnership that helps companies effectively manage 
their greenhouse gas emissions by providing them with new management 
tools and recognizing them for their success. In this program, 
companies pledge to achieve company-wide emission reductions in 
greenhouse gases over the next 5 to 10 years, and report on their 
progress. Two other partnership programs, built around energy 
production, are the Green Power Partnership and the Combined Heat and 
Power Partnership. These new voluntary programs are designed to reduce 
the environmental impact of electricity generation by promoting 
renewable energy and energy-efficient technology through technical 
assistance and public recognition.
Asthma Education
    EPA has also taken a voluntary, information-based approach in 
helping to combat asthma, a disease which has grown to epidemic 
proportions in the United States, and one which is often triggered by 
indoor air pollution. While scientists do not fully understand what has 
caused the rise in asthma, outdoor air pollution and environmental 
contaminants commonly found indoors are known to trigger asthma attacks 
and in some cases, can even lead to the development of new cases of 
asthma. In response to this epidemic, EPA has joined with other Federal 
agencies including the Department of Health and Human Services and non-
profit health organizations, to step up the national fight against 
asthma. With pro-bono help from the Advertising Council, in 2001 we 
launched a multimedia public-service advertising campaign to raise 
public awareness of the need to reduce exposure to indoor environmental 
triggers as part of a comprehensive asthma management plan. In the 
first six months of the campaign, we utilized over $30 million worth of 
donated media exposure in the form of TV, radio, and print advertising. 
EPA's program also is supporting other direct asthma education 
initiatives in schools, day-care centers, primary health care clinics 
and managed care organizations to promote comprehensive asthma 
management including preventing exposures to indoor environmental 
triggers.
Indoor Air: Tools for Schools
    Beyond its asthma efforts, EPA also has applied voluntary, 
information-based approaches to indoor air quality problems more 
broadly. One especially important site where poor indoor air quality 
often causes health problems (including asthma) is the schoolroom. To 
help educators and the public make their schools more healthful for 
children and faculty, EPA has developed an Indoor Air Quality ``Tools 
for Schools'' (TfS) Kit to prevent or correct common indoor air quality 
problems. More than 9,000 schools across the US have voluntarily 
adopted the operation and maintenance practices in the TfS, and we are 
gaining momentum: the Chancellor of the New York City School System 
(1,200 schools serving 1.1 million children) has declared that all 
schools in NYC will implement TfS by the 2005-2006 school year. Several 
states have incorporated the key concepts into requirements for all 
their schools. EPA is placing special emphasis on promoting 
implementation of this voluntary guidance in states with large student 
populations. Texas, Florida, New York and California account for 32% of 
the students in the US.
Environmental Tobacco Smoke
    Another serious indoor air problem is secondhand tobacco smoke, 
which causes hundreds of thousands of excess lower respiratory tract 
infections in young children each year, increases their risk of middle 
ear infections often requiring hospitalization, and worsens the 
condition of a million children with asthma. EPA is using a voluntary 
approach to address this serious issue through a sustained campaign to 
educate and motivate parents to protect their children by making their 
homes smoke-free. The initiative includes an award-winning national 
television, print, and radio media campaign which has resulted in over 
$15 million of donated air time.
AIRNow Program
    In addition to these indoor-focused programs, EPA has also used 
voluntary, information-based approaches to help address outdoor air 
quality problems. To help citizens understand and make decisions about 
their own personal exposure to high ozone levels, EPA has developed the 
AIRNow program which includes a web site to provide the public with 
easy access to air quality information, both local and national. 
Through the web site and national media, AIRNow provides daily air 
quality forecasts as well as real-time air quality for over 100 cities 
across the United States. AIRNow is one of the first environmental 
programs to deliver real-time data to the public in an easily 
understandable, color-coded, graphical format, similar to the color-
coded warning program for homeland security. The animated air quality 
map and air quality forecasts give the public information they can use 
to make daily decisions about the air quality in their area. AIRNow 
also goes beyond the Internet to reach the broader public, with USA 
Today featuring AIRNow air quality forecasts and TV stations 
incorporating it into weather forecasts on national programs like the 
Weather Channel as well as local programs. Over the next several 
months, the program will be expanded to address particulate matter.
Commuter Choice
    A new business-government partnership, called the Commuter Choice 
Leadership Initiative, focuses on reducing vehicle emissions and 
improving the way people get to and from work. EPA and DOT assist 
participating employers by offering technical assistance, public 
recognition, training, Web-based tools, and forums for information 
exchange. To participate, employers make a series of commitments, 
including ensuring a minimum level of employee participation and 
offering a series of commuter benefits. In return for offering these 
benefits, employers can reap the important benefits of helping to 
attract and retain employees, reduce the demand for limited or 
expensive parking, and exhibit leadership and corporate citizenship. 
Almost 300 companies, employing over 750,000 people, have joined the 
program since it was launched last year.
Community-Based Programs
    Some of EPA's most innovative work comes by working with people in 
their communities at the local level. For example, the Ozone Flex 
program, started last year in Texas, offers increased regulatory 
flexibility to encourage state, local and tribal governments to make 
voluntary, early reductions of air emissions that form ground-level 
ozone. Another community-based program, the Cool Cities initiative, 
shows local governments how to reduce the polluting effects of heat 
buildup in cities, and offers them regulatory credit for doing so. This 
program began in Houston, Texas, and we hope that other cities will 
follow Houston's lead and also join the Cool Cities program.
    Another important new initiative is the Cleveland Air Toxics 
project, which is setting the stage for a new way to solve the problem 
of urban air pollution. We have assembled a group of community leaders 
who are building a sustainable, results-focused project that is a model 
for the entire nation. And the Cleveland pilot, for the first time, 
integrates our work across stationary, mobile, and indoor pollution 
sources. The approach bridges organizational barriers here at EPA and 
allows the community to address the issues they believe have the most 
impact on their lives.
                         iv. today's challenges
Reducing Fine Particles and Smog
    Two of the greatest air quality challenges facing us today are 
reducing levels of fine particles and ground-level ozone (smog) to meet 
the more health protective air quality standards EPA issued in 1997 
based on an exhaustive review of new scientific evidence on effects of 
these pollutants. Fine particles and 8-hour ozone levels appear to be 
of concern in many areas of California and across broad regions of the 
eastern United States.
    On March 26, after years of litigation and a favorable Supreme 
Court decision, the U.S. Court of Appeals for the D.C. Circuit rejected 
all remaining legal challenges to both standards. The Administration 
vigorously defended the standards before the court.
    As Administrator Whitman said last month, the court decision ``is a 
significant victory in EPA's ongoing efforts to protect the health of 
millions of Americans from the dangers of air pollution. EPA now has a 
clear path to move forward to ensure that all Americans can breathe 
cleaner air.'' Now EPA will work in partnership with state, tribal and 
local governments to implement those standards.
    We believe that fine particles pose the greatest public health 
risks of any regulated air pollutant. Fine particles are associated 
with tens of thousands of premature deaths per year in people with 
heart and lung diseases. Fine particles aggravate heart and lung 
disease, leading to increased hospitalizations, emergency room and 
doctor visits, use of medication, and many days of missed school and 
work. Fine particles have also been associated with respiratory 
symptoms such as coughing and wheezing and chronic bronchitis, as well 
as heart beat irregularities and heart attacks. And fine particles are 
a year-round problem.
    Ozone smog also is a significant health concern, particularly for 
children and people with asthma and other respiratory diseases who are 
active outdoors in the summertime. Ozone can cause increased transient 
respiratory symptoms, such as coughing and pain when breathing deeply, 
as well as transient reductions in lung function and inflammation of 
the lung. Ozone has also been associated with increased 
hospitalizations and emergency room visits for respiratory causes. 
Repeated exposure over time may permanently damage lung tissue.
    We are determined to move expeditiously to achieve the health 
benefits of the standards. However, there is some preliminary work that 
must be completed before we can designate areas under the new 
standards, which starts the clock on many implementation requirements.
    Before the PM2.5 nonattainment areas can be designated, 
three years of data are needed to determine whether an area is not 
attaining the standard. We will have 3 years of quality-assured data 
beginning in the summer of 2002. It is difficult to project a precise 
schedule for designating PM2.5 nonattainment areas, but I 
have asked my staff to determine how we can move forward expeditiously 
in light of the public health threat posed by fine particles. The 
Transportation Equity Act of 1998 requires states and EPA complete the 
process within two years after three years of monitoring data are 
available, or no later than December 31, 2005. Based on a preliminary 
two-year data set from 250 counties, more than 130 areas are expected 
to violate the annual standard. About 100 of these areas also appear to 
be not attaining the 8-hour ozone standard, and it will make sense for 
states to consider both ozone and PM in devising attainment strategies.
    As we work with the states on fine PM designations, we also will be 
working with our governmental partners and stakeholders to develop an 
implementation strategy. In the East, high PM2.5 levels are 
attributed to regionally high sulfate and nitrate concentrations 
(primarily from power plants and motor vehicles) combined with local 
urban emissions of other pollutants. President Bush's Clear Skies 
Initiative to cut emissions from power generators through a cap-and-
trade program can substantially reduce the number of areas with 
unhealthy levels of fine particles. Regional strategies and/or national 
rules should be the first step toward addressing sulfates and nitrates, 
particularly in the East. A number of already-adopted mobile source 
programs, such as Tier II standards for cars and light trucks, reduced 
sulfur in fuel, and standards for new heavy duty diesel engines, will 
also help reduce local emissions. However, additional local strategies 
will need to be developed for certain cities to address their 
particular mix of emissions sources also contributing to the problem. 
For example, a diesel engine retrofit program (e.g. for buses) appears 
to be one obvious local action that cities can take to protect the 
public from PM2.5 health effects now.
8-Hour Ozone
    We are actively working on several fronts to prepare the way for 
implementation of the 8-hour ozone standard. Because the Supreme Court 
ruled that EPA's original implementation strategy was unlawful, EPA is 
working with state and stakeholders to develop a new approach that will 
be adopted through rulemaking. The new approach will be proposed this 
summer and finalized a year after its proposal. We also are working to 
complete our response to the May 1999 remand from DC Circuit court 
concerning UVB radiation, and anticipate a final rule this year. EPA 
plans to designate areas for the 8-hour ozone standard no earlier than 
the end of 2003.
    There are over 300 counties measuring exceedances of the 8-hr ozone 
standard. Existing EPA programs, including national motor vehicle 
programs and the NOX SIP call, are projected to help many of 
the new nonattainment areas meet the standard over the next few years. 
States and localities also will need to do their part to reduce 
emissions from local pollution sources.
Cost-effective strategies and technology advances
    Under the Clean Air Act, both EPA and the States have 
responsibilities for developing regulations requiring pollution sources 
to reduce their emissions to help attain air quality standards. In both 
cases, cost is a key consideration, helping determine which pollution 
sources should reduce emissions, by how much, and on what timetable. As 
mentioned above, EPA develops national emission standards for large 
sources such as automobiles, powerplants, and factories. These 
rulemakings consider costs in a number of ways, from broad economic-
impact studies to more specific analyses of impacts on states, 
localities, and small businesses. Costs are also a central 
consideration to states and localities as they design their state 
implementation plans to achieve the additional reductions needed beyond 
those provided by EPA's rules. EPA works closely with regulated 
communities to obtain information on currently available and emerging 
control technologies and their estimated costs. EPA uses this 
information in developing its Federal rules, and it also makes such 
information available to states, localities, and industries to assist 
them in their planning.
    A word should be said here about technological innovation and its 
role in projecting future costs of pollution control. As is the case 
for technology generally, air pollution control technology is 
developing so rapidly that it is difficult to predict very far into the 
future. We know based on experience that technological advances over 
the longer term will provide substantial help in meeting clean-air 
goals. But it is inherently difficult to estimate the amount of 
emissions reductions and cost savings that will be available five, 10, 
or 15 years from now through technological advances in numerous 
industries--including advances that are entirely unforeseen today.
    Our experience over the past 30 years, and the promise of cleaner 
technologies emerging today, strongly suggest that technological 
innovation will continue to produce new, cleaner processes and 
performance improvements that reduce air pollution at reasonable cost. 
The Clean Air Act itself has spurred such advances, as innovative 
companies have responded to the challenges of the Act with great 
success, producing breakthroughs such as alternatives to ozone-
depleting chemicals and new super-performing catalysts for automobile 
emissions. We are continuing to promote such innovation through 
emission-reduction strategies that set clear emissions goals and then 
provide flexibility on the means of achieving them--for example, 
through the kind of market-based approach in the President's Clear 
Skies proposal.
Protecting Our Environment and Resources
    The same emissions that form fine particles and ozone, causing 
public health risks, also contribute to environmental and resource 
damage. One example is visibility degradation, which I already have 
discussed.
    In addition, modeling results and recent studies of ecological 
response to emissions reductions under the Acid Rain Program indicate 
that Title IV is moving us in the right direction, but not far enough. 
For example, scientists in the Shenandoah National Park discovered the 
first observed disappearance of a fish population due to acidification. 
Researchers in that region claim that reductions of sulfate deposition 
of 70 percent or greater from 1991 levels are necessary to prevent 
further acidification of Virginia brook trout streams.
    A recent assessment of acid deposition and its effects in the 
northeast by the Hubbard Brook Research Foundation reflects a similar 
finding. Researchers found no significant improvement in lake and 
stream water quality in the Adirondack and Catskill Mountains, even 
following recent decreases in acid rain. The study concluded that full 
implementation of the 1990 Amendments will not result in substantial 
recovery in acid-sensitive ecosystems in the northeast. Instead, it 
concluded that further reductions of SO2 emissions from 
power generation are necessary to achieve recovery of aquatic 
ecosystems in this region.
    Recent studies also demonstrate that nitrogen deposition is an 
increasing concern in many regions of the country. For example, EPA's 
recently released national coastal condition report found deteriorating 
water quality in many areas of the eastern U.S. and Gulf Coasts, much 
of it due to increasing nitrogen pollution. Other researchers have 
found symptoms of ``nitrogen saturation'' in forest ecosystems in 
diverse areas of the country, including the Front Range of the Colorado 
Rockies, forests in southern California, and forests along the 
Appalachian Mountain chain of the eastern U.S. As a result, forest 
soils lose nutrients, forests are less productive, and streams and 
lakes continue to get more acidic.
    Taking into consideration the ongoing concern about acid 
deposition, President Bush's Clear Skies Initiative would address these 
problems by cutting emissions of SO2 and NOX from 
power generators through a cap-and-trade program.
Air Toxics Challenges
    Two important air toxics challenges are elevated risks from the 
multiple toxic pollutants emitted into urban airsheds, and health risks 
from mercury, a persistent toxic substance that accumulates in the food 
chain.
Urban Air Toxics Strategy
    Air toxics can pose special threats in urban areas because of the 
large number of people and the variety of sources of toxic air 
pollutants. Individually, some of these sources may not emit large 
amounts of toxic pollutants. However, all of these pollution sources 
combined can potentially pose significant health threats. Under the 
Clean Air Act, EPA is required to develop an Integrated Urban Air 
Toxics Strategy that addresses air toxics in urban areas, looking 
collectively at emissions from large and small industrial and 
commercial operations, on-road and off-road vehicles, as well as indoor 
air sources. We are also concerned about the impact of the toxic 
emissions on minority and low income communities, which are often 
located close to industrial and commercial urbanized areas.
    We will also assist State, local, and tribal agencies in making 
their own assessments and decisions on risk strategies by providing 
them tools, guidance, and training, while continuing to develop 
national standards. We are also exploring new approaches for 
identifying flexible, less expensive methods for reducing emissions. In 
addition, to better understand local risk, we will collect and analyze 
data from on-going community projects to provide a centralized 
information database. We will also continue to participate in projects 
such as in Cleveland, Ohio. This integrated approach will allow EPA and 
state, local, and tribal governments the ability to cooperatively 
address specific risks and administer direct and cost efficient 
controls in specific ``hot spots'' or target areas.
Mercury
    Mercury is a potent toxin that causes permanent damage to the brain 
and nervous system, particularly in developing fetuses, depending on 
the level of ingestion. Most exposure comes through eating contaminated 
fish. Currently 42 states have advisories warning people to limit or 
avoid intake of recreationally caught fish due to mercury 
contamination. Even so, almost 400,000 children are born each year to 
mothers whose blood mercury levels exceed the reference dose 
established by EPA, which builds in a margin of safety.
    Recent actions to reduce mercury emissions from medical waste 
incinerators and municipal waste combustors are significantly reducing 
emissions of mercury. In fact, full implementation and compliance with 
medical waste incinerator and municipal waste combustor regulations 
will result in significant mercury emission reductions from these 
important sources. Power generation is now the largest uncontrolled 
source of mercury emissions, contributing approximately 35% of the 
total anthropogenic mercury emissions in this country. President Bush's 
Clear Skies Initiative would put a cap on mercury emissions from power 
generators.
                             v. the future
    Although the focus of this hearing is Clean Air Act successes, not 
new legislation, I would like to take a brief moment to describe 
President Bush's Clear Skies Initiative. The President believes Clear 
Skies is the best way to address the most serious of the challenges I 
have just described. The initiative builds on the tremendous success of 
the Acid Rain Program, using its cap-and-trade model as its foundation. 
The President's proposal sets mandatory caps on emissions from power 
generators, and gives facilities the opportunity to comply through 
trading, which provides compliance flexibility, cost savings, and 
incentives for technology innovation.
    Under the Clear Skies Initiative, all Americans will benefit from 
cleaner air as emissions of the major pollutants from power generation 
(SO2, NOX and mercury) are reduced by roughly 70 
percent. The President's proposal will dramatically reduce the number 
of areas with unhealthy levels of fine particles, and provide health 
benefits to tens of millions of people. An integrated approach, Clear 
Skies will reduce all the concerns associated with regulated pollutants 
from power plants across the nation, including fine particles, ozone, 
mercury contamination, acid rain, nitrogen deposition and visibility 
impairment. As a result, we will see thousands fewer premature deaths, 
millions fewer incidences of aggravated asthma and respiratory 
symptoms, and reduced risk of childhood illness. Clear Skies is a clear 
winner for the American people.
    Thank you. I would be happy to answer any questions that you may 
have.

    Mr. Barton. Thank you, Mr. Holmstead.
    We have a few housekeeping things. Then I have got a 
question for you.
    We are going to do a fair number of hearings on the Clean 
Air Act, and the EPA is going to be asked to testify probably 
at almost every one of those hearings. We like to have the 
testimony so that the staffs on both sides can look at it. What 
is our minimum requirement for testimony? Two days.
    Your testimony got here last night at 9 o'clock. So the 
minority got mad at us, because we were hiding the testimony, 
when the fact is we didn't get it until 9 o'clock. So in the 
future, if you would ask Governor Whitman, encourage her and 
all the other folks like you that come up to represent your 
agency to try to comply with us in getting us your testimony so 
that those that agree with it can study it and ask you softball 
questions, and those that disagree with it can ask you very 
smart, tough, pointed questions; and between those two, we will 
get a good hearing record. Could you try to help us out a 
little bit on that?
    Mr. Holmstead. I will do my best, and I can tell you, I 
would have rather been doing something else at 9 o'clock last 
night than trying to finish up that.
    Mr. Barton. Well, I know it is a fairly tortuous thing to 
get testimony cleared through the White House and OMB and all 
that, but if you start the process sooner, it gets finished 
sooner, and we get it on time, and it just helps us.
    Mr. Holmstead. I will give you the name of Laurie Schmidt 
here, so you can call her if the testimony is----
    Mr. Barton. Is that the young lady there in the red blouse?
    Mr. Holmstead. Thank you. We will do that. Yes.
    Mr. Barton. All right. Now start the clock.
    This subcommittee, as Mr. Dingell pointed out and Mr. 
Waxman and Mr. Markey and Mr. Hall--they have worked with 
various administrations throughout the years as we get into 
these issues on the Clean Air Act.
    A lot of the information that is required to make an 
informed decision on legislation is technical in nature, and 
the EPA staff has that information. Now I have talked to you on 
the phone several times. I met you in person several times. I 
have talked to Governor Whitman several times, and at every one 
of the meetings I have asked that your staffs work with our 
staffs on both sides of the aisle to get us the information so 
that we can have an informed debate.
    That has yet to happen. Now this Clear Skies initiative 
that the Bush Administration is putting forward, I think, has a 
lot of merit, but none of the staffers on the Hill have any 
idea what the technical basis is for that. What can you do to 
tell the subcommittee today that the EPA staffs are going to 
work with our staffs and help provide information so that both 
sides of the aisle can actually analyze what is going on and 
try to come to some joint understandings?
    Mr. Holmstead. I do understand that we have a lot of 
detailed analysis that really only we can produce, and you as 
well as members on the Senate have been asking for that, and I 
again apologize that we have been slow in getting that up, and 
I promise you that we will be remedying that beginning this 
week.
    I do want to just give you a sense of just how complex this 
is in terms of the kind of information that I think you are 
interested in, and I won't take up a lot of time. The computer 
modeling runs that we do to analyze this are the kinds that--
there are actually two different runs, and we have to take the 
output from one and use it in another. I am happy to talk with 
your staff more about all of the technical details.
    The bottom line is it actually takes several months to 
complete and to QA these computer runs, and during the 
development of the Clear Skies proposal we, obviously, did a 
number of different runs that we are preparing now to turn over 
to you, beginning this week.
    Just so you know what we are sending up, which I think will 
satisfy everyone who has been asking us for this information, 
we have air quality modeling analysis, the kind of state-of-
the-art analysis that really only EPA can do, on four, and we 
are working on a fifth. What we plan to give you, I hope by the 
end of this week or by the beginning of the following week at 
the latest, is all of those modeling runs.
    There are some that are less stringent, there are some that 
are more stringent than the Clear Skies proposal. Those were 
really used to bound the----
    Mr. Barton. We are going to get that information in the 
next 2 weeks?
    Mr. Holmstead. Yes, sir, and we will provide all of the air 
quality modeling information as well as all of the--We have a 
linear programming model that actually goes through and 
predicts impacts on different facilities. That is extremely 
comprehensive, and we also plan to give you, in addition to the 
air quality modeling runs, the underlying modeling runs that 
shows the various impacts on fuel supply, price, many other 
things, and you will have all of that within 2 weeks.
    Mr. Barton. In the charts that you put up earlier that you 
showed the Gross Domestic Product going up and almost all the 
other trend lines on emissions going down, is there one 
underlying issue or one underlying technique that has most 
caused the trend lines for air emissions to go down, which 
means the air quality would go up? Is there some lesson that we 
have learned from the 1990 amendments that we can apply to any 
future reauthorizations in a general sense?
    Mr. Holmstead. I think the single most important thing that 
we collectively have learned, members of this committee, people 
at EPA, people in the academic arena who have looked at these 
issues, is the use of market based tools that actually create 
incentives for companies to look for better and cheaper ways to 
control pollution.
    You know, 20 years ago, I think a lot of people thought 
that the best way to do it was just tell people what kind of 
technology to put on. We have learned, for instance, in the 
acid rain--The acid rain program is probably the most visible 
example, but we use it in many other cases--that if we set a 
standard and then allow people the flexibility to meet that 
standard in the most cost effective way, we tend to get 
reductions faster and cheaper.
    More importantly, if we actually give people a financial 
incentive to overcomply, as was the case with the acid rain 
program where, if they did more than they were required to, 
they would create what we call allowances that have value, then 
it spurs a lot of technological innovation. We have tried to 
use those same sorts of programs, for instance, with our 
automobile standards and even fuel standards where we allowed 
that sort of banking and trading of allowances that have been 
achieved through overcompliance.
    So I think, if I had to mention one lesson, that would be 
the most important thing that we have learned over the last--
and particularly over the last probably 10 or 15 years as we do 
this.
    Mr. Barton. My time has expired. I would recognize the 
gentleman from Virginia for 5 minutes for questions.
    Mr. Boucher. Well, thank you, Mr. Chairman, and Mr. 
Holmstead, thank you for your testimony this morning.
    Many of the statements that have been made here, both by 
members and by you, have celebrated the successes that we have 
achieved under the 1990 amendments and the underlying Clean Air 
Act. The air is clearer today than it was 30 years ago. We have 
had dramatic increases in the economy and large increases in 
fossil fuel use, and yet we have cleaner air now than we did 
three decades ago.
    Given that reality, do you see any overwhelming reason why 
we should open the Clean Air Act in some substantial way? Have 
we not already, through the law, given EPA the tools that it 
needs in order to conduct even further proceedings and through 
those further proceedings assure a continuing increase in air 
quality?
    Mr. Holmstead. There is no question that the Clean Air Act 
has been remarkably successful in cleaning up the air. We have 
learned a lot over the last 30 years, and there are some things 
that we, quite frankly, would do differently.
    One of the things that I would mention specifically is, as 
I think you all know, the basic theory underlying the Clean Air 
Act is that EPA sets these national ambient air quality 
standards, and then States have the primary responsibility and 
the discretion to figure out the best way of coming into 
attainment with those standards.
    One of the things that we now know, and especially as we 
look at the problem of ozone and fine particles, is that 
oftentimes high levels of those particles don't come from 
sources nearby, but can actually travel hundreds of miles from 
several States away. The current mechanism that we have to deal 
with that is something called Section 126 that is actually sort 
of a cumbersome process whereby one State petitions EPA to 
regulate a source in another State.
    This is really what we are trying to accomplish with the 
President's Clear Skies initiative. Rather than having this 
cumbersome petitioning process which can take years and years 
and years by the time you include the litigation, we would very 
much like to convince you all and your colleagues in the Senate 
that we can accomplish a great deal more a great deal faster 
and at less cost using a cap and trade program.
    So I know that there are some people who are reluctant to 
fix something that has worked so well, but we do believe that 
there are ways that the Clean Air Act can be improved.
    Mr. Boucher. So Section 126 would be among the 
recommendations that you will make to the Congress. When the 
President announced his Clear Skies initiative, he said that it 
was designed to replace existing clean air programs. Did he 
mean that literally? Are you preparing comprehensive 
legislative recommendations that will replace existing clean 
air laws and, if so, can you at this point give us a summary of 
what specific programs you would propose to replace beyond 
Section 126?
    Mr. Holmstead. Our goal all along in the Environmental 
Protection Agency has been to create the most efficient and 
most effective program that we can to achieve the environmental 
benefits. Part of that, in our view, means replacing programs 
that are really no longer necessary in light of the stringent 
caps that we have on the utility sector.
    Right now, depending on how you count them up, there are 
between sort of 8 and 12 different regulatory programs that 
will have an impact on the power sector over the next 15 years. 
We believe that some of those are completely redundant and 
actually could be counterproductive.
    Let me just be clear that we are not talking about 
replacing 126. That is an important tool that States have used 
to identify upwind sources. Now we are looking at how that 
might work in the context of Clear Skies and whether there 
would be some unique role that 126 would play in dealing with 
power plants, but it would still remain in place for every 
other type of source, and probably in some respects for power 
plants as well.
    So I don't want to leave you with the impression that we 
are talking about eliminating Section 126, because I think that 
would be a mistake. We do believe that the NSR program would 
actually be counterproductive with this sort of a cap and trade 
system, and I know that there is a lot of controversy about 
that. I would be happy to talk more about it.
    I honestly can't figure out why, because right now the NSR 
program gets us no additional reductions of SO2. It 
may get us some modest reductions in NOX emissions, 
but nothing compared to what we would get under the President's 
proposal. Having that sort of a program that just adds delay to 
the way that facilities would achieve these new caps, we think, 
would be a mistake.
    There is another rule that is coming up that we refer to as 
the BART rule. It stands for best available retrofit 
technology. That would really be entirely redundant in light of 
the caps that the President has proposed. We are looking at 
other things, and we hope within the next few weeks to work 
with members of both sides of the aisle, both in the House and 
in the Senate, to develop a more detailed legislative package 
that deals with the interaction of Clear Skies.
    Mr. Boucher. Mr. Holmstead, let me just ask you one 
additional question, with your indulgence, Mr. Chairman. Do you 
have a schedule for bringing up to Capitol Hill legislative 
recommendations?
    Mr. Holmstead. At this point, we do not.
    Mr. Boucher. You do not? All right. Thank you, Mr. Chairman 
Mr. Barton. I thank the gentleman from Virginia. We would 
recognize the gentleman from Illinois for 5 minutes for 
questions.
    Mr. Shimkus. Thank you, Mr. Chairman. I work as an Army 
Reservist to help train some future generals to deal with 
Members of Congress in this type of setting, and it is a lot of 
fun. What we kind of warn them about is be prepared for any 
question, even though you might be here to discuss a certain 
subject. So here is your chance to excel.
    Mr. Holmstead. I appreciate the warning.
    Mr. Shimkus. That is right. My concern deals with a lot of 
issues that have brought up to me in my Congressional district, 
and it deals with methyl bromide, which is a fumigant used to 
control insects in weeds, pathogens in more than 100 crops and 
forests. Of course, on January 1, 2003, the amount of methyl 
bromide will be reduced by 70 percent.
    Can you assure current users of the product that by January 
1 effective and commercially viable alternatives will be 
available to substitute for 70 percent of the use?
    Mr. Holmstead. I think this is a good example of the sort 
of thing that this committee has done in the past to actually 
amend the Clean Air Act. Originally, when the Clean Air Act was 
passed in 1990, methyl bromide would have been completely 
phased out, 100 percent phased out by the year 2001.
    Back in 1998 this committee, led by this committee 
actually, that schedule was pushed back to be consistent with 
the Montreal Protocol. So that was, I think, an important 
change so that we wouldn't be disadvantaging our farmers 
compared to farmers around the world.
    The way that statute worked that amended the Clean Air Act 
in 1998, there are actually three steps in the phasedown. So I 
don't think it is quite right to look at this as a 70 percent 
reduction in 2003. There was already a 25 percent reduction, 
then a 50 percent reduction which I think went into place last 
year or the year before, and then we go from 50 percent to 70 
percent. So it is that additional increment.
    We are certainly working very hard with our colleagues at 
EPA who deal with agricultural issues, and also our colleagues 
at the USDA who look at all these issues. My sense right now is 
that, given the kind of creativity and innovation that we have 
seen in the agricultural sector, that when this next phase goes 
into place that there will be sufficient quantities of other 
alternatives to allow farmers to continue to have the kind of 
crop protection tools that they need.
    I can't say that it is going to be painless, but we have 
worked as hard as we can with our colleagues at EPA to get 
other things approved. We have worked with our colleagues at 
Agriculture, and I think at this point that we believe that 
that will be achievable, given the kinds of things that we are 
seeing that are coming on the market right now.
    Mr. Shimkus. Well, I would follow up then, and ask for you 
to work closely with the USDA, who has spent over $100 million 
for research alternatives, and I am not sure they are as 
optimistic as you might be of the ability to replace this. If 
you can do that, if we are getting contradictory signals, then 
that would be helpful for me to know. But I think there is a 
big concern out there, because there has been reduction, but 
the next phase could be at such great cost that it will be 
economically unfeasible and cause great harm in central and 
southern Illinois, for sure, and anyone. It is not just our 
commodity products but also in the storage of grains. It is a 
critically important ingredient.
    So I just throw that out. If you work with me on that, it 
would be helpful.
    Mr. Holmstead. I would be delighted to do that, and we can 
make sure that our staff is in contact with someone that you 
would designate.
    Mr. Shimkus. And I think from your opening testimony, from 
what I hear, and now going back to the issue at hand, that this 
cap and trade issue is something that is receiving great 
optimism in the future.
    Can you just briefly talk about the whole issue of ``hot 
spots'' and how the cap and trade issue deals with the whole 
debate on ``hot spots''?
    Mr. Holmstead. Back in 1990 there was a fair amount of 
concern about that issue, because trading would be allowed--
Some were concerned that we would create ``hot spots.'' Let me 
just say two important things that I think everyone needs to be 
aware of.
    First of all, everyone would still be required to meet the 
Federal standards for clean air. So the NAAQ standards remain 
in place, and under any sort of a trading program every area of 
the country is required to meet those. It is not as though this 
trading program can overrule that. So essentially, people are 
guaranteed that the existing mechanisms of the Clean Air Act 
will protect against that.
    In addition, what we can say--Again, this is one of these 
areas where I have been a little bit annoyed. There was a 
report that came out from one of the environmental groups that 
picked out a couple of areas where they said emissions had 
increased between 1995 and 2000.
    Well, again, you can prove almost anything if you 
manipulate the baseline years. Given that the acid rain trading 
program actually started in 1990, if you look from 1990 to 
today, everywhere in the country has cleaned up. There is no 
part of the country that has air that is--Well, let me say that 
in a slightly different way. There is nowhere in the country 
where utility emissions are higher as a result of the cap and 
trade program.
    So it is true that some facilities may reduce more than 
others, but facilities across the board reduce every where, and 
especially when we are talking about the kinds of reductions 
that the President has proposed. More than 70 percent, or 
basically 70 percent of all three pollutants, there is simply 
no possible way for there to be ``hot spots'' that would cause 
levels of concern.
    Mr. Barton. The gentleman's time has expired. The gentleman 
from Michigan.
    Mr. Dingell. Mr. Chairman, thank you. Mr. Holmstead, 
welcome to the committee. I note that Administrator Whitman has 
reaffirmed EPA's commitment to lower the level of sulfur diesel 
fuel to 15 parts per million by mid-2006 as a part of the heavy 
duty diesel engine rule. Removing sulfur from diesel fuel will 
have substantial benefits to air quality, including reductions 
in particulate matter, oxides and nitrogen, and SO2, 
some of this on the order of 90 to 95 percent.
    Clean burning diesel technology is accepted widely in 
Europe. Forty-eight percent of the passenger vehicles sold 
there last year, including 75 percent of luxury vehicles, will 
have clean burning diesel engines that are made possible by 
removal of sulfur from fuel. The fuel economy of these vehicles 
is phenomenal.
    Audi's A2 gets 78 miles per gallon. This is in a full size 
vehicle. In Europe, the sulfur standards range from zero parts 
per million in Sweden to 10 parts per million in the rest of 
Europe. By 2010 diesel fuel must be sulfur free throughout 
Europe.
    Now is there any technical reason why EPA did not set the 
standard to be consistent with the European standard, thereby 
allowing widespread introduction of clean burning diesel and 
clean burning diesel engines of extraordinary fuel efficiency? 
Is there a technical reason why they didn't?
    Mr. Holmstead. The issue, I think, that you are raising is 
why the difference between our standard, which is 15 parts per 
million----
    Mr. Dingell. No. The question, sir--I have a special reason 
for wanting the answer to the question in the particular form 
in which I gave it to you. I will repeat. Is there any 
technical reason why EPA did not set the standard to be 
consistent with the European standard, thereby allowing 
widespread introduction of clean burning diesel and clean 
burning diesel engines? Yes or no?
    Mr. Holmstead. I think there may be a technical reason, and 
I would be happy to----
    Mr. Dingell. Are you aware of it now?
    Mr. Holmstead. Here is what I think the issue is.
    Mr. Dingell. Is there any technical reason why we couldn't 
do it?
    Mr. Holmstead. I think there is, yes. I believe it has to 
do with the way fuel is transported. In our country, given how 
much we use pipelines to transport the fuel, even if you 
eliminate sulfur entirely at the refinery, by the time it 
actually gets to the place where you put it in the cars, it 
tends to pick up--We are talking about parts per million levels 
here, and my understanding is that actually, given the kinds 
of--and again very small amounts of sulfur that can be 
introduced in the transportation system. That is the issue.
    Mr. Dingell. Sir, Europe has the same transportation 
problems we do, do they not?
    Mr. Holmstead. I am not sure of that, but I do want to 
assure you of this, that we believe, and all of our technical 
people strongly believe, that with 15 ppm diesel fuel that that 
will facilitate the widespread use of clean, very fuel 
efficient cars in this country. So we don't expect that the 
small--Remember that right now much of the fuel is 5,000 or 
3,000 ppm. So by going from that, from the 5,000 or 3,000 or 
even 500 ppm down to 15, we will facilitate the use of that.
    Mr. Dingell. You just said something there, and you said 
that the levels that you have fixed it at are going to permit 
us to go to clean burning diesels and clean burning fuel. I 
want you to make that as a flat statement, not as a statement 
in which you say ``I think'' and ``maybe,'' because I want this 
record to reflect what EPA did, and I want you to give us a 
good, hard answer and not a toad answer.
    Now is this going to facilitate the use of clean burning 
diesel engines like the A2, or is it not?
    Mr. Holmstead. Yes, it will.
    Mr. Dingell. It will?
    Mr. Holmstead. Yes.
    Mr. Dingell. And what will be the fuel efficiency of those 
engines?
    Mr. Holmstead. That will depend on many things. I honestly 
don't know, but we do know that on average you will get better 
fuel efficiency from diesel engines.
    Mr. Dingell. Let me ask you this question. The standard is 
an average. So if one refiner or one refiner run is at zero and 
another refiner run is at 30, you are going to have somebody 
getting runs which are going to be high in sulfur. This high 
level of sulfur in the fuel is going to create significant 
problems in terms of the operation of the catalyst, and the end 
result is the catalysts are going to get skunked up, as they do 
with lead.
    The end result is you are going to have a lot of unworkable 
catalysts. EPA is not going to allow the shift to an A2 or 
something like that, simply because the fuel does not clear the 
catalyst in proper fashion, reacts in a way inside the catalyst 
that makes the catalyst not work. Isn't that so?
    Mr. Holmstead. I don't think we--It is certainly true that 
excessive sulfur levels can clog what is referred to as the 
catalyst. We don't believe that that will happen with the fuel 
standards that we have set, and I would be happy to provide 
much more detailed technical information, but we have----
    Mr. Dingell. I am going to send you a letter so that you 
can give us a much more definitive response to these matters, 
because I know you----
    Mr. Holmstead. I have seen some of your letters before. We 
will look forward to the opportunity.
    Mr. Dingell. I know you want that assistance, and I know 
you want to give us an answer which is helpful to the concerns 
which I have expressed today. For that reason, Mr. Chairman, 
noting my time is getting close to expiration, I would ask 
unanimous consent that the record be kept open both for the 
letter, which I will send to you, dear sir, and also to the 
Department of Energy, asking certain questions.
    Of course, I know you are going to make all effort to get 
that letter response back so that our chairman will not be 
distressed about the fact that you have----
    Mr. Barton. You know, I would not want to be distressed, 
and I am distressed when Mr. Dingell is distressed. So we want 
to keep us both undistressed. I think that is fair to say.
    The gentleman's time has expired, and we will have a second 
round of questions for this witness if the panel wants to. I 
want the members to know that.
    The Chair would recognize the gentleman from Kentucky for 5 
minutes for questions.
    Mr. Whitfield. Thanks, Mr. chairman.
    Mr. Barton. Will the gentleman suspend? The gentleman from 
Michigan had a unanimous consent request. Would the gentleman 
from Michigan--Could we have the gentleman from Michigan's 
attention, please? Would you restate your unanimous consent 
request? I know you asked.
    Mr. Dingell. I asked to have the record kept open so that 
the letter could be in this record, if you please.
    Mr. Barton. Hearing no objection, so ordered.
    Mr. Dingell. Thank you for your kindness, Mr. Chairman.
    Mr. Barton. The gentleman from Kentucky is now recognized 
for 5 minutes for questions.
    Mr. Whitfield. Mr. Holmstead, the 1990 amendments relating 
to Title III included a list of 189 substances to be regulated 
by the Environmental Protection Agency. I was reading Dean 
Goldstein's testimony, and he was talking about how the fact 
that we have gone to this precautionary principle in changing 
the burden of proof basically on listing an item, that that 
presented real problems in determining the impact on health. He 
specifically stated, ``Simply put, you cannot know what harm 
has been averted if you regulate pollutants without sufficient 
degree of what their harm is.''
    Would you comment on the concern about this precautionary 
principle?
    Mr. Holmstead. I think Mr. Goldstein actually raises a 
legitimate concern that we have also been looking at. The 
theory behind Title III was that we would--It is a technology 
based program. So that what we would do is look at the 
technology that is currently being used in an industry sector. 
There is sort of a complex formula for doing that, but then 
making sure that that same technology is used in the rest of 
the sector.
    So the theory is this was just a program to make sure that 
we are sort of leveling the playing field by requiring good 
technology across the whole sector. One of the things that I 
think we have learned over the last 10 years or 12 years is 
that, because we are regulating individual compounds and so you 
are only subject to regulation if you use or emit one of those 
188, in at least some cases what that has encouraged companies 
to do is to simply switch from a listed compound to an unlisted 
compound.
    We know relatively little about the relative toxicity of 
those different things. So I think it is something of a 
concern. On the whole, I think we are confident that, viewed as 
a whole, the program has been successful in reducing hazardous 
air pollution and reducing risk. Because it is not a risk based 
program, we know relatively little about exactly what those 
risks have been, and that is one of the things that we are 
struggling with right now.
    I will tell you that we are nearing the end of this 
program. We are almost through with the Title III program and 
are entering a phase now that we refer to as the residual risk 
phase where we actually do look specifically at the risks. 
Technically and scientifically, it is much more challenging, 
but I think it is a more effective way than the technology 
based standards have been, although I think, viewed as a whole, 
they have been quite successful, but I think there are some 
legitimate concerns that all of us have about those.
    Mr. Whitfield. And the EPA cannot remove a compound from 
the list unless there is proof that there is no harm. Is that 
correct?
    Mr. Holmstead. That is correct, yes.
    Mr. Whitfield. Now methyl bromide, that is on the list. Is 
that correct? That is one of the 189?
    Mr. Holmstead. I believe that it is.
    Mr. Whitfield. Now it is my understanding that on January 
1, 2003, the amount of methyl bromide will be reduced by 70 
percent. Can you ensure current users of the product that by 
January 1, effective and commercial viable alternatives will be 
available to substitute for that 70 percent?
    Mr. Holmstead. Let me come back before I answer and just 
correct something I just said. My staff reminded me that methyl 
bromide is not actually one of the 188 substances listed under 
Title III.
    Mr. Shimkus [presiding]. If the gentleman would suspend, we 
are looking through the legislation right now, and I think we 
have methyl bromide. For the record, it is on the list, 74839.
    Mr. Holmstead. Okay. So methyl bromide is on the list of 
HAPs.
    Mr. Shimkus. Right. So I just wanted to interject.
    Mr. Holmstead. Let me amend my amendment. I think the real 
issue you are getting at, as I understand your question, really 
doesn't deal with the fact that it is listed as a hazardous air 
pollutant. That only applies to major stationary sources. I 
think the big concern that the agricultural community has had, 
and they are not regulated under Title III, is under Title VI. 
Methyl bromide is also listed as an ozone depleting substance 
and, therefore, under the Montreal Protocol.
    As I mentioned just a few minutes ago, Congress actually 
went back in 1998 and made our regulatory structure here less 
stringent to give U.S. businesses more time to phaseout of 
methyl bromide. So under the original Act, methyl bromide would 
have been phased out 100 percent with no exceptions by 2001. In 
1998 Congress actually adjusted that and adopted the same 
phaseout schedule that is required under the Montreal Protocol.
    Now that Protocol, I think, required an initial reduction 
of 25 percent, then 50 percent, then, as you say, 70 percent.
    Mr. Whitfield. But I notice that developing nations have 
until about the year 2015. Now the Department of Agriculture 
has spent $100 million trying to come up with alternatives for 
methyl bromide, and I know that all have Fast Track 
registration process for any alternative. Are you aware of any 
alternatives that they are seeking to register as a substitute 
at this time?
    Mr. Holmstead. Yes, actually. There are several. At this 
point there is no single alternative that can substitute for 
methyl bromide in all applications. Methyl bromide has been a 
very effective and useful product, but there have been a number 
of--In fact, right now moving through the process there are 
alternatives that will really, I think, take the place of 
methyl bromide in all of the major applications that I am aware 
of.
    Now this is something that we are looking at very closely, 
and we will be happy to work with you more on it, but it is a 
significant issue.
    Mr. Whitfield. Mr. Chairman, I have some additional 
questions that I would just submit, and would appreciate if you 
all could get back with me.
    Mr. Shimkus. There has already been a unanimous consent 
request open, and they will comply, and I would--The extra time 
was because of the brilliance of his last question. I wanted to 
make sure that he had full opportunity to respond. I will now 
turn to my colleague from California, Mr. Waxman, for 5 
minutes.
    Mr. Waxman. Thank you very much, Mr. Chairman. Mr. 
Holmstead, the Bush Administration has increasingly been 
criticized for withholding important information from the 
Congress and the public, and I want to say that I was pleased 
that Chairman Barton raised this issue with you with regard to 
the Environmental Protection Agency, because it seems like your 
office appears to be participating in these efforts to keep 
Congress and the public in the dark.
    Last September I requested certain data that EPA had in its 
possession. That was over 7 months ago. I renewed that request 
on March 7, almost 2 months ago, and most recently on April 18, 
I and 17 colleagues on the Government Reform Committee had to 
invoke our rights under the 7 member rule to seek this 
information. Yet today EPA has neither produced the data, 
indicated when the agency will provide it, nor provided any 
reason for the delay, and that is completely unacceptable.
    What, of course, we are asking for is technical data, not 
State secrets, and all we are seeking is data that EPA has 
modeled on the air quality effects and costs of requiring power 
plants to meet various levels and timing of pollution limits. 
This is data that is essential to us to evaluate the proposal 
that may be presented to us from the President on clean air, 
and I am pleased you said to Chairman Barton that you are going 
to finally release the data generated by EPA.
    Can you tell me today that EPA will fully comply with my 
April 18 information request?
    Mr. Holmstead. As I mentioned in response to the chairman, 
we are turning over all of the air quality modeling which--I 
don't have your request in front of me, but we are turning over 
all of the air quality modeling data that we have developed 
over the last number of months that is really relevant to the 
issue of controlling emissions in the power sector.
    Along with that, we are giving you the underlying, what we 
call the IPM model runs, which are really the--It is a linear 
programming model that we use to look at the effects of 
different policies on power generators. So you will have all of 
that data, and we will begin to provide that with you by the 
end of the week. We should be able to collate it and get it all 
to you, and I must warn you, it's quite extensive.
    Mr. Waxman. Well, I accept the warning, and also I want to 
advise you that we sent in several requests to you for 
information, and we would want our requests complied with. It 
is our way to be able to know the real facts about the 
President's air pollution proposal, and some of these facts 
have apparently been obtained by the New York Times. So 
technical data ought to be available to the Members of the 
Congress. So I hope you will look at that April 18 letter and 
fully comply with it.
    Under the Clinton Administration, EPA sued nine power 
companies for violating the Clean Air Act by expanding their 
facilities and increasing emissions, but failing to install 
pollution controls. Those nine companies are responsible for 
about a quarter of the total emissions of NOX and 
SO2 from the power sector, and according to a recent 
report, these emissions contribute to roughly 5,000 to 10,000 
premature deaths per year. They also cause other harm to health 
and the environment.
    Some people estimate that pursuing just the pending 
enforcement actions could reduce emissions of NOX 
and SO2 by roughly 5 million tons per year. Power 
companies are refusing to settle these lawsuits, because they 
figure EPA will change the rules to let them off the hook 
directly or to weaken the government's case.
    In your former job, you represented industry fighting EPA 
on air regulations. So you know that even a proposed rule can 
be used in litigation to support industry's interpretation of 
the law. Will you commit to complete the enforcement cases 
before proposing any changes to the NSR rules?
    Mr. Holmstead. First of all, just to clarify a 
misperception that you may have left with some people, I never 
represented anyone in the power industry, and certainly not 
anyone who was the subject of any of these enforcement actions, 
just lest anyone have that misperception. I also want to assure 
you, as I know Government Whitman has, as well as Attorney 
General Ashcroft, that we are pursuing all of those enforcement 
cases.
    As a legal matter, as you know, nothing that we could do in 
terms of administrative reforms to the NSR program would have 
any impact on those cases as a legal matter, because----
    Mr. Waxman. Let me ask you this, because I see my yellow 
light, and the time is going to be finished: The Attorney 
Generals is concerned EPA is undermining these cases, but the 
real concern a lot of us have is whether there is going to be a 
change in any regulation without the opportunity for public 
comment. Will you be able to assure us that before finalizing 
any rule change, you will comply with the request that you 
allow public comment?
    Mr. Holmstead. We will certainly satisfy all of our 
obligations under the Administrative Procedures Act to have 
full public participation for all of the things that we are 
considering, and again I must point out that most of the things 
that we are considering as possible administrative changes are 
things that were proposed by the Clinton Administration back in 
1996.
    Mr. Waxman. Will you accept public comment on your specific 
proposal before it is finalized?
    Mr. Holmstead. Where we need to do that under the 
Administrative Procedures Act, yes, we will.
    Mr. Waxman. How about where you need to do it for public 
participation and good government and to make a better 
regulation by hearing what the other side, other views, might 
tell you?
    Mr. Holmstead. Again just to be completely clear here, 
there are a few proposals that we are considering that were 
proposed in 1996 by the Clinton Administration. They were the 
subject of extensive public comment, including a number of 
public hearings. Since I have been at EPA, we have had numerous 
public meetings about those very same issues, those very same 
proposals.
    Where there has already been a comprehensive public 
process, including literally thousands of public comments, at 
this point our current intention is to go ahead and finalize 
some of those reforms. Now none of those reforms, just so you 
know, really have any relevance to the power sector. They tend 
to be things that I know your staff is aware of, things like 
the plantwide applicability limit, some ideas for reforms that 
have been around for many, many years.
    The issues that seem to be of greatest concern to people 
are things that we are planning to go through a new public 
notice and comment process on. So we anticipate at this point 
proposing a series of possible changes and taking full public 
comment on those.
    Mr. Waxman. Thank you very much.
    Mr. Barton. The gentleman's time has expired. I think the 
gentleman from Ohio is actually next, Mr. Hall. I think it is 
Mr. Sawyer's turn, but if he wants to yield to you, I would be 
happy to let him yield to you.
    Mr. Sawyer. Thank you, Mr. Chairman. Just out of curiosity, 
the 90 day review on New Source Review has been going on for 9 
months. Can you give us a sense of when we are likely to see 
the results of that work?
    Mr. Holmstead. I hope it will be fairly soon.
    Mr. Sawyer. I suspect we will keep asking those questions 
as these hearings go on.
    Can I ask you what we can expect? Will it include a 
clarification of what we mean by routine maintenance or will it 
simply remove the program altogether?
    Mr. Holmstead. Well, we have no ability administratively to 
remove the program. One of the things that we are looking at, 
and one of the things that many, many people have asked us to 
do, is to provide a more clearcut definition of routine 
maintenance, repair, and replacement. That is one of the 
reforms that at this point we are planning on doing.
    Mr. Sawyer. Regulatory certainty would be of enormous 
value.
    Mr. Holmstead. Yes, I think that is a fair point, and that 
is one of the things that we are planning to do.
    Mr. Sawyer. Let me ask you another question. Under the 1990 
amendments, how did the EPA select the total number of sulfur 
dioxide emission allowances to distribute, and were the 
allowances distributed equally among power plants? How did the 
power plants obtain them, and how much trading actually took 
place? A series of questions to let you talk about the whole 
trading program.
    Mr. Holmstead. The issue of allowances was debated 
extensively, both in the House and in the Senate. In the end, 
as I recall, Congress actually assigned allowances in the 
legislation. I believe that the Title IV of the Clean Air Act 
actually lists all of the then existing plants along with the 
allowances that they were entitled to under that.
    Mr. Sawyer. I couldn't remember.
    Mr. Holmstead. Yes. I believe that is the case. One of the 
big issues always tends to be, if you allocate based on 
emissions, then you penalize people who are already cleaner. So 
the way that I think we have dealt with that in other 
circumstances is to do it based on heat input, which is sort of 
a fairer way of doing it.
    What I can tell you is, yes, a fair amount of trading has 
gone on. As I mentioned before, the program has been just sort 
of amazing for people, because there was this theory back in 
1990. A lot of people were very concerned about it, but in 
fact, the supporters, including Joe Goffman from Environmental 
Defense, were correct, that when you actually give them an 
economic reward for overcomplying, a lot of people figured out 
how to do that and generated excess allowances that they could 
sell to other people who were not able to be as efficient in 
reducing those.
    I actually would guess that Mr. Goffman can perhaps tell 
you more about the number of trades that were made, but a full 
market has actually been developed. You can go on the Chicago 
Board of Trade and actually purchase SO2 allowances, 
if you would like to, and some people have done that.
    Mr. Sawyer. Did Enron do that? No. Thank you very much, Mr. 
Chairman. I yield back.
    Mr. Barton. Probably Enron did, actually, yes. Mr. Markey 
is recognized for 5 minutes for questions.
    Mr. Markey. Thank you, Mr. Chairman, very much. The first 
question: Have you submitted yet, Mr. Holmstead, legislative 
language for your Clear Skies proposal?
    Mr. Holmstead. No, we have not.
    Mr. Markey. You have not. Have the States endorsed Clear 
Skies?
    Mr. Holmstead. I am not sure that, in terms of--Oh, I am 
sorry. There are some. The Western Governors Association has 
endorsed Clear Skies. I believe that I saw something from the 
Southern Governors who have issued a statement saying that they 
endorse a national cap and trade program at least as stringent 
as Clear Skies.
    Mr. Markey. Has the Sierra Club or the League of 
Conservation Voters or Natural Resource Defense Council--have 
they endorsed the plan?
    Mr. Holmstead. Not that I am aware of. I do know that the 
Adirondack Council, which is primarily concerned with the acid 
rain issue, has endorsed the program, because they understand--
--
    Mr. Markey. Which group is that?
    Mr. Holmstead. The Adirondack Council. This is the group 
that has been concerned primarily about acid rain deposition in 
New England, and they have endorsed it because it actually goes 
beyond legislation that Senator Moynihan introduced for a 
number years, actually gets substantially greater reductions 
than that bill. I think they now understand that this would 
really solve the acid rain problem in the northeastern United 
States.
    Mr. Markey. Has any utility group endorsed it?
    Mr. Holmstead. I am not sure. Not that I am aware of.
    Mr. Markey. So the Edison Electric Institute has yet to 
endorse it?
    Mr. Holmstead. I have seen statements saying that they are 
generally supportive of the idea of a multi-pollutant approach. 
I think they are also interested in seeing some of the 
additional details, in particular how allowances would be 
distributed.
    Mr. Markey. Well, my problem with the whole debate is that 
there is no bill to read. There is no language to endorse. 
There is no basis for us to have a discussion. I think that I 
heard you say earlier to Mr. Boucher in answer to his question 
that you think there are 8 to 12 regulatory proposals affecting 
the utility industry that you considered to be 
counterproductive or redundant and that, while you aren't going 
to propose repealing Section 126 of the Act, you did seem to 
suggest that you wanted to rewrite it, at least as it applies 
to utility power plants.
    Have you given us that language yet?
    Mr. Holmstead. No, and let me just clarify. I didn't say 
that we had identified 8 to 12 programs that would be 
counterproductive and that would be replaced. I said I believe 
there are 8 to 12 programs that would affect this sector over 
the next 12 years or so. There are some of those that we do 
think would be counterproductive, and I mentioned two of those 
that we have identified.
    Mr. Markey. Which are those?
    Mr. Holmstead. It is the so called NSR program and the BART 
program. So those are two things from the very beginning we 
have said that we would replace by the President's bill.
    Mr. Markey. You think the NSR program, the New Source of 
respiratory illness program, is too stringent in protecting 
against new respiratory?
    Mr. Holmstead. No, no. It has nothing to do with whether 
they are stringent or not. It just doesn't work very well. If 
you look at the utility sector, there were emissions--The New 
Source Review program has been in place since 1977. Emissions 
from that sector continued to grow all the way through 1990. In 
1990 emissions were over 18 million tons a year of 
SO2, and those have now been cut almost--well, not 
quite in half, but all of those reductions are because of the 
cap and trade program. It has nothing to do with New Source 
Review.
    So we just believe that NSR is a program that hasn't worked 
very well, and a much better way to get those reductions is 
through a cap program similar to what we have achieved under 
Title IV.
    Mr. Markey. Well, let me understand this. In 1999 the 
Clinton EPA filed lawsuits against the electric utilities in 
violation of the New Source Review.
    Mr. Holmstead. Right.
    Mr. Markey. Now many of the utilities were faced with being 
fined and forced to reduce emissions. The Bush Administration 
responds to utility complaints by asking the Justice Department 
to review the legality of the Clinton lawsuits.
    Now when the Bush Department of Justice concludes that the 
Clinton lawsuits against these polluting utilities is legal 
under the Clean Air Act, then the Bush Administration announces 
plans to amend the Clean Air Act. So it seems to me that the 
Clinton Administration had put in place a tough program to 
reduce the new sources of respiratory illnesses in the country, 
these things that the American Lung Association and other 
health associations are very concerned about, and then as the 
utilities continue to drag their feet, hoping for relief, the 
Bush Administration gets elected. They find out that what 
Clinton was doing was legal in reducing the amount of 
pollutants. So then they say we are going to amend the Clean 
Air Act to take care of what the utilities want.
    I think the problem is that the reason I can't read your 
recommendations and be educated as to what you are going to 
propose is that the utility industry wrote them, and that is 
why the Edison----
    Mr. Holmstead. Mr. Markey, just to assure you that that----
    Mr. Markey. Let me just finish my point. The Edison 
Electric Institute wrote the provisions, and we can't read them 
here on this body, even as you testify, because we are not 
going to be given access until all of the pieces are put in 
place that you can roll back the protections that were put in 
place in order to protect those 25 million Americans with 
asthma.
    Mr. Barton. The gentleman's time has expired. The Chair 
wants to let all members know, the purpose of this hearing is 
to look at what has actually happened or not happened in the 
Clean Air Act. Now, obviously, all members, as we all do, are 
free to ask questions about anything, and that is appropriate, 
but we are hoping to focus before we look into future 
legislation initiatives what has happened in the Clean Air Act 
amendments that we passed in 1990.
    I would point out that the purpose of this hearing is not 
to review a Clear Skies initiative legislative proposal, which 
has yet to be developed. So when it is developed, we will hold 
a hearing on it, and perhaps at some point in time even go to 
markup on that legislation or something similar to it.
    Mr. Markey. Well, I appreciate that, Mr. Chairman, but I 
think understanding the history of how we got to the point--
that is, what the Clinton Administration was trying to do--
helps us to understand why they are about to redraft the Clean 
Air Act.
    Mr. Holmstead. Nothing that we are doing under----
    Mr. Barton. Again, the purpose of this hearing is simply to 
look at what has worked and perhaps what hasn't worked under 
the Clean Air Act as it is currently enacted. There will be 
lots of opportunity, and the gentleman from Massachusetts will 
be welcomed at hearings when we begin to be prospective, and he 
knows that. He is a veteran of this committee and a smart guy, 
and very knowledgeable on these subjects.
    The Chair would recognize Mr. Hall for 5 minutes for 
questions.
    Mr. Hall. Mr. Chairman, thank you. My questions would be 
basically on the effect of some of the things that have not 
worked, and maybe to inquire as to how they could be corrected.
    Mr. Shimkus hit on methyl bromide. That is of great import 
to me for a lot of reasons, but for one reason, Marshall 
Milling Company is in my district, is in Denton, Texas, and 
they are affected by it. You gave some answers a few moments 
ago that I think you alluded to the use of methyl bromide, as 
to whether or not that was on the list, and then upon reading 
to you that you were right in the first place, it was on the 
list. You were thinking about the impact on the recovery of 
ozone layer, and they are two different things.
    Now what I want to ask you about is the impact on people 
like Marshall Milling that have to store and process foods, and 
they need methyl bromide to treat pests that could infect the 
stored food. Now that is a goal that none of us can oppose, but 
since the Act--and in 1998 actually, the Congress amended the 
Clean Air Act to move the U.S. phaseout date from 2001 to 2005. 
I think I am correct on that, and that is the phaseout date for 
developing nations. It was at that time. However, at the same 
time Congress included language, it made it clear that such 
uses would be available.
    I didn't really understand why the agency would go on to 
the next meeting of the Montreal Protocol and negotiate 
narrower language that attempted--it seems to me, that would 
negate the Congressional statute. That is one thing that I am 
concerned about.
    My question is why did your agency agree to allow so called 
developing nations that compete with us for the business, for 
the sales and with our economy, to use methyl bromide until 
2015, and yet you are going to phase these people out?
    My last question is: They need a little more time to 
phaseout. Even 2 years would help them. I don't see any real 
opposition to that. Is that possible?
    Mr. Holmstead. Let me try to answer all those questions. I 
think that you raise some very legitimate issues. Just to 
clarify, I think it is important for everyone to understand 
that after what Congress did in 1998 which established this 
phaseout schedule, the schedule in the United States is the 
same as the schedule for all of the other countries in the 
developed world.
    So we are bound not only by the Clean Air Act but by the 
Montreal Protocol. So in order to accomplish what you suggest, 
which would be an additional 2 years, we would have to amend 
the Clean Air Act, but we would also have to seek an amendment 
of the Montreal Protocol or we would be out of compliance with 
our international obligations.
    So just to put it in context, it is not anything that EPA--
and I am not saying that we support that or don't support that. 
Just as a practical matter, it is nothing that EPA can do 
administratively. It would have to be both negotiated 
internationally with all the other parties and then it would 
have to adopted by Congress to give that additional 2 years.
    Now we are doing a number of things to address the concerns 
that have been raised, and I just want to assure you of that. 
One of them, and I am not familiar with the specific company 
that you mentioned, but it sounds like they would benefit from 
something that we have done fairly recently, which is to have 
an exclusion for containment and preshipment, people who are 
storing food and grains.
    So again, I don't know about that specific----
    Mr. Hall. Is that a possibility?
    Mr. Holmstead. We would have to find out for that specific 
company whether they are covered or not, but that is a 
possibility. I think we need to follow up and find out a little 
bit more about what specific company this is.
    The other thing that we are looking at, and we are spending 
a lot of time with USDA right now, is developing a package--We 
are allowed to seek what is called a critical use exemption, 
and at this point we are working to put together a packet that 
will explain to the other members of the international 
community the specific circumstances we have here in this 
country that make it necessary for us to have some critical use 
exemptions to continue to allow us to use methyl bromide for a 
longer period of time than they might.
    So we are very much involved in that process. We have 
regular meetings with USDA as well as members of the 
agricultural community. So that is another thing that we are 
committed to, and we hope that that, in combination with the 
newer alternatives that are being approved right now, that are 
in the approval process, will take care of the concerns that I 
know a number of people in the agricultural community have 
raised.
    Mr. Hall. If our competitors are allowed to go to 2015, 
surely we can afford two more years, and EPA's Registration 
Division has a policy that any methyl bromide alternative might 
be ``fast tracked,'' whatever that means. That would be 
helpful. But if it would help in treating pests that can infest 
stored food and processed food and didn't have any significant 
impact on the recovery of the ozone layer as contemplated under 
the Clean Air Act, there is not any real reason why you all 
couldn't do that, if you can find the authority for it.
    Mr. Holmstead. Right.
    Mr. Hall. All right. I appreciate that. I yield back my 
time. Thank you, Mr. Chairman.
    Mr. Barton. The gentleman from North Carolina, Mr. Burr, is 
recognized for 5 minutes.
    Mr. Burr. Thank you, Mr. Chairman. I feel compelled to 
follow up on Mr. Hall's line of questioning for some of it. 
Heaven forbid that we tick off the international community 
because something is beneficial to our farmers, but I hope you 
heard the message that he said.
    I would be very curious as to what USDA's suggestions to 
you are relative to whether we should seek some type of 
critical use provision.
    Mr. Holmstead. We are definitely planning to seek----
    Mr. Burr. It was their suggestion that we need more time?
    Mr. Holmstead. Yes, and the way we can accomplish that is 
through the critical use exemption process. Just so you know, 
EPA as an agency is just is committed to that as USDA is.
    Mr. Burr. I hope that, in fact, what you are saying is, in 
fact, correct and that we will see that type of action.
    I would be remiss, and I apologize for my tardiness in 
getting here late--this may have already been covered, but let 
me assure you, if the EPA testifies in front of this 
subcommittee or full committee again and brings testimony in at 
9 o'clock the night before, this is one member that will vote 
that you not have the opportunity to testify.
    That message was sent loud and clear to the last 
administration. I would hope, with changes in the 
administration, we would see changes in agencies, and it is 
unfair to every member of this committee. It is unfair to the 
American people that it would take you that long to clear your 
testimony through whoever needed to clear it. This committee 
should have ample opportunity to read your testimony, to ask 
you questions that are valid to your testimony, and not have to 
spend all night sitting up reading your testimony. Please pass 
that message on to the Administrator, if you will.
    Mr. Holmstead. I will be happy to.
    Mr. Burr. Mr. Holmstead, public opinion shows that people 
believe that air is getting dirtier, not cleaner, as EPA's 
emission trends report constantly show. Why do you think that 
that is the case?
    Mr. Holmstead. I had better be careful, lest I be too 
provocative, but I think that there may be some groups that 
have an interest in creating that misperception, because 
otherwise it makes it harder for them to attract support for 
their groups. I don't want to mention anybody by name.
    Mr. Burr. What challenges does that present to the EPA as 
it relates to explaining the gains that you have made?
    Mr. Holmstead. Well, we have a number of communications 
challenges. I think all of us recognize that we are in a 
political environment that is very difficult, and our mission 
is to clean up the air and to do it in the most efficient and 
cost effective way possible.
    We have actually done some things to try to get out the 
message that the air is cleaner, is actually much cleaner, and 
we are getting many improvements. So from a communications 
perspective, it has been a challenge, and that is one of the 
reasons we appreciate the chance to be here today and to try to 
help set the record straight, that notwithstanding this 
misperception, the air is dramatically cleaner than it was 30 
years ago, and it will continue to improve over time.
    Mr. Burr. Several places in your testimony, you reference 
to stakeholder involvement and public-private partnerships such 
as the EnergyStar program and Commuter Choice program. Do you 
believe that the agency's experiences in these areas justify 
continued such efforts in the future?
    Mr. Holmstead. Absolutely. One of the things that has been 
surprising and gratifying to me in the year that I have been at 
the Agency is to see the kinds of environmental benefits that 
we get from these sorts of nonregulatory programs where we 
work--and stakeholder is a word I don't particularly like. It 
was coined, I don't know, some years ago--with people who have 
a real interest in our issues from the industry sector, from 
public groups, community groups.
    If you look at something like the EnergyStar program, if 
you look at all of the programs we have, for instance, focused 
on asthma and improving indoor air in homes and in schools, we 
get enormous benefits from those programs, and we do it through 
nonregulatory programs. I think in many ways, that is an 
opportunity that we are looking to expand, to continue to 
achieve those sorts of benefits.
    Mr. Burr. North Carolina is within the reach of an 
agreement between the State and our generators of electricity 
on an agreement that will have a substantial impact on cleaning 
the air in our State. Does the EPA have any comment or 
observations on this agreement that was reached outside of the 
realm of the EPA and the Federal Government?
    Mr. Holmstead. We support those sorts of programs, which I 
think have been successful not only in North Carolina but in 
other areas as well where, through this sort of a stakeholder 
process, without legislation or regulation, industry and 
governments and community groups have been able to come 
together on approaches which will necessarily involve 
significant expenditures of money, but people have been willing 
to step up to the plate and do that, and we really applaud 
those sorts of efforts.
    Mr. Burr. Does the EPA envision that State regulators could 
potentially play a larger role in the future with flexibility 
to bring others to the table at reaching agreements that may 
not be necessarily structured by the EPA, but do reach 
agreements that clean up the air and clean up the water?
    Mr. Holmstead. Absolutely. I think that the culture at EPA 
has evolved over a number of years, and I wish I could take 
credit for this, but I think it is not new with this 
administration. I simply think that over time as the agency has 
become aware of the successes of these programs, has developed 
more confidence in State regulators and seeing the caliber of 
people that we have in many States, as well as the honest 
commitment of industry, I think that we have become 
increasingly supportive, and we are firmly committed to those 
sorts of programs and that sort of flexibility.
    Mr. Burr. I thank you for being here. I thank the chair.
    Mr. Barton. Thank the gentleman from North Carolina. Would 
recognize the gentleman from Pennsylvania for 5 minutes of 
questions.
    Mr. Doyle. Thank you, Mr. Chairman. Administrator 
Holmstead, thank you for your testimony today and for being 
here.
    I just have one question, because many of my questions have 
already been answered. You made it very clear that EPA believes 
that this market based cap and trade program such as is 
utilized in the acid rain program is going to be, in your 
opinion, the most effective way of addressing other pollutants. 
Especially in my neck of the woods, in western Pennsylvania, we 
have seen how we have involved State and local governments in 
the SIPs, the State Implementation Plans, as we were trying to 
achieve our emission reductions.
    If this cap and trade approach is utilized on a wider 
basis, what do you see as the involvement of State and local 
governments in the process?
    Mr. Holmstead. Well, let me start by saying this, and there 
were some maps that we were able to release, I think, last 
week. With the President's proposal, most areas of the country 
that are out of attainment with either ozone or fine particles 
will come into attainment with no further action by State and 
local governments.
    One of the reasons why we are so supportive of this sort of 
a cap and trade system on a national basis is it really gets--
It saves enormous resources at the State and the local level, 
because by getting this national and regional reduction in 
pollutants, there is no longer a need to go through the SIP 
process in many parts of the country.
    I don't know specifically about your district. I would be 
happy to look at that. But it may be that those sorts of 
programs will continue to be effective to look at local 
problems, to look at priorities within your community and 
within your area, but they will no longer be necessary to 
address the Federal standards, because that will be taken care 
of by the cap and trade program for utilities.
    Mr. Doyle. Thank you. Mr. Chairman, I yield back, in the 
interest of time.
    Mr. Barton. The gentleman yields back the balance of his 
time. The Chair would recognize Mr. Barrett for 5 minutes for 
questions.
    Mr. Barrett. Thank you, Mr. Chairman, and thank you for 
your testimony, Mr. Holmstead. I appreciate it.
    May 1 is a big day in Wisconsin, because this is the day 
when gasoline terminals all over the State have to transition 
from winter to summer reformulated gas. This has been an issue 
in Wisconsin the last several years as we have seen 
unbelievable gas spikes as a result of this transition.
    I am concerned, because I am worried that EPA, although it 
certainly has indicated its interest in clean air, does not 
seem to be at all sensitive to the issue of price spikes or 
price stability that accompany this program. Earlier this year 
I wrote a letter to Administrator Whitman back in March 
proposing a government-industry partnership to prevent retail 
gasoline price spikes in the midwest this summer.
    I sent a similar letter to the president of the American 
Petroleum Institute and to Energy Secretary Abraham. I was very 
pleased to get a prompt response from the president of the 
American Petroleum Institute, but I am disappointed that he is 
the only one so far who seems to have any specific interest in 
this problem.
    As I noted to Ms. Whitman in my letter to her, the EPA's 
recent initiatives on blendstock accounting may well help the 
problem, but I don't think that these measures alone are enough 
to have a quiet summer in Wisconsin as it pertains to this 
issue.
    I would like you to respond to my concern and to relay my 
concerns to the Administrator, because simply saying, well, 
price is not our issue leaves the people in the State of 
Wisconsin befuddled and leaves them at a loss as to what to do.
    I understand what the EPA's role is, but I can't fathom a 
situation where, if prices go to $2, $3, $3.50 a gallon, that 
there is no concern there from the EPA.
    Mr. Holmstead. If I can just tell you the extent to which 
we are concerned about this issue, I get every day an update on 
wholesale and retail prices of reformulated gasoline, and there 
are a number of people who watch this very carefully, because 
we are extremely concerned about the price spikes that we have 
seen over the last couple of years during this transition 
period.
    We engaged in a very comprehensive process. We met with 
State officials. We also met numerous times with folks in the 
industry to try to figure out if there was a better way for us 
to have our regulatory program that meets the requirements of 
the Clean Air Act, but also makes this transition program work 
better.
    We have adopted three reforms. We had proposed a fourth 
reform, and then were convinced by the industry that it could 
actually make things worse. It was not only the blendstock 
accounting rules that you mentioned. We have granted additional 
discretion in what we call the first tank turnover to alleviate 
and to make that whole transition from winter to summer go more 
quickly.
    I am sorry that you haven't received a response yet. I will 
check into that, but I can assure you that this is something 
that we take very seriously, because we don't like the 
perception or the misperception that our program is creating a 
hardship on drivers in the midwest. That is not what we are 
about. We have done everything we can to try to improve that, 
and we are happy to sit down again and think more creatively 
with State officials and with industry officials to see if 
there is a better way for this program to work.
    Mr. Barrett. If you could tell me the extent to which you 
have worked with industry. I just want the prices not to go 
through the ceiling. That is perception or misperception. I 
just remember coming out of a stall in a men's room and having 
a constituent waiting for me, because gas prices were so high 
in the midwest and in Wisconsin, in particular.
    To me, I need to know specifically what you are doing with 
industry. I saw the testimony of the president of Marathon--I 
think it was Marathon--yesterday before the Senate committee, 
saying that there was no withholding of supply. I can't accept 
the notion that, well, that is not our bailiwick. So I need to 
know what you are doing to make sure that the supply is 
adequate. The issue is adequate supply.
    Mr. Holmstead. I want to be careful how I say this, because 
I want to make sure that I am saying it precisely. We have 
looked at this issue every year since before I got there. The 
first thing that almost was on my plate when I arrived last 
April was this very issue.
    In our conversations with many of the industry groups, what 
they tell us is that there are many other explanations for 
these price spikes, and I can't go through them all. I am not a 
refinery expert or a supply expert. They think that actually 
very little, if any, of these price spikes have to do with EPA 
regulations.
    Now everyone likes to point their finger at us, and we have 
tried to look at everything we can. I can tell you, we have had 
numerous meetings with not only the trade associations, API and 
NPRA, but we have also met with a number of the refineries that 
supply those areas to talk about ways in which we can make our 
program work better.
    There are many other market forces at work that have little 
or nothing to do with EPA, and those we can't control. But what 
I can tell you is anything that we can do, we are doing, and 
anybody that has any additional ideas, we are happy to sit down 
and talk with them about that, because that is a very serious 
issue.
    Mr. Barton. The gentleman's time has expired.
    Mr. Barrett. One second, if I may. Again, my request 
specifically is to follow up with the Administrator and ask her 
for a response. If you can let us know what you are doing, we 
are in the dark. We don't know what you are doing.
    Mr. Holmstead. I will make sure that we follow up on that 
and get you a response.
    Mr. Barrett. Thank you very much.
    Mr. Barton. Before we recognize Mr. Radanovich, the Chair 
has participated in the last 6 years in at least two, and I 
think three, investigations of alleged price gouging, supply 
withholdings. In every case, we found out that there are acts 
of God and market forces that are predominantly, if not 
totally, the cause of the increase in prices.
    I mean, the fact is we have got a very tight refinery 
situation in this country. World economy is coming back, and if 
you get a little bit of discontinuity in the pipeline 
somewhere, there is going to be some regional price spikes. I 
mean, I don't know in this case, but that is the case--That is 
what is happening in every other look-at we have had at these 
issues.
    Mr. Barrett. Mr. Chairman, if I could respond just for 10 
seconds.
    Mr. Barton. Sure.
    Mr. Barrett. Certainly, acts of God--I am not messing with 
the big guy or the big gal, but the refinery issue--There 
certainly, I think, is a correlation in the size of the 
refineries and the fact that we have fewer and fewer 
refineries.
    Yes, I understand your comment alleged this or that. The 
reality in Wisconsin is people feel they are being gouged, and 
it is Republicans. It is Democrats. It is Independents. 
Everybody feels they are being gouged. So there is probably a 
different perspective in Texas where some of this comes from, 
but in Wisconsin----
    Mr. Barton. Well, our people feel gouged. There is no 
regional gouging implication.
    Mr. Barrett. Come to Wisconsin.
    Mr. Barton. I mean, they feel just as gouged in Texas. The 
fact is, when gasoline goes above $1 or $1.25, everybody----
    Mr. Barrett. I am talking $2. I'm talking $2.
    Mr. Barton. Well, I would encourage them to vacation in 
Texas this summer. You can still get it for $1.26.
    Mr. Barrett. That is why there is all those rich people in 
Texas and not that many rich people in Wisconsin.
    Mr. Barton. The gentleman from California is recognized for 
5 minutes.
    Mr. Radanovich. Thank you very much, Mr. Chairman. Thank 
you. I am going to bring up a subject that certainly has come 
up, I understand, and that is methyl bromide. I need to way in. 
I come from one of the top agriculture producing counties in 
the Nation, Fresno, California. I am dismayed at the agencies--
No. 1, their insincerity. I think, on the 2001 deadline for 
providing a suitable replacement when guarantees were made that 
suitable replacements would be fast tracked for Federal 
approval by the time that methyl bromide was phased out. And by 
an appearance of the administration not to move the phaseout 
period from 2001 to 2005, as was expressed by Congress. 
Especially when, as I understand, during the Montreal Protocols 
the negotiators' narrow language did not include the extension 
of the phaseout period from 2001 to 2005 in their negotiations, 
even when Congress had already spoken to that issue.
    What is the intent of the administration? No. 1, are we 
going to fast track some reasonable alternatives, those that 
are acceptable to the farming community in the United States? 
Are we also going to extend that deadline to 2005?
    Mr. Holmstead. We already did that.
    Mr. Radanovich. You took care of it?
    Mr. Holmstead. Yes. That was effectively done by Congress 
in 1998. The deadline for the phaseout of methyl bromide was 
originally 2001. With the encouragement of then the Clinton 
Administration, the Congress actually did move that back to 
adjust our statute. So the phaseout date for methyl bromide is 
2005.
    Mr. Radanovich. Was that included in the Montreal 
Protocols?
    Mr. Holmstead. Yes. The situation before then was that in 
the 1990 amendments Congress actually put the United States on 
a more aggressive, more stringent schedule.
    Mr. Radanovich. Right.
    Mr. Holmstead. Then in 1998 Congress then adjusted that 
schedule to push it back from 2001 to 2005. So that is the case 
right now. I think the big concern--A legitimate concern that 
people in the agricultural community have is that there is a 
gradual phasedown. The first two phases have already occurred. 
There was a 25 percent reduction a couple of years ago, and 
then a 50 percent reduction.
    In January of 2003, it goes from 50 percent to 70 percent, 
and I think there is legitimate concern by people who have used 
methyl bromide for many years--they know how it works--about 
what they are going to do. We are working very closely not only 
with the ag community but with our colleagues at USDA to make 
sure that there are adequate alternatives.
    Now we, obviously, don't do the R&D work to develop those, 
but we have fast tracked them. I need to check with my 
colleague in the Pesticide Office, but there is at least two 
and maybe more alternatives that are under review right now 
that we expect to have approval on very soon.
    Mr. Radanovich. Would you call that under fast track?
    Mr. Holmstead. Yes. Oh, yes. Those approvals--Let me just 
assure you that we listen to the agricultural sector.
    Mr. Radanovich. Good.
    Mr. Holmstead. And those are being fast tracked right now 
to get those done.
    Mr. Radanovich. Thank you. I appreciate the clarification. 
Thanks.
    Mr. Barton. Does the gentleman yield back his time?
    Mr. Radanovich. Yes.
    Mr. Barton. The gentleman from Tennessee, Mr. Bryant, is 
recognized for 5 minutes.
    Mr. Bryant. Thank you, Mr. Chairman. I apologize. We have a 
number of commitments, as the speaker understands, that keep us 
from this hearing, but I wasn't sure I was going to be able to 
get here and had submitted some questions, or will be in the 
process--I didn't bring them with me--of submitting some 
questions for the speaker to answer and just add as, I assume, 
a late filed exhibit to your testimony.
    I would like to ask, if I could, though, in just sort of a 
follow-up to that: During the rulemaking process regarding 
diesel fuel for over-the-road trucks, and particularly on 
behalf of the marketers of that fuel, we ask that, and tried to 
pass some guidance to the EPA on the phase-in period of that 
new, cleaner burning diesel fuel.
    Initially, we were able to get that passed, I think, 
through the subcommittee, but in the full committee it was 
rejected, and a number of very powerful groups were out there 
working against us on that.
    Quite simply, the whole issue to the marketers was the 
expense involved in maintaining separate tanks during the 
phase-in period, and they were willing to go ahead and move 
forward quickly and go to the cleaner fuel immediately at the 
initial starting point rather than have to incur the additional 
cost and risk the complications of mixing up the fuels and 
putting them in the wrong trucks or not being able to afford a 
second tank and having to send customers down the road to their 
competitor, things that just don't really work in the real 
commercial world out there.
    We weren't successful in doing this. It was thought that 
the concept of maybe bringing in the cleaner fuel four or 5 
years earlier might result in some cleaner air four or 5 years 
earlier, and that many of the groups out there that like clean 
air would support that. To the contrary, they were suspicious 
of this and were afraid to support it in fear, perhaps 
legitimately, that if you open it up in one spot that other 
people would open up in other ways, and maybe just defeat the 
whole program in the end.
    It did not work, but one of the discussions we had in the 
negotiations about that was that the EPA would consult with 
those marketers. Even though we weren't going to be able to 
eliminate the phase-in, they would consult with the marketers 
over this and perhaps work out with them something that would 
be more equitable in terms of the economics of it. That has not 
occurred.
    I have heard from the marketers, and they are not--They are 
waiting. They are sitting there anxiously by the phone every 
Friday night waiting for that call, so they could go out with 
you and talk about this, but they are not getting the call. So 
I would encourage you to go back and see if we couldn't move 
that along, and perhaps open up some discussions with them. I 
would appreciate that.
    Let me also--Oh, I would ask also for unanimous consent, 
Mr. Chairman, for my late filed questions to be answered and be 
made part of this record.
    Mr. Barton. Without objection, so ordered.
    Mr. Bryant. I would yield.
    Mr. Barton. The gentleman yields back the balance of his 
time. Does the gentleman from Mississippi wish to ask 
questions?
    Mr. Pickering. Mr. Chairman, not at this moment, if I could 
yield back to you.
    Mr. Barton. Does any other member of the panel wish to ask 
a follow-up question before we release the witness? Mr. Doyle, 
Mr. Sawyer, Mr. Boucher, Mr. Whitfield? Mr. Whitfield, do you 
have a second question or two for Mr. Holmstead? Okay.
    We will release you. Thank you for your testimony. We will 
have some written questions for you. I would ask that you be 
expeditious in replying, and also some of the pending material 
that you talked about in your opening statement and questions 
to me and answers to myself and Mr. Waxman. We would appreciate 
that. But we look forward to working with you.
    One of your predecessors in the Clinton Administration, 
Mary Nichols, got to be on a first name basis with most of the 
subcommittee and the staff in our series of hearings, and we 
look forward to getting to know you just as well.
    Mr. Holmstead. Thank you very much.
    Mr. Barton. Thank you, sir.
    We would like to now call forward our second panel. We 
would like to have Dr. Bernard Goldstein who is the Dean of the 
School of Public Health from University of Pittsburgh come 
forward; Dr. James Lents who is with the Environmental Policy, 
Atmospheric Processes and Modeling Laboratory at the University 
of California at Riverside; Mr. Joseph Goffman who is an 
attorney for the Global and Regional Air Program for the 
Environmental Defense Fund; Mr. Alan Krupnick who is a Senior 
Fellow and Director, Quality for the Environment Division at 
the Resources for the Future; Mr. David Driesen who is an 
Associate Professor at the Syracuse University College of Law. 
I think I got everybody.
    Before we begin, Mr. Doyle of Pennsylvania wishes to make 
one of his special introductions to a constituent. So the Chair 
would recognize Mr. Doyle for an introduction.
    Mr. Doyle. Mr. Chairman, thank you very much for allowing 
me the opportunity to introduce Dr. Bernard Goldstein. Since I 
joined the subcommittee at the beginning of last year, I have 
had the pleasure of introducing a number of distinguished 
individuals from Pennsylvania, including many from my hometown 
of Pittsburgh, as they have come before this subcommittee.
    Mr. Barton. I think you have introduced everybody from your 
hometown.
    Mr. Doyle. Well, today I am pleased that we are going to 
hear from Dr. Bernard Goldstein. Dr. Goldstein currently serves 
as the Dean of the University of Pittsburgh's graduate School 
of Public Health. He comes to the University of Pittsburgh as 
the next step in a distinguished career in academia and 
government.
    Most recently, Dr. Goldstein was the director of the 
Environmental and Occupational Health Science Institute, which 
is a joint program of Rutgers, the State University of New 
Jersey, and the University of Medicine and Dentistry of New 
Jersey Robert Wood Johnson Medical School.
    In the early and mid-eighties he served as Assistant 
Administrator for Research and Development for the EPA, and he 
has also served as a member or chairman of a number of 
committees that were part of NIH, EPA and the World Health 
Organization. He is also the author of over 200 articles and 
book chapters relating to his primary field of expertise in 
environmental health sciences and public policy.
    I am confident that Dr. Goldstein's testimony will prove 
invaluable to us as we begin to examine the multitude of issues 
surrounding the history and future of the Clean Air Act. 
Welcome to the subcommittee, Dr. Goldstein, and thank you for 
being here today. And, Mr. Chairman, thank you.
    Mr. Barton. We thank you for the introduction, and we 
welcome you, Dr. Goldstein. Before we allow each of you to 
testify, we will stipulate that all of you have glowing 
resumes, and we will put those in the record and stipulate 
there is some Member of Congress that would love to come 
introduce you just as well as Mr. Doyle did Dr. Goldstein.
    I will say that, when I saw you, Dr. Goldstein, the First 
Lady's Chief of Staff is a woman that used to work for me, 
Andrea Ball, and her husband is Lonnie Ball. He is a water well 
contractor, a drilling contractor, and heat pump equipment rep 
in Austin, Texas, and you and he are twins. I actually thought 
what is Lonnie Ball doing in this hearing room, when I saw you.
    So at some point in time, we will try to get you invited to 
one of the White House soirees, and you can meet Lonnie and 
Andy, because you and Lonnie look unbelievably alike, 
unbelievable, and he is a handsome man, just like you. So I 
don't mean that in a negative way.
    Each of your testimony is in the record in its entirety.
    Mr. Barton. We are going to start with Dr. Goldstein. I 
will give each of you 5 minutes to summarize your testimony 
orally, and then we will have questions for this panel. So, 
welcome, all of you, and we start with Dr. Goldstein.

  STATEMENTS OF BERNARD D. GOLDSTEIN, DEAN, SCHOOL OF PUBLIC 
  HEALTH, UNIVERSITY OF PITTSBURGH; JOSEPH GOFFMAN, ATTORNEY, 
 GLOBAL AND REGIONAL AIR PROGRAM, ENVIRONMENTAL DEFENSE; JAMES 
LENTS, ENVIRONMENTAL POLICY, ATMOSPHERIC PROCESSES AND MODELING 
    LABORATORY, UNIVERSITY OF CALIFORNIA AT RIVERSIDE; ALAN 
     KRUPNICK, SENIOR FELLOW AND DIRECTOR, QUALITY FOR THE 
 ENVIRONMENT DIVISION, RESOURCES FOR THE FUTURE; AND DAVID M. 
 DRIESEN, ASSOCIATE PROFESSOR, SYRACUSE UNIVERSITY COLLEGE OF 
                              LAW

    Mr. Goldstein. Thank you, Mr. Chairman. Just another 
delightful reason to move to Pittsburgh.
    Let me begin by stating that from a public health 
viewpoint, the Clean Air Act has been highly successful. At 
your invitation, I am limiting my remarks to the hazardous air 
pollutant provisions. For this section, Section 112, it is 
still unclear whether the public health benefits have kept pace 
with the rest of the Clean Air Act.
    I believe the question of benefits from Section 112 
exemplifies an issue related to actions taken under the 
precautionary principle. That is a principle that you will be 
hearing much more about in your coming debates. One of the many 
definitions, an early one from the Rio, is that, where there 
are threats of serious or irreversible damage, scientific 
uncertainty shall not be used to postpone cost effective 
measures to prevent environmental degradation.
    The precaution principle is evident, even though it wasn't 
discussed at the time, in the hazardous air pollutant 
amendments in 1990 in that the amendments came about largely 
because of frustration with the slowness of the previous risk 
based, science based approach.
    It is evident in that the burden of proof was shifted away 
from the requirement that EPA find an agent was harmful at 
ambient levels and shifted to the requirement that 189 
compounds should be controlled unless they were proven 
harmless. Third, the maximum available control technology was 
required, relegating the previous selective risk and science 
based approach to secondary importance.
    The claim that the new approach would be faster and cheaper 
is difficult in retrospect to support, in view of the delays 
and the cost in establishing the regulations. The complexities 
of MACT regulations were simply not anticipated, but most 
importantly, has it worked in terms of improving public health?
    The good news is that we can certainly expect a decrease in 
total tonnage of chemicals released into air. However, inherent 
in the precautionary approach is that we really do not know to 
what extent these chemicals will have had an impact on public 
health. By requiring maximum available control technology, we 
probably will reduce the emissions of known human cancer 
causing chemicals such as benzine, which causes leukemia, but 
these were already regulated under the previous risk based 
approach.
    For almost all of the newly regulated chemicals, there is 
really no evidence that they produce harm at outdoor levels, 
and in some cases, such as toluene, there is sufficient data to 
suggest that there is really no reason for concern.
    Certainly, reducing exposure to these compounds can be 
justified on prudent public health grounds, but by definition 
one cannot do a cost-benefit analysis when there is no evidence 
on which to claim benefit, and this is in contrast to the NAAQS 
pollutants for which there is a rich data base on which 
documentation can occur.
    Other problems related to the precautionary approach to 
hazardous air pollutants includes the lack of an incentive to 
improve control technology, once we have established maximum 
available control technology. It is sort of establishing what 
we call CATNIP. CATNIP is a technical term. It stands for the 
cheapest available technology not involving prosecution.
    How do you get better technology, once you are into MACT, 
and that is a question which perhaps can be dealt with, but 
right now it is difficult, considering the fact that we have 
traditionally built our new control technology on advances on 
basic science and technology. Why would one invest once the 
MACT had been established?
    There are other problems. We have the same level of control 
for compounds that we know are problems, such as benzine, as we 
do for toluene. That can be a potential problem. But perhaps 
the most important long term public health problem is the 
disincentive to invest in research to find out the truth about 
the chemicals we are regulating.
    EPA's budget in this area has plummeted, its research and 
development budget, and we really need to do a lot more to 
accomplish our public health goals by finding out exposure and 
effect indicators that are far simply superior to simply 
measuring pounds of pollutants. So I urge additional support to 
this type of research.
    The 1990 Clean Air Act HAP amendments also raise two public 
health issues unrelated to the precautionary principle. On a 
public health basis, purely looking at this from public health, 
it is hard to justify an emphasis on outdoor air, when the 
highest human exposure levels to most of these compounds occurs 
indoors. EPA is approaching indoor air pollution, but certainly 
not at a level commensurate to the expense, to the force that's 
been put in the exposure to outdoor pollutants.
    Second, the residual risk provisions of the Clean Air Act 
are based solely on risk to the maximally exposed individual 
rather than incorporating standard public health population 
based approaches. One can get gross underestimates of the 
actual public health impact. One can get such silliness as 
regulating in a situation in which literally there will be one 
adverse effect every 17.5 million years. That is a situation 
which is about 10 times longer than people have been on the 
planet.
    Let me conclude by being sure that my critique of the 
public health impact of the HAP provisions is not 
misunderstood. The inability to prove a benefit is a common 
problem in public health. We all agree that prevention is 
valuable.
    Sometimes we have to fall back on the well known 16 to 1 
benefit cost ratio for primary prevention. That is based upon 
an ounce of prevention is worth a pound of cure. We have 
learned in public health that to extract that sixteenfold 
benefit requires highly efficiency approaches focused on the 
major threats, using the best available science. In that 
regard, our approach to the 1990 hazardous air pollutant 
amendments has some unfortunate shortcomings.
    Thank you, Mr. Chairman.
    [The prepared statement of Bernard D. Goldstein follows:]
 Prepared Statement of Bernard D. Goldstein, Dean, Graduate School of 
                Public Health, University of Pittsburgh
                              introduction
    Mr. Chairman, Members of the Committee. Thank you for inviting me 
to give a public health viewpoint on the impact of the hazardous air 
pollutant provisions of the 1990 Clean Air Act Amendments. With your 
permission, I would like to submit written remarks for the record and 
to summarize them in my oral testimony.
    My name is Bernard Goldstein. I am a physician and an environmental 
health scientist, and am currently Dean of the University of Pittsburgh 
Graduate School of Public Health, one of the nation's largest schools 
of public health. I have had more than thirty years of experience in 
studying and commenting on the health effects of air pollutants, 
including serving as Assistant Administrator for Research and 
Development of the US Environmental Protection Agency under William 
Ruckelshaus and Lee Thomas, and chairing the Congressionally mandated 
Clean Air Scientific Advisory Committee.
             issues related to the precautionary principle
    In discussing the public health impact, I believe it helpful to 
frame the 1990 HAP amendments in terms of the Precautionary Principle. 
This is a relatively new term, embodying an evolving and as yet not 
well-defined set of concepts that is increasing in prominence among 
environmental and public health advocates. One definition, provided in 
the 1989 Rio Declaration, is:
         ``Nations shall use the precautionary approach to protect the 
        environment. Where there are threats of serious or irreversible 
        damage, scientific uncertainty shall not be used to postpone 
        cost-effective measures to prevent environmental degradation''
    The more recent formulations have tended to extend the 
precautionary principle to public health. In some cases there has been 
a weakening of the emphasis on cost effectiveness and on the extent of 
adverse impact needed to invoke the precautionary principle.
    You will hear much more about the Precautionary Principle, not the 
least because it is being heavily advocated by the European Community, 
perhaps as a rationale for trade barriers on US products. Although not 
discussed as such at the time, the 1990 amendments to Section 112 of 
the Clean Air Act governing the control of hazardous air pollutants 
contain a classic use of the precautionary principle. First, the 
amendments are derived from a sense of frustration with the slowness of 
a risk based scientific approach--relatively few of HAPs had been 
regulated. Second, the burden of proof is shifted as is evident from 
Congress listing 189 pollutants and limiting EPA's role to one of 
removal of a pollutant from the list based upon proof of no harm, which 
replaced the previous dependence upon a finding of harm to be listed 
for regulation. Third, there is a requirement of maximum available 
control technology for pollutant control of all sources, relegating the 
previous selective risk-based approach to secondary importance.
    But has it worked? In 1990 advocates of this new approach claimed 
it would be ``faster, better, cheaper''. It is hard to argue that it 
has been faster or cheaper, given how long it has taken to write the 
regulations and how much it has cost to do so, as well as the toll that 
uncertainty always has on the market place. However, the key question 
is whether the 1990 CAA HAP Amendments have improved public health.
    Let me start with the positive. We do know that many tons of HAPs 
have been or will be removed from the air. However, we know little 
about how much of a health difference this has made. One of the guiding 
concerns in the control of HAPs is that of human cancer. Almost all of 
the pollutants that were known or reasonably anticipated to cause 
cancer or to have other adverse effects at ambient air levels had been 
regulated before the 1990 CAA amendments. These amendments have led to 
more stringent contol on at least some of these pollutants through 
requiring maximum available control technology. To the extent that 
these controls can be quantified (e.g., reduction in the emissions of 
benzene, a known cause of human leukemia), some estimate can be made of 
the additional benefit of the MACT provision. However, this will not be 
possible for almost all of the newly regulated pollutants on this list.
    The reason there is so much uncertainty about health benefit for 
almost all of the pollutants listed by name as HAPs in the 1990 CAA 
Amendments is inherent in the precautionary principle. Simply put, you 
can not know what harm has been averted if you regulate pollutants 
without some degree of proof that they are harmful. As a corollary, the 
congressional requirement in the Clean Air Act that EPA perform cost-
benefit analysis, which can be done for NAAQS pollutants, can not be 
achieved for those HAPs for which there is no evidence of benefit, 
despite the substantial cost in controlling these pollutants. And 
almost all of the HAPs for which there is sufficient evidence of harm 
to provide the basis for a benefit analysis were regulated under the 
pre-1990 Section 112 rules.
    If we really want to know the public health benefits of regulating 
this broad list of agents, we must develop benefit indicators that go 
beyond the simple measure of tons of pollutants. Using pollutant 
weight, as does our HAP regulations, rather than pollutant effect, can 
be problematic, particularly where there is a clear differential among 
these pollutants in their potential for toxicity. Removing a ton of 
toluene from air emissions is probably meaningless in terms of public 
health, while removing a ton of benzene is very likely to be of direct 
health benefit. The current approach to HAPs focuses the same attention 
on both. Better indicators of the potential for adverse health effects 
are needed if we are to develop cost-effective approaches to hazardous 
air pollutants, particularly as for many of these pollutants the 
outdoor exposures regulated by the CAA are relatively trivial compared 
to indoor exposures.
    Another area of concern about the precautionary principle is often 
is antithetical to scientific research that gets to a true 
understanding of cause and effect relationships. The central principles 
of toxicology are that chemicals have very specific actions within the 
human body and that they vary greatly in the dose that causes the 
action. They are the basis for two of the components of risk 
assessmen--hazard identification and dose response assessment. These 
principles are no more complicated than saying that aspirin works for a 
headache but not for constipation, and that a very tiny grain of 
aspirin will have no effect while too much can kill. By treating all of 
the 189 chemicals on the list as exactly the same in terms of 
specificity of action and dose responsiveness, the CAA Amendments 
simply ignore these toxicological principles. There is no question that 
avoidance of any possible effect of any of these agents could be 
preventive--there is also no question that this shotgun approach 
inherent in the precautionary principle is less than a fully efficient 
means of dealing with the potential public health consequences of HAPs.
    There is work under way attempting to develop better indicators of 
air pollutant health effects. In fact, EPA Administrator Whitman 
provided major leadership in this area while governor of New Jersey and 
now at EPA. I wish to particularly commend the research activities 
supported by various government agencies including the National 
Institute of Environmental Health Sciences, the CDC Center for 
Environmental Health and by the EPA's Office of Research and 
Development, and to encourage Congress to enhance support for these 
approaches.
    There is another problem inherent in the precautionary principle 
approach to HAPs. This is a paradox built into the MACT approach. The 
goal is to achieve the lowest possible levels of pollution control by 
specifying the best available control technology today (actually 
defined as the ``best performing 12% of existing sources''). But once 
having done so, once having spent better than a decade writing the 
regulations guiding the use of the specific technology, how do you get 
better control technology? Pollution control technology is an applied 
field, usually borrowing from advances in basic technology that are 
then utilized to meet the demand for pollution control. But what demand 
will be left after the regulations are completed? Thus a potential 
negative of the MACT approach is that it leaves little likelihood that 
there will be continued improvement in control technology.
    One other aspect of the potential public health impact of a 
precautionary principle approach is also difficult to quantify. This is 
the extent to which the misplaced emphasis on unnecessary public health 
actions limit the availability of resources for needed public health 
activities. Our national public health infrastructure is under 
tremendous pressure. We have taken for granted many of the advances in 
public health. These advances have been sustained by a highly efficient 
workforce that had been stretched to the limit even before September 
11th. This workforce needs reinforcement, it needs to have a greater 
level of support for its activities and our nation needs more focus on 
how we will replace those already in the field. In making your 
judgments as to where to place needed public health resources, I urge 
you to give high priority to the workforce infrastructure.
       issues not directly related to the precautionary principle
    There are two issues concerning the HAP provisions of the 1990 CAA 
Amendments that are directly related to public health but do not 
clearly fall under the heading of the Precautionary Principle: the 
relative lack of emphasis on the major public health threat of these 
chemicals, that of indoor air pollution; and in calculating residual 
risk, the inappropriate sole focus on the Maximally Exposed Individual 
rather than also on the total population.
    Public health principles for hazardous chemicals require us to 
focus on the highest levels of exposure to the most toxic agents. In 
general, for HAPs this is exposure in the home to HAP compounds that 
were already regulated before 1990. Thus, there is a disconnect between 
the major public health concern about these chemicals and the emphasis 
that the CAA puts on their control.
    Risk assessment remains a part of the regulation of HAPs in the 
form of a residual risk estimation. Unfortunately, the risk assessment 
approach specified is not in keeping with public health practice in 
that the risk estimate is driven by the Maximally Exposed Individual 
rather than the population at risk. This is both an inappropriate and 
an inefficient way to protect public health. Population based 
approaches should be the primary driver in risk based approaches with 
risk to the Maximally Exposed Individual also being calculated to be 
sure that no one individual is particularly at risk. Just one of the 
many problems in using the MEI as opposed to the population based 
approach is that we in essence assume that the MEI lives at the fence 
line of the source 24 hours a day, 7 days a week, for 70 years. This 
simplifying approach is true if we assume that someone is at that 
location as part of a population based risk estimate, but it is a gross 
and highly variable overestimate to assume that a single individual 
gets that full 70 years.
    Moreover, one can readily demonstrate the silliness of the reliance 
on the MEI with a paper experiment. Assume that there is a plant at the 
edge of a rural area such that only one family of four lives 
immediately downwind and that it has a life time cancer risk of one in 
one million due to these emissions. Assume further that this plant goes 
on emitting the same level of pollutants ad infinitum, and this family 
of four is replaced every 70 years by another family of four. The time 
period during which one cancer case is expected to occur is 17.5 
million years, or roughly one case during a period about ten times 
longer than humans have existed on this planet. This needs to be 
changed.
    So as to be sure that my critique of the public health impact of 
the HAP provisions is not misunderstood, let me emphasize that the 
inability to prove a benefit is a common issue in public health. We all 
agree that prevention is valuable, and that sometimes we have to fall 
back on the well-known 16:1 cost benefit ratio for primary prevention. 
This is based on an ounce of prevention is worth a pound of cure. We 
have learned in public health that to extract that sixteen-fold benefit 
requires highly efficient approaches focused on the major threats using 
the best available science. In that regard, the 1990 HAP amendments 
have unfortunate shortcomings.

    Mr. Barton. Thank you.
    We would now like to welcome Mr. Joseph Goffman, who is an 
attorney for the Global and Regional Air Program for the 
Environmental Defense Fund in New York. Your testimony is in 
the record. We ask that you summarize it in 5 minutes. Welcome 
to the subcommittee.

                   STATEMENT OF JOSEPH GOFFMAN

    Mr. Goffman. Thank you, Mr. Chairman. I am very grateful to 
you and the subcommittee for your invitation to testify today 
about the Clean Air Act amendments of 1990, in particular, 
Title IV, the provisions that established the national cap and 
trade program for power plant SO2 emissions as a key 
precursor of acid rain.
    President George Herbert Walker Bush first introduced the 
cap and trade model when he introduced this proposal, and this 
model has been enthusiastically embraced by both of his 
successors as they have moved forward to address a variety of 
pollution control challenges. It is a very interesting 
coincidence that three different administrations have now 
stepped forward to support this proposal.
    I think that the results of the SO2 program so 
far explain perhaps that this is more than a coincidence. 
First, the SO2 program passes the ``greener, faster, 
cheaper'' test that long has been the Holy Grail of just about 
everybody in the environmental policy community. The 
SO2 program passes the ``keep it simple'' test, 
defying critics' claim that only complex, intrusive 
environmental laws and regulations can deal with pressing 
environmental challenges.
    The SO2 program passes the ``right tool for the 
job'' test in the case of acid rain and, by extension, the case 
of other environmental problems that involve long range 
transport of pollution. Indeed, the SO2 program has 
proven to be a perfect complement, not a replacement but a 
complement, to the fundamental structure of the Clean Air Act 
as embodied in the various authorities of Title I.
    Cap and trade, in short, is a vitally important, even 
indispensable tool in the toolbox of pollution problem solving. 
Even so, the success of any air pollution program, including 
one based on cap and trade, depends both on setting the 
emissions reduction targets at levels low enough to solve the 
environmental problem and on ensuring that the cap and trade 
tool works in harmony with other tools in a fully complementary 
fashion.
    The virtue of cap and trade is not as an end in itself, but 
is that it simply makes it easier to reach the right pollution 
reduction levels, assuming those are established by law, and to 
harmonize multiple pollution control programs and strategies.
    I think that the single most important reason that cap and 
trade has achieved the current level of credibility that it has 
in the last 10 years is reflected in the fact that, in 
formulating his initial proposal in 1989, President George 
Herbert Walker Bush harvested part of the cost savings expected 
to result from the acid rain emissions trading program to 
create an environmental dividend.
    That is, when he put forward his proposal, he explicitly 
supported an emission reduction target of 10 million annual 
tons of reductions, not just 8 million tons. That is, he went 
to a target that was 25 percent more ambitious and more in line 
with contemporary scientific understanding at the time of what 
was needed to address acid rain than the targets proposed in 
alternative legislation then pending in Congress.
    His proposal also included for the first time an explicit 
cap on emissions, again something that was made uniquely 
possible by the flexibility built into the emissions trading 
approach. This fundamental insight of the first President Bush 
is the most important reason--I think it is the reason--that we 
are still talking about cap and trade 13 years later. The 
insight was that cap and trade programs can and must deliver 
more environmental bang for the buck.
    What that means is that, as you move forward to consider 
other proposals, not the least of which is the current 
President Bush's Clean Skies initiative, this historical fact 
is going to be in the background of every proposal you 
evaluate.
    The Clean Skies proposal legislation pending in the Senate 
seem, in both cases, to be based on a classic cap and trade 
model, which means that the polluting sources will have a full 
opportunity to take advantage of market based emissions trading 
to yield significant cost savings.
    In contrast with the first Bush Administration's decision 
to share some of those cost savings, dividends, with the 
environment, the current administration's ultimate reduction 
goals seem to feel--in fact, they do fall noticeably short and 
late of delivering on the promise of attaining the health based 
standards for fine particles and ozone.
    Nevertheless, thanks to the first President Bush's 
fundamental decision, the public is going to be asking where is 
the environmental and public health dividend that should be 
yielded by the expected cost savings of the cap and trade 
approach.
    Mr. Barton. Could you summarize?
    Mr. Goffman. Yes. The last three sentences.
    The historical precedent set by the President's father of 
yoking the cost savings of emissions trading with an 
environmentally relevant reduction target presents the 
permanent foil against which all future proposals are going to 
be evaluated. The power of cap and trade programs inheres in 
their ability to link synergistically through emissions trading 
markets cost savings and superior environmental performance, 
but that link, that synergy, cannot be achieved unless such 
programs are based on emissions reduction targets that are 
truly capable of addressing the needs of public health and the 
environment.
    In this case, we are probably talking about a 2 million ton 
SO2 cap and a 1.1 million to 1.25 million ton 
NOX cap in the case of those two pollutants by the 
end of this decade.
    Thank you.
    [The prepared statement of Joseph Goffman follows:]
 Prepared Statement of Joseph Goffman, Senior Attorney, Environmental 
                                Defense
                              introduction
    My name is Joseph Goffman. I am a senior attorney with 
Environmental Defense. I am most grateful to the Subcommittee for its 
invitation to testify today and am most appreciative of the careful and 
deliberate approach it is taking in reviewing the development of the 
Clean Air Act.
    The focus of my testimony today will be Title IV of the Clean Air 
Act Amendments of 1990, in particular those provisions that established 
the national cap and trade program for power plant sulfur dioxide 
(SO2) emissions, a key precursor of acid deposition.
    Some would find it a challenge if asked to name an important public 
policy approach on which President George H.W. Bush, President Bill 
Clinton and President George W. Bush all shared an identical position. 
Students of environmental policy, however, would have no trouble. As 
President, each of these leaders put forward in major presidential 
addresses, and then pressed ahead with, high-profile environmental 
proposals that were centered on a cap and trade system.
    While cap and trade embodies certain principles that many see as 
reflecting a distinctively American philosophy, the international 
community has begun to embrace this approach in its effort to reduce 
greenhouse gas emissions. Perhaps even more striking is the fact that 
national and provincial environmental policy-makers in the Peoples 
Republic of China are in the process of fashioning a regional 
SO2 emissions trading program modeled on the US cap and 
trade approach.
    Looming on the horizon in this country are a series of potentially 
daunting new public health and environmental challenges posed by 
current levels of air pollution. Despite the evident emissions 
reduction success of the 1990 SO2 program, acid rain 
continues to plague sensitive ecosystems from the Rockies to the East, 
and visibility-marring haze blights our national parks and monuments. 
Tens of millions of Americans breathe air made unhealthful by ozone 
smog and particulate matter--and, even in the wake of his rejection of 
the Kyoto Protocol, President Bush pledged to continue to focus on the 
issue of climate change, including consideration of more broad-based 
policies within the next ten years.
    As it turns out, electric power plants are a chief source of the 
range of pollutants and gases directly implicated in all of these 
problems. In February, when he put forward his Clear Skies Initiative 
(CSI), President Bush ensured that both power plants and the cap and 
trade model would be at the center of any future debate about how to 
address this suite of air pollution challenges.
    If that is the case, then it is vital for this subcommittee, as one 
of the prime movers in such a debate, to evaluate the US experience, so 
far, with the use of the cap and trade tool to curb power plant 
pollution.
    Fortunately, we are now 12 years on in what, during the '90's many 
referred to as the world's largest public policy ``experiment'' with 
market-based regulation. Thanks to its own work in 1990, this Committee 
can examine the results and apply the lessons of the SO2 cap 
and trade program to its efforts going forward to combat air pollution.
    Let me sum up my views on those results:

1. The SO2 program passes the better-faster-cheaper test 
        that long has been the Holy Grail of just about everybody in 
        the environmental policy community.
2. The SO2 program passes the ``keep-it-simple-stupid'' 
        test.
3. The SO2 program passes the right-tool-for-the job test; 
        indeed, it has proven to be the perfect complement--as opposed 
        to replacement--to the fundamental structure of the Clean Air 
        Act, as embodied by Title I of the Act.
4. Cap and trade is a vitally important tool in the toolbox of 
        pollution problem-solving. Even so the success of any air 
        pollution program, including one based on cap and trade, 
        depends both on setting the emissions reduction targets at low 
        enough levels to solve the problem and on ensuring that the cap 
        and trade tool works in harmony with other vital tools. The 
        virtue of cap and trade is simply that it makes it easier to 
        reach the right pollution reduction levels and to harmonize 
        multiple pollution control programs and strategies.
I. Faster, Cheaper and Greener: Performance Results
    From 1995 to 1999, or the period known as ``Phase I,'' the acid 
rain program yielded impressive environmental and economic results. 
Phase I power plants reduced their SO2 emissions far below 
the level that was legally allowable under all of the provisions of the 
program. Furthermore, in response to the economic dynamics created by 
the ``cap and trade'' design of the program, these plants released 
substantially less pollution relative to the more stringent level of 
``base'' allowable emissions established by Congress. At the same time, 
the SO2 emissions trading market has done what markets do 
best: drive down costs.

 While achieving 100% program compliance during Phase I, power 
        plants reduced SO2 emissions 22% more than the 
        restricted number of ``base allocations'' initially allotted to 
        them by Congress, equal to 7.3 million tons of extra emissions 
        reductions.
 When factoring all types of emissions allowances included in 
        the program, including those for auction and performance 
        incentives, actual emissions were 30% lower than the amount 
        that was legally allowed, equal to 11.6 million tons of unused 
        allowances.
 The extra reductions in emissions were distributed across 22 
        of the 24 states whose power plants have participated in Phase 
        I, and many of the highest-emitting sources--such as those in 
        Ohio, Indiana, Georgia, Pennsylvania, West Virginia, and 
        Missouri--made the greatest number of cuts in emissions.
 The extra reductions, which represent a concrete economic 
        asset because of the banking and trading provisions of the 
        program, have occurred in the absence of any federal or state 
        action to restrict the saving or transfer of allowances.
 The cost of SO2 reductions, as reflected indirectly 
        in the price of traded SO2 emissions allowances, is 
        far below the cost predicted during the initial debates on the 
        program.
 Despite the rapid fall in SO2 emissions over the 
        past five years, both electricity generation and the United 
        States economy experienced strong growth during the same 
        period. Thus the results of the program offer more evidence to 
        disprove the supposed link between economic growth and 
        emissions growth.
 Reductions in sulfate deposition have been observed in 
        geographic areas affected by atmospheric transport of sulfur.
    The superior environmental and economic results of Phase I of the 
SO2 program are precisely what should have been expected of 
a program that matched an explicit emissions limit with a market that 
turned pollution reductions into marketable assets.
    Year 2000, the first year of Phase II, continued these trends for 
the most part. One significant feature of compliance in 2000 was that 
some utilities drew from the ``bank'' of extra Phase I reductions to 
offset emissions above their nominal target levels. Overall, however, 
SO2 emission in the highest-emitting regions continued to 
fall.
II. Faster, Cheaper and Greener: Acid Rain Politics of '89-'90
    The notion of using emissions trading as part of the implementation 
of national SO2 emissions reductions was formally unveiled 
in June 1989 in a speech by President George Bush, when he introduced 
his administration's overall proposals for amending the Clean Air Act. 
At the time, emissions trading was highly controversial among both 
environmental advocates and the public at large.
    The controversy was sparked because the initial focus of the 
ensuing debate revolved around emissions trading as a ``market 
mechanism'' and as a method for reducing compliance costs. To many, 
these were but shorthand for ``industry loophole.''
    In 1989 and 1990, the issue of cost remained the pivotal point of 
the political debate. In the end, however, the link between emissions 
trading and cost savings played to the environment's advantage. 
Initially, the Bush administration's economic analysts were leaning 
toward supporting a reduction target of only 8 million tons. Moreover, 
legislation introduced in early 1989 and in previous Congresses had 
mandated an annual reduction in SO2 emissions of only 8 
million tons. It was the promise of cost savings through emissions 
trading that persuaded the Bush administration to propose in its Clean 
Air legislation that the SO2 program stipulate an annual 
reduction of 10 million tons.1 President Bush's insight was 
that the country could afford a greater level of environmental 
protection, given that the use of emissions trading would yield the 
lowest compliance costs possible. The shift from an 8-million-ton 
annual reduction target to a 10-million-ton target was especially 
important. The 10-million-ton target was much closer to the reduction 
level first suggested by the National Academy of Sciences as that 
required to curb acid deposition. With a Republican president sending a 
10 million-ton bill to a Democrat-led Congress, the enactment of the 
more stringent target was all but ensured. Thanks to the anticipated 
cost savings of emissions trading, the final legislation required the 
additional 2 million tons of annual SO2 reductions.
---------------------------------------------------------------------------
    \1\ Tom Wicker, ``Who'll Stop the Rain?'' New York Times, 16 June 
1989, A27.
---------------------------------------------------------------------------
    Perhaps even more important, the inclusion of emissions trading led 
to another environmental victory. Throughout the 1980s, the 
environmental community and some of its congressional champions had 
sought to craft acid rain legislation that both reduced SO2 
emissions and capped total emissions at the reduced levels. None of 
these efforts succeeded. In legislation sent to Capitol Hill in July 
1989, however, the Bush administration included the critical elements 
of just such a cap, which was made possible only by the operational 
flexibility offered to companies by emissions trading. In the ensuing 
legislative process, the Senate Committee on Environmental and Public 
Works (and subsequently the full Senate and the House of 
Representatives) used the allowance allocation system to construct a 
truly comprehensive emissions cap.
III. The Clear Skies Initiative: What Happened to Faster, Cheaper, 
        Greener?
    Against this historical background, some of the criticism of the 
President's Clean Skies Initiative may seem more understandable. The 
CSI proposal seems to be structured in a way that will allow power 
plants to take full advantage of the cost-savings opportunities 
afforded by an emissions trading market. In contrast with the first 
Bush administration's decision to share some of the cost-savings 
dividend with the environment in the form of an additional 2 million 
tons of reductions, the current administration's ultimate reduction 
goals fall noticeably short--and late--of delivering on the promise of 
attaining the health-based standards for ozone smog and fine particles. 
Where, critics are asking, is the environmental and public health 
dividend that should be yielded by the expected cost-savings?
    This question is more than rhetorical, as the ``environmental 
dividend'' is likely to mean the difference between success in 
attaining the national ambient air quality standards (NAAQS) for ozone 
and fine particles and failure. As in the case of the 10-million-ton 
target for acid rain, the level and timing of reductions required under 
any national cap and trade program for power plant SO2 and 
NOX emissions will have a direct bearing on the capacity of 
metropolitan areas across the country to attain the health-based 
standard for ozone and fine particles. To be sure, by itself a national 
cap and trade program for power plant SO2 and NOX 
reductions will not ensure attainment of the fine particle and ozone 
NAAQS in every area. At the same time, unless such a program achieves 
the full measure of cost effective reductions from this sector, the 
prospects of attaining the NAAQS will be extremely remote in many high-
population communities.
    Recent press reports, such as that in last Sunday's New York Times 
indicate, for example, that EPA analysis points to the necessity of 
achieving SO2 and NOX reduction levels and 
timetables beyond those included in the CSI if the NAAQS are going to 
be attained as required under current law. It is widely believed that 
the EPA analysis referred to in the Times story demonstrated that an 
SO2 emissions cap in the 2.0 to 2.25 million ton range and a 
NOX cap in the 1.25 million ton range were essential both to 
addressing acid rain and to attaining the fine particle and ozone 
NAAQS. In addition, current law appears to impose a deadline for 
attaining the fine particle and ozone NAAQS in 2009-10 time period.
    These targets and this timetable contrast unfavorably with those in 
the President's CSI. In addition, the historical precedent ``set by the 
President's father--of yoking the cost-savings of emissions trading 
with an environmentally relevant reduction target presents yet another 
unfavorable contrast as well. The power of cap and trade programs 
inheres in their ability to link synergistically--through emissions 
trading markets--cost-savings and superior environmental performance. 
That synergistic link cannot be achieved unless such programs are based 
on emissions reduction targets that are truly capable of addressing the 
needs of public health and environmental protection. It would seem that 
EPA's analytic focus on a 2--2.5 million ton SO2 cap and a 
1.25 million-ton NOX cap points to the target levels needed 
for a successful multi-pollutant cap and trade program.
Keeping It Simple: A New Regulatory Paradigm
    The SO2 program is first and foremost an emissions 
reduction program. What set the program apart from other Clean Air Act 
programs is that the reduction was implemented as an annual 
SO2 emissions budget--literally a ``cap'' on total 
SO2 emissions from power plants--at levels substantially 
lower than those of the 1980s. This approach was unprecedented, as 
existing air pollution regulation at the time relied on specific 
technical or operational requirements on sources, usually resulting in 
a restriction on the rate of emissions discharge, not on total 
discharges. Although such requirements were based on projections of 
actual emissions reductions, fixed levels of total reductions were 
never explicitly mandated. Consequently, as long as sources met their 
operational requirements, they were not held responsible if the 
projected levels of emissions reductions were not met.
    Under the SO2 program, however, the Environmental 
Protection Agency (EPA) distributes to each power plant a fixed number 
of emissions ``allowances,'' each of which gives the owner the 
authorization to emit one ton of SO2 at any time. A plant 
may then sell the allowances to another plant (or to any interested 
buyer, including environmental groups and speculators) provided that at 
the end of the year it surrenders to the EPA enough allowances to cover 
its emissions for that year. Allowances that are not used to cover 
emissions in one year may be saved for use in later years, which is 
known as ``banking.'' Because the number of emissions allowances the 
EPA distributes every year is fixed, then, by definition, an allowance 
remaining in excess of a plant's emissions represents an ``extra'' 
reduction that may be transferred to another plant to cover its 
incremental emissions. No matter how many or how few allowances are 
transferred total emissions always remain at or below the cap. The law 
requires each power plant to install continuous emissions monitors and 
to report the results on a quarterly basis to the EPA. The EPA is 
required, in turn, to operate an emissions and allowance tracking 
system, which has ensured the transparency and sound record-keeping 
needed to make the program successful.
    Phase I of the acid rain program mandated participation by the 
largest emitters of SO2--specifically, 263 sources at mostly 
coal-burning electricity plants (located primarily in eastern and 
midwestern states). They were joined by additional sources that 
voluntarily chose to participate in Phase I rather than wait until 
Phase II, as allowed under certain provisions of the legislation. The 
total program budget, or cap, for 1995 included 8.7 million tons worth 
of allowances. By 1999, the budget gradually decreased to roughly 7 
million tons as a result of the phase-out of provisions designed to 
promote certain control options and investments.
    Phase II, which began in January 2000, imposed more stringent 
emissions limits on the units participating in Phase I. In addition, 
Phase II also established caps on SO2 emissions for 
virtually every other power plant in the continental United States (any 
with output capacity of greater than 25 megawatts) as well as all new 
utility units, thus bringing the total universe of regulated units to 
more than 2,000. The annual budget for these sources was set at 9.2 
million tons. It will continue at that level until 2010 when the cap 
drops to a permanent level of 8.95 million tons, a level roughly equal 
to 50% of electric utility emissions in 1980.
    In 1989, the rhetoric surrounding SO2 emissions trading 
emphasized ``market mechanisms,'' ``economic incentives,'' and ``cost-
savings.'' Less apparent, but equally significant, is that in the 
process of establishing the SO2 program, Congress ended up 
creating a new paradigm for pollution policy. That paradigm managed to 
overthrow the traditional discretionary powers of environmental 
regulators even while making it more certain that the full measure of 
promised emissions reductions would be delivered to the public and the 
environment.
    Between 1970, when the ``modern'' Clean Air Act was first adopted, 
and 1990, programs to control air pollution were characterized by 
requirements focusing on how sources of emissions operated. State and 
federal regulators were empowered and called on to assess the cost, 
feasibility, and effectiveness of various technologies, methods, and 
processes for reducing emissions from the operations of various classes 
of sources.
    On the basis of those assessments, regulators would impose either 
specific technology requirements or operational parameters such as 
emissions rates. Compliance was defined in terms of meeting those 
operational parameters, not in terms of meeting specified emissions 
reduction targets. Often, plants were subject to detailed operating 
permits, and enforcement resources went toward ensuring that plants 
developed and submitted compliance plans and met the operational 
milestones delineated in the plans, rather than focusing on actual 
emissions performance. To a significant extent the approach worked. 
According to many key indicators, air quality in the United States 
improved substantially.
    By 1990, however, the performance of the traditional approach was 
often burdened by a broad range of flaws. In many cases, the full 
increment of pollution reductions that had been promised, predicted, or 
assumed when operational requirements were adopted had not been 
achieved. Because compliance was defined simply in terms of 
technologies or operating parameters, however, nobody, including the 
polluters themselves, was legally accountable for the failure to 
achieve the expected levels of total reductions. With fewer than the 
expected and needed pollution reductions achieved, key ambient air-
quality standards were often not attained. Specifying technologies or 
operating parameters was not enough to limit total emissions 
discharges.
    At the same time, the costs of these programs were high. The 
regulatory community's resources often were inadequate for collecting 
and processing the range of information needed to formulate operational 
requirements for whole classes of sources. As a result, once the 
requirements and implementing permits were put in place, the capacity 
to absorb new information and respond to inevitable and ongoing 
economic and other operational changes was virtually nonexistent. 
Although the characteristics of sources varied, requirements tended to 
be uniform and thus many sources were subject to expenses that could 
have been avoided in more flexible systems. Simultaneously, sources 
that could have adopted more effective or innovative control 
technologies had no incentive to do so. At the same time, regulators, 
mindful of the need to control costs, compromised the stringency of 
requirements either in setting the standards or in negotiating 
individual permits and ``variances'' to permits, all at the cost of 
total emissions reductions achieved.
    In contrast, the SO2 program replaced the regulator with 
the polluter itself as the pivotal actor in compliance, overthrew the 
traditional paradigm, and replaced it with a new one. Under the 
SO2 program, the pollution sources are legally accountable 
for achieving a specified level of emissions reductions and for little 
else save continually monitoring and reporting their actual emissions. 
The only job that regulators have to do is ensure that each source 
meets its monitoring and reporting requirements and that its actual 
annual emissions equal the number of allowances the source holds.
    How power plants reduce their SO2 emissions has been 
left completely to the discretion of the plant operators themselves. As 
a result, it is up to them to manage the continually changing economic, 
technical, and other circumstances in which they are operating and to 
integrate their basic business activities with their obligation to meet 
their emissions cap. The burden and the opportunity of lowering costs 
are placed squarely on the power plants operators. In place of 
variances and other cost-relieving methods that entail compromise of 
standards and forego actual emissions reductions, plant operators under 
a cap and trade system must turn to emissions banking and trading for 
cost control. Because of the built-in cap-based structure of the 
program, cost savings through emissions trading in no way lessens the 
amount of total emissions reductions or their environmental.benefit. 
Today, the EPA proudly embraces the very coup that, at least as far as 
SO2 is concerned, stripped it of much of the scope of its 
traditional regulatory power. Noting that the acid rain program 
embodies the highest ratio of tons of pollution reduced to 
administrative resources expended, the agency reports approvingly that 
the program produced 100% compliance--all while giving regulators far 
less authority to exert direct control over the methods of compliance.
V. Keeping it Simple: One Key to Economic Success
    Critical to the character and success (and not just the mechanics) 
of the program is the fact that the aggregate number of allowances 
circulated every year is fixed, or capped. As a result of this design, 
power companies must plan for economic growth and change while 
operating against a limit on their total SO2 emissions. This 
cap and trade regime gives utilities a direct financial incentive to 
reduce emissions below required levels. Extra reductions, in the form 
of unused allowances, give companies flexibility to offset increases in 
emissions in one location with reductions in another. In addition, 
utilities can optimize control by reducing emissions when it is least 
expensive to do so and then bank the surplus allowances for future use 
or sale. Consequently, extra reductions give power plants the 
flexibility needed to respond to economic demands and opportunities 
while meeting their compliance obligations under the cap. Where extra 
reductions are achieved, the environment benefits from less pollution 
at an earlier time than required by law. Furthermore, through emissions 
trading, power companies have both the incentive and the means to find 
the lowest-cost ways of achieving compliance anywhere within the entire 
electricity system and to reap financial rewards for developing those 
means. Under this program, each power plant can choose between various 
compliance alternatives, for example, using low-sulfur fuel, investing 
in energy efficient technologies, chemically removing sulfur from 
smokestack emissions, or acquiring allowances from other utilities that 
can make reductions more cost-effectively. By including emissions 
trading in the full suite of compliance options open to power plants, 
the program enhances the ability of the interlocking emissions and 
electricity markets to find the most efficient responses. The 
SO2 emissions trading market has been effective in reducing 
costs because it has fostered implicit or ``latent'' emissions trading 
as well as active trading. Put another way, emissions trading places 
all compliance options in direct competition with each other. Of 
course, any program that permits flexibility in compliance choices does 
this. Because of emissions trading, however, that competition is 
geometrically expanded in the SO2 program. Different 
compliance options do not compete with each other only at any one 
facility. Because emissions trading allows a facility operator to 
choose to apply a compliance option at its own site or, in effect, at 
any other affected facility that can make surplus emissions allowances 
or reductions available, the facility operator's range of choices are 
much broader, the competition among them much more intense, and the 
capacity of that competition to lower costs much, much greater.
    As a result, the different compliance alternatives have been forced 
to compete with one another even more vigorously. The expected result 
has occurred: compliance costs have been driven steadily downward.
    By fundamentally transferring the decision of how to comply to 
power plant operators, the SO2 program created a regulatory 
environment in which the government in effect delivered the 
environmental and economic results promised by, in effect, ``getting 
out of the way'' of the market. To be sure, the program did not ``get 
out of the way'' of power plant emissions. On the contrary, the mandate 
to cut emissions is backed by the stiffest and closest-to-automatic 
penalties in almost all of public law. The program ``got out of the 
way'', however, of the underlying fuel and electricity market as it 
responded to the electricity industry's very real emissions reduction 
mandates.
    In practice, this has meant that power plant operators could 
capitalize on long-term economic trends in the fuel market in order to 
maximize cost-savings. Analysts in both the government and academia 
have observed, for example, that beginning in the 1980's modernizing 
changes in mining operations and inter-regional rail transport have 
made coal from the Powder River Basin an increasingly economical option 
for power plants throughout parts of the Midwest and East. Earlier 
proposals to curb acid rain would have imposed operational requirements 
that likely would have stymied these coal market trends. The 
flexibility inherent in establishing only an actual emissions target as 
sources' sole legal requirement meant that these trends have continued 
to develop as the fuel and electricity markets, not as legislators or 
regulators, have dictated.
VI. The Right Tool for the Job
    Congress chose to focus the design of the SO2 program on 
total cumulative emissions reductions and on unrestricted emissions 
trading and banking because of the atmospheric characteristics of 
SO2 emissions. In the atmosphere SO2 reacts with 
other pollutants, including the various elements of ``smog,'' to form 
acidic particles and droplets. These are what constitute acid 
deposition. Various components of this ``soup'' of pollutants have been 
traced traveling over long distances, after being mixed from widely 
dispersed groups of sources.
    In the United States, one common wind pattern moves air from the 
midwestern region to the northeastern region of the country. These 
winds mix and carry SO2 and sulfate (a chemical derived from 
SO2), as well as other pollutants involved in the formation 
of acid deposition. Congress believed that existing scientific 
understanding supported the conclusion that general wind patterns 
prevailing over the eastern half of the United States capture the large 
amount of SO2 emissions in the Midwest and South. Once the 
emissions are captured, they are dispersed widely over those parts of 
the country as well as over the Mid-Atlantic and the Northeast, where 
acid rain has had a severe local effect.
    In view of this, Congress focused on reducing and capping the 
overall level of SO2 emissions instead of trying to control 
local, source-by-source variables. Since it is the total accumulation 
of acid deposition that principally determines its effect on the 
environment, the reduction in total emissions of acid precursors 
(rather than reductions from any one source) appeared to be most 
critical. Consequently, Congress concluded that it was acceptable to 
allow emissions trading to occur without restrictions. As long as 
overall reductions were achieved, the emissions levels of individual 
sources could be permitted to adjust to market forces through trading.
    The program's provisions that permit sources to bank allowances for 
future use also stemmed from the commitment of Congress to both the 
environmental and the economic performance of the program. Through 
banking, sources would enjoy much greater flexibility in operating 
under their SO2 emissions constraints. In fact, banking 
could play a critical role in the formation of the overall 
SO2 emissions trading market. Equally important, the 
opportunity to bank extra allowances could yield more and earlier 
reductions than Congress otherwise could mandate.
    At the time the program was proposed, a formal analysis of 
alternative policy designs was undertaken by Environmental Defense. The 
study strongly suggested that the very large quantity of SO2 
emissions in the Midwest and parts of the South would allow those 
regions and their sources to tap economies of scale in making 
SO2 reductions. Because of their large inventory of 
emissions, power plants in those parts of the country would exploit 
opportunities to make substantial reductions relatively easily and 
inexpensively. The resulting lower marginal cost of an incremental ton 
of reduction would make it economically attractive for those sources to 
``over-control'' their emissions--so that they could either sell their 
extra reductions to other sources or bank those reductions for use in 
offsetting future emissions. Consequently, the likely economic dynamics 
of an emissions trading and banking market favored making both 
mandatory and extra reductions at the high-emitting sources.
    The banking component of this dynamic was particularly important. 
Even for those sources that were uncertain about the short-term 
economic value of creating extra reductions for the purpose of selling 
the unused allowances, the prospect of banking those extra reductions 
was likely to be appealing. While the market demand for extra 
reductions might not materialize in the short-term, sources knew that 
they would have to operate against a permanent cap on their emissions. 
The certainty of the cap and the expectation of economic growth over 
time would mean that the opportunity to bank extra reductions for 
future use all but guaranteed that those extra reductions would be 
economically valuable. Furthermore, with Congress taking a phased 
approach to control, both the banking provisions and the provisions 
that allowed Phase II sources to ``substitute in'' offered the 
opportunity to design system-wide control optimization.
    At the same time, the common understanding of the adverse 
ecological effects of acid deposition strongly suggested both that 
reducing cumulative SO2 emissions should be the goal of the 
program, and that early reductions were of significant environmental 
value. The earlier the reductions, the sooner the ecosystems affected 
by acid deposition could begin to recover their acid-neutralizing 
capacity. As a result, the economic dynamic created by an emissions cap 
with banking favored the environmental benefit of early, extra 
emissions reductions. Indeed, the cap and trade program for 
SO2 emissions has provided immediate and significant 
reductions in those emissions beyond the legal mandate.
    Finally, Congress' latitude in permitting unlimited emissions 
banking and trading, albeit in the implementation of a large mandatory 
cap and reduction requirement, was augmented by other existing 
provisions of the Clean Air Act. Beginning with its enactment in 1970, 
the Act has required the EPA and the states to regulate the release of 
SO2 from sources whose emissions had local effects on public 
health. In fact, in the legislation establishing the SO2 cap 
and trade program, Congress explicitly barred sources subject to 
SO2 emissions limits under the local health-effects program 
from using SO2 emissions allowances to meet their local 
limitations. As a result, plants subject to SO2 emissions 
limits imposed for purposes of protecting local air quality cannot 
exceed these limits no matter how many SO2 allowances they 
hold.2
---------------------------------------------------------------------------
    \2\ The legislation establishing the SO2 program 
explicitly preserved the existing Clean Air Act authorities of Congress 
and the EPA to impose additional restrictions on SO2. In 
addition to calls for Congress to require further reductions in annual 
SO2 emissions beyond those mandated for Phase II, the EPA 
has issued new standards for fine particle emissions (these regulations 
are currently in litigation). Depending on how the implementation 
programs for these standards are designed, power plants may face either 
one of, or a combination of, additional reductions in the 
SO2 emissions cap and/or additional source-specific 
reduction requirements.
---------------------------------------------------------------------------
VII. The Right Tool for Other Jobs?
    Although history lessons may be interesting, the most pressing 
questions often involve looking forward. As Congress looks ahead to the 
imperatives created by the new health-based standards for groundlevel 
ozone smog and fine particles, by the persistence of acid rain in many 
areas of the country, by the continued problem of haze in pristine 
areas and national parks and by the mounting evidence of unwanted 
human-induced climate change, it will need to decide whether and how to 
use the cap and trade tool. The President's Clean Skies Initiative and 
multi-pollutant power plant legislation long pending in the Senate 
ensure that cap and trade will be at the center of any legislative 
consideration of new air pollution reduction mandates.
    In the view of Environmental Defense, cap and trade is a powerful 
and versatile tool. Congress should make every effort to design new 
legislation to reduce SO2, oxides of nitrogen 
(NOX) and carbon dioxide (CO2) emissions from 
power plants using the cap and trade model. The President and both his 
predecessors were right to feature cap and trade in their respective 
environmental policy initiatives.
    At the same time, however powerful cap and trade may be, it can 
only be used constructively if it is embedded in carefully and 
precisely designed clean air programs and strategies. This issue has 
already become quite acute in the current debate, as many, including 
senior administration officials, have suggested that a national cap and 
trade program for power plant emissions can replace existing 
authorities under Title I of the Clean Air Act.
    If Congress pursues the Clean Skies Initiative or any multi-
pollutant power plant cap and trade program it will need to confront 
this issue seriously. I would like to suggest a construct for thinking 
about this question.
    First, as already noted in this testimony, the acid rain program 
was established as a complete complement to, not as a replacement for, 
existing Clean Air Act and state air pollution authorities. This 
complete separation of the SO2 program from Title I is 
illustrative. As a precursor of acid rain, SO2 emissions are 
a threat to the extent that they are projected into the atmosphere in 
great quantities and transported over long distances by prevailing 
winds. As vehicles for exposing human lungs to particulate matter, 
SO2 emissions are largely of concern because of their impact 
within the confines of local airsheds. Hence Congress' decision in 1990 
to address SO2 emissions simultaneously in two separate 
programs. Again, the Clean Air Act makes clear that Title I authorities 
take precedence over the SO2 acid rain program.
    In the context of multi-pollutant power plant legislation, 
SO2 and NOX emissions again would be regulated as 
precursors of acid rain. They also would be regulated as precursors of 
groundlevel ozone and fine particles. It is in this respect that these 
pollutants should be subject both to new cap and trade requirements and 
to existing Title I authorities. This is because even in the context of 
the attainment of the national ambient air quality standards for ozone 
and fine particles, power plant SO2 and NOX 
contribute to nonattainment both as pollutants transported in quantity 
from an aggregation of remote sources and as pollutants injected into 
local airsheds by local or nearby upwind sources, including power 
plants in both instances.
    A cap and trade program can guarantee aggregate reductions in power 
plant SO2 and NOX emissions but the reductions 
are guaranteed only for that portion of the local emissions inventory 
comprising the contributions of long-distance transport. Consequently, 
reductions in SO2 and NOX in the local airshed 
will occur only in proportion to the amount of airshed SO2 
and NOX attributable to reductions in long-range transport. 
To the extent that airshed SO2 and NOX continue 
to be generated by local power plants or nearby upwind power plants 
additional reductions at those sources may be needed to attain the 
NAAQS. By itself a cap and trade program cannot ensure that all cost-
effective and/or necessary reductions from local, or critical nearby 
upwind, sources will be achieved. Only programs and authorities 
currently constituted under Title I can ensure those.
    Thus, in some nonattainment areas, residual local emissions from 
power plants may prove to be critical contributors to nonattainment. In 
that case, the retention of Title I applicability to those emissions 
will prove to be vital to attaining the NAAQS. If, however, those 
authorities are removed or effectively disabled as the political price 
exacted for multi-pollutant cap and trade legislation, then the entire 
exercise will have proven to be self-defeating for the people living in 
those areas forced to face continued exposure to unhealthful air.
VII. Something Missing: Carbon Dioxide (CO2)
    In his February 14 speech presenting his Clean Skies Initiative and 
climate strategy, President Bush said:
        ``If, however, by 2012 our progress is not sufficient and sound 
        science justifies further action, the United States will 
        respond with additional measures that may include broad-based 
        market programs as well as additional incentives and voluntary 
        measures designed to accelerate technology development and 
        deployment.''
    Although the President's intent was just the opposite, this 
statement would seem to reinforce the logic underlying the adoption of 
multi-pollutant power plant legislation that included CO2, 
as well as the three conventional pollutants. The President seems to 
have set up a high-stakes wager.
    In the coming decade and a half the power sector will be facing 
either legislated reductions of SO2, NOX and 
mercury emissions or reduction requirements driven under current law by 
the MACT standard for mercury and by the demands of attaining the NAAQS 
for ozone and fine particles. This means that virtually every 
electricity sector company will be making substantial long-term capital 
investments involving fuel and technology choices. The logic of a 
multi-pollutant approach, legislated by Congress and implemented by a 
cap and trade system, is that companies will be able to bring a higher 
degree of economic efficiency, environmental efficacy and overall 
rationality to those investment and operation decisions if they are 
acting, with certainty, under a comprehensive emissions regime.
    This logic applies in its fullest sense only if that regime 
encompasses all four--not just three--of the pollutants or classes of 
emissions likely to be subject to new reduction requirements at some 
point during the current investment horizon. To ask companies to make 
investments with certain knowledge of what their liabilities are for 
SO2, NOX and mercury and with only speculation as 
to their potential CO2 obligations, is to make each company 
place a bet on what the future of climate-related emissions control 
regulation will be. If they bet wrong, and after having made 
substantial SO2, NOX and mercury compliance 
investments, are called on again to make separate investments in 
limiting their CO2 emissions, their overall costs are likely 
to be much higher than if multi-pollutant legislation is truly 
comprehensive and covers CO2.
    The President's own explicit reference to potential climate policy 
changes in the next ten years is a tip off as to how acute this 
uncertainty is. After all, even discounting for the most compelling 
arguments that critics offer against both the Kyoto Protocol and the 
bona fides of those nations moving to ratify it, a great many members 
of the international community--including the world's leading 
scientists, national policy-makers and the executives of some of the 
largest multinational energy and chemical companies--have already 
concluded that the current state of the science justifies limiting 
greenhouse gas emissions now. In this light, the potentially high-cost 
bet that power companies will be forced to make either under current 
law or under three-pollutant cap and trade legislation--that they will 
not be facing CO2 emissions obligations in the next 15-to-20 
years--seems almost rigged against them. In contrast, incorporating a 
CO2 emissions limitation requirement implemented through a 
fully flexible cap-and-trade model that allowed offsets from other 
sectors, including agriculture and land use, offers electric companies 
a far more cost effective path forward--instead of a dangerous, rigged 
wager. Little wonder, then, that at least one major coal-burning 
utility acting by itself and a separate coalition of utilities have 
come forward to support four- rather than three-pollutant legislation.

    Mr. Barton. Thank you, Mr. Goffman.
    We now want to hear from Dr. James Lents, the Environmental 
Policy, Atmospheric Processes and Modeling Laboratory at the 
University of California at Riverside.
    Your statement is in the record in its entirety. We would 
ask that you summarize in 5 minutes. Welcome to the 
subcommittee.

                    STATEMENT OF JAMES LENTS

    Mr. Lents. Yes, sir. As stated, my name is James Lents, and 
I am Director of the programs you alluded to at the University 
of California, Riverside. But prior to my present position, I 
served 8 years as Technical Director for the Chattanooga-
Hamilton County Air Pollution Control Program, 7 years as 
Director of the Colorado Air Pollution Control Program, and 11 
years as Executive Officer for the South Coast Air Quality 
Management District in California.
    Mr. Barton. You don't look that old. You started at two? 
You were a child prodigy.
    Mr. Lents. In each of these assignments, the Clean Air Act 
played an important and critical role in supporting and even 
engendering the air quality improvement that has occurred in 
each location. News releases by the Mayor of Chattanooga, the 
Governor of Colorado and the leaders in Southern California 
illustrate the pride that each area has taken in the 
significant air quality improvements that have been achieved.
    In 1970, Chattanooga suffered some of the dirtiest air in 
the Nation. This included particulate levels in the downtown 
region that were among the highest in the Nation, NO2 levels 
that serves as a laboratory for the early development of NO2 
health standards, and violations of the carbon monoxide and 
ozone standards.
    Although Chattanooga had operated a smoke abatement program 
since the 1930's, the rules had little effect. Air quality was 
so poor that auto dealers and homeowners washed their cars 
daily to avoid permanent paint damage, and high ambient NO2 
levels even damaged women's nylon hose while they were being 
worn.
    A local health study demonstrated that children living in 
areas that were at the lower end of the Chattanooga air 
pollution spectrum had significantly above normal respiratory 
problems. The effects on the minority communities that existed 
in the worst part of the pollution were never documented.
    In association with the 1990 Clean Air Act amendments, 
Federal funding was withdrawn from Chattanooga, and a Federal 
implementation plan was threatened to inspire serious actions 
by local and State officials. These steps, along with the 
establishment of nationally accepted health standards called 
for in the 1970 amendments, inspired the local city and county 
governments to revamp their air pollution control effort.
    The Federal Government then provided funding that allowed 
the city and county to hire a small staff of air pollution 
control experts to oversee the cleanup effort. The region 
implemented tough emission standards in the early 1970's, with 
controls completed between 1973 and 1979. Particulate levels 
dropped noticeably in the 1970's and early 1980's, and 
Chattanooga came into compliance with existing standards in the 
mid-1980's.
    Following this achievement, Chattanooga transformed its 
formerly grimy downtown area into a beautiful mall and 
riverfront park. Chattanooga's economy has continued to grow, 
becoming a poster child for what could be done to control air 
pollution. The 1970 Clean Air Act was the seminal event that 
stimulated these important changes.
    I supplied a figure to show the change in particulate level 
in Chattanooga between 1970 and 1990.
    Denver, Colorado, experienced the worst carbon monoxide 
levels in the United States in the 1970's, close to four times 
the national health standard, with levels getting worse year by 
year along with a burgeoning ``brown cloud'' problem and a 
concern about ozone.
    The 1970 and 1977 Clean Air Act amendments required 
Colorado to produce a compliance plan by 1982 to demonstrate 
how the carbon monoxide problem would be solved. The 1977 Clean 
Air Act amendments also mandated a vehicle inspection and 
maintenance program for the Denver area. More importantly, 
however, the Federal law set a strict deadline to attain 
healthy air, and included sanctions for not making a good faith 
effort to meet cleanup requirements.
    After a brief application of Federal sanctions to get 
legislative action, Colorado adopted an I&M program in 1980, 
and with the aid of automobile emission standards set forth by 
the Clean Air Act, began its development of an attainment plan. 
Local planning processes resulted in a conclusion that I&M and 
the Federal automobile emission standards were inadequate to 
meet ambient air quality levels by the 1987 deadline.
    This conclusion resulted in the development of a pilot 
episodic no-drive program and research into cleaner burning 
fuels. While the no-drive program did not produce the desired 
results, the cleaner burning gasoline did. The tightening 
automobile emission standards, combined with the I&M program 
and cleaner burning gasoline produced significant carbon 
monoxide reductions before 1990 and attainment of the carbon 
monoxide standard in the early 1990's. Again, I supplied a 
chart, Figure 2, showing the results.
    Los Angeles, which suffered severe photochemical smog by 
the 1950's, is the birthplace of the understanding of the 
source and cause of much of our urban air pollution. It 
initiated the control of automobile emissions in the 1950's, 
ahead of anyone else in the United States. However, by the 
1970's, the air pollution problem in Los Angeles had become 
generally worse, in spite of these local county air pollution 
control efforts.
    The advent of the 1970's and 1977 Clean Air Act amendments 
accelerated the development of a region-wide air pollution 
control agency called the South Coast air Quality Management 
District, and the far reaching automobile standards in the 
1970's Clean Air Act amendments set California on an aggressive 
path toward cleaner air.
    Inspired by the results of the Clean Air Act's automobile 
emission standards, California, as the only State allowed to 
set separate mobile source standards, took over the lead from 
U.S. EPA in driving vehicle emission standards in the 1980's 
and 1990's.
    The citizen suit provisions in the Clean Air Act amendments 
played an important role in fostering clean air in Los Angeles. 
After the failure of the South Coast Air Quality Management 
District to develop a suitable State implementation plan by 
1982, environmental groups used the citizen suit sections of 
the Clean Air Act to get a judicial ruling requiring the U.S. 
EPA to develop a Federal implementation plan for the region.
    This embarrassment to the local leadership, along with 
subsequent State and Congressional hearings, resulted in a much 
more activated South Coast air pollution control program, 
advancing progress toward clean air and producing important 
experience needed for the 1990 Clean Air Act amendments.
    Mr. Barton. Could you summarize, Dr. Lents, please?
    Mr. Lents. Sure. I'll jump over.
    There is still a long way to go to achieve the goal of 
healthy air in the United States. Chattanooga and much of the 
eastern United States are likely in violation of the new 
PM2.5 and ozone standards. Acid deposition is 
another significant problem that needs continued focus, 
especially in the east.
    Los Angeles, along with many other areas in California and 
Texas, still suffers from ozone air pollution, and will violate 
the new PM2.5 standards. Western visibility is 
significantly reduced.
    A unifying theme surrounding these 21st Century issues is 
the need to address the multi-jurisdictional, regional aspects 
of smog. When the Clean Air Act was envisioned in 1963, 1970 
and 1977, and to some degree in 1990, air pollution was seen as 
primarily a local and State problem that simply needed a boost 
from the Federal Government to reach attainment goals.
    It is clear today that air pollution problems cross State 
lines and international boundaries and, in some cases, are 
global in nature. Future air quality improvement programs must 
address these complex inter-jurisdictional issues.
    I will conclude my testimony here, and I will be pleased to 
answer questions.
    Mr. Barton. Thank you, Doctor. It is obvious you have 
probably testified before the Senate where they don't have a 
time limit, because you know so much, you just get carried--not 
carried away, but it is hard to squeeze as much as you know 
into 5 minutes.
    [The prepared statement of James Lents follows:]
 Prepared Statement of James M. Lents, Director, Environmental Policy 
and Atmospheric Research Laboratory, Center for Environmental Research 
         and Technology, University of California at Riverside
    Good morning. My name is James M. Lents. I am Director of the 
Environmental Policy and Atmospheric Research Laboratory for the Center 
for Environmental Research and Technology at the University of 
California, Riverside, Bourns College of Engineering. Prior to my 
present position, I served 8 years, from 1971 to 1979, as Technical 
Director for the Chattanooga-Hamilton County Air Pollution Control 
Program, 7 years, from 1979 to 1986, as Director of the Colorado Air 
Pollution Control Program, and 11 years, from 1986 to 1997, as 
Executive Officer for the South Coast Air Quality Management District 
in California.
    My environmental career began at the adoption of the 1970 Clean Air 
Act Amendments working in the Chattanooga, Tennessee, air pollution 
control program. I continued to work in air pollution control programs 
following the 1977 and 1990 Clean Air Act Amendments in Colorado and 
California respectively. In each of these assignments, the Clean Air 
Act played an important and critical role in supporting and even 
engendering the air quality improvement that has occurred in each 
location. News releases by the Mayor of Chattanooga in the early 1980s 
and by the Governor of Colorado and the leaders in Southern California 
more recently illustrate the pride that each of these areas has taken 
in the significant air quality improvements that have been achieved.
    In 1970, Chattanooga suffered some of the dirtiest air in the 
nation. This included particulate levels in the downtown region that 
were among the highest in the nation, NO2 levels that served 
as the laboratory for the early development of NO2 health 
standards, and violations of the Carbon Monoxide and Ozone standards. 
Although Chattanooga had operated a smoke abatement program since the 
1930s, the rules had little effect. Air quality was so poor that auto 
dealers and homeowners washed their cars daily to avoid permanent paint 
damage, and high ambient NO2 levels even damaged women's 
nylon hose while they were being worn. A local health study 
demonstrated that children living in areas that were at the lower end 
of the Chattanooga air pollution spectrum had significantly above 
normal respiratory problems. The effects on the minority communities 
that existed in the worst part of the pollution were never documented.
    In association with the 1970 Clean Air Act Amendments, Federal 
funding was withdrawn from Chattanooga and a Federal Implementation 
Plan was threatened to inspire serious actions by local and state 
officials. These steps, along with the establishment of nationally 
accepted health standards called for in the 1970 Amendments, inspired 
the local city and county governments to revamp their air pollution 
control effort. The Federal government then provided funding that 
allowed the city and county to hire a small staff of air pollution 
control experts to oversee the cleanup effort. In the face of medical 
testimony from local company doctors that air pollution in Chattanooga 
was not a problem and threats by local manufacturers to close their 
plants if air pollution rules were adopted, the region implemented 
tough emission standards in the early 1970s. Controls on sources were 
completed between 1973 and 1979. Particulate levels dropped noticeably 
in the 1970s and early 1980s, and Chattanooga came into compliance with 
existing standards in the mid-1980s. Following this achievement, 
Chattanooga transformed its formerly grimy downtown area--where you 
once could not see across the street--into a beautiful mall and 
riverfront park. Chattanooga's economy has continued to grow, becoming 
a poster child for what could be done to control air pollution. A 
national article in Time magazine and an EPA film titled ``What One 
City Did'' documented the efforts by Chattanooga to resolve its air 
quality problems. Today, Chattanooga takes great pride in its much 
cleaner air. The 1970 Clear Air Act was the seminal event that 
stimulated these important changes. Figure 1 shows the change in 
particulate levels in Chattanooga between 1970 and 1990.
    Denver, Colorado, experienced the worst Carbon Monoxide levels in 
the United States in the 1970s, close to 4 times the national health 
standard, with levels getting worse year by year along with a 
burgeoning ``Brown Cloud'' problem and concern about Ozone. The 1970 
and 1977 Clean Air Act Amendments required Colorado to produce a 
compliance plan, referred to as a State Implementation Plan in the 
Clean Air Act, by 1982 to demonstrate how the Carbon Monoxide problem 
would be solved. The 1977 Clean Air Act Amendments also mandated a 
vehicle inspection and maintenance (I/M) program for the Denver area. 
More importantly, however, the Federal law set a strict deadline to 
attain healthy air and included sanctions for not making a good faith 
effort to meet cleanup requirements. After a brief application of 
Federal sanctions to get legislative action, Colorado adopted an I/M 
program in 1980, and with the aid of automobile emission standards set 
forth by the Clean Air Act began its development of an attainment plan. 
The local planning process resulted in the conclusion that I/M and the 
Federal automobile emission standards were inadequate to meet ambient-
air quality levels by the 1987 deadline. This conclusion resulted in 
the development of a pilot episodic no-drive program and research into 
cleaner-burning fuels. While the no-drive program did not produce the 
desired results, the cleaner-burning gasoline did. The tightening 
automobile emission standards as specified in the Clean Air Act 
combined with the I/M program and cleaner-burning gasoline produced 
significant Carbon Monoxide reductions before 1990 and attainment of 
the Carbon Monoxide standard in the early 1990s. A synopsis of the 
change in Carbon Monoxide levels between 1970 and 2000 is shown in 
Figure 2.
    Los Angeles, which suffered severe photochemical smog by the 1950s, 
is the birthplace of the understanding of the source and causes of much 
of our urban air pollution. It initiated the control of automobile 
emissions in the 1950s, ahead of anyone else in the United States. 
However, by the 1970s, the air pollution problem in Los Angeles had 
become generally worse in spite of these local county air pollution 
control efforts. The advent of the 1970 and 1977 Clean Air Act 
Amendments accelerated the development of a region-wide air pollution 
control agency called the South Coast Air Quality Management District, 
and the far-reaching automobile standards in the 1970 Clean Air Act 
Amendments set California on an aggressive path toward cleaner air. 
Inspired by the results of the Clean Air Act's automobile emission 
standards, California, as the only state allowed to set separate mobile 
source standards, took over the lead from the U.S. EPA in driving 
vehicle emission standards through the 1980s and 1990s.
    The citizen suit provisions in the Clean Air Act Amendments played 
an important role in fostering clean air in Los Angeles. After the 
failure of the South Coast Air Quality Management District to develop a 
suitable State Implementation Plan by 1982, environmental groups used 
the citizen suit sections of the Clean Air Act to get a judicial ruling 
requiring the U.S. EPA to develop a Federal Implementation Plan for the 
region. This embarrassment to the local leadership along with 
subsequent State and Congressional hearings resulted in a much more 
activated South Coast air pollution control program, advancing progress 
toward clean air and producing important experience needed for the 1990 
Clean Air Act Amendments.
    Once adopted, the 1990 Clean Air Act Amendments gave Los Angeles a 
reasonable time frame to solve its problems. With this more realistic 
deadline, the South Coast Air Quality Management District in 
association with the California Air Resources Board and Southern 
California Association of Governments produced the first State 
Implementation Plan to ever be approved by the U.S. EPA for Southern 
California. Implementation of this Plan has produced remarkable 
results. In spite of some of the largest population and economic growth 
in the nation, California has reduced the number of violation days of 
air quality standards by 80% since the 1970s and has had no air 
pollution alerts since 1999 for the first time in the history of air 
monitoring there. Figure 3 illustrates the changes in Ozone levels in 
Southern California since the 1977 Clean Air Act Amendments.
    As I close my testimony, I want to note three important issues. 
First, there was clearly a need for the Federal government to intervene 
at times and to push states to develop adequate clean air programs; 
however, the Clean Air Act would not have succeed as it has without a 
close partnership between state and local air pollution control efforts 
and the Federal government. Second, there has been difficulty in 
achieving the flexibility for state programs and businesses that were 
envisioned in the discussions surrounding the Clean Air Act Amendments. 
This needs to be improved in the future. Third, the air pollution 
problem is far from solved and will require even more complex actions 
as we proceed into the 21st Century.
    State and local programs established and now maintain almost all of 
the nation's air monitoring stations, wrote and continue to adopt most 
of the applicable stationary source regulations, and operate and 
enforce most of the local compliance programs. No success would have 
been achieved if these programs had not been effective. The California 
automobile control program has provided much of the leadership for the 
clean vehicles that are being produced today. The Colorado air 
pollution control program combined with subsequent efforts in 
California pointed the way toward the development of today's cleaner 
burning gasoline and diesel fuel.
    The processes employed by the U.S. EPA to enforce Federal 
requirements in the Clean Air Act have not always enabled the level of 
flexibility that could have been included in the process. Examples can 
be cited concerning experiences with I/M programs, the specific design 
of State Implementation Plans, and most notably the recent application 
of the Title V Federal permitting program. Greater effort needs to be 
made in future Clean Air Act implementation to find more flexible ways 
of applying its requirements. Although not a panacea, an important 
potential for the future can be a further move away from command and 
control regulation toward more flexible market-based solutions. It 
appears that Federal regulatory programs along with many state and 
local programs are now recognizing the benefits of market-based 
solutions in many key regulatory programs.
    There is still a long way to go to achieve the goal of healthy air 
in the United States. Chattanooga and much of the Eastern United States 
are likely in violation of the new PM2.5 and Ozone 
standards. Acid deposition is another significant problem that needs 
continued focus, especially in the East. Los Angeles along with many 
other areas in California and Texas still suffers from Ozone air 
pollution and will violate the new PM2.5 standards. Western 
visibility is significantly reduced in many locations, leaving Denver 
and many other areas without the beautiful vistas that they once 
enjoyed. A unifying theme surrounding these 21st Century issues is the 
need to address the multi-jurisdictional, regional aspects of smog. 
When the Clean Air Act was envisioned in 1963, 1970, and 1977, air 
pollution was seen as primarily a local or state problem that simply 
needed a boost from the Federal government to reach attainment goals. 
It is clear today that air pollution problems cross state lines and 
international boundaries and in some case are global in nature. Future 
air quality improvement programs must address these complex inter-
jurisdictional issues.
    Finally, the population of the earth will pass 10 billion during 
this century. Available land for humans and ecosystems to operate has 
dropped from about 17 acres per person in the 1950s to 8 acres per 
person today. This decline will continue in this century to levels 
possibly below 5 acres per person. This increasing human density along 
with continued economic growth will further exacerbate air quality and 
other environmental problems. It is imperative that Congress continues 
to provide both national and international leadership towards cleaner 
air.
    This concludes my testimony. I will be pleased to answer questions 
at the appropriate time.
[GRAPHIC] [TIFF OMITTED] T9470.001

[GRAPHIC] [TIFF OMITTED] T9470.002

[GRAPHIC] [TIFF OMITTED] T9470.003

    Mr. Barton. We are now going to hear from another expert, 
Mr. Alan Krupnick, who is a Senior Fellow and Director, Quality 
for the Environment Division of the Resources for the Future, 
and we welcome you, sir. Your testimony is in the record, and 
ask that you attempt to summarize it in 5 minutes.

                   STATEMENT OF ALAN KRUPNICK

    Mr. Krupnick. Sure. Well, I want to thank you for inviting 
me here again. It has been about five or 7 years or something 
since I was back, and this is my favorite topic and favorite 
committee. So, thank you.
    Mr. Barton. We like you, too.
    Mr. Krupnick. I want to applaud you for starting hearings 
again to look at reopening the Clean Air Act, and I think the 
reasons are because the goal posts have now been--with criteria 
pollutants have now been moved back. with the new ozone 
standard, the new fine particulate standard, many new areas of 
the country are going to be in violation of these standards, 
and without certain initiatives that are being discussed, we 
are going to face as a country a tough job in meeting these 
standards. So it is appropriate that we reopen, look again at 
our thinking, and care much more than we have in the past 
perhaps about cost effectiveness.
    In addition, and perhaps ironically to some, because of the 
success of the cap and trade program, we really need to look at 
the appropriateness of New Source Review, and I'll get to that 
in a minute.
    So what I did first is look at the performance of the Act 
according to two metrics. One has to do with those lines, the 
graph that Jeff Holmstead put up. I have more lines on my 
graph, if anyone wants to look at it, but the message is, of 
course, the same, that economic activity is going up, and 
emissions are going generally down. But that doesn't say too 
much about the costs of control and the cost effectiveness of 
the controls.
    So one way to look at that is by looking at the studies 
that you all mandated EPA to do, the retrospective and 
prospective cost-benefit analyses of the Clean Air Act and its 
amendments. I have done--You probably all looked at them. I 
have relooked at them recently.
    Of course, they show that the benefits of this Act far 
outweigh the costs, pretty much no matter how you slide it up, 
as a general rule. Having said that, it is important to note 
that most of those benefits come from reductions in 
SO2 that are related to mortality reductions, at 
least the benefits that were quantified in these studies, and 
perhaps the benefits from some of the other pollutants have not 
been that large.
    It is also important to know that the studies didn't 
disaggregate the benefits by pollutant and by sector or even by 
subsection of the Act. So when we look to those studies as a 
guide for how to change things in the future, we come up pretty 
short.
    Mr. Barton. Keep going.
    Mr. Krupnick. Okay. So I have looked at some other studies 
in the literature and our own work as well as just economic 
analyses to try to shed some more light on what worked and what 
hasn't worked. Of course, as we have all said, the 
SO2 trading program is the bright, shining star of 
the Clean Air Act, as far as I am concerned as an economist, 
and it has really led the way to a change in the thinking about 
policy instruments at EPA and indeed even around the world.
    In addition to that, we haven't talked much today about 
mobile sources, and I think that the fuel, particularly the 
early fuel reformulations, Federal measures for them, and 
Federal tailpipe standards did a cost effective job in reducing 
these emissions. But recently things have gotten a bit 
tattered.
    The MTBE problem as an additive causing water pollution, 
the ethanol as a substance being heavily subsidized and being 
put into reformulated gas, and the problem of designer fuels in 
gas spikes need to, I think, command the committee's attention.
    Now less effective segments of the Act and its amendments 
are a couple. One is the SIP process. This is really not that 
well suited to address issues of long range pollution 
transport.
    In a committee I was on with James Seitz to look at the 
future of Clean Air Act implementation, we talked about areas 
of influence and areas of violation as a different paradigm 
than the SIP process to think about controlling pollution, and 
I encourage the committee to look at that.
    Inspection and maintenance programs are not working very 
well. That needs to be looked at. They don't target very well 
the dirtiest vehicles, and the dirtiest vehicles don't get 
cleaned up well. That needs to be looked at.
    Then finally the New Source Review. As I started before, I 
want to try to make this as clear as I can that the existence 
of a cap on SO2 means that, if new sources have to 
do more with New Source Review than if there was no New Source 
Review, all that means is that the price of allowances is going 
to go down, and the costs of control are going to go way up. 
But the SO2 permits themselves, the SO2 
emissions themselves, are going to stay constant, because of 
the cap.
    So there is no benefit to the environment, no clear benefit 
to the environment from this cap and from the New Source 
Review. So I would suggest that the administration's Blue Skies 
initiative where we are reducing SO2 caps and 
perhaps eliminating New Source Review makes economic sense, and 
it makes environmental sense. Thank you.
    [The prepared statement of Alan Krupnick follows:]
   Prepared Statement of Alan Krupnick, Senior Fellow and Director, 
                        Resources for the Future
    Thank you Chairman Barton and other members of the subcommittee for 
the opportunity to testify on the performance of the Clean Air Act. I 
am Alan J. Krupnick, senior fellow and director, at Resources for the 
Future (RFF), a nonprofit, nonadvocacy research and educational 
organization specializing in problems of natural resources and the 
environment since 1952. The views I express today are my own, not those 
of RFF.
    The performance of the Clean Air Act (CAA) can be measured in two 
general ways:

(1) by how much better off the American people are with the act than 
        without it, in other words, by the excess of the benefits of 
        the act compared to the costs; and
(2) by whether these benefits and costs are distributed throughout the 
        population in a way that we as a society find acceptable or 
        advantageous.
    The former may be termed an efficiency measure; the latter is an 
equity measure. I will offer some thoughts on the former only.
Economic Versus Environmental Performance Measures
    There are several ways in which efficiency can be measured. One 
revealing, but nonrigorous approach is simply to compare how well the 
economy has performed since the Clean Air Act was implemented to the 
performance of various indicators of emissions and air quality. If 
economic activities are going up while pollution is going down, this is 
an indicator that something in the act is going well. It is an 
incomplete indicator, to be sure. For example, as the economy grows, 
the composition of its output changes. If by accident this change 
results in lower emissions, such changes should not be counted as a 
benefit of the act.
    The attached chart presents some of these comparisons. Measures of 
general economic activity include gross domestic product, megawatt 
hours of electricity generated, fuel used, and vehicle miles traveled.
    These activities are compared to the U.S. Environmental Protection 
Agency's (EPA) emissions and air quality trends data for each of the 
criteria pollutants, except lead. Lead is an obvious, major success 
story for the Clean Air Act as it is a highly toxic pollutant that was 
largely removed from environmental concern through EPA's phase-out of 
lead from gasoline, using authority conferred to the agency by the act. 
Even the policy used to implement the phase-out was well conceived from 
a cost-effectiveness perspective, as the lead phase-down rule was an 
early version of tradable permit programs, which have turned out to be 
so successful.
    From Figure 1, with each trend line indexed to 1970, it is clear 
that measures of general economic activity, as well as activities more 
or less directly leading to emissions, are trending strongly upward 
while emissions are either flat (NOX emissions) or falling. 
The flat or downward trend in emissions is also mirrored in the air 
quality data (not shown) where the number of nonattainment areas has 
been falling, although not steadily.
Cost-Benefit Analyses of Performance 1
---------------------------------------------------------------------------
    \1\  Much of the discussion in this section is taken from Krupnick 
and Morgenstern (2002).
---------------------------------------------------------------------------
    A more rigorous approach to measuring the efficiency of the act is 
to simply refer to the results of the Section 812 studies that Congress 
required in the 1990 Clean Air Act Amendments (CAAA) EPA to do: The 
Benefits and Costs of the Clean Air Act: 1970 to 1990 (EPA, 1997a) and 
The Benefits and Costs of the Clean Air Act, 1990 to 2010 (EPA, 1999). 
Because the first of these studies began after 1990, it is called the 
retrospective study, while the latter, tracking the effects of the 1990 
Amendments, is called the prospective study.
    These studies are probably the most intensive and expensive cost-
benefit analyses ever done at the agency. Under the auspices of the 
agency's Science Advisory Board, both studies were scrutinized 
throughout the decade-long preparation by at least three expert 
committees of outside economists, air quality modelers, 
epidemiologists, and other health experts.
    Although both the retrospective and the prospective studies involve 
many controversial policy and technical issues, they clearly show that, 
taken as whole, the nation has received high returns on its investment 
in improved air quality over the past three decades. The estimates 
indicate that, for the early years, benefits exceed costs by a factor 
of 40 or more. Prospectively to the 1990 Amendments, benefits still 
exceeded costs, although by a far smaller margin.
    Table 1 presents the annualized (central) estimates for both 
benefits and costs developed in the two studies. Each of the two 
(aggregate) scenarios is evaluated by a sequence of economic, 
emissions, air quality, physical effect, economic valuation, and 
uncertainty models to measure the differences between the scenarios in 
economic, human health and environmental outcomes. Both studies examine 
the benefits and costs of reducing volatile organic compounds (VOCs), 
nitrogen oxides (NOX), sulfur dioxide (S02), 
carbon monoxide (CO), coarse particulate matter (PM10), and 
fine particulate matter (PM2.5).2
---------------------------------------------------------------------------
    \2\ Although the incremental effects of the 1990 Amendments on 
primary particulate matter (PM) emissions is relatively small, PM in 
the atmosphere is comprised of both directly emitted primary particles 
and particles that form in the atmosphere through secondary processes 
as a result of emissions of SO2, NOX, and organic 
compounds. These PM species, formed by the conversion of gaseous 
pollutants emissions, are referred to collectively as ``secondary'' PM. 
Because the Clean Air Act, especially the 1990 Amendments, achieve 
substantial reductions in these gaseous precursor emissions, it has a 
much larger effect on PM10 and PM2.5 than might 
be apparent if only the changes in directly emitted particles are 
considered. Also, the retrospective analysis assessed the effect of CAA 
provisions governing lead in the environment. However, since the 1990 
Amendments do not include new provisions for the control of lead, it is 
not considered in the prospective analysis.
---------------------------------------------------------------------------
    These results indicate that aggregate benefits of air pollution 
control exceed costs by more than an order of magnitude for the period 
1970-1990. Note that this conclusion is robust with respect to 
alternative assumptions about age-adjusted mortality. Also note that 
the costs were treated as if the were certain, when, in fact, there is 
much uncertainty about such costs.

 Table 1: Central Estimates of Total Annual Monetized Benefits and Costs
                      of Environmental Regulations
                  (Billions of 1996 dollars as of 1999)
------------------------------------------------------------------------
                                                   Benefits        Costs
------------------------------------------------------------------------
EPA retrospective report, 1990.............   $960 \1\ to $1450     $54
EPA prospective report, 2000...............      $55 \1\ to $96     $20
------------------------------------------------------------------------
Source: OMB (2000)
\1\ Age-adjusted mortality estimate.

    While benefits still exceed costs for the prospective study, the 
ratio of benefits to costs is considerably lower than in the 
retrospective analysis, suggesting that the ``truly low-hanging fruit'' 
may have been picked in the early years.3
---------------------------------------------------------------------------
    \3\ In one of the scenarios presented in the prospective study (low 
benefits) costs actually exceed benefits by $1 billion per year.
---------------------------------------------------------------------------
    Table 2, taken directly from the prospective study, summarizes the 
central estimates on a present value basis by title of the Clean Air 
Act. For Titles I-V, present value estimates of benefits exceed those 
of costs by a factor of four. About 90% of these benefits are 
associated with avoided mortality. The remainder are associated with 
avoided morbidity and with ecological and welfare benefits. On the cost 
side, the prospective analysis finds that Title I accounts for almost 
half of the total cost of the first five titles. Title II accounts for 
another third, with the balance distributed among Titles III-V. Because 
of the long-term nature of the benefits of Title VI (stratospheric 
ozone), the results for this title are not fully integrated into the 
overall findings. However, the present value benefits of this title 
exceed costs by a factor of 20.
    Overall, as the Agency has written in the prospective study, the 
conclusion of the 812 analysis is clear:
        ``While alternative choices for data, models, modeling 
        assumptions, and valuation paradigms may yield results outside 
        the range projected in our primary analysis, we believe based 
        on the magnitude of the difference between the estimated 
        benefits and costs that it is unlikely that eliminating 
        uncertainties or adopting reasonable alternative assumptions 
        would change the fundamental conclusion of . . . [the] study: 
        the Clean Air Act(s') . . . total benefits to society exceed 
        its costs.'' (page v)
    How much stock should we put in these overall results? The Science 
Advisory Board's general endorsement is certainly good reason for 
trusting the results. However, there were some important and 
acknowledged shortcomings, including the lack of disaggregation of 
benefits, difficulty in defining a baseline, difficulties in measuring 
the willingness to pay for mortality risk reductions, omissions of 
important benefit categories, and poorly estimated costs.
    Not Enough Disaggregation. Both studies were conducted at a highly 
aggregate, economy-wide level. The retrospective study did not estimate 
either the benefits or the costs of individual regulations, pollutants, 
or of any subcategories (for example, stationary versus mobile sources) 
of the federal air pollution program. The prospective study estimated 
costs but not benefits by title of the 1990 Amendments, but there were 
no further disaggregations.
    From a policy perspective, an analysis of total costs and total 
benefits represents a very simple approach to a complex issue. 
Arguably, few propose abandoning all federal air pollution control. The 
more policy-relevant question concerns the costs and benefits of 
individual regulations and, even more relevant, the costs and benefits 
of marginal changes to individual regulations on individual pollutants. 
The principle rationale offered by the agency for this highly aggregate 
analysis is that while costs can be reliably attributed to individual 
regulations or programs, the broad-scale methodology used for the 
benefits analysis precludes reliable estimation of the benefits by 
regulation or program, especially since some pollutants, such as 
NOX, show up in multiple titles and affect multiple criteria 
pollutants (NO2, ozone, and particulates).
    Yet, others have analyzed disaggregated pollutants by title, taking 
EPA's aggregate benefit estimate (and cost estimates by title) as given 
(Smith and Ross, 1999), and for Title IV alone (Chestnut, 1995, Burtraw 
et al, 1998), which applied only to the electricity generation sector. 
In addition, EPA was able to develop separate benefit estimates for 
their new ozone and fine particulate National Ambient Air Quality 
Standards (NAAQS) (USEPA, 1997b). The findings from these studies are 
presented in table 3. This table shows that some titles deliver more 
net benefits than others and that the new fine particulate NAAQS is 
likely to be a much better buy for society than the new 8-hour ambient 
ozone standard.
    Difficulty Defining the Baseline. The so-called baseline issue is 
another knotty problem for judging the reliability of these studies. In 
both studies the Agency analyzed air pollution programs by comparing 
specific policy and baseline scenarios. The retrospective study 
contrasted a scenario reflecting historical economic and environmental 
conditions observed with the Clean Air Act in place to a hypothetical 
scenario projecting the economic and environmental conditions which 
would have existed on the assumption that the stringency and 
effectiveness of air pollution control technologies were frozen at 
their 1970 levels. In the prospective study, all rules promulgated or 
expected to be promulgated pursuant to the 1990 Act were contrasted to 
a scenario that essentially freezes federal, state, and local air 
pollution controls at the levels of stringency and effectiveness 
prevailing in 1990. Both studies hold constant the geographic 
distributions of populations and economic activities across the 
scenarios.4
---------------------------------------------------------------------------
    \4\ Although the scenarios do reflect the basic trends in 
population and economic growth across the country over the relevant 
time periods, they do not allow for the possibility that people would 
respond to pollution by moving away from the dirtiest areas.
---------------------------------------------------------------------------
    The frozen technology assumption--an obvious simplification--is 
central to the overall results. Arguably, in the absence of new federal 
regulation, one would expect to see some air pollution abatement 
activity, due to state or local regulation or, possibly, on a voluntary 
basis. As Davies (1970) has reported, nonfederal air pollution efforts 
date back to 1881 when the city of Chicago adopted an ordinance that 
declared: ``the emission of dense smoke from the smokestack of any boat 
or locomotive or from any chimney anywhere within the city shall be . . 
. a public nuisance.'' Davies reports that other cities followed 
Chicago's example. More recently, some states have imposed particularly 
stringent controls, especially California. If one assumed that state 
and local regulations would have been equivalent to federal 
regulations, then a cost-benefit analysis of the Clean Air Act would be 
a meaningless exercise: both benefits and costs would equal zero. For 
both studies, EPA and the outside experts wrestled with the possibility 
of developing more realistic baseline scenarios. In the end, they 
decided that any attempt to predict how states' and localities' 
regulations or voluntary efforts would have differed from the Clean Air 
Act is too speculative.
    Difficulty Measuring Values for Mortality Risk Reductions. The 
monetized benefits reflect interpretations of the available science and 
economic literature made by the Agency in consultation with its outside 
experts. As a form of sensitivity analysis, a number of alternative 
interpretations of the literature also were examined. The 
quantitatively most important concern the valuation of premature 
mortality. In both the retrospective and prospective analyses, the 
Agency developed an alternative scenario based on the loss-of-life-
years approach to reflect the greater susceptibility of older 
individuals to air pollution-induced mortality. In both studies, this 
scenario yielded significantly lower benefits. The prospective study 
also examined alternative assumptions about the incidence of mortality, 
the incidence and valuation of chronic bronchitis, as well as certain 
other effects. For Title VI, sensitivity analysis reflected potential 
averting behaviors, such as remaining indoors or increasing use of 
sunscreen or hats.
    Since these studies were published, two distinct elements of the 
health valuation literature have been expanded. The first is a more 
systematic evaluation of the main body of the literature, which is 
associated with using wage rate differentials reflecting differential 
workplace risks. Mrozek and Taylor (2002) have performed a meta-
analysis of 38 labor market studies contributing 203 estimates of the 
value of a statistical life (VSL). They find that EPA's best estimate 
for VSL ($6 million of 1998 dollars) is three times too large (that is, 
their best estimate is $2 million), owing to a number of factors. The 
most important is a false attribution of wage rate differentials to 
mortality rate differences, when in fact, much of this variation is due 
to inter-industry differences in wage rates that occur for other 
reasons.
    The second is some new studies in the mortality risk valuation 
literature (for example, Hammitt and Graham, 1999; Krupnick et al, 
2002; Strand, 2001; Johannesson and Johansson, 1996) that are 
specifically designed to reflect the mortality risks associated with 
air pollution using survey techniques, rather than using estimates from 
labor markets, a context and population far different than that 
appropriate to air pollution. Much of this literature also suggests 
that EPA's $6 million estimate for VSL is too high (a factor of three 
to six too high would not be out of line) with the appropriate 
adjustment being quite uncertain, as this literature needs to mature. 
Additional context adjustments, say for the dread associated with 
cancer or other diseases and deaths caused by air pollution, could 
result in higher VSLs, however.
    Omissions. Although both studies attempt broad coverage, there are 
some notable omissions, largely because of data or modeling 
limitations. Emissions of hazardous air pollutants are not extensively 
considered in either study.5 Estimates for Title VI of the 
1990 Amendments regarding stratospheric ozone depletion are developed 
in the prospective study but they are not fully integrated into the 
main analysis.
---------------------------------------------------------------------------
    \5\ Some pilot analyses of hazardous air pollutants were conducted 
but it was determined that the poor quality of the available 
information precluded comprehensive quantification of the effects.
---------------------------------------------------------------------------
    Despite efforts to characterize the impacts of air pollution on 
natural systems, the inability to quantify and/or monetize the damages 
precluded the development of benefits estimates for ecosystem impacts 
(except for a supplementary calculation for avoided costs of nitrate 
reductions associated with NOX emissions). A similar story 
applies to potential carcinogenic and certain other health effects 
associated with criteria pollutants.
    Poorly Estimated Costs. Costs are estimated as increases in 
expenditures by different entities to meet the additional control 
requirements of the 1990 Amendments, including operation and 
maintenance expenditures plus amortized capital costs (that is, 
depreciation plus interest costs associated with the existing capital 
stock).6 Changes in employment and prices as well as impacts 
that might be experienced among customers of the firms that must incur 
these costs were partially examined in the retrospective analysis but 
omitted in the prospective study. In limiting consideration of these 
so-called general equilibrium effects, the EPA reports effectively 
preclude analysis of the tax interaction effect, which reflects the 
economy-wide result of imposing additional costs in the context of 
existing (distortionary) taxes.
---------------------------------------------------------------------------
    \6\ Costs for meeting Title IV through the SO2 trading 
program were estimated by a model that allocates emissions reductions 
cost effectively in a context of responding to market signals in the 
electric power and tradable allowance markets.
---------------------------------------------------------------------------
    This effect was extensively discussed by the expert review 
committee of the prospective study, and is mentioned in the study, but 
is not incorporated quantitatively. The tax interaction effect (Parry 
and Oates, 2000) refers to the effect of increased control costs on the 
deadweight loss associated with our existing system of labor and other 
taxes. The slight rise in the cost of living slightly lowers real 
wages, with aggregate losses being quite large because there are so 
many people affected.7 Costs may be significantly 
underestimated on this account. At the same, the difficulties of 
forecasting future technological changes (and EPA's current practice of 
fixing technology) probably leads to an overestimate of costs 
(Harrington, Morgenstern, and Nelson, 2000).
---------------------------------------------------------------------------
    \7\ One committee member estimated that costs of implemented the 
1990 Amendments could be 30% higher than shown in the report.
---------------------------------------------------------------------------
    In summary, while significant challenges remain to estimate the 
cost and benefit performance of the Clean Air Act and its Amendments, 
there are as many reasons for expecting that net benefits will be 
higher than estimated as lower than estimated, with the net effect 
awaiting further research. Clearly, new benefits will be larger in some 
elements of the act than in others, a discussion to which I now turn.
Performance of Specific Elements of the Clean Air Act
    A final approach to examining performance of the Clean Air Act is 
to consider some of the evidence on individual elements of the act. 
This examination will be highly selective, mostly choosing topics about 
which I have some expertise.
    SO2 Allowance Trading. The SO2 Allowance 
Trading Program in Title IV is an unmitigated net benefit and has lead 
the way to a revolution in thinking about the use of market-based 
instruments for pollution control. Research at RFF and elsewhere has 
examined the workings of this program in great detail.
    We find that the lion's share of benefits results from reduced risk 
of premature mortality, especially through reduced exposure to 
sulfates, and these expected benefits measure several times the 
expected costs of the program (Burtraw et al, 1998). Although emission 
trading in theory could have environmental impacts, ``the geographic 
consequences are not consistent with the fears of the program's critics 
. . . pollutant concentrations decrease and health benefits actually 
increase in the East and Northeast due to trading . . . Deposition of 
sulfur in the eastern regions also decreases.'' (Burtraw and Mansur, 
1999). Meanwhile, ``allowance trading may achieve cost savings of $700-
$800 million per year compared to `enlightened' command-and-control . . 
. (and) annual savings of almost $1.6 billion'' compared with a less 
enlightened command-and-control alternative of forced scrubbing. 
``Innovation accounts for a large portion of these cost savings . . .'' 
involving ``. . . organizational innovation at the firm, market and 
regulatory level and process innovation by electricity generators and 
upstream fuel suppliers.'' (Carlson et al, 2000). Although some of 
these innovations were already in the works prior to the program, the 
allowance trading program deserves significant credit for providing the 
incentive and flexibility to accelerate and to fully realize exogenous 
technical changes that were occurring in the industry.
    Based on these good results, it is fair to say that EPA considers 
trading programs at least equally with traditional command-and-control 
methods when it considers new regulations. The best recent example is 
the NOX trading program, designed to help states implement 
the NOX SIP call. Other agencies and stakeholders also think 
of trading as a cost-effective and politically palatable means of 
reducing pollution, witness the enthusiasm in some quarters outside of 
those inhabited by economists, for CO2 trading, tradable 
CAFE credits, and the like. The success of Title IV has made this 
popularity and even ``faith'' possible.
    Yet, the SO2 trading program and other trading programs 
could have been made better in hindsight, and could be made better in 
the future. In particular, the level of the cap could be tied to an 
economic index, such as allowance prices (Burtraw, 2002). As allowance 
prices fall, the pace of reduction in emissions could be accelerated to 
capture low-cost benefits for the environment and public health. 
Conversely, if allowance prices rise to unanticipated or unjustified 
levels, the pace of emission reductions could be slowed.
    Federal Measures for Mobile Source Emissions Reductions. Another 
success is the federal measures called for in Title II to reduce 
emissions of hydrocarbons, CO2 and NOX from 
mobile sources. These measures, such as reformulated gasoline and 
tailpipe emissions standards, are generally believed to have 
contributed the dominant share of the emissions-reduction benefits from 
mobile sources. Reformulated gasoline has the advantage of being 
relatively low cost and of being applicable to the entire vehicle 
stock, whereas the tailpipe standards affect only new vehicles. 
Further, by making new cars more expensive relative to used cars, the 
tailpipe standards may have contributed some to the dramatic increase 
in the lifetime of used cars, whose emissions tend to be larger than 
newer cars. Cost-effectiveness of gasoline reformulated to reduce VOC 
emissions, for instance, has been estimated to be in the range of 
$1,900 to $3,900 per ton (Harrington, Walls, and McConnell, 1995). 
These estimates do not capture the environmental costs associated with 
MTBE additives nor the subsidies associated with using ethanol. Thus, 
only some reformulations come this cheaply.
    More problematic has been the vehicle inspection and maintenance 
programs required of some nonattainment areas by the act (Title II). A 
detailed RFF study of Arizona's enhanced I/M program finds its cost-
effectiveness is about $5,500 per ton of NOX plus VOCs 
(Harrington, McConnell, and Ando, 2000). Further, the recent NAS study 
(2001) found that such programs have ``generally achieved less 
emissions than originally projected'' (p. 2) and quoted estimates of 
cost-effectiveness ranging from $4,400 to $9,000 per ton of 
NOX plus VOCs. Providing effective and efficient means of 
finding and repairing dirty vehicles should be a top priority for the 
future. The near elimination of tailpipe emissions of new cars leaves 
the maintenance of vehicles as they age the last potentially low-cost 
area for on-road mobile source emissions reductions. One approach is to 
rethink the allocation of responsibility for in-use emissions in a more 
fundamental way, putting more of the emission liability on 
manufacturers, through extended warranties, emission repair liability, 
or expanded use of vehicle leasing. Such alternative assignments of 
liability can perhaps reduce the cost of monitoring and enforcement of 
I/M, reduce the incentives of motorists to avoid maintenance and 
repair, and, by providing more flexibility about which vehicles to 
repair, increase the efficiency of I/M as well.
    More problematic still in terms of cost-effectiveness are the 
various programs to mandate or otherwise promote the use of low-
emitting, alternate-fueled vehicles. As shown in a new report (NRC, 
2002, appendix F), projected costs per ton of reductions from these 
vehicles range from a low of $6,000 up to nearly $100,000 per ton of 
VOCs plus NOX reductions. Of course, to meet the NAAQS may 
require implementation of measures with large costs-per-ton reduction 
and, specifically referring to alternate-fueled vehicles, these costs 
are likely to come down significantly with technological change and 
mass production. Nevertheless, what is important is whether cheaper 
means for such reductions are left unimplemented and whether changes in 
program design for the implemented programs could reduce costs, raise 
effectiveness, or both.
    Federal Measures for Point-Source Emissions Reductions. Aside from 
SO2 trading and the future trading program, the regulation 
of point source emissions has been effected by the New Source Review 
(NSR) program and nonattainment level permit activities related to the 
SIP. While the NSR program has undoubtedly spurred new abatement and 
low-polluting process technology, as was intended, these emissions 
reductions have come at a high cost. As with mobile sources, tighter 
standards applied to new sources relative to old sources create a bias 
against capital turnover, leaving possibly dirtier capital in place for 
far longer than it would have been with a more balanced treatment of 
sources. Further, with cap-and-trade programs in place, such as those 
for SO2 nationally, RECLAIM in Los Angeles, and 
NOX in the northeastern United States, NSR is simply 
redundant. Forcing new sources to meet a tight technology-based 
standard will only reduce the demand for allowances, lowering their 
price below what they would otherwise be. While the individual new 
sources will have lower emissions with NSR than without it, other 
sources will have greater emissions, since total emissions are capped. 
On net, exposures over time and space will be different, but not 
clearly higher or lower.
    The SIP Process. The SIP process has probably not worked very well. 
This is not necessarily the fault of the Clean Air Act. At the time the 
Act and its Amendments were passed, the magnitude of long-range 
pollution transport was not known and was assumed to be small. Now we 
understand that ozone and its precursors, as well as the finer 
particulates and their precursors can travel many hundreds of miles (or 
more) making the process of placing responsibility for attainment on 
the shoulders of individual nonattainment areas (even with all the 
federal measures in place) problematic. Figures 2 and 3 show some 
recent results from a state-of-the-art air quality model (Mendoza-
Dominguez, and Russell, 2000; Yang, Wilkenson, and Russell, 1997) that 
integrates ozone and aerosol chemistry into a highly spatially and 
temporally disaggregated model of ozone and fine particulate 
concentrations. These figures show how much population-weighted 
particulate and ozone concentrations in a state can be cut by 
reductions of SO2 and NOX emissions, 
respectively, in each of the states.8 The figures clearly 
show that several nearby states are substantially involved in other 
states' pollution and that the local (own-state) share of 
concentrations is only around 20 to 25%.
---------------------------------------------------------------------------
    \8\ In our study area of the eastern U.S., NOX emission 
reductions also reduce PM2.5 concentrations, but only about 
\1/10\th to \1/20\th as much as SO2 on a ton for ton basis. 
These estimates and those in Figures 2 and 3 are for an often-studied 
meteorological episode in July 1995. These figures result from 
simulating a 1,000 ton reduction of either SO2 or 
NOX emissions in each state and examining the reduction in 
24-hour PM2.5 and 8-hour ozone concentrations for a given 
state. The height of the bars gives the concentration reduction that 
results from this case. These very large reductions in NOX 
cause at most a 12.7 ppb reduction in ozone concentrations, for 
instance.
---------------------------------------------------------------------------
    The lawsuits that have resulted to get long-range sources under 
control are another indication of the problems with the SIP process. A 
Federal Advisory Act Committee (USEPA, May 1998), which John Seitz at 
OAQPS and I co-chaired, spent many hours trying to develop alternatives 
to this process, recognizing that there were areas of violation and 
areas of influence, that needed to form the basis for a new way of 
reaching attainment.
    The National Ambient Air Quality Standards. Of course, the 
centerpiece of Clean Air legislation from 1970 onwards has been the 
National Ambient Air Quality Standards. By meaning such standards to be 
enforceable, Congress tagged them as the driving force in air quality 
regulation. As such, it is perhaps unsurprising that they have come 
under so much criticism, both on the basis of the criteria for setting 
them and for the criteria that may not be used. In spite of the recent 
Supreme Court ruling against the use of cost-benefit analysis and 
economic efficiency as a criterion for standard setting, it still 
remains the case that the criteria for setting standards in the absence 
of a threshold are not defined, if not indefinable. Tighter and tighter 
standards are not necessarily in the country's best interests. 
Arguably, as EPA's Regulatory Impact Analysis for Ozone and Particulate 
Matter shows, it might have been better to have a new ozone standard no 
tighter than the current one and a fine particulate standard even 
tighter than the new one.

                               References

    Burtraw, Dallas. 2002. ``Three Pollutants and An Emission: A 
Playbill for the Multipollutant Legislative Debate,'' Brookings Review, 
Vol. 20, No. 2 (Spring), 14-17, 48.
    Burtraw, D. and Erin Mansur, 1999. ``The Environmental Effects of 
SO2 Trading and Banking,'' Environmental Science and 
Technology, Vol. 33, No. 20, (October 15), 3489-3494.
    Burtraw, D., Alan J. Krupnick, Erin Mansur, David Austin and 
Deirdre Farrell. 1998. ``The Costs and Benefits of Reducing Air 
Pollutants Related to Acid Rain,'' Contemporary Economic Policy, vol. 
16 (October), 379-400.
    Carlson, C., Dallas Burtraw, Maureen Cropper and Karen Palmer, 
2000., ``SO2 Control by Electric Utilities: What are the 
Gains from Trade?'' Journal of Political Economy, Vol. 108, No. 6, 
1292-1326.
    Chestnut, Lauraine. 1995. Human Health Benefits Assessment of the 
Acid Rain Provisions of the 1990 Clean Air Act Amendments, final report 
prepared by Hagler Bailly consulting, Inc. for the U.S. EPA, Acid Rain 
Division.
    Davies, J. Clarence, 1970. The Politics of Pollution (Pegasus 
Press, New York).
    Hammitt, J.K. and J.D. Graham. 1999. ``Willingness to Pay for 
Health Protection: Inadequate Sensitivity to Probability?'' Journal of 
Risk and Uncertainty, 18(1): 33-62.
    Harrington, Winston and Virginia D. McConnell. 2000. ``Coase and 
Car Repair: Who Should Be Responsible for Emissions of Vehicles in 
Use?'' in Michael Kaplowitz and Michael Lawrence, Property Rights, 
Economics and the Environment. JAI Press, Stamford CT.
    Harrington, Winston, Richard Morgenstern and Peter Nelson, 2000. 
``On the Accuracy of Regulatory Cost Estimates, Journal of Policy 
Analysis and Management 19 (2) 297-322.
    Harrington, W. V. McConnell, and A. Ando. 2000. ``Are Vehicle 
Emissions Inspection programs Living Up to Expectations? Transportation 
Research, Part D 5, 153-172.
    Harrington, W., M. Walls, and V. McConnell. 1995. ``Use Market 
Forces to Reduce Auto Pollution.'' Chemtech pp. 55-60 (May).
    Krupnick, A.J., M. Cropper, A. Alberini, N. Simon, B. O'Brien, and 
R. Goeree. 2002. ``Age, Health and the Willingness to Pay for Mortality 
Risk Reductions: A Contingent Valuation Survey of Ontario Residents,'' 
Journal of Risk and Uncertainty 24(2) 161-175 (March).
    Krupnick, A.J. and R. Morgenstern. 2002. ``The Future of Cost-
Benefit Analysis of the Clean Air Act,'' The Annual Review of Public 
Health 23, 427-48.
    Johannesson, M. and P-O Johansson. 1996. ``To Be or Not To Be: That 
is the Question: An Empirical Study of the WTP for an Increased Life 
Expectancy at an Advanced Age,'' Journal of Risk and Uncertainty 13 
163-174.
    Mendoza-Dominguez, A.; Russell, A.G.: (2000) ``Iterative Inverse 
Modeling and Direct Sensitivity Analysis of a Photochemical Air Quality 
Model,'' Environ. Sci.Technol. 34, 4974-4981.
    Mrozek, Janusz R. and Laura O. Taylor. 2002. ``What Determines the 
Value of a Life? A Meta-Analysis,'' Journal of Policy Analysis and 
Management 21 (2) 253-70 (Spring).
    National Research Council, Transportation Research Board. 2002. The 
Congestion Mitigation and Air Quality Improvement Program: Assessing 10 
Years of Experience (NAS Press, Washington, D.C.)
    National Research Council. 2001. Evaluating Vehicle Emissions 
Inspection and Maintenance Programs (NAS Press, Washington, D.C.).
    Parry, I. and Oates, W. E. 2000. ``Policy Analysis in the Presence 
of Distorting Taxes,'' Journal of Policy Analysis and Management 19 (4) 
(Fall).
    Smith, Anne and Martin Ross. 1999. Benefit-Cost Ratios of the CAAA 
by CAAA Title: An Assessment Based on EPA's Prospective Study, for 
General Motors Corporation by Charles Rivers Associates, CRA D2050-00 
(November).
    Strand, J. 2001. Public and private-good values of statistical 
lives: Results from a combined choice experiment and contingent 
valuation survey. University of Oslo Working Paper.
    U.S. Environmental Protection Agency. 1997a. The Benefits and Costs 
of the Clean Air Act: 1970 to 1990, Office of Air and Radiation/Office 
of Policy, Washington, D.C.
    US Environmental Protection Agency. 1997b. Regulatory Impact 
Analysis for Ozone and Particulate National Ambient Air Quality 
Standards, Washington, DC.
    U.S. Environmental Protection Agency. 1998. Final Report on 
Subcommittee Discussion, Subcommittee for Ozone, Particulate Matter and 
Regional Haze Implementation Programs. (May).
    U.S. Environmental Protection Agency, 1999. The Benefits and Costs 
of the Clean Air Act, 1990 to 2010, Office of Air and Radiation/Office 
of Policy, Washington, D.C.
    Yang, Y-J, Wilkinson, J. and Russell, A. (1997) ``Fast, Direct 
Sensitivity Analysis of Multidimensional Photochemical Models,'' Env. 
Sci. & Technol., 31: 2859-2868.

  Table 2: Summary of Quantified Primary Central Estimate Benefits and
                                  Costs
                      (Estimates in million $1990s)
------------------------------------------------------------------------
                                          Annual Estimates
       Cost or Benefit Category        ----------------------   Present
                                           2000       2010       Value
------------------------------------------------------------------------
Costs:
Title.................................     $8,600    $14,500     $85,000
Title II..............................     $7,400     $9,000     $65,000
Title III.............................       $780       $840      $6,600
Title IV..............................     $2,300     $2,000     $18,000
Title V...............................       $300       $300      $2,500
Total Costs, Title I-V................    $19,000    $27,000    $180,000
Title VI..............................    *$1,400  .........    *$27,000
Monetized Benefits:
Avoided Mortality.....................    $63,000   $100,000    $610,000
Avoided Morbidity.....................     $5,100     $7,900     $49,000
Ecological and Welfare Effects........     $3,000     $4,800     $29,000
Total Benefits, Title I-V.............    $71,000   $110,000    $690,000
Stratospheric Ozone...................   *$25,000  .........   *$530,000
------------------------------------------------------------------------
* Annual estimates for Title VI stratospheric ozone protection
  provisions are annualized equivalents of the net present value of
  costs from 1990 to 2075 (for costs) or 1990 to 2165 (for benefits).
  The difference in time scales for costs and benefits reflects the
  persistence of ozone-depleting substances in the atmosphere, the slow
  processes of ozone formation and depletion, and the accumulation of
  physical effects in response to elevated UV-b radiation levels.
Source: EPA, 1999. The Benefits and Costs of the Clean Air Act,
  19902010.


   Table 3. Summary of Cost-Benefit Studies of the 1990 Clean Air Act
                           Amendments for 2010
                      (estimates in million $1990).
------------------------------------------------------------------------
                   Study                         Benefits         Costs
------------------------------------------------------------------------
Title IV
Burtraw et al (1998)\1\...................             $25,000      $800
Chestnut (1995)...........................             $35,277        NA
New NAAQS (EPA, 1997)\2\
Ozone (8-hr.), partial attainment.........         $400-$2,100    $1,100
Ozone (8-hr.), full attainment............       $1,500-$8,500    $9,600
Fine Particulates, partial attainment.....    $19,000-$104,000    $8,600
Fine Particulates, full attainment........    $20,000-$110,000   $37,000
Clean Air Act Amendments (Smith, 1999)\3\
Title I...................................             $26,564   $14,500
Title II..................................             $14,968    $9,000
Title III.................................              $1,925      $840
Title IV..................................             $69,297    $2,000
------------------------------------------------------------------------
\1\ While this estimate is specific to the eastern United States, these
  benefits are expected to account for 98% of total U.S. benefits.
\2\ Partial attainment costs are incremental to partial attainment of
  current standards, and reflect partial attainment of promulgated
  standards. EPA estimates 17 potential residual nonattainment areas for
  ozone, and 30 potential residual nonattainment counties for fine
  particulates as of 2010. Full attainment costs, however, are
  incremental to full attainment of current standards.
\3\ Total 1990 Amendments benefit estimate ($110 billion; see table 2
  above, in bold) and cost estimates by title (see table 2, above) are
  from EPA (1999).

  [GRAPHIC] [TIFF OMITTED] T9470.004
  
  [GRAPHIC] [TIFF OMITTED] T9470.005
  
  [GRAPHIC] [TIFF OMITTED] T9470.006
  
    Mr. Barton. Thank you, sir.
    Now we have a pending vote on the floor. If Mr. Driesen 
will pretty stay within his 5 minute rule, we can give Mr. 
Boucher a chance to ask a question, myself a chance to ask a 
question, and then you folks can go have lunch, and we can 
adjourn the hearing. So with that as an incentive, we want to 
recognize Mr. David Driesen, who is an Associate Professor from 
Syracuse University, and he is here to testify.
    Your statement is in the record. We would ask that you 
summarize it in 5 minutes.

                  STATEMENT OF DAVID M. DRIESEN

    Mr. Driesen. Thank you, Mr. Chairman, members of the 
subcommittee. I appreciate the opportunity to testify today on 
the accomplishments of the Clean Air Act.
    The 1990 amendments have improved public health, 
ameliorated environmental impacts. We have reduced emissions of 
almost all the pollutants the amendments target, often quite 
substantially, and this represents a major achievement.
    To my mind, the most stunning success story is actually the 
phaseout of ozone depleting chemicals to protect the 
stratosphere ozone level. That, if we continue along that path, 
is probably going to solve the problem.
    I agree that acid rain has also been a successful program, 
and we have reduced criteria pollutants as well. But the new 
scientific research indicates that ozone and soot are causing 
more death, more asthma than we had thought and, as a result, 
EPA has had to revise those standards.
    Because you are going to be thinking about power plant 
emissions, I think it is important to understand what the Act 
is going to bring in the way of future power plant regulation. 
First of all, the State's Attorney General and the Justice 
Department are now enforcing previously under-enforced New 
Source Review requirements, and these actions, if they 
continue, will bring about substantial reductions in power 
plant emissions.
    Second, EPA is about to begin an emissions trading program 
for nitrogen oxide in the northeast and midwest, which will 
also bring about significant reductions beginning in 2003. 
Finally, States in order to achieve the national ambient air 
quality standards, the revised ones, are going to have to 
regulate sulfur dioxide and nitrogen oxide from utilities.
    With respect to hazardous air pollutants, we have achieved 
very large reductions. The old program only succeeded in 
listing eight pollutants. Congress listed 189 that States and 
local agencies had associated with serious health effects like 
cancer and birth defects, and in just over 10 year we got far 
more reductions from far more pollutants than we ever saw, in a 
much faster fashion than we ever saw before the 1990 
amendments.
    EPA has just begun work on a second phase which is designed 
to eliminate residual risk. It will involve some risk 
assessment.
    EPA will be regulating power plant mercury emissions for 
the first time in 2004 under the toxics program. I think that 
is important background to evaluating the proposals on power 
plant emissions.
    The major challenge for the future, though, and the major 
failure of the Clean Air Act, has been the failure to address 
greenhouse gas emissions. In marked contrast to the rest of the 
Act, these have risen some 14 percent since 1990, because we 
have relied entirely upon voluntary efforts.
    That is a serious problem, because scientists are telling 
us that it is clear that the climate is warming, that we can 
expect more heat waves which translates to worse summer smog 
programs, making the States' job in achieving criteria of 
pollutant standards more difficult. We can expect that there 
may be floods, droughts and the spread of infectious diseases 
if we don't address this problem, and every year we wait, it 
gets more serious, because once we put this carbon into the 
atmosphere, it stays there. So there is no going back. So that, 
to my mind, is the most serious gap in the amendments.
    So to conclude, the States and EPA have made significant 
progress in protecting public health and the environment. They 
are in the midst of implementing a number of programs that 
promise to deepen and continue that progress, but we have a 
major gap in not addressing carbon dioxide from utilities and 
greenhouse gas emissions in general.
    [The prepared statement of David M. Driesen follows:]
 Prepared Statement of David M. Driesen, Associate Professor, Syracuse 
                       University College of Law
    The question of how well the 1990 Amendments have succeeded in 
protecting public health and the environment from air pollution is very 
important. Air pollution is associated with tens of thousands of annual 
deaths, afflicts many millions more with asthma and lung disease, poses 
risks of cancer and birth defects, and causes neurological damage. In 
addition, air pollution destroys forests, acidifies lakes, and damages 
crops. Finally, air pollution warms the climate. Climate change will 
likely exacerbate summertime smog and therefore increase the frequency 
and severity of asthma and heart attacks, while creating potential new 
catastrophes--flooding of islands and coastal areas, destruction of 
eco-systems, droughts, and the spread of tropical diseases.1 
Unfortunately, greenhouses gases, once released, remain in the 
atmosphere for decades, so delay in addressing this problem has 
irreversible consequences.
---------------------------------------------------------------------------
    \1\ See Intergovernmental Panel on Climate Change, Climate Change 
2001: Synthesis Report (Cambridge University Press 2001).
---------------------------------------------------------------------------
    I'm pleased to report that the 1990 Amendments have improved public 
health and ameliorated environmental impacts. We have reduced emissions 
of most of the pollutants the Amendments target, often quite 
substantially. This represents a major achievement, for this progress 
occurred in spite of increased population and in conjunction with high 
economic growth. Furthermore, the 1990 Amendments require further 
actions that will build on this progress.
Stratospheric Ozone Depletion
    The most stunning success came from efforts to protect people from 
skin cancer and cataracts by combating the depletion of the 
stratospheric ozone layer, which shields us from ultraviolet rays. We 
eliminated the production of many substances contributing to depletion 
of the ozone layer high in the atmosphere, as did other countries 
around the world. While a hole has opened up in the ozone layer, 
scientists tell us that it probably will heal as a result of this 
vigorous response. Because we have not proceeded as aggressively on 
other issues, our success in other areas, while impressive, has been 
somewhat more limited.
Acid Rain
    The acid rain program, which combines very specific Congressional 
decisions about limits with emissions trading confined to well-
monitored pollutants, has also proven enormously successful. It has 
reduced sulfur dioxide at much lower cost than predicted. While acid 
deposition has declined as a result, lakes and forests have been slow 
to recover.2 Further planned cuts in sulfur dioxide and 
nitrogen oxides, the principal causes of acid rain, will aid recovery.
---------------------------------------------------------------------------
    \2\ See Charles T. Driscoll et al., Acidic Deposition in the 
Northeastern United States: Sources and Inputs, Ecosystem Effects, and 
Management Strategies, 51 BioSciences 180 (2001); Charles T. Driscoll 
et al., Acid Rain Revisited: Advances in Scientific Understanding Since 
the Passage of the 1970 and 1990 Clean Air Act Amendments (Hubbard 
Brook Research Foundations, 2001).
---------------------------------------------------------------------------
Smog and Soot: The Criteria Air Pollutants
    The Clean Air Act relies upon a combination of state regulation and 
federal vehicle controls to address problems caused by pervasive health 
impairing criteria pollutants. These pollutants include soot (or 
particulate), ground level (i.e. not stratospheric) ozone, and carbon 
monoxide. Because of these efforts, levels of all of these pollutants 
have declined between 1992 and 1999 by the levels indicated below:

          Percentage Decline Criteria Pollutants: 1992-1999 \3\
------------------------------------------------------------------------
------------------------------------------------------------------------
Carbon Monoxide............................................        2%
Particulate Matter: 10 Microns or Less.....................       13%
Particulate Matter 2.5 Microns or Less.....................        7%
Ozone......................................................        4%
------------------------------------------------------------------------
\3\ EPA, National Air Quality and Emissions Trends Report, 1999 Appendix
  A (2001).

    As a result, only one area in the country violated the carbon 
monoxide standard in 1999. A sizable number of the moderately polluted 
areas have achieved the ozone and particulate standards in effect in 
1990, but many metropolitan areas with large populations continue to 
violate these standards. The 1990 Amendments anticipated that seriously 
polluted areas would comply by 1999 (they haven't), but expected that 
areas suffering severe or extreme ozone pollution probably would not 
comply by 2002.
    Unfortunately, new scientific research associates ozone and 
particulate pollution with even more cases of death, asthma and lung 
disease than were apparent in 1990. More than 100 million Americans 
still do not have clean healthful air to breathe. Accordingly, EPA has 
recently revised national ambient air quality standards for particulate 
and ozone. Implementation of these standards will take some time, but 
promises to improve this situation.
    The national ambient air quality standards serve as goals for state 
pollution control programs. They establish the maximum concentration of 
pollutants EPA deems tolerable in the air that surrounds us. States 
regulate emissions of pollution sources in order to bring about the 
needed improvements in ambient air quality. Because state decisions 
about which regulatory strategies to use affect cost, costs will vary 
from state to state. And because local air quality varies, so do state 
air quality control programs. This is not a one-sized fits all 
approach, and it unfolds slowly.
    Because utility nitrogen oxide and sulfur dioxide emissions 
contribute enormously to violations of the new national ambient air 
quality standards, states will have to control these emissions in order 
to meet the new standards. These substantial reductions will contribute 
not only to human health, but also to efforts to combat acid rain.
    Quicker results will likely come from federal and state efforts to 
enforce new source review requirements against power plants that have 
evaded strict federal controls while renovating dirty old plants. The 
1970 Amendments reflect a compromise, exempting existing stationary 
sources (e.g. factories) from federal controls, while imposing controls 
on new sources. Congress expected that as plant owners replaced or 
modernized their facilities relatively stringent new source controls 
would apply, which would improve air quality over time. It has 
frequently been said that new source review has discouraged 
modernization. The attorneys general of several states and the Justice 
Department, however, have found that electric utilities have modernized 
their facilities, but did not comply with new source review 
requirements.
    Furthermore, EPA has begun to administer an emissions trading 
programs to reduce nitrogen oxide emissions in many northeastern and 
midwestern states. This program focuses primarily upon electric 
utilities and anticipates reductions beginning in 2003. Nitrogen oxide 
has risen since 1990, probably because of increased driving, use of 
diesel fuel, and increasing energy use, so we need additional controls. 
This trading program, while directed toward compliance with the old 
ozone standard, will also ameliorate acid rain and reduce particulate 
pollution. The nitrogen oxide trading program, new source review 
enforcement, and state regulation to comply with the revised national 
ambient air quality standards should bring about substantial reductions 
of utility nitrogen oxide and sulfur dioxide emissions, which should 
greatly reduce death, illness, and ecosystem damage.
Hazardous Air Pollutants
    We have also apparently achieved large reductions in emissions of 
hazardous air pollution.4 Prior to 1990, the federal program 
in this area had been moribund, because it relied heavily upon risk 
assessment. In twenty years, EPA succeeded in listing only eight 
hazardous air pollutants for regulation. The 1990 Amendments tried a 
broader approach. Congress listed 189 substances that state and local 
government agencies had linked to cancer and other serious health 
effects and directed EPA to regulate them in two phases.5 
The first phase, a technology-based phase, is mostly complete. In just 
over ten years, EPA stimulated much greater decreases in hazardous air 
pollutants, and the risks of serious illness associated with them, than 
it had achieved in the twenty years preceding the 1990 Amendments. 
While EPA has not often met the numerous statutory deadlines governing 
this massive program, it has experienced nothing like the enormous 
delays that routinely riddled the pre-1990 implementation 
process.6 Moreover, the breadth of the new program offers 
better protection, because people breathe in a mixture of carcinogens 
and a broad approach is needed to protect them from the combined 
effects of many different pollutants.
---------------------------------------------------------------------------
    \4\ Id. The Toxics release inventory shows a decline of hazardous 
air pollutants of 39% between 1992 and 1999. Much of this data is 
imprecise, because of a lack of comprehensive monitoring. The 
information respecting hazardous air pollutants represents reporting by 
a small subset of toxic emitters (albeit ones with especially large 
emissions) using estimation methods of the operators' choosing. See 
EPA, Toxic Release Inventory 1999: Executive Summary, E-10-11 (2001). 
TRI data may exclude some reductions required by EPA and include some 
reductions made for other reasons (such as state standards).
    \5\ 42 U.S.C. Sec. 7412(b)(2).
    \6\ See e.g. Natural Resources Defense Council v. EPA, 705 F. Supp. 
698, 703 (D.D.C. 1989) (discussing a ten year delay in promulgating a 
benzene standard).
---------------------------------------------------------------------------
    EPA has just begun work on a second phase, designed to eliminate 
the residual risks of cancer, birth defects, and other serious illness 
remaining after the first round cuts. This second phase requires 
regulation to protect public health with an ample margin of safety, 
employing a precautionary approach to public health.
    While the 1990 Amendments generally required two rounds of cuts for 
all sources of listed pollutants, it contained a temporary exemption 
for mercury emissions from electric utilities. This provision required 
a study and a discretionary decision about whether to regulate toxics 
from electric utilities.7 While EPA decided to regulate 
mercury and other hazardous air pollutants from electric utilities, it 
made that decision very late (2000) and has not yet completed the 
regulation. Nevertheless, EPA has committed to regulating mercury from 
electric utilities by the end of 2004, which should provide substantial 
reductions protecting public health and the environment from mercury. 
This commitment to a utility ``maximum achievable control technology'' 
(MACT) standard is extremely important, because mercury accumulates in 
the environment and can cause many serious health problems in human 
beings.
---------------------------------------------------------------------------
    \7\ 42 U.S.C. Sec. 7412(n).
---------------------------------------------------------------------------
Challenges for the Future
    While we have made progress, the air program still has gaps and 
weaknesses. We have failed to effectively address greenhouse gas 
emissions, which rose approximately 14.1% between 1990 and 2000, in 
spite of voluntary efforts to address the problem.8 The 
greenhouse gas emissions rose because the Clean Air Act Amendments of 
1990 did not address them.
---------------------------------------------------------------------------
    \8\ U.S. EPA, Greenhouse Gas Emissions and Sinks: 1990-2000, E-2 
(2002).
---------------------------------------------------------------------------
    The overwhelming majority of this pollution comes from a single 
class of activities--burning fossil fuels. We burn massive amounts of 
coal in order to generate electricity. We refine gasoline and then burn 
it in automobiles and other kinds of engines. Fossil fuel consumption 
accounted for 82 percent of greenhouse gases in the 1990s, the gases 
that contribute to climate change.9 Carbon dioxide emissions 
from fossil fuel combustion are almost evenly divided between 
industrial uses, transportation, and residential and commercial 
buildings, with electric utilities (which burn energy used for both 
industry and buildings) contributing about 36% of the carbon 
dioxide.10
---------------------------------------------------------------------------
    \9\ See United States EPA, Inventory of U.S. Greenhouse Gas 
Emissions and Sink: 1990-1999 at ES-3 n. 6 (2001). This figure refers 
to gases weighted by global warming potential. Carbon dioxide from 
fossil fuel combustion alone accounted for 80% of weighted emissions. 
Id. at ES-3.
    \10\ Id. at ES-15 (Industrial end-use sector 33 percent, 
transportation, 31 percent, residential and commercial end uses 35%).
---------------------------------------------------------------------------
    We have not implemented sufficiently demanding and comprehensive 
standards to encourage significant changes in how we generate 
electricity. Such changes would address climate and reduce growing 
damage to public health and the environment.
    We need to improve monitoring of hazardous air pollutants and 
volatile organic compounds. All of the risk assessment in the world 
will not clarify the health effects of hazardous air pollution, unless 
we know much more about what people are breathing than we know now. 
Quantitative assessment of poorly understood risks simply masks what we 
do not know with seemingly precise, but quite unreliable, numbers.
    Finally, the air program relies heavily upon state regulation. But 
EPA has proven extremely reluctant to enforce state obligations. As a 
result, the significant progress achieved through state programs has 
amounted to something less than the 1990 Amendments envision. More 
demanding and specific direct federal regulation of nationally 
significant pollution sources like power plants would certainly help. 
But Congressional support for state delivery of environmental benefits 
to the public will remain essential.
                               conclusion
    The states and EPA have made significant progress in protecting 
public health and the environment. They are in the midst of 
implementing a number of programs that promise to deepen and continue 
this progress.

    Mr. Barton. Thank you, Mr. Driesen for being brief. I 
really sincerely appreciate that.
    We are going to recognize Mr. Whitfield for one question, 
and we are going to recognize Mr. Boucher for one question, and 
then we will adjourn the hearing. We will have a series of 
written questions for all of you. Mr. Whitfield. And we have 7 
minutes and 21 seconds to get to the floor to vote.
    Mr. Whitfield. Thanks, Mr. Chairman.
    Mr. Krupnick, I notice in your testimony you talk quite a 
bit about acid rain and also the need for further regulation of 
CO2 emissions. I have read in a number of 
publications that methane, for example, has a lot of greenhouse 
properties, by some estimates even 30 times the warming potency 
of CO2.
    Are you all advocating the regulation of methane emissions 
as well?
    Mr. Krupnick. Sorry. In my testimony, I didn't mention 
CO2 emissions. It is maybe Mr. Driesen.
    Mr. Whitfield. Oh, I am sorry. Mr. Driesen, okay.
    Mr. Driesen. Well, I think eventually Congress should come 
to grips with the full range of greenhouse gases. While methane 
is very potent, 80 percent of the emissions on a carbon 
weighted basis are carbon dioxide. They are of the most 
important. There is so much of it.
    So I think there is a need to look at the issue in general. 
I think carbon dioxide is the most high priority target, but we 
probably will eventually need to do more about a bunch of 
gases.
    Mr. Whitfield. Now----
    Mr. Barton. This will have to be your last question.
    Mr. Whitfield. Okay. The National Acid Precipitation 
Assessment Program, which was the world's longest, largest, and 
most expensive and spanned almost a decade, involved 700 
scientists and cost $500 million, and they did a survey of 
various trees, Virginia pines, tulip poplars and white oaks, 
and they exposed them to high concentrations of acid rain, and 
they planted them in soils that were much less rich than normal 
soils in forests.
    Yet the results came back that, even with precipitations 
almost 10 times as acidic as the average acid rain in the 
eastern U.S., that all of those trees grew even as a normal 
tree would grow, which left a clear--The conclusion was that 
there is no case of forest decline in which acidic deposition 
is known to be a predominant cause.
    Mr. Driesen. Yes. I would disagree with that. I guess what 
I could offer to add to the record on this is some work by 
Charles Driscoll, Syracuse University and Hubbard Brook 
Research Center on this. It shows that there have been 
impairment of growth from acidification of soils.
    So I think there is a pretty strong case that it has been a 
problem for trees, and it has certainly been a problem for 
lakes and streams. What we found is that we have had a 
reduction in acid deposition, thanks to the 1990 amendments, 
but the ecosystems have been slow to recover. That is a major 
reason that we need more----
    Mr. Barton. We are going to have to recognize Mr. Boucher 
very quickly.
    Mr. Boucher. Thank you very much, Mr. Chairman. I am going 
to be very brief.
    Mr. Goffman, I have one question of you. I know you were 
very much involved in the preparation of the cap and trade 
program for SO2 as we wrote the amendments in 1990, 
and you have a long experience in having helped originate that 
program and also watched its implementation.
    What happened that made it such a great success? We achieve 
more in terms of benefits. We achieve more in terms of cost 
than was originally anticipated. What was the element that made 
it so successful, and do you think that we should consider 
applying it to other kinds of pollutants; and if so, which 
ones?
    Mr. Goffman. What made it so successful, in my personal 
view, is that we changed--made a significant legal change. 
Sources became legally liable for controlling their actual 
emissions, and for nothing else. We didn't use surrogates. We 
used actual emissions.
    We made a change, an economic change. We literally created 
a market for extra reductions in pollution. It made sense to 
make those investments economically.
    I would suggest that, as a long range transport pollutant, 
SO2 should be further ratcheted down under a cap and 
trade model. Same with oxides of nitrogen. Same with greenhouse 
gases. I am puzzled, however, as to why anyone is proposing 
that mercury be regulated in this way, because I think the 
atmospheric characteristics of mercury are significantly 
different.
    Mr. Barton. We are going to conclude the hearing. My 
question that I will submit in writing, and each of you can 
answer, goes to what Mr. Krupnick was talking about, where we 
haven't really identified the vehicles that are causing most of 
the vehicular pollution.
    I had an amendment to the Act that allowed the use of what 
we now call the ``smog dog,'' but it hasn't been very widely 
implemented. I will ask that there be some discussion on that.
    Normally, we would ask a series of questions. I apologize, 
but we have 2 minutes and 7 seconds to get to the floor for 
three votes. So we are going to adjourn the hearing, but there 
will be written questions to each of you. Thank all of you 
gentlemen for attending.
    This hearing is adjourned.
    [Whereupon, at 1:13 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]
       Responses of the EPA to Questions of Hon. Henry A. Waxman
                      implementation of the naaqs
    Question 10. States and localities have expressed concerns 
regarding how they will attain the new NAAQS for 8-hour ozone and fine 
particles. Several key sources of cost-effective emissions reductions 
will require federal measures, which it is up to EPA to implement. 
Critical federal measures include the following: (1) adoption of 
rigorous PM and NOX emission standards for heavy-duty 
nonroad diesel engines that are based on the technology advances in the 
heavy-duty onroad diesel sector, and adoption of corresponding 
requirements for low sulfur diesel fuel that will enable the new 
technology; (2) issuance of a SIP call for SO2, which is 
critical to lower harmful concentrations of fine particles; and (3) 
issuance of a SIP call to ``annualize'' the summertime NOX 
abatement program, which will lower harmful NOX emissions 
year-round in a highly cost-effective way.
    a. Does EPA intend to adopt federal measures to help states and 
localities attain the new NAAQS?
    b. Does EPA intend to adopt each of the measures described above?
    c. If not, what measures does EPA intend to adopt?
    Answer: EPA believes that federal measures are an extremely 
important component of an overall strategy to help the states attain 
the new 8-hour ozone and PM 2.5 standards. The most efficient way to 
control mobile sources of emissions and major long range transport 
sources of emissions is through national rules. Over the past 30 years 
EPA has set increasingly more stringent standards for motor vehicles 
that are used on our streets and highways. In addition, the 1990 
amendments to the Clean Air Act gave EPA new authority to establish 
emission limits for nonroad engines and equipment. As a result, EPA has 
adopted national emission control programs for the following nonroad 
equipment: locomotives, marine vessels, outboard recreational boats, 
and small gasoline engines used in lawn and garden equipment. The 
Agency is currently working on regulations that will dramatically 
reduce emissions from large, nonroad diesel engines used in 
construction, mining, airport and agricultural equipment.
    EPA's preferred approach to control long range transport of 
SO2 and NOX is through legislative changes to 
adopt our Clear Skies initiative. As an alternative, we plan to prepare 
to implement an annual SIP call for SO2 and NOX.
    d. What is EPA's planned schedule for proposing and finalizing each 
of the federal measures identified by the Agency? If additional 
technical work is necessary prior to proposal of any measure, please 
describe the nature, scope, and planned timing for such work, including 
identifying any interim milestones that must be met for the measures to 
be adopted in a timely manner.
    Answer: i) Emission standards for large diesel engines used in 
nonroad equipment: EPA is currently preparing draft regulations and 
supporting analyses that would establish nationally-applicable 
requirements for this category. One of the major issues that is being 
considered is the potential need to lower the sulfur levels in nonroad 
diesel fuel to enable new exhaust control technology to be utilized on 
future engines. The Agency plans to submit draft proposed rulemaking 
for interagency review by the end of this year. ii) SIP Call for 
SOX and NOX: EPA is currently evaluating the 
steps and timing necessary to develop and implement a SIP Call for 
SO2 and NOX. We have not yet developed a schedule 
to finalize a SO2/NOX SIP Call.
    e. In particular, how will EPA address the problem of interstate 
transport of pollution, which states do not have authority to regulate 
directly?
    Answer: As previously discussed, we believe the best approach for 
addressing interstate transport of pollution is through enactment of 
Clear Skies legislation. However, because such legislation has not been 
addressed in Congress yet, EPA is working in parallel to conduct 
technical analyses to support a SIP Call for SOX and 
NOX.
                    review of the clean diesel rule
    Question 25: As you know, EPA's clean diesel rule was recently 
upheld by the D.C. Circuit against all challenges from industry. 
However, I am concerned that EPA may be considering reopening this 
important rule. According to press reports, EPA has convened a Clean 
Diesel Independent Review Panel. Reportedly, this panel will begin 
meeting on May 23 and report its findings to EPA in September.
    a. Please provide information on this review panel, including the 
charge of the panel, the schedule for meetings, and its membership.
    Answer: The Clean Diesel Independent Review Panel was created by a 
charter issued under the Clean Air Act Advisory Committee, which was 
originally established on November 19, 1990 in accordance with the 
requirements of the Federal Advisory Committee Act (FACA).
    The purpose of the panel is to provide independent advice to the 
Agency on industries' progress in developing and demonstrating 
technologies that will be used to reduce engine exhaust emissions and 
to lower the sulfur level of highway diesel fuel in accordance with the 
regulations establishing the Clean Diesel Program.
    Specifically, the objectives of the panel's charter are to assess 
the progress of:

i) manufacturers of diesel engines and emission control systems in 
        developing technology to reduce engine exhaust pollutants, and;
ii) the fuels industry in developing and demonstrating technologies to 
        effectively lower the sulfur level of highway diesel fuel.
    The panel is composed of leading experts from the public health 
community, petroleum refiners, fuel distributors and marketers, engine 
manufacturers, emission control systems manufacturers, and state 
governments. The panel will hold meetings, analyze issues, conduct 
reviews, make necessary findings, and undertake other activities 
necessary to meet its responsibilities. The panel has been requested to 
produce a final report by the panel charter's expiration date of 
September 30, 2002.
    The first meeting of panel is scheduled for May 23, 2002, in 
Alexandria, VA. Other information can be found on the panel's web site 
(http://www.epa.gov/air/caaac/clean--diesel.html).
    Future panel meeting dates are as follows: Thursday and Friday, 
June 27 & 28; Tuesday and Wednesday, July 30 & 31; and Tuesday and 
Wednesday, September 24 & 25.
    Panel members are listed in the following table:

    Federal Advisory Committee Act--Clean Air Act Advisory Committee
                  Clean Diesel Independent Review Panel
------------------------------------------------------------------------
              Panel Chairman                 Designated Federal Official
------------------------------------------------------------------------
Mr. Daniel Greenbaum, President, Health     Ms. Mary Manners, Chemical
 Effects Institute.                          Engineer, U.S.
                                             Environmental Protection
                                             Agency
Ms. Josephine Cooper, President and CEO,    ............................
 Alliance of Automobile Manufacturers.
Mr. Pat Charbonneau, Vice President,        Dr. John Wall, Vice
 Engineering, Navistar International         President, Research and
 Transportation Corporation.                 Development, Cummins Engine
                                             Company, Incorporated
Mr. Bruce Bertelsen, Executive Director,    Dr. Timothy Johnson,
 Manufacturers of Emission Controls          Manager, Emerging
 Association.                                Technology and Regulations,
                                             Corning, Incorporated
Mr. Tom Bond, Director, Global Fuels        Mr. Michael Leister,
 Technology, BP.                             Manager, Fuels Technology,
                                             Marathon Ashland Petroleum
                                             LLC
Ms. Sally Allen, Vice President,            Mr. Bob Neufeld, Vice
 Administration & Governmental Affairs,      President, Environment and
 Gary-Williams Energy Corporation.           Governmental Relations,
                                             Wyoming Refining Company
Mr. James Kennedy, Manager, Project Sales   Mr. Alan Wright, Vice
 Distillate and Resid Technologies, UOP      President, Pilot Travel
 LLC.                                        Centers LLC
Mr. Bill Becker, Executive Director,        Mr. Tom Cackette, Assistant
 STAPPA/ALAPCO.                              Executive Officer, State of
                                             California Air Resources
                                             Board
Mr. Paul Billings, American Lung            Mr. Rich Kassel, Natural
 Association.                                Resources Defense Council
Dr. Bob Sawyer, Professor of the Graduate   Mr. Mike Walsh, Consultant
 School, University of California at
 Berkeley, Department of Mechanical
 Engineering.
------------------------------------------------------------------------

    b. Does EPA anticipate that the clean diesel rule could be modified 
as a result of this panel's review?
    Answer: The panel will submit a report of its findings to 
Administrator Whitman in September of this year. The Agency will 
thoroughly review these findings. In addition, EPA will conduct its own 
annual review of progress toward implementation of the program 
requirements. The Agency does not anticipate the need to modify the 
regulations. The program provides adequate lead time before the 
requirements take effect. The adequacy of the lead time was recently 
affirmed by the court.
    Question 26. According to a recent press report, the American 
Petroleum Institute (API) is seeking to expand the scope of the Panel's 
review and to change the composition of the Panel in order to seek 
weakening changes to the regulations. Will EPA expand the scope of the 
Panel's review as API has requested? Will EPA change the composition of 
the Panel in response to API's request?
    Answer: The Agency has consistently stated that the issues for 
review would be limited to the review of progress in developing the 
technologies needed to meet the program standards. The Charter provided 
to the Independent Review Panel reflects that commitment. We believe 
the composition of the panel is balanced and fairly represents all 
major stakeholders.
                       implementation of title v
    Question 27. The Inspector General of EPA recently issued a report 
on the extensive delays in state issuance of permits under the Title V 
program. The Inspector General found that eleven years after the 
adoption of Title V, only 70% of the sources have permits as required. 
The Inspector General also made a number of recommendations as to how 
EPA should improve the Title V program.
    a. What actions are you taking to respond to the Inspector 
General's recommendations? Please describe how each of these actions 
will further the objectives of the Title V program and indicate the 
anticipated timing for each specific action identified.
    Answer: EPA will reevaluate our role in overseeing the 
implementation of the title V programs in States. Our regulations 
authorize us to review State programs for compliance with the 
requirements of part 70. Through our Fiscal Year 2003 annual program 
guidance, we will ask all ten Regional Offices to commit to performing 
multiple permit program evaluations each year, based on an evaluation 
protocol. These evaluations will be tailored to the unique 
circumstances of each State. The evaluations would investigate in 
detail those areas of a State's program which the Regional offices 
consider to be contributing to the State's permit issuance rates. 
Regions would be expected to follow up with the States as necessary 
after completing the evaluations. Areas of the permitting program that 
we would expect to evaluate include lessons learned from issuing 
permits, good practices concerning implementation, impediments to 
prompt and thorough permit preparation and issuance, issues concerning 
staffing and resources, issues concerning the ease of translating 
Maximum Available Control Technology (MACT) standards into permit 
terms, and the fee protocol, among other things. Target date for this 
effort is to have the evaluation protocol developed by October 2002 
with the evaluations beginning in FY 2003 and extending over the 
following few years. This effort furthers the objectives of Title V by 
working toward faster issuance of better permits.
    EPA has a specific mandate to work with STAPPA and develop 
implementation tools for certain MACT standards. The website http://
www.epa.gov/ttn/atw/eparules.html is devoted to information about many 
of the MACT standards and associated implementation tools. Selecting 
the hypertext link for any of about 40 rules in this section of the 
website results in access to information explaining individual rules 
and includes implementation details designed specifically for State 
permit writers such as self-paced interactive training, fact sheets, 
and even some State-developed training materials. Thus we feel we have 
done our best in writing permit friendly MACTs. However, we will 
continue to investigate why some permitting authorities still contend 
that MACTs are not permit friendly. We will do this through the 
evaluations described in the previous paragraph. This effort furthers 
the objectives of Title V by working to improve the implementation of 
air toxic regulatory terms and conditions as described in operating 
permits.
    EPA intends to continue including a requirement for the Regional 
Offices of EPA to input Permit Program Data Elements in AIRS as a part 
of the annual Air Program Guidance prepared for the Regional Offices. 
As necessary, changes will be made to that annual requirement to gain 
additional insights into measures of progress in permit issuance. The 
data elements which we routinely collect have proven over time to be 
sufficient to manage permit issuance and to answer questions from EPA 
management and the public concerning the status of State permitting 
programs. These data are publicly accessible on our website and are 
updated quarterly. This is an ongoing effort. This effort, while 
addressing the Inspector General's recommendation, does little to 
further the objectives of Title V, and merely provides up-to-date 
information on the numbers of permits issued over time.
    Pursuant to the November 2000 settlement agreement with the Sierra 
Club, we gave citizens an opportunity to comment on State program 
deficiencies. A number of comments were received on permit issuance. 
The Agency decided that the most efficient way to deal with this issue 
was to require State agencies to submit issuance schedules with 
trackable milestones for those States that received such citizen 
comments. These schedules were submitted with the understanding that 
EPA could issue Notices of Deficiency (NOD's) if the milestones were 
missed. It is still EPA's plan for the Regional Offices to proactively 
manage those schedules, including tracking interim milestones, and 
identifying reasons why milestones are missed. Based on those 
schedules, it is our plan to issue NOD's for missed milestones and 
schedules. We will include in the FY 2003 annual air program guidance a 
requirement that the Regional Offices manage and report progress 
against these schedules. Should NOD's be needed, they will likely occur 
at the midway point or end date of the schedule. The target date for 
completion of this work is December 2003. This effort furthers the 
objectives of Title V by ensuring consistency in the implementation of 
permitting programs across the country, and highlighting States that 
are behind schedule in order to improve permit issuance.


                                

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