[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



THE CLEAR SKIES INITIATIVE: A MULTIPOLLUTANT APPROACH TO THE CLEAN AIR 
                                  ACT

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 8, 2003

                               __________

                           Serial No. 108-65

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

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                            WASHINGTON : 2003
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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
  Vice Chairman                      PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               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           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho

                   Dan R. Brouillette, 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
RICHARD BURR, North Carolina           (Ranking Member)
ED WHITFIELD, Kentucky               ALBERT R. WYNN, Maryland
CHARLIE NORWOOD, Georgia             THOMAS H. ALLEN, Maine
JOHN SHIMKUS, Illinois               HENRY A. WAXMAN, California
  Vice Chairman                      EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico           RALPH M. HALL, Texas
JOHN SHADEGG, Arizona                FRANK PALLONE, Jr., New Jersey
CHARLES W. ``CHIP'' PICKERING,       SHERROD BROWN, Ohio
Mississippi                          BOBBY L. RUSH, Illinois
VITO FOSSELLA, New York              KAREN McCARTHY, Missouri
STEVE BUYER, Indiana                 TED STRICKLAND, Ohio
GEORGE RADANOVICH, California        LOIS CAPPS, California
MARY BONO, California                MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon                  CHRIS JOHN, Louisiana
MIKE ROGERS, Michigan                JOHN D. DINGELL, Michigan
DARRELL ISSA, California               (Ex Officio)
C.L. ``BUTCH'' OTTER, Idaho
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Holmstead, Hon. Jeffery, Assistant Administrator for Air and 
      Radiation, Environmental Protection Agency.................    00
Additonal material submitted for the record:
    Reeder, John E., Principal Deputy Associate Administrator, 
      U.S. Environmental Protection Agency, letter dated April 
      12, 2004, to Hon. Henry A. Waxman, enclosing response for 
      the record.................................................    00

                                 (iii)

  

 
THE CLEAR SKIES INITIATIVE: A MULTIPOLLUTANT APPROACH TO THE CLEAN AIR 
                                  ACT

                              ----------                              


                         TUESDAY, JULY 8, 2003

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:02 p.m., in 
room 2123, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Burr, Whitfield, 
Shimkus, Issa, Tauzin (ex officio), Boucher, Wynn, Allen, 
Waxman, Markey, Strickland, Capps, and Dingell (ex officio.)
    Also present: Representative Bass.
    Staff present: Robert J. Meyers, majority counsel; Bob 
Rainey, fellow; Michael Goo, minority counsel; and Bruce 
Harris, minority professional staff member.
    Mr. Barton. The subcommittee will come to order. If we can 
have Mr. Holmstead take his seat at the witness table. If our 
audience would get situated.
    Without objection, the subcommittee will proceed pursuant 
to Committee Rule 4(e) which governs opening statements by 
members, and the opportunity to defer them for extra 
questioning time. Hearing no objection, prior to the 
recognition of the first witness for testimony, any member when 
recognized for an opening statement may completely defer his or 
her 3-minute opening statement, and instead use those 3 minutes 
during the initial round of questioning. Is there any 
objection? Hearing none, so ordered.
    The Chair would recognize himself for an opening statement.
    I want to welcome everyone to today's hearing on the Clear 
Skies Initiative. With Chairman Tauzin, I have introduced this 
legislation at the request of the President; I introduced it 
last year and reintroduced it again this year in the 108th 
Congress. I am pleased to have accommodated President Bush in 
this regard.
    I believe the introduction of the bill has helped initiate 
a debate not only concerning the proper Clean Air Act policies 
or the regulation of utilities, but also a debate concerning 
the proper energy policy to apply to this vital sector of our 
Nation's economy.
    Discussion has only been heightened by increases in the 
prices of natural gas which we held a hearing on several weeks 
ago in this committee, the fuel used to power most of the new 
utilities units constructed over the last decade in this 
country. While the Clear Skies Initiative predates the most 
recent price increase, inevitably environmental and energy 
policy become linked with the statutory scheme of the Clean Air 
Act.
    We on the Energy and Commerce Committee recognized that 
fact back in 1990 during the development of Title 4 of the 
Clean Air Act on which the Clear Skies Initiative was based. In 
Title 4, multiple policy choices were made concerning various 
classes of generating units, a proper amount of allocation 
should apply to each. In other words, we made decisions 
regarding the relative economic burden each unit or class of 
units using various fuel types would bear. We then made 
decisions in the law which ultimately resulted in fuel 
switching, replacement of certain types of coal by other types 
of coal. Many members weighed in during this process regarding 
regional, State, and local economies which might be affected by 
the new emission reductions. In fact, it was the most extensive 
part of the direct member input into the Clean Air Act debate, 
as I recall. However, despite intensive review, and an attempt 
to accommodate all the interests, all the effects and 
compliance strategies were in the end foreseeable.
    In preparing for this hearing, I thought back to those 
difficult and arduous debates in the early 1990's. When I 
reviewed the list of current members of this committee and 
compared it to those who served on the committee in 1990, I 
found only eight common names, eight out of 57 members on this 
committee on both sides of the aisle were members when we last 
considered the Clean Air Act legislation. Mr. Boucher to my 
left was one of those, Mr. Dingell, Mr. Tauzin are two others, 
Mr. Markey and Mr. Waxman, Mr. Bilirakis, and I believe that is 
all the members. I may be missing one or two.
    This fact alone indicates that there is much for this 
subcommittee to learn as we once again start to consider 
whether we should legislate in this arena.
    There has been a continuous process of review by the 
administration, including a new analysis that was announced on 
July 1 using updated information modeling to produce new 
estimates of costs and benefits, and our witness is going to 
talk about that today. But that doesn't mean that the Congress 
and the members of this committee have been a part of that 
process and have studied that process as it has been ongoing. 
It is imperative that we have open public hearings in which all 
the facts and figures concerning the President's Clear Skies 
Initiative can be put on the table for members to digest. I 
myself have probably followed it about as close as anybody on 
the committee and have numerous questions and concerns. For 
example, I believe that the mercury provisions of the pending 
bill deserve additional scrutiny. I am aware of the various 
health studies which have been conducted, but I am also aware 
of the complex mechanism involved in predicting precise health 
end points that may emanate from utility stack emissions, given 
not only other sources of environmental mercury but the complex 
of deposition, creation of methyl mercury, bioaccumulation of 
methyl mercury, and consumed fish.
    I also believe that we need to review the initiative's 
reliance on auctioning of allowances. The auction of 
allowances, although accomplished over many years, is a 
departure from current structure of Title 4. Its policy 
implications need to be fully understood. In addition, I also 
believe that it is critical that any initiative of this sort 
contain not only a robust scientific provision, but also ensure 
the important questions having the impact of regulatory policy 
be evaluated.
    Finally, I believe it is vital that the overall integration 
of the control programs contemplated by the Clear Skies 
Initiative within the current Clean Air Act regulatory 
provisions be reviewed. At its core, the Clear Skies Initiative 
is not a new idea. Let me repeat that. At its core, the Clear 
Skies Initiative is not a new idea. Efforts to develop 
multipollutant legislation affecting utility sector date back 
at least to 1995, when the Clean Air Power Initiative was 
initiated by then President Clinton and then Assistant 
Administrator for Air and Radiation, Mary Nichols, who 
testified before my subcommittee numerous times. During this 
initiative, the EPA explored options to expand cap-and-trade 
systems for utility emissions, including the policies of not 
seeking further reductions from this sector at all for a 
certain period of time, as well as creating a Federal safe 
harbor from further NOX and SOX emissions 
from the power generation sector.
    While that initiative was ultimately not successful, at a 
minimum, clear skies builds upon the base of early discussion 
attempts to provide additional certainty and predictability and 
regulatory efforts. I would also note that some progress on 
associated regulatory provisions has been made with respect to 
the Clear Skies legislation that was introduced in this 
Congress. We may need to review all provisions affecting Title 
1 programs in detail. After many years of discussion and 
review, the legal system, which must be seen as heavily biased 
to endless litigation, any legislation affecting such matters 
simply must get it right. And this subcommittee, if we are 
going to move, is going to get it right.
    I want to welcome EPA Assistant Administrator Jeff 
Holmstead and all members of the audience to the first hearing 
in the House of Representatives on the Clear Skies Initiative. 
I can assure you, folks, this will not be the last hearing on 
this subject. Let the education, discussion and review begin.
    And with that, I would ask my good friend, the ranking 
member from Virginia, if he wishes to make an opening 
statement.
    Mr. Boucher. Thank you very much, Mr. Chairman. I do have 
an opening statement. I want to commend you for scheduling this 
hearing on the administration's Clear Skies Proposal which 
would make substantial changes in our Nation's Clean Air laws. 
Since enactment of the Clean Air Act and the 1990 amendments, 
we have made significant progress in reducing emissions and 
improving air quality at the same time that the Nation's 
economy and overall energy use have expanded. From 1970 to 
1999, the gross domestic product of this Nation increased by 
158 percent, and during that same period, electricity use 
increased by 148 percent.
    Despite increases in energy consumption, our Nation's air 
is much cleaner today than it was in 1970. During the last 30 
years, sensible environmental regulations along with new 
technology and voluntary actions by our Nation's industry have 
led to a significant reduction in air emissions, and we are 
enjoying that reduction today. These improvements in air 
quality have been largely due to the success of the 1970-era 
Clean Air Act and the 1990 amendments.
    One of the most noted provisions of the 1990 amendments was 
the innovative cap-and-trade program that was instituted with 
the goal of reducing SO2 emissions. Through 
implementation of cap-and-trade, sulfur dioxide emissions have 
declined by 39 percent since 1990. The administration's Clear 
Sky's Proposal seeks to build on the success of the 
SO5 program by instituting a similar cap-and-trade 
program for NOX and one for mercury emissions. The 
proposal sets two phases of reductions with overall reduction 
targets of 67 percent for NOX and 69 percent for 
mercury by the year 2018. In addition, the Clear Skies 
legislation would further reduce SO2 emissions by 73 
percent.
    The Clear Skies Proposal has provoked strong opposition 
from the conservation community which asserts that the proposal 
would do little, if anything, to enhance overall air quality, 
and that in some respects it could hinder a continuation of the 
air quality improvement trend that this Nation has enjoyed for 
the past 30 years. Proponents suggest that cap-and-trade can 
work for NOX and for mercury just as it has worked 
for SO2, and argue that Clear Skies would promote a 
genuine improvement in air quality. During this hearing and 
subsequent ones before the subcommittee on the administration's 
Clear Skies Proposal, we will examine this spectrum of view 
points so that a well-informed decision can be made on the 
administration's proposal at some future time.
    I want to commend the chairman for scheduling this hearing. 
I want to thank Mr. Holmstead for joining us here today and the 
other witnesses for preparing testimony for our use, and I am 
very much look forward to hearing from them.
    Thank you, Mr. Chairman. I yield back.
    Mr. Barton. Thank you, Mr. Boucher.
    The Chair wants to correct his opening statement. I said 
there were only eight members of the full committee that were 
on this committee back in 1990. And there are at least nine, 
and we think there may have been 10. So we are going to double 
check that. But Mr. Boucher and Mr. Markey and I and Mr. Waxman 
are, so I did get the individuals right.
    Does the gentleman from Kentucky wish to make an opening 
statement?
    Mr. Whitfield. I am going to waive.
    Mr. Barton. The gentleman waives.
    Does the gentlelady from California, Mrs. Capps?
    Mrs. Capps. I would defer to Mr. Dingell.
    Mr. Barton. Does Mr. Dingell wish to make an opening 
statement?
    Mr. Dingell. Mr. Chairman, thank you. And I commend you for 
holding this important hearing.
    Mr. Barton. The gentleman is recognized.
    Mr. Dingell. There are many matters within the jurisdiction 
of this committee, but few as complex and wide-ranging as the 
Clean Air Act. The history of this committee's work on Clean 
Air is filled with extremely difficult and hard fought 
compromises. Many of us who went through the 1990 amendments 
have small reason to want to go back into the subject again. 
Before we turn to the topic of the President's Clean Air 
proposal or his Clear Skies proposal, I would note that the 
last hearing held by this committee on a Clean Air Act matter 
was 1 year ago. The topic was accomplishments of the Clean Air 
Act. At that time, I stated the hearing was appropriate, but 
far from exhaustive in its examination of the progress made 
since the 1990 amendments. At that time, you indicated that you 
envisioned that the hearings would be the first in a series of 
hearings that would be a bipartisan examination of the Clean 
Air Act.
    Although that series of hearings has yet to materialize, I 
believe that your instincts were correct, and I hope that your 
intention remains. Because the Clean Air Act legislation is so 
complex, we need to hear from a wide range of views and a broad 
range of witnesses commenting on the specifics of various bills 
before we take actions. Several members of this committee were 
present during the years and months that led to the 1990 
amendments. Most were not. Regardless, we would all do well to 
remember the very hard work that ultimately led us after many 
difficult efforts to a successful bill. The preludes to the 
1990 amendments took years. The legislative history of those 
amendments encompasses six volumes and well over 10,000 pages 
of testimony. Hard work, indeed, but ultimately justified by 
the results.
    Since 1990, emissions of sulfur dioxide have fallen by 24 
percent, lead by 50 percent, volatile organic compounds by 16 
percent, and carbon monoxide by 16 percent. The bottom line is 
simple: Our air is cleaner, and it was made so during a period 
of great economic growth.
    We mention this history as a means of urging caution as we 
consider the President's Clear Skies Initiative, a proposal 
that would fundamentally alter structure of the Clean Air Act. 
Although our witness from EPA will attempt to lull us into 
legislating with a swan song of enhanced environmental 
protection through so-called streamline regulations, lower-cost 
industry, and less litigation, I maintain a healthy skepticism 
of that view, and I am less impressed with the administration's 
efforts to date.
    For example, last week, EPA released a revised and detailed 
analysis of the Clear Skies Initiative that, not surprisingly, 
painted a rosy picture. According to Energy Daily in commenting 
on competing proposals, Mr. Jeffrey Holmstead, our witness 
today, said: ``This sort of analysis that we are showing you 
today is a result of months and months and months of staff 
work. We have no intention of doing the kind of work on other 
legislative proposals.''
    A very curious position. I think we need to know about 
other matters and will perhaps have some time to inquire of 
that matter a little later today.
    The implication here that the President's proposal is the 
only game in town does not bode well for a thoughtful and a 
thorough inquiry into what changes, if any, need to be made in 
the Clean Air Act. And they appear to attempt to deny the 
committee the chance to inquire into other matters and to get 
intelligent, thoughtful, and well-thought-out responses. For 
example, how could the environment benefit from the vigorous 
enforcement of current standards compared to the enforcement of 
those proposed by the administration? I think EPA ought to be 
able to tell us. Maybe they don't know. Maybe they should know. 
In any event, if they are asked, they ought to be able to tell 
us.
    Amending the Clean Air Act requires balancing protection of 
the human health and the environment and the protection of 
economic productivity and growth. Before legislating, we must 
be certain that such action is warranted; that our air will be 
cleaner than when we began; and that we will not cause 
substantial harm to our economic well-being or indeed to the 
health of our people. We should also be sure that such action 
will result in better, simpler policy than currently exists. To 
do otherwise would appear to me to be pure folly. I would note 
that, as of today, none of the necessary consensus is in place 
to achieve a major change in the law. And I would note 
something else. Starting out on a piece of legislation without 
achieving a measure of intelligent consensus is to impose risk 
on all, on the environment, on the environmentalists, but also 
on industry. And industry will not have an easy time of getting 
a decent piece of legislation upon which there is not proper 
prefatory work.
    I look forward to the hearing and to many more, and I hope 
that we will get the answers to the questions that we need on 
these matters. Thank you, Mr. Chairman.
    Mr. Barton. Thank you, Congressman Dingell.
    The Chair would recognize the full committee chairman, Mr. 
Tauzin for an opening statement.
    Chairman Tauzin. Thank you, Mr. Chairman. And today is an 
auspicious day, and I think we ought to make mention of it. 
Today is the birthday of the ranking minority leader of the 
committee, Mr. Dingell. And I think we all ought to join in 
wishing you a very happy birthday, Mr. Dingell.
    As you know, John is the dean of the entire House, and so 
we want to extend to you, John, our best wishes for this 
birthday and for your continued good health and success.
    Almost 13 years ago, in fact, I sat in this very room not 
far from the seat I sit in today. It was about 5 o'clock in the 
morning, and for most of the previous 24 hours the members of 
our committee, including the distinguished ranking minority 
leader, was sitting on one side of the witness table. There 
were various members of the Senate sitting on the other side 
along with their staff, and we were working away that night 
inch by inch, line by line through the 1990 Clean Air Act 
amendments. We worked, as I said, all night long until 5 
o'clock in the morning. Sometimes we compromised, and sometimes 
we simply exerted the will of the majority on tough votes. 
Finally, I think in the middle of that night we, with a few 
hand shakes, the deal was finally done and we filed a 
conference report and got the bill to the floor in the waning 
hours of the 101st Congress.
    I bring these memories up today not simply to reminisce, 
but because the subject matter of this hearing is quite simply 
the most sweeping amendments to the Clean Air Act since that 
enactment in 1990 of those enormous changes to our Clean Air 
laws. While this committee has acted several times in the last 
decade regarding various provisions of the act, the Clean Skies 
Initiative seeks to implement major innovative changes to the 
Clean Air Act which would indeed have a substantial effect for 
most of this decade, as well as the next.
    Now, the Clear Skies Initiative attempts to build on the 
attempts of the Acid Rain Program and to extend the cap-and-
trade system used in Title 4 of the Clean Air Act to the 
regulation of sulfur dioxide, noxious oxide, and mercury from 
nearly all power plants operating in the U.S. Each pollutant 
would be subject to a phase reduction resulting in emissions 
fully 70 percent below current levels. This level of control 
would be on top of the 5-million-ton reduction in sulfur 
dioxide emissions and 2-million-ton reductions in nitrous oxide 
emissions that we have obtained from this sector over the past 
10 years. The Environmental Protection Agency projects that 
this Initiative would by itself, largely provide for national 
compliance with the fine particulate standard, vastly reduce 
the areas of the country subject to ozone nonattainment, and 
virtually halt the further acidification of lakes around the 
country and certainly the lakes in the Adirondack.
    The total health benefit are projected at $110 billion by 
the year 2020. The agency projects that the early compliance 
with the mandated reductions would help produce over $50 
billion in annual health benefits by the year 2010.
    Now, this initiative obviously is not without its critics. 
They have made themselves known in various public forums. The 
Clear Sky Initiative has been criticized as, quote, worse than 
current law, end quote, and a rollback of existing standards. 
In support of these statements, various projections have also 
been made about how the existing Clean Air Act could be 
implemented over the next 10 to 15 years, how its various 
provisions would either be triggered by petitions or litigated, 
how future EPA administrators would theoretically act, and how 
and when future courts of law might, in fact, make decisions. I 
intend to carefully assess these criticisms and the data and 
analysis upon which they are based. But let me also say, I have 
heard much of this before.
    It is a truism on Capitol Hill that nearly every proposed 
amendment to every proposed environmental law can do no right, 
while nearly enacted statute can do no wrong. And throughout 
the legislative process leading up to the 1990 amendments, we 
heard those same criticisms. After enactment, it appeared we 
had stumbled upon the legislative equivalent of the Holy Grail. 
I don't know if the Clear Skies Initiative rises to that 
status, and this hearing is a first step to review and better 
understand its complexities and the resulting impact on the 
Clean Air Act upon public health and upon the environment. I 
have made no decision regarding the future course of this 
proposal in the committee, as I know the chairman of the 
subcommittee has similarly made no decisions yet. But I also 
believe that the subcommittee is obviously and must obviously 
commit itself to a consideration and review of this proposal 
and then decide a precise course.
    It appears we have much to learn about this detailed and 
ambitious undertaking, and this is a good first step. I do know 
that a considerable amount of effort has already taken place to 
this point, and the Clear Skies Initiative, as a whole, 
attempts to be a balanced and well-reasoned proposal. That is a 
good start. Now, let us hear from our distinguished witness, 
and at least begin to make our individual assessments and see 
if we can't stumble upon another holy Grail.
    Thank you, Mr. Chairman.
    Mr. Barton. I thank the chairman.
    Does the gentlelady from California wish to make an opening 
statement?
    Mrs. Capps. I do.
    Mr. Barton. The gentlelady is recognized for 3 minutes.
    Mrs. Capps. Thank you, Mr. Chairman, for calling this 
hearing today.
    As was just stated by Mr. Tauzin, we have made great 
strides in reducing air pollution since Congress enacted the 
Clean Air Act; yet, much remains to be done. When it comes to 
clean air, our priorities should be simple: To cut air 
pollution that is causing tens of thousands of premature 
deaths, creating heart and lung problems in senior citizens, 
and giving kids asthma. We must do it expeditiously.
    American families shouldn't have to wait any longer for 
clean air, but that is what happens under the so-called Clear 
Skies Initiative. As a public health nurse, I have serious 
concerns with the President's plan. For example, rather than 
enforcing the Clean Air Act, the President's plan would delay 
current deadlines for particular areas to achieve clean air. 
This extension would force millions of Americans to continue to 
breathe unsafe air. We have national Clean Air standards to 
protect the health of all Americans, but many areas of this 
country still do not meet those standards. EPA estimates that 
82 million people live in areas with dangerous levels of fine 
particles. More than 133 million Americans live where the air 
is unsafe to breathe because of ozone pollution.
    Under the Clean Air Act, these areas will have to meet the 
Clean Air standards by 2009. The President's plan extends the 
deadline to 2015 for most of these areas. It also eliminates 
the tools the Clean Air Act provides to help areas clean up and 
meet their deadlines. If an area does not achieve Clean Air by 
2015, the clock starts over, and the area does not have to be 
cleaned up until 2022. That is 13 additional years of dirty 
air.
    The administration's plan also eliminates the tools to help 
areas clean up their air and meet these deadlines. This will 
make continued pollution problems more likely.
    It is clear. Delaying the goals of the Clean Air Act will 
not make our air cleaner or protect our health. And we must not 
delay the cleanup, because the public health impacts of air 
pollution are stunning. EPA estimates that air pollution 
results in hundreds of thousands of asthma attacks. Each year, 
fine particle pollution causes tens of thousands of premature 
deaths. Ozone and particulate materials are responsible for an 
estimated 20,000 annual hospital admissions from respiratory 
and cardiac illnesses. Ozone created by emissions from power 
plants has caused an estimated 7,000 emergency room visits per 
year due to asthma and other breathing difficulties, and 
triggered an estimated 600,000 asthma attacks. These effects 
fall hardest on our children and on our elderly. Children 
breathe more rapidly than adults, have more lung surface area 
for their body size. Pound for pound, children breathe 50 
percent more air than adults do. With it, more air pollution. 
As a grandmother of three young boys that live in California, 
two of whom have experienced asthma, one serious enough to be 
hospitalized, I was particularly concerned by a recent study of 
college freshmen that were lifelong residents of California. 
The study found a strong relationship between lifetime ozone 
exposure and reduced lung function. Another recent study found 
that when the air pollution worsens, more children stay at home 
due to respiratory illnesses.
    Mr. Chairman, during my 20 years as a school nurse, asthma 
cases more than doubled. Just last year a new study showed that 
ozone actually causes children to develop asthma in addition to 
triggering attacks in those already having it.
    I expect Mr. Holmstead is going to talk about the terrible 
effects of air pollution, but the administration seems more 
interested in repealing Clean Air Act requirements----
    Mr. Barton. The gentlelady needs to wrap up her statement.
    Mrs. Capps. [continuing] than protecting people's health. 
We saw this when the administration rejected the multipollutant 
approach that EPA proposed in August 2001. I look forward the 
the testimony of our witness today.
    Mr. Barton. I thank the gentlelady.
    Does Mr. Issa wish to make an opening statement?
    Mr. Issa. I will waive at this time.
    Mr. Barton. The gentleman waives.
    Does Mr. Markey wish to make an opening statement?
    Mr. Markey. Can I pass at this moment?
    Mr. Barton. The gentleman waives.
    Does Mr. Shimkus wish to make an opening statement?
    Mr. Shimkus. Yes, I do, Mr. Chairman.
    Mr. Barton. The gentleman is recognized for 3 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Clear Skies does something past Clean Air efforts failed to 
do. It ties reductions in emissions to potential impact on 
energy use and cause. We know that stricter environmental 
standards will increase energy cost and increase our reliance 
on foreign fuels. Clear Skies is drafted in a way that reduces 
those increases while still providing for a cleaner 
environment. Clear Skies provides a balance between our 
environment and our energy policies. And I appreciate the 
comments from Mr. Boucher on the 1990 amendments in which he 
addressed the issue of the cap-and-trade system which has been 
very, very successful. And I think we need to remember that.
    I also remember the hearing of last year which talked about 
the benefits of the Clean Air Act. And I think during that 
hearing I stressed that there were some disadvantages. In my 
State, 13 mines have closed, 3,000 mineworkers are out of 
employment. Especially in the areas of Illinois, Kentucky, 
Ohio, West Virginia, those States have been hit tremendously 
hard by the Clean Air Act. And this is an attempt to get that 
balance, to make sure that we can move forward on Clean Air 
without the destructive effects of just unilaterally disarming 
ourselves in the rural areas and the poor areas of southern 
Illinois.
    A perfect example is EPA. If EPA proceeds with the mercury 
MACT proposed rule, we will see that utilities will fuel switch 
from coal to natural gas. And what is the major No. 1 issue 
that we have been talking about and energy related in the last 
6 weeks? The high cost of natural gas. That will lead to an 
even greater increase in natural gas prices than we are 
currently seeing today. Clear Skies gives each plant the 
flexibility to choose the pollution reduction strategy that 
best meets their needs. That flexibility is not part of the 
mercury MACT proposed rule. Clear Skies will lead to a cleaner 
environment without large increases in fuel costs, and without 
all the gloom and doom we are hearing from the environmental 
community.
    I look forward to hearing Mr. Holmstead's testimony, and I 
yield back the balance of my time, Mr. Chairman.
    Mr. Barton. The gentleman yields back the balance of his 
time.
    Does Mr. Waxman wish to make an opening statement?
    Mr. Waxman. Yes, Mr. Chairman.
    Mr. Barton. The gentleman is recognized for 3 minutes.
    Mr. Waxman. We have made progress on air pollution over the 
past 30 years because Congress adopted a tough Clean Air Act 
for EPA and the States to carry out. We still face serious air 
pollution problems; 133 million Americans breathe unhealthy 
air; acid rain and haze are harming our parks; and we have yet 
to tackle global warming. But the administration bill that we 
are going to consider today would repeal, delay, or gut many 
existing Clean Air Act requirements, allowing more pollution 
for years longer than current law requires. For example, under 
the Clean Air Act, areas must meet the health standard for 
particulate matter by 2009. The Bush bill slips the 2009 
deadline until 2015. If the area still isn't clean by 2015, it 
has until 2020 to come up with a plan. And the plan doesn't 
even have to aim for healthy air until 2022. That is 13 years 
after the current deadline, a whole generation of children 
would suffer harmful air pollution.
    Similarly, the Clean Air Act requires power plants to 
control their toxic air pollution by 2007. The Bush bill 
repeals this requirement, providing only some mercury 
reductions by 2010 and 2018. The Bush bill guts current 
protections for downwind States, repeals the new source review 
for power plants, and eliminates protections for parks and 
wilderness areas until a power plant is virtually next door.
    Mr. Holmstead is going to argue the administration's 
proposal will reduce emissions more than under the Clean Air 
Act, at least for a little while. But when it comes right down 
to it, Mr. Holmstead is really saying, trust us. Just last week 
the Washington Post reported the Bush administration is 
withholding critical information related to this bill. And I 
have a poster of the Washington Post story. They refuse to 
release benefits estimates for Senator Carper's bill showing it 
more effective than Clean Skies. They play the same game with 
Senator Jeffords' Clean Power bill, and now they are 
manipulating information on mercury. Months ago, EPA promised 
to model the mercury reductions. EPA abruptly canceled the 
modeling. We asked them for the analysis over 6 weeks ago. We 
haven't received it.
    If Clear Skies really were better for air quality, it 
wouldn't have to delay the Clean Air deadlines. If the Clear 
Skies bill really addressed pollution transport, it wouldn't 
have to remove backstop provisions protecting downwind States. 
If Clear Skies really achieved greater mercury reductions, the 
administration would release modeling for the mercury rule. If 
Clear Skies really was the superior policy choice, the 
administration would give Congress analyses of competing 
proposals.
    Mr. Barton. The gentleman needs to wrap up his statement.
    Mr. Waxman. The administration calls this the Clear Skies 
Act. That is good marketing, but the reality is that this bill 
is terrible for air quality, and should be opposed by every 
member of this committee.
    Mr. Barton. We thank the gentleman. Does the gentleman from 
Maine wish to make an opening statement?
    Mr. Allen. I do, Mr. Chairman.
    Mr. Barton. The gentleman is recognized for 3 minutes.
    Mr. Allen. Thank you. I do represent Maine. We are in the 
far Northeast, so we have a different view of air pollution 
than some people who don't have the wind of the entire country 
blown toward them. Clear Skies has always seemed to me a 
triumph of marketing over substance, because in many cases, 
including the one I am going to talk about, mercury, it will 
not clean up the air as quickly as the strict enforcement of 
existing law.
    I call your attention to the chart on the board. The Bush 
plan, the Clear Skies, really does mean more mercury because it 
weakens mercury protections in the current Clean Air Act. 
Current law requires EPA to issue maximum achievable control 
technology standards for coal-fired power plants with 
compliance due by the end of 2007. In December 2001, the EPA 
told the Edison Electric Institute that the Clean Air Act's max 
standard could reduce power plants' mercury emissions by 90 
percent, from 48 tons to 5 tons nationwide, by 2008. And so 
that is what that chart shows in the pale green.
    The Clear Skies plan would delay any mercury reductions to 
2010, and then allows 26 tons in 2010 and 15 tons in 2018. That 
is more than five times as much power plant mercury pollution 
through 2017, and three times as much mercury each year after 
that, indefinitely. And we are talking about a serious health 
hazard, especially to pregnant women and their fetuses. Forty-
four States now have advisories against the consumption of 
fish. We are talking about a very serious problem.
    And I will say that in contrast to my friend from Illinois 
who talked about the risk of significant fuel switching, there 
are control technologies out there. They are being tested. And 
I am just going to read an article, a paragraph from an article 
in the American Coal Council, of all places, on mercury control 
technology. And here is the paragraph:
    Recent full-scale demonstrations have proven the 
effectiveness of powdered activated carbon injection for 
reducing mercury emissions for different coals and control 
configurations. Results indicate that this near-term technology 
will be well-suited to be retrofitted on existing coal-fuel 
boilers. It requires minimal new capital equipment, can be 
retrofitted without long outages, and is effective on both 
bituminous and subbituminous coals. Because of the promise 
shown by PAC injection to control mercury emissions from all 
types of coal, it appears unlikely that compliance with pending 
mercury reduction regulations will result in significant fuel 
switching.
    We have the technology today, it will be commercially 
available by 2008. There is no reason to back off from the 
standards in the current Clean Air Act. And, Mr. Chairman, I 
yield back.
    Mr. Barton. We thank the gentleman.
    Does the gentleman from Maryland wish to make an opening 
statement?
    Mr. Wynn. Thank you, Mr. Chairman. I will defer at this 
time, and I would like to request unanimous consent to submit.
    [The prepared statement of Hon. Albert Wynn follows:]

Prepared Statement of Hon. Albert R. Wynn, a Representative in Congress 
                       from the State of Maryland

    Mr. Chairman, I look forward to hearing the Administration's 
position on the Clear Skies Initiative. As an avid supporter of a 
cleaner environment, this discussion on the Clear Skies Initiative will 
provide Members with the opportunity to discuss the merits of the 
proposal. It appears that it is the intention of every Member to reduce 
pollution. However, the key question is how we are going to get there.
    The Clear Skies Act attempts to reduce air pollution through the 
expansion of emission cap and trade programs. The program tells the 
entire industry when and how much to reduce pollution by establishing a 
maximum cap on emissions. Many believe the cap and automatic penalties 
for noncompliance ensure that the environmental goal is achieved and 
maintained while providing market value and certainty.
    At the same time, I am concerned that the bill appears to roll back 
existing public health laws for meeting emission standards along with 
measures protecting local air quality.
    The bill delays cleaning up air pollution by up to a decade 
compared to current law. This forces residents of heavily-polluted 
areas to wait years longer for clean air compared to the existing Clean 
Air Act.
    I also have concerns about the Mercury reduction provisions in the 
bill. Mercury pollution that is spread through the air and water is 
linked to several public health problems such as birth defects, 
neurological damage to fetuses and young children, lung damage, 
fatigue, weight loss, gastrointestinal problems, and behavioral and 
personality changes. In addition, mercury-contaminated fish can poison 
the public. The Administration's plan cuts mercury emissions by 69%. I 
am concerned about the Administration's plan because compared to 
current law, the Clear Skies plan would allow three times more toxic 
mercury emissions.
    According to the Chesapeake Bay Foundation, each year about 97.5 
million pounds of nitrogen comes from air deposition; mostly from power 
plant smoke stacks and vehicle emissions. This represents about one 
third of the Bay's nitrogen load and is a significant problem. Nitrogen 
oxides are major components of acid rain. The Clear Skies Initiative 
guarantees to reduce nitrogen emissions by 58% in 2008 and 67% in 2018. 
In light of the toxic effect that nitrogen has on the environment, the 
time frame for the reduction levels should be more aggressive. For this 
reason, supporters of the Chesapeake Bay have argued that the Clear 
Skies proposal is too weak.
    I am hopeful that this will be the beginning of discussions on the 
clear skies act and not the end. I believe that it is critical that we 
seek ways to reduce pollution in our air and water. Mr. Chairman, I 
appreciate your attention to this matter. I look forward to hearing 
from today's Administration witness.

    Mr. Barton. Without objection. Mr. Markey, I thought you 
wanted 3 minutes in your questioning. You want to go ahead and 
do it now? Okay. The gentleman from Massachusetts is recognized 
for 3 minutes.
    Mr. Markey. Thank you.
    Congress rarely creates perfect public policy. During the 
Clean Air Act amendments in 1990 and the creation of the Acid 
Rain Program, we kept protections for local air quality in 
place just in case there were unintended consequences, because 
the goal of the Clean Air Act is primarily to protect human 
health. We made sure that plans were in place to deal with the 
problems if there were targets that were missed. And we 
believed inevitably there would be missed targets.
    In contrast, Clear Skies eliminates or significantly 
changes these protections. With the creation of transitional 
pollution cities or towns, Clear Skies creates a new class of 
city or towns with none of the public health protections of 
current law.
    A transitional pollution city or town would be designated 
based solely on theoretical software models that show the 
transitional pollution city or town what it could potentially 
achieve in terms of national air quality standards by 2015, 
unlike current law, which requires the monitoring of the actual 
air to determine its quality. So they have a theoretical 
transition pollution city or town, and then a theoretical model 
for pollution, which is then established but without the relief 
in place that would have actual air monitoring.
    Further, the transitional pollution city or town would not 
have to submit any contingency plans to protect public health 
if, in fact, it failed to achieve clean air by 2015. Right now, 
contingency plans are the real plans for improving air quality, 
because we all recognize that very often, despite the best 
planning, targets are missed.
    Not until 2015, 9 years after the implementation of the 
Clear Skies, would State and local air quality directors have 
to assess the real state of their air and start to design a 
plan to deal with any problems. Of course, these plans wouldn't 
come into effect for a further 3 years, and extension beyond 
that would always be a possibility, increasing the exposure of 
the public to unhealthy air that causes asthma and other 
respiratory diseases. The President, a lot of times through 
Karl Rove, refers to himself as kind of a Theodore Roosevelt 
kind of a guy. But Theodore Roosevelt actually had asthma, 
which is why he appreciated clean air out in the country. Under 
this bill, the model will be, regulate softly but carry a big 
inhaler for the 8 million children and the 24 million Americans 
with asthma.
    Mr. Barton. The gentleman's time has expired.
    Mr. Markey. I urge a close examination of this legislation.
    Mr. Barton. We thank the gentleman.
    [Additional statement submitted for the record follows:]

  Prepared Statement of Hon. Frank Pallone, Jr., a Representative in 
                 Congress from the State of New Jersey

    Today we are asked to consider a bill with the almost comically 
inappropriate name ``Clear Skies''. We are further asked to substitute 
the provisions of this bill for the Clean Air Act, a law with a proud 
history of cleaning up the air that millions of Americans breathe. This 
is simply another example of this Administration's cow-towing to its 
friends in industry, and I sincerely hope that our colleagues will see 
through this farce before the so-called Clear Skies Act negates the 
progress that we have made in air quality with the Clean Air Act.
    In his State of the Union address, President Bush suggested that 
his ``Clear Skies'' initiative would cut air pollution from power 
plants by 70 percent over the next 15 years. While the spin-doctors 
should be commended on their catchy title for this initiative, in 
reality the President's pollution-control targets are weaker than 
current law. Furthermore, most of the targets in this proposal would 
not become effective until 2010, and not fully effective until 2018. So 
for the next seven years it's just business as usual with industry 
spewing more pollutants into our air, resulting in more newborn babies 
at risk of neurological problems, more children developing asthma, more 
premature deaths in adults, and let's not forget, more heat-trapping 
carbon dioxide emissions, since the latter is not even addressed in the 
so-called ``Clear Skies Act''.
    Although each of these pollutants is of serious concern to air 
quality, I am especially concerned about the lax approach of this 
legislation toward reducing mercury emissions. The damaging effects of 
mercury are well documented. Plain and simply, the Bush 
Administration's so-called ``Clear Skies'' bill fails the American 
public. In fact, the only people who appear to benefit from this 
legislation are power plant owners. The power sector emits more mercury 
air pollution than any other major industry, yet it is the only 
industry not subject to mercury emission standards. The American public 
has been told that this ``new and improved'' version of the Clean Air 
Act will improve air quality around the nation, but this statement is 
based upon a comparison with current pollutant emissions, NOT with the 
standards that are due to be set by December of 2004 under current 
Clean Air provisions. Under current law, power plants must meet the 
2004 standards by December 2007. The Clear Skies Act would not require 
its final caps to be met until 2018!
    Although the Majority will argue that the mercury allowance program 
under their proposal is based on the current cap-and-trade program for 
acid rain deposition under the Clean Air Act, the fact remains that the 
Clear Skies bill would simply NOT reduce mercury as quickly, or to the 
same extent, as current law is projected to. Furthermore, today's bill 
would seriously undermine regulatory authority at the state and 
regional levels, in contrast to the current acid rain program for 
sulfur dioxide emissions, which has been very successful without being 
such a debilitating influence on States' authority. The so-called Clear 
Skies Act is nothing more than a ``bye'' for polluters so that they can 
avoid emissions reduction improvements and extend the time frame for 
compliance.
    If anything, we should be acting to strengthen air quality 
standards at this time. With the recent announcement from the United 
Nations-based World Meteorological Organization that the erratic global 
weather patterns of the past several years correspond with the 
predictions of global warming, it is more obvious than ever that this 
is a real problem that needs to be addressed in the immediate future. 
Responsible legislation should address this by developing tough 
standards for carbon dioxide emissions, as well as mercury, sulfur 
dioxide, and nitrogen oxides.
    The so-called Clear Skies Act consistently places the concerns of 
polluters over the health concerns of the citizens of this Nation, and 
this should not be tolerated.

    Mr. Barton. Seeing no other members present, the Chair is 
going to proceed. The members that deferred their opening 
statements, that were here at the time we had opening 
statements, will have an additional 3 minutes. All members who 
come will get 5 minutes.
    We want to welcome Mr. Holmstead to the subcommittee, and 
recognize you for such time as you may consume. Your entire 
written statement is in the record, so you may summarize. But 
welcome to the committee.

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

    Mr. Holmstead. Thank you very much, Mr. Chairman.
    It really is an honor to be here today and to appear in 
front of you again. I had planned to begin by singing a rousing 
rendition of Happy Birthday to Mr. Dingell. But now that 
Chairman Tauzin has already recognized this day, I think I will 
defer in all of our interests.
    I have been looking forward to this opportunity for quite 
some time. And at your invitation, I am going to depart from 
custom a little bit, and rather than reading a statement, what 
I would like to do is just give a relatively brief presentation 
and go through some slides in the hope that we can collectively 
understand some of these issues a little bit better. And I do 
hope, in particular, that I can begin to overcome Mr. Dingell's 
skepticism.
    As a number of you have mentioned, the air in our country 
has gotten significantly cleaner over the last 30 years because 
of the actions of this committee and committees in the Senate 
and actions by the full Congress. And it really is remarkable 
progress when you look at the reductions in air pollution in 
the face of enormous economic growth, growth in the use of 
energy, growth in the vehicle miles traveled by our vehicles.
    Over the last 30 years, as we have implemented all of these 
programs, I think we have collectively learned a lot. The 
Congress, certainly EPA that has been in charge of these 
programs, we have learned that some programs have worked 
extremely well and been highly efficient; we have learned that 
other programs haven't worked so well. What we have tried to do 
within the Agency is to take advantage of everything that we 
have learned over the last 30 years. And the Clear Skies Act 
proposal is really historic, I believe in the history of 
environmental law in this country, because it is the first time 
that an administration has proposed to review carefully a piece 
of environmental legislation and to expand and modernize and 
take advantage of the parts that work very well and use those 
to replace the parts that haven't worked as well. And as a 
result, what I can guarantee you this morning is, if you adopt 
Clear Skies, we will get greater environmental benefits, 
certainly over the next decade, substantially--substantially 
cleaner air quality in this country. We will do it at the 
lowest possible cost. If we were to achieve these same benefits 
using the traditional mechanisms, it would be much more costly. 
We can do it in a way that provides certainty to the 
environment so we know exactly and so States in particular can 
do the air quality planning. It provides certainty to the power 
sector because they can go to the financial markets and know 
exactly what their regulatory obligations are going to be.
    A lot of you have mentioned concern about natural gas, 
which is a big concern of ours as well. Secretary Abraham has 
said, and we agree, that this is one of the most important 
things we can do to ensure against natural gas price increases, 
which is important to almost every business in this country, 
and every consumer who heats his or her house with natural gas. 
By providing clear targets, clear certainty, what we get is 
much cleaner air from the installation of advanced control 
technology on coal so that the utility sector is not driving up 
the price of natural gas. We can do this in a way that will 
avoid most of the litigation that we constantly undertake. By 
taking advantage of the mechanism that this committee debated 
and adopted by back in 1990--and with some slides here I would 
like to just show you a little bit more about really what that 
has accomplished. But if I can, if you can go through--oh. The 
slide is already up. I am looking at myself up there in the 
television screen and not seeing the map.
    This map you see right now is based on the most recent 
monitoring data. These are equipment that we have out in the 
field around the country. It shows the counties that currently 
do not meet the Clean Air Act standards for either ozone or 
fine particles. This is something in the order of 350 counties. 
You will see that California has a pronounced problem largely 
because of geography and climate. And then east of the 
Mississippi, almost every major urban area in the country at 
this point doesn't meet our current--the most stringent Clean 
Air Act standards we have ever had.
    Now, we know an awful lot about this problem, a lot more 
even than we knew about 10 years ago. And I just wanted to 
quickly show you this chart. The basic approach of the Clean 
Air Act is for the Federal Government to set these national 
ambient air quality standards and then tell States and cities 
that they have to decide the best way to meet those standards. 
And they are restricted to what they can do within their 
jurisdiction. What this chart shows is the breakdown between 
the sources of the pollution that contribute to fine particle 
pollution, which we think is the most serious air quality 
issue, and these are sort of chosen at random. We didn't mean 
to get all the Midwest cities. This is indicative of every city 
east of the Mississippi.
    The red part of the bar shows the portion of the fine 
particle pollution that comes from outside the local area, from 
regional transport. The yellow part is the part that that urban 
area actually has control over. So, for instance, if you look 
at Cincinnati in this slide, they can eliminate all of the 
local, all the local air pollution sources completely and they 
would still not meet the Federal standards of 15 micrograms per 
cubic meter. You will see that no matter where we look through 
the eastern United States, by far the biggest part of the fine 
particle pollution problem is this regional transport that 
comes in, really, throughout the eastern United States.
    Well, let me tell you another thing we know about that. In 
all of those cities east of the Mississippi, the single largest 
part of that--and for those of you who are interested in even 
more detail, we can provide it to you. But we have a lot of 
studies showing that the biggest part of that problem is 
sulphate. And the sulphate emission, the sulphate part of the 
fine particles comes from SO2 emissions, and by far 
the lion's share of the SO2, comes from the burning 
of coal for electric power from power plants. Another big part 
is nitrate that comes from NOX emissions. So let me 
quickly point you to this chart that shows that nationally the 
power sector is responsible for about 63 percent of the 
SO2. It is actually even higher than that in the 
eastern part of the United States, responsible for about a 
fourth of the NOX emissions. And if you look at that 
NOX chart, you see that big green slice is the 
transportation sector. That part is shrinking over time as the 
fleet turns over with cleaner cars and cleaner trucks that are 
in place now. So the power sector, notwithstanding the progress 
that has been made, continues to be primarily responsible for 
this regional transport that causes the nonattainment problem 
in the entire eastern United States, at least in the major 
urban areas.
    Now, as several of you have pointed out, there are 
mechanisms in the Clean Air Act that will eventually address 
this problem. And let me just give you an indication and sort 
of a summary of what that looks like on the next slide, if I 
can.
    This is a time line that captures not every regulatory 
action but the major regulatory actions EPA takes that will 
effect the power sector between now and about 2018. Now, almost 
every one of these steps requires that we go through a 
regulatory process that you know well. We develop a proposal, 
we put it out for public comment, we have public hearings. We 
do a final rule, we get litigation; that litigation drags 
things on and on. But that is the way the Clean Air Act has 
worked relatively well, but it does mean that it takes a long 
time to address some of these problems.
    Now, what I would like to do for just a second is compare 
this chart with the Acid Rain Program that many of you were 
involved in developing. And let me just go over a couple of 
slides to sort of keep this in mind. The other thing to point 
out about this, if I can, is that it deals with one pollutant 
at a time. We deal, we have this mercury MACT standard that Mr. 
Allen and others have mentioned that deals just with mercury. 
Then we have the ability to use other sections to look at 
SO2 to look at NOX, and we have different 
timeframes for each of those. So, just keep that in mind.
    If I can go to the next slide. This shows on the ground 
real data about what has happened under the Acid Rain Program 
with sulfur emissions. On the left is actual measured data 
showing sulphate deposition prior to the 1990 Act that many of 
you were involved in. And you can--I think it is fairly obvious 
from the color scheme, but the darker the red color, the 
greater the concentration of sulfur actually that is deposited 
in that area. That is from pre-1990. If you look at the 1999 to 
2001 data, on the right side you will see that all of those red 
areas have shrunk pretty dramatically. We can measure in the 
environment just how effective this program has been. And as 
some of you may remember, one of the concerns about the Acid 
Rain Program is that it would result in so-called hot spots; 
that you would have areas that actually got worse. In fact, not 
only EPA but a number of groups have looked at this issue, and 
this slide demonstrates that while we haven't completely 
eliminated the problem, we certainly haven't made it worse 
anywhere; we have made it better everywhere.
    Now, one other thing about the Acid Rain Program I just 
wanted to show you visually. Because it is a market-based 
program that allows the utility sector collectively to find the 
least costly way of achieving these reductions, it has turned 
out to be much less expensive than people envisioned back in 
1990. I was peripherally involved in some of those discussions, 
and I remember discussions about how much the cost would be to 
impose that cap, about a 50 percent reduction in SO2 
emissions. And back in 1990, EPA estimated the annual cost 
would be about $5.7 billion. The industry estimated $7 billion. 
Four years later, as people had an economic incentive to go out 
and find the best ways to reduce these emissions, the most 
effective ways, the estimates of full implementation went 
from--again the industry, in this case EPRE which is associated 
with EEI, that estimated went from $7 billion a year to $2.5 
billion a year. GAO estimated $2.3 billion a year. And 8 years 
later, in 1998, the most recent study, EPRE, estimated its 
estimate or revised its estimate downward to $1.6 billion, a 
very well-recognized think tank, RFF, projects it is about $1 
billion a year.
    So in terms of its cost-effectiveness, there is no other 
tool that has ever been developed that is nearly as cost-
effective as this one for controlling stationary sources of air 
pollution. But just as importantly, it is the most 
environmentally efficient approach that we are aware of. Under 
the Acid Rain Program, we know that we have virtually 100 
percent compliance. How do we know that? We know that because 
every stack out there in the country has a continuous emissions 
monitor. So we monitor on an ongoing basis exactly what the 
emissions are. It is completely transparent to everyone. We 
don't have teams of lawyers, we don't have teams of inspectors. 
We have a relatively small number of people largely in 
Washington that monitors these data. And we have other ways of 
electronically monitoring the monitors. So this is the only 
program we know of where we can say we have virtually 100 
percent compliance. We have never had to bring an enforcement 
action. It is effectively self-enforcing because it is so 
transparent. So from a cost perspective, from an effectiveness 
standpoint, the success of this program that many of you were 
involved in developing has been absolutely amazing.
    So what we have tried to do is think back to that slide I 
showed you just a second ago that has the time line with all 
those different things on it. We have tried to consolidate 
those into a single program that looks like the Acid Rain 
Program. And that is what I show here on this slide, where we 
basically tell the industry, all these affected sources, that 
they have to reduce their emissions of SO2 from 11 
million tons to 3 million tons in two phases, NOX 
from 5 million to 1.7 million, mercury from 48 tons to 15 
tones. Approximately 70 percent from each of these things 
across time. And so we know really what this means.
    And let me shows you what this means environmentally, if I 
can, on the next page. I am sorry this is a little hard to 
read. I think you have slides in front of you.
    This shows on the top the areas the counties that are----
    Mr. Waxman. Excuse me, Mr. Chairman. Mr. Holmstead has a 
lot of charts up here.
    Were they given to us with your written testimony?
    Mr. Holmstead. I believe they were, yes.
    Mr. Barton. Well, they were handed out. I don't believe we 
had them in advance.
    Mr. Waxman. Well, the rules do require that testimony be 
given in advance. And we had written testimony given to us in 
advance without these charts.
    Mr. Barton. The testimony was given in advance. The 
graphics, I saw for the first time today, but the written 
testimony has been at the committee level since last week.
    Mr. Waxman. Mr. Chairman, I don't think Mr. Holmstead is 
following the written testimony. He is extemporaneously going 
through some of the points he wants to make, but is not--you 
are not reading from the written testimony. Are you?
    Mr. Holmstead. No, I am not. I thought it would be most----
    Mr. Barton. And he is not required to read from the written 
testimony. There is no rule that requires him to do that.
    Mr. Waxman. And, Mr. Chairman, is this an unlimited time 
presentation?
    Mr. Barton. I told the gentleman, since he is the first 
administration witness on this important initiative, that he 
would be given such time as he may consume.
    Mr. Waxman. Well, I have no objection to that, although it 
is unusual. We have never had that before. But it is contrary 
to the rules to have a written statement given to us in advance 
that is not part of the presentation or not being followed in 
the presentation, and graphics that are used that have not been 
submitted to us in advance. I am sure these graphics were 
available before today.
    Mr. Barton. I think it is important, given the complexity 
of this issue, to give this particular witness ample time to 
explain it and go into details. This is the first of many 
hearings. As I said in my opening statement, it is important 
that we get this right. And one of the ways to get it right is 
to get the facts on the table. Mr. Holmstead, if not the most 
authoritative, is one of the most authoritative administration 
officials on this issue, and it is important to give him 
opportunity to explain the proposal.
    Mr. Waxman. Mr. Chairman, I don't quarrel with that, but I 
hope we will be given ample time to question him so that we can 
get all the facts out from not just his perspective but from a 
give and take.
    Mr. Barton. Well, I would point out, it is highly unusual 
for a member to interrupt a witness who is giving testimony. 
But I have given the gentleman from California that courtesy.
    Mr. Holmstead. And I am really pleased to stay as late as 
anyone has questions and to follow up. If you have questions 
about these slides. I apologize. I thought we had gotten these 
up a little earlier, but I would be quite happy to go through 
any questions you might have about----
    Mr. Waxman. Thank you very much, Mr. Holmstead and Mr. 
Chairman. I appreciate the willingness to cooperate.
    Mr. Barton. Please continue.
    Mr. Holmstead. And I am nearing the end, but sometimes I 
get worked up about this. We have all been spending a lot of 
time--the bulk of the last couple of years working through all 
these issues. I think I just have three more slides I wanted to 
walk you through.
    This top map shows--again, this is monitored data--counties 
throughout the country that do not meet the fine particle 
standard. You will see there are 129 counties that exceed that 
standard today. We have done the most comprehensive air quality 
modeling study ever done at the national level to look at the 
impacts of clear skies along with a diesel rule that we have 
recently proposed, along with some other actions that States 
and local governments have taken, and you go in the next 17 
years from this top slide, 129 counties to this bottom slide, 
where other than California--and I am sorry, Mr. Waxman.
    California has some unique challenges that aren't really 
related to the power sector, but other than California, we 
virtually eliminate the nonattainment problem, and even in 
these few areas that remain, they are very--the air quality has 
gotten much better.
    So with one exception, each of these areas that still isn't 
quite into attainment is within one microgram per cubic meter 
of meeting the standard, and many of you were around back in 
1997 when there was substantial debate about how we would ever 
meet the new PM2.5 standard. Now we know with the 
combination of stringent diesel regulations and the clear skies 
approach, this multipollutant approach, we can go from this top 
map to the bottom map.
    Now, let me show you ozone, and many of you have worked on 
ozone issues for years and years and know how intractable those 
have been. Right now we have 290 counties, home to about 110 
million people that live in counties that exceed the new more 
stringent 8-hour ozone standard. Again, you look out to 2020, 
and we go way, way down, and, again, even these areas that 
continue to be out of attainment are much closer.
    Now, in the case of ozone, much of this has to do with 
other things besides just clear skies. In particular the 
NOX SIP Call, the mobile source rules that are in 
place, including some of the ones we have done in the last 
couple of years, but the combination of these all these things 
gets you from a situation where today--and I look at the States 
represented here, and air quality is substantially better 
everywhere, and most areas come into attainment, or at least 
they are within shouting distance.
    Now, because we use this highly efficient mechanism, let me 
just go to one more slide to show you, for those of us who are 
also concerned about energy security and energy diversity in 
this country, one of the big concerns that we have all had in 
designing this sort of an approach is really what does it mean. 
Does it make us overly dependent on natural gas, and the answer 
is absolutely not. We have analyzed this extensively. The 
Department of Energy, the Energy Information Agency and the use 
of coal continues to grow in this country. The chart on the 
bottom left shows current usage--I am sorry. 1990, 2000, 2020, 
and the use of coal continues to grow. What happens is it is 
just well controlled coal. We can break this down by region. 
Our projections are that you--it stays roughly the same in the 
Powder River Basin, goes up slightly in Appalachia, goes up 
substantially in the Interior. I am happy to explain more why 
that is, but all of these things, we and others have studied 
extensively.
    So we can do this without driving us to natural gas. We can 
do it without costing jobs, and how do we do it? We do it by 
using the title 4 approach that many of you were involved in 
designing to really replace a lot of the other parts of the Act 
that haven't worked so well.
    Now, one last slide, and then I do very much appreciate the 
extra time you have given me. What we can say categorically is 
that because of the cumbersomeness of the current Clean Air Act 
process, we can do very little about the--in particular, the 
PM2.5 problem between now and at least over the next 
decade. So we look just out through 2010, because of the way 
our models work, and we can show you in 2010 these are benefits 
that we would get under Clear Skies that we cannot get under 
the Clean Air Act. And I am happy to go into as much detail as 
anybody is interested in going into, but I can tell you that in 
2010, there will be almost 8,000 premature deaths avoided that 
we can't do under the Clean Air Act, and I will go into detail 
about what we can and we can't do and how long that takes.
    Almost 8,000 premature deaths in 2010 alone, and the 
benefits begin almost immediately because of the way this 
program works.
    When Congress speaks, when Congress puts deadlines and caps 
in place, markets move, because people know those are in place. 
If we go through all of our other procedures, what does the 
private sector do? They litigate, because that is the way the 
world works. When Congress acts, put these deadlines in place, 
we know it is going to happen, and you have got almost 8,000 
premature deaths avoided, 5,400 cases of chronic bronchitis, 
hospitalization, emergency room visits avoided, about 17,000, 
and nonfatal heart attacks, 13,000 avoided. This is in 2010 
alone. These are benefits that we can't get under the current 
Clean Air Act.
    So, again, I very much appreciate the opportunity to 
present this information, and I am delighted to answer any 
questions that anyone may have, but I just want to reiterate 
that by modernizing the Clean Air Act, by moving forward on 
this important initiative, we can provide greater environmental 
benefits. We can do it at less cost. We can provide certainty 
for the environment. We can provide certainty for the industry, 
and we can ensure that we keep energy prices low for consumers.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Hon. Jeffrey Holmstead follows:]

Prepared Statement of Jeffrey Holmstead, Assistant Administrator, U.S. 
                    Environmental Protection Agency

                            I. INTRODUCTION

    Thank you, Mr. Chairman and Members of the Committee for the 
opportunity to speak with you today about the Clear Skies Act of 2003. 
Based on one of the most successful programs created by the Clean Air 
Act, Clear Skies is a proposal to substantially reduce emissions of the 
three most harmful pollutants from power generation--and to do so in a 
way that is much faster and more efficient than under current law.
    As President Bush said in the State of the Union Address, Clear 
Skies will advance our goal of ``promot[ing] energy independence for 
our country, while dramatically improving our environment.'' The 
Administration is committed to working with this Subcommittee and 
Congress to pass legislation this year. The widespread support for 
multi-pollutant legislation to reduce power plant emissions is a strong 
indicator that the time for action on this critical issue is now. 
Failure to enact Clear Skies this year will delay important public 
health and environmental benefits.
    This country should be very proud of the progress we have already 
made in cleaning up our air. According to the Environmental Protection 
Agency's (EPA) first Draft Report on the Environment, since the Clean 
Air Act was first enacted in 1970, total national emissions of the six 
most common air pollutants have been reduced 25 percent. Remarkably, 
this improvement in national air quality has occurred even while, 
during the same 30-year period, the U.S. Gross Domestic Product 
increased 161 percent, energy consumption increased 42 percent, and 
vehicle miles traveled increased 149 percent.
    Although we have made much progress since 1970, we still face major 
air quality challenges in many parts of the country. Clear Skies is the 
most important next step we can take to address these challenges and 
achieve healthy air and a clean environment for all Americans. Clear 
Skies would make great strides towards solving our remaining air 
quality problems in a way that also advances national energy security 
and promotes economic growth. It would reduce power plant emissions of 
sulfur dioxide (SO2), nitrogen oxides (NOX) and 
mercury by approximately 70 percent from today's levels and do it 
faster, with more certainty, and at less cost to American consumers 
than would current law. With Clear Skies, power plants would emit far 
less over the next decade than they would under the current Clean Air 
Act. Because of the innovative cap-and-trade approach used in Clear 
Skies, power plants would have an incentive to start reducing emissions 
as soon as Clear Skies is passed, resulting in emissions reductions 
more quickly than required.
    EPA recently updated our analyses of Clear Skies using the most 
recent air quality data, population census information, and modeling 
techniques. This modeling represents the most sophisticated, 
comprehensive, detailed national modeling EPA has ever produced. These 
analyses reaffirm that Clear Skies would greatly reduce air pollution 
from power plants while ensuring a reliable, affordable supply of 
electricity.
    When fully implemented, Clear Skies would deliver tens of billions 
of dollars in annual health benefits, prolong thousands of lives and 
prevent millions of illnesses each year, provide billions of dollars of 
economic benefits, and save millions of dollars in health care costs. 
The added benefit of Clear Skies would virtually assure attainment of 
the new ozone and particulate matter standards for much of this 
country, providing air that meets the new, more protective health-based 
national air quality standards to millions of people. Achieving the 
national standards has been a problem that has plagued our nation's 
communities for decades. Clear Skies would also virtually eliminate 
chronic acidity in northeastern lakes, reduce nitrogen loading in 
coastal waters, and help restore visibility in our national parks and 
wilderness areas.
    The Clean Air Act has been, and continues to be, a vehicle for 
great progress in improving the health and welfare of the American 
people. The Clear Skies Act substantially expands one of the most 
successful Clean Air Act programs--the Acid Rain Program--and reduces 
the need to rely on complex and less efficient programs. The result 
would be significant nationwide human health and environmental 
benefits; certainty for industry, states and citizens; energy security; 
and continuing low costs to consumers.

             II. CLEAR SKIES PROVIDES SIGNIFICANT BENEFITS

    The heart of Clear Skies is a proven cap-and-trade approach to 
emissions reductions. Mandatory caps restrict total emissions and 
decline over time. When fully implemented, Clear Skies would result in 
a 70% reduction in emissions of SO2, NOX and 
mercury from today's levels. Clear Skies would continue the existing 
national cap-and-trade program for SO2, but dramatically 
reduce the cap from 9 million to 3 million tons. Clear Skies would also 
use a national cap-and-trade program for mercury that would reduce 
emissions from the current level of about 48 tons to a cap of 15 tons, 
and would employ two regional cap-and-trade programs for NOX 
to reduce emissions from current levels of 5 million tons to 1.7 
million tons.
    Although national in scope, Clear Skies recognizes and adjusts for 
important regional differences in both the nature of air pollution and 
the relative importance of emissions from power generation. The eastern 
half of the country needs reductions in NOX emissions to 
help meet the ozone and fine particle standards, which generally are 
not a regional issue in the western half of the county (with the 
exception of California, which does not have significant emissions from 
existing coal-fired power plants). The western half of the country 
needs NOX reductions primarily to reduce the regional haze 
that mars scenic vistas in our national parks and wilderness areas, and 
the nitrogen deposition that harms fragile forests. Recognizing these 
regional differences, Clear Skies would establish two trading zones for 
NOX emissions and prohibit trading between the zones to 
ensure that the critical health-driven goals in the East are achieved.
    Clear Skies also recognizes the special visibility protection 
measures that have been developed by states participating in the 
Western Regional Air Partnership (WRAP). Clear Skies would essentially 
codify the WRAP's separate SO2 backstop cap-and-trade 
program, which would come into effect only if the WRAP states did not 
meet their 2018 SO2 emissions targets.
    Finally, Clear Skies requires tough, technology-based new source 
standards on all new power generation projects and maintains special 
protections for national parks and wilderness areas when sources locate 
within 50 km of ``Class I'' national parks and wilderness areas.
Significant Public Health and Environmental Benefits
    The public health and environmental benefits of Clear Skies present 
compelling reasons for its immediate passage. EPA's new analysis 
projects that, by 2010, reductions in fine particle and ozone levels 
under Clear Skies would result in billions of dollars in health and 
visibility benefits nationwide each year, including prolonging as many 
as 7,900 lives annually. Using an alternative methodology, Clear Skies 
would prolong 4,700 lives annually by 2010. EPA's base methodology for 
calculating benefits shows that Americans would experience significant 
health benefits each year by 2020, including:

 14,100 fewer premature deaths;
 8,800 fewer cases of chronic bronchitis;
 23,000 fewer non-fatal heart attacks;
 30,000 fewer visits to hospitals and emergency rooms for 
        cardiovascular and respiratory symptoms, including asthma 
        attacks; and
 12.5 million fewer days with respiratory illnesses and symptoms.
Using an alternative methodology, by 2020 Americans would experience 
8,400 fewer premature deaths each year.
    We have not developed methodologies for quantifying or monetizing 
all the expected benefits of Clear Skies. Still, under all of our 
analytical approaches, it is clear that the benefits far exceed the 
costs. EPA estimates that the monetized value of the health benefits we 
can quantify under Clear Skies would be $110 billion annually by 2020--
substantially greater than the projected annual costs of approximately 
$6.3 billion. An alternative approach projects annual health benefits 
of $21 billion, still significantly outweighing the costs. The Agency 
estimates an additional $3 billion in benefits from improving 
visibility at select national parks and wilderness areas. These 
estimates do not include the many additional benefits that cannot 
currently be monetized but are likely to be significant, such as human 
health benefits from reduced risk of mercury emissions, and ecological 
benefits from improvements in the health of our forests, lakes, and 
coastal waters.
    Clear Skies would achieve most of these benefits by dramatically 
reducing fine particle pollution caused by SO2 and 
NOX emissions, which is a year-round problem. Of the many 
air pollutants regulated by EPA, fine particle pollution is perhaps the 
greatest threat to public health. Hundreds of studies in the peer-
reviewed literature have found that these microscopic particles can 
reach the deepest regions of the lungs. Exposure to fine particles is 
associated with premature death, as well as asthma attacks, chronic 
bronchitis, decreased lung function, and respiratory disease. Exposure 
is also associated with aggravation of heart and lung disease, leading 
to increased hospitalizations, emergency room and doctor visits, and 
use of medication.
    By reducing NOX emissions, Clear Skies also would reduce 
ozone pollution in the eastern part of the country and help keep ozone 
levels low in the western portion of the country. Ozone (smog) is a 
significant health concern, particularly for children and people with 
asthma and other respiratory diseases who are active outdoors in the 
summertime. Ozone can exacerbate respiratory symptoms, such as coughing 
and pain when breathing deeply, as well as transient reductions in lung 
function and inflammation of the lung. Ozone has also been associated 
with increased hospitalizations and emergency room visits for 
respiratory causes. Repeated exposure over time may permanently damage 
lung tissue.
    Clear Skies would help move us from a situation where nearly every 
major urban area is projected to be out of attainment with the ozone 
and fine particle standards, to a scenario where only a few major 
cities would continue to have nonattainment problems. Based on current 
data (1999-2001 data), 129 counties nationwide (114 counties in the 
East) currently exceed the fine particle standard and 290 counties 
nationwide (268 counties in the East) currently exceed the new ozone 
standard. As a result, 45% of all Americans live in counties where 
monitored air was unhealthy at times because of high levels of fine 
particles and ozone. Clear Skies would dramatically reduce that number. 
By 2020, the combination of Clear Skies, EPA's proposed rule to 
decrease emissions from nonroad diesel engines, and other existing 
state and federal control programs, such as pollution controls for cars 
and trucks, would bring all but 18 counties nationwide (including only 
8 counties in the East) into attainment with the fine particle 
standards and all but 27 counties nationwide (including only 20 
counties in the East) into attainment with the ozone standards. Even in 
the few areas that would not attain the standards, Clear Skies would 
significantly improve air quality. This would make it easier for state 
and local areas to achieve the new ozone and fine particle standards. 
Throughout the West, Clear Skies would hold emissions from power plants 
in check, preserving clean air in high-growth areas and preventing 
degradation of the environment, even as population and electricity 
demand increase.
    [See Attached Figures 1 and 2, Attainment with Fine Particle and 
Ozone Standards]
    Clear Skies would also reduce mercury emissions from power plants. 
EPA is required to regulate mercury because EPA determined that mercury 
emissions from power plants pose an otherwise unaddressed significant 
risk to health and the environment, and because control options to 
reduce this risk are available. Mercury, a potent toxin, can cause 
permanent damage to the brain and nervous system, particularly in 
developing fetuses when ingested in sufficient quantities. People are 
exposed to mercury mainly through eating fish contaminated with 
methylmercury.
    Mercury is released into the environment from many sources. Mercury 
emissions are a complex atmospheric pollutant transported over local, 
regional, national, and global geographic scales. EPA estimates that 
60% of the mercury falling on the U.S. is coming from current man- made 
sources. Power generation remains the largest man-made source of 
mercury emissions in the United States. In 1999, coal-fired power 
plants emitted 48 tons of mercury (approximately 37% of man-made 
total). These sources also contribute one percent of mercury to the 
global pool.
    Mercury that ends up in fish may originate as emissions to the air. 
Mercury emissions are later converted into methylmercury by bacteria. 
Methylmercury accumulates through the food chain: fish that eat other 
fish can accumulate high levels of methylmercury. EPA has determined 
that children born to women who may have been exposed to high levels 
may be at some increased risk of potential adverse health effects. 
Prenatal exposure to such levels of methylmercury may cause 
developmental delays and cognitive impairment in children. Clear Skies 
will require a 69% reduction of mercury emissions from power plants.
    In addition to substantial human health benefits, Clear Skies would 
also deliver numerous environmental benefits. Nitrogen loads to the 
Chesapeake Bay and other nitrogen sensitive estuaries would be reduced, 
reducing potential for water quality problems such as algae blooms and 
fish kills. In fact, the Chesapeake Bay States, including NY, VA, MD, 
PA, DE, WV and DC, recently agreed to incorporate the nitrogen 
reductions that would result from Clear Skies legislation as part of 
their overall plan to reduce nutrient loadings to the Bay. Clear Skies 
would also accelerate the recovery process of acidic lakes, eliminating 
chronic acidity in all but 1% of Northeastern lakes by 2030. For 
decades fish in the Adirondacks have been decimated by acid rain, 
making many lakes completely incapable of supporting populations of 
fish such as trout and smallmouth bass. The Acid Rain Program has 
allowed some of these lakes and the surrounding forests to begin to 
recover; Clear Skies would eliminate chronic acidity in Adirondack 
region lakes by 2030. Clear Skies would also help other ecosystems 
suffering from the effects of acid deposition by preventing further 
deterioration of Southeastern streams. Finally, Clear Skies would 
improve visibility across the country, particularly in our treasured 
national parks and wilderness areas, resulting in improvements of 
approximately two to seven miles in visual range in many areas. For 
example, in the Southeast, Clear Skies would improve the visual range 
by two to four miles.
    Clear Skies is designed to ensure that these public health and 
environmental benefits are achieved and maintained. By relying on 
mandatory caps, Clear Skies would ensure that total power plant 
emissions of SO2, NOX and mercury would not 
increase over time. This is a distinct advantage over traditional 
command-and-control regulatory methods that establish source-specific 
emission rates but which allow total emissions to increase over time. 
Like the Acid Rain Program, Clear Skies would have much higher levels 
of accountability and transparency than most other regulatory programs. 
Sources would be required to continuously monitor and report all 
emissions, ensuring accurate and complete emissions data. If power 
plants emit more than allowed, financial penalties are automatically 
levied--without the need for an enforcement action. More importantly, 
every ton emitted over the allowed amount would have to be offset in 
the following year, ensuring no net environmental harm. This high level 
of environmental assurance is rare in existing programs; Clear Skies 
would make it a hallmark of the next generation of environmental 
protection.
Reasonable Costs and Energy Security for Consumers and Industry
    The President directed us to design Clear Skies to meet both our 
environmental and our energy goals. Under Clear Skies, electricity 
prices are not expected to be significantly impacted. Our extensive 
economic modeling of the power industry looked at a broad array of 
factors to gauge the effects of Clear Skies on the energy industry--and 
they all show that cleaner air and energy security can go hand-in-hand.
    Clear Skies would maintain energy diversity. With Clear Skies, coal 
production for power generation would be able to grow by 10 percent 
from 2000 to 2020 while air emissions are significantly reduced. EPA's 
extensive economic modeling for Clear Skies demonstrates that the 
proposal's emission reductions would be achieved primarily through 
retrofitting controls on existing plants. Clear Skies's timeframe and 
certainty enable the power sector to meet aggressive emission reduction 
targets without fuel switching. This is important not only to power 
generators and their consumers who want to continue to rely on our most 
abundant, reliable, affordable and domestically secure source of 
energy, but also to other consumers and industries whose livelihoods 
could be hurt by a rise in natural gas prices. Our analysis shows that 
Clear Skies would have little effect on natural gas prices.
    Under Clear Skies by 2010, more than two-thirds of U.S. coal-fired 
generation is projected to come from units with billions of dollars of 
investment in advanced SO2 and/or NOX control 
equipment (such as scrubbers and Selective Catalytic Reduction, which 
also substantially reduce mercury emissions). In 2020, the percentage 
is projected to rise to over 80 percent. Cost effective strategies and 
technologies for the control of sulfur dioxide and nitrogen oxides 
emissions exist now, and--thanks in good part to the Clear Skies 
market-based system--improved methods for these pollutants, and for 
mercury, are expected to become increasingly cost-efficient over the 
next several years. In fact, the Institute of Clean Air Companies 
forecasts that the U.S. markets for most technology sectors will remain 
fairly strong, adding momentum to the air pollution control technology 
industry. We expect that the Clear Skies Act will provide great 
benefits to American jobs in the engineering and construction 
industries.
    One of the key reasons Clear Skies would be cost-effective is its 
reliance on cap-and- trade programs. Like the Acid Rain Program upon 
which it is based, Clear Skies would give industry flexibility in how 
to achieve the needed emission reductions, which allows industry to 
make the most cost-effective reductions and pass those savings on to 
consumers. Power plants would be allowed to choose the pollution 
reduction strategy that best meets their needs (e.g., installing 
pollution control equipment, switching to lower sulfur coals, buying 
excess allowances from plants that have reduced their emissions beyond 
required levels). Like the Acid Rain program, Clear Skies includes 
banking provisions, enabling companies to save unused allowances for 
future use. Banking creates a tangible, quantifiable, economic 
incentive to decrease emissions beyond allowable levels, which EPA 
projects will result in significant early benefits due to over-
compliance in the initial years, particularly for SO2. It 
also leads to gradual emissions reductions over time, and therefore a 
less disruptive transition to tighter emission controls needed to 
address lingering problems. Based on past experience under the Acid 
Rain Program, by placing a monetary value on avoided emissions, Clear 
Skies would stimulate technological innovation, including efficiency 
improvements in control technology, and encourage early reductions.
    EPA's models, however, do not predict this technological 
innovation. The updated analyses show that mercury control costs would 
be higher than were estimated last year. We are still in the early 
stages of understanding how different technologies will affect mercury 
emissions from power plants because mercury is not currently regulated 
in the power sector. There is an ongoing dynamic research process 
sponsored by EPA, the Department of Energy (DOE), the Electric Power 
Research Institute (EPRI), and vendors specifically aimed at furthering 
our understanding of mercury control, with new data being made 
available on a continuous basis.
    Over the last year, both EPA and DOE's Energy Information Agency 
(EIA) used updated information to reassess what mercury emissions 
levels would be in 2010 after installation of NOX and 
SO2 controls necessary to meet the Clear Skies' 
SO2 and NOX caps (NOX and 
SO2 control equipment also reduce some mercury emissions--
i.e., ``cobenefit'' reductions). Due to differences in assumptions and 
models, the Administration estimates that these mercury emissions would 
range from 34 to 46 tons. EIA's and EPA's updated analyses estimate the 
incremental cost now of complying with the 2010 cap to be $650 to $750 
million per year.
    A key feature of understanding this cost is the Clear Skies' safety 
valve provision that sets a maximum cost of $35,000 per pound of 
mercury emissions. The safety valve is designed to minimize 
unanticipated market volatility and provide more market information 
that industry can rely on for compliance decisions. The updated 
modeling projects that the safety valve provision would be triggered if 
technology does not improve in the future (the modeling does not 
include any assumptions about how technology will improve). If the 
safety valve is triggered, EPA will borrow allowances from the 
following year's auction to make more allowances available at the 
safety valve price. The future year cap is reduced by the borrowed 
amount, and the emissions reductions are ultimately achieved.
    EPA believes that, as technology develops, the cost of mercury 
controls will decrease. If it does not, the new analyses project 
greater mercury emissions in 2020 than did the 2002 analyses due to the 
triggering of the safety valve.
Assistance to State and Local Governments
    Under the current Clean Air Act, state and local governments face 
the daunting task of meeting the new fine particle and ozone standards. 
Clear Skies would substantially reduce that burden. By making enormous 
strides towards attainment of the fine particle and ozone standards, 
Clear Skies would assist state and local governments in meeting their 
obligation under the Clean Air Act to bring areas into attainment with 
these health-based standards, and provide Americans with cleaner air.
    As noted previously, the combination of Clear Skies, EPA's proposed 
rule to decrease emissions from nonroad diesel engines, and other 
existing state and federal control programs--such as pollution controls 
for cars and trucks--would, by 2020, bring all but 18 counties 
nationwide (including only 8 counties in the East) into attainment with 
the fine particle standards and all but 27 counties nationwide 
(including only 20 counties in the East) into attainment with the ozone 
standards. Even in the few areas that would not attain the standards, 
Clear Skies would significantly improve air quality. This would make it 
easier for state and local areas to reach the ozone and fine particle 
standards.
    Clear Skies' assistance to states goes beyond ensuring that power 
plants will reduce their emissions. Clear Skies relies on a common-
sense principle--if a local air quality problem will be solved in a 
reasonable time frame by the required regional reductions in power 
plant emissions, we should not require local areas to adopt local 
measures. Under Clear Skies, areas that are projected to meet the ozone 
and fine particles standards by 2015 as a result of Clear Skies would 
have a legal deadline of 2015 for meeting these standards (i.e., will 
have an attainment date of 2015). These areas would be designated 
``transitional'' areas, instead of ``nonattainment'' or ``attainment,'' 
and would not have to adopt local measures (except as necessary to 
qualify for transitional status). They would have reduced air quality 
planning obligations and would not have to administer more complex 
programs, such as transportation conformity, nonattainment New Source 
Review, or locally-based progress or technology requirements in most 
circumstances.

           III. IMPROVING THE CLEAN AIR ACT WITH CLEAR SKIES

    Clear Skies would improve the Clean Air Act in a number of ways. It 
would build on the proven portions of the Clean Air Act--like the 
national ambient air quality standards and the Acid Rain Program--and 
reduce reliance on complex, less efficient requirements like New Source 
Review for existing sources. The mandatory emissions caps at the heart 
of Clear Skies guarantee that reductions will be achieved and 
maintained over time. In contrast, uncertainties with respect to 
regulatory development, litigation, and implementation time make it 
difficult to estimate how quickly and effectively current regulations 
would be implemented under the current Clean Air Act. The level of 
SO2 and NOX reductions we expect by 2010 with 
Clear Skies legislation would not be achieved under the existing Act. 
After that, we know that Clear Skies would achieve significant 
reductions, while both the timing and level of reductions under the 
current Clean Air Act are unclear.
Early Reductions
    One of the major reasons we need Clear Skies now is that adoption 
of Clear Skies would provide greater protection over the next decade 
than the traditional regulatory path. The Clear Skies Act will result 
in significant over-compliance in the early years, particularly for 
SO2, because sources are allowed to bank excess emissions 
reductions. Because of the incentives provided by the cap-and-trade 
approach used in Clear Skies, power plants would start reducing 
emissions almost as soon as Clear Skies is passed. Without Clear Skies, 
EPA and the states will have to go through regulatory processes to put 
the necessary emission control programs in place. These regulatory 
processes take years and are subject to litigation--and power plants 
would have no incentive to reduce emissions before the outcome of those 
regulatory processes were known.
    As a result, emission reductions under Clear Skies would start 
years earlier than under the current regulatory approach. Clear Skies' 
emissions reductions would cost less since EPA does not have statutory 
authority under the current Clean Air Act to design an integrated 
program that is as cost-effective as Clear Skies. Every year that 
emissions reductions are delayed, we delay the health and environmental 
benefits that would be achieved if Clear Skies were to become law.
    Our analysis suggests that the amount of pollution controls that 
the industry will have to install under Clear Skies over the next 
decade will stretch the limits of available labor and other 
construction resources, but can in fact be accomplished while 
maintaining energy reliability and continuing competitive electricity 
prices.
Legislation Now Is Better than Regulation Followed by Years of 
        Litigation
    Even if Clear Skies is not passed by Congress, power plants will be 
required to reduce their emissions of SO2, NOX 
and mercury. There is no more cost-effective way than Clear Skies to 
meet the requirements of the current Clean Air Act or to achieve our 
public health and environmental goals. We know that, absent new 
legislation, EPA and the states will need to take a number of 
regulatory actions, although it is unclear now when the requirements 
will come into effect or what their control levels will be.
    Clear Skies has several benefits over the regulatory scheme that 
will otherwise confront power generators. Clear Skies provides 
regulatory certainty and lays out the timeframes necessary for managers 
to design a cost effective strategy tailored to both their current 
budgets and future plans. Clear Skies is designed to go into effect 
immediately upon enactment. Power plants would immediately understand 
their obligations to reduce pollution and would be rewarded for early 
action. As a result, public health and environmental benefits would 
begin immediately and result in emissions reductions more quickly than 
required. Given Clear Skies' design, it is unlikely that litigation 
could delay the program (particularly since Congress would decide the 
two most controversial issues--the magnitude and timing of reductions). 
In contrast, under the current Clean Air Act, power plants would not 
know what their obligations would be until after EPA and states started 
and completed numerous rulemakings.
    Past experience suggests that litigation delays on the regulatory 
path are likely. Our experience with two cap-and-trade programs--the 
legislatively-created Acid Rain Trading Program and the 
administratively-created NOX SIP Call--illustrates the 
benefits of achieving our public health and environmental goals with 
legislation rather than relying solely on existing regulatory 
authority.
    Though we project a great deal of benefits will arise from 
implementation of the NOX SIP call, the journey down the 
regulatory path has been difficult and is not yet over. The 
NOX SIP call was designed to reduce ozone-forming emissions 
by one million tons across the eastern United States. The rulemaking 
was based on consultations begun in 1995 among states, industry, EPA, 
and nongovernmental organizations. A federal rule was finalized in 
1998. As a result of litigation, one state was dropped and the 2003 
compliance deadline was moved back for most states. Most states are 
required to comply in 2004, although two states will have until 2005 or 
later. Meanwhile, sources in these states continue to contribute to 
Eastern smog problems. Although the courts have largely upheld the 
NOX SIP Call, the litigation is not completely over. 
Industry and state challenges to the rules have made planning for 
pollution control installations difficult, raised costs to industry and 
consumers, and delayed health and environmental benefits.
    In contrast, reductions from the Acid Rain Program began soon after 
it passed (even before EPA finalized implementing regulations). There 
were few legal challenges to the small number of rules EPA had to 
issue--and none of the challenges delayed implementation of the 
program. The results of the program have been dramatic--and 
unprecedented. Compliance has been nearly 100 percent. Reductions in 
power plant SO2 emissions were larger and earlier than 
required, providing earlier human health and environmental benefits. 
Now, in the ninth year of the program, we know that the greatest 
SO2 emissions reductions were achieved in the highest 
SO2-emitting states; acid deposition dramatically decreased 
over large areas of the eastern United States in the areas where they 
were most critically needed; trading did not cause geographic shifting 
of emissions or increases in localized pollution (hot spots); and the 
human health and environmental benefits were delivered broadly. The 
compliance flexibility and allowance trading has reduced compliance 
costs by 75 percent from initial EPA estimates.
    [See 2001 Acid Rain Program Progress Report submitted for the 
record.]
    It is clear from this example that existing regulatory tools often 
take considerable time to achieve significant results, and can be 
subject to additional years of litigation before significant emissions 
reductions are achieved. Under this scenario, there are few incentives 
to reduce emissions until rules are final and litigation is complete, 
posing potentially significant delays in achieving human health and 
environmental benefits.
    The Clean Air Act contains several provisions under which EPA will 
be required to impose further emission controls on power plants in 
order to enable states to meet the new national ambient air quality 
standards (NAAQS) for PM2.5 and ozone. For example, Section 126 of the 
Clean Air Act provides a petition process that states can use to force 
EPA to issue regulations to reduce emissions of SO2 and 
NOX from upwind sources, including power plants. A number of 
states have indicated that they intend to submit Section 126 petitions 
in the near future. However, compared to Clear Skies, this approach 
will almost certainly involve years of litigation and uncertainty about 
reduction targets and timetables.
    Additional reductions are required from power plants through the 
regional haze rule's BART (Best Available Retrofit Technology) 
requirements and forthcoming mercury MACT (maximum achievable control 
technology) requirements. EPA is required to propose by the end of 2003 
a MACT standard for utility mercury emissions that must be met, plant-
by-plant, by every coal-fired utility with unit capacity above 25 
megawatts. EPA is required to finalize this rule by the end of 2004. 
The Act generally gives sources three years within which to comply with 
MACT standards. This compliance obligation could be delayed by a court 
if EPA's rule is challenged.
    Because these regulations will be the product of separate federal, 
state and judicial processes, comparable health and environmental 
protection is likely to cost more under the current Clean Air Act than 
under Clear Skies. EPA estimates that a comprehensive, integrated 
approach relying on cap-and-trade programs could reduce costs by one-
fourth as compared to the regulatory approach achieving comparable 
emission reductions. These cost savings would be passed on to the 
public through lower electricity prices and greater profitability to 
investors and owners of electric generation.
New Source Review
    Some have suggested that Clear Skies is an attempt to undermine the 
Clean Air Act. This is simply not true. To achieve the next generation 
of environmental progress, we must build on the successful provisions 
in laws that have served us well--and learn from those provisions that 
have not served us well, or have had only limited success. New Source 
Review (NSR) is an example of a program that EPA and stakeholders have 
long recognized is not working well.
    There is a misconception that the principal goal of the NSR program 
is to reduce emissions from power plants. This is simply incorrect. 
Reducing emissions from power plants is the principal goal of Clear 
Skies. The NSR program is triggered only when facilities emitting large 
amounts of air pollution are built, and when modifications at these 
facilities result in significant increases in air pollution. The NSR 
program is not designed to result in nationwide reductions of air 
pollution from power plants. When it comes to reducing harmful air 
emissions from power plants, Clear Skies would accomplish more than 
NSR. Figure 3 illustrates how the coordinated reductions that result 
from Clear Skies would improve air quality in the air shed that affects 
the Great Smoky Mountains National Park. In our estimate, such 
significant regional improvements could not be obtained in this time 
frame under the NSR framework.
    Clear Skies would significantly modify the NSR program for power 
plants, but contain some important backstops. We expect that existing 
power plants would not have to go through NSR for modifications. New 
sources would no longer have to go through the entire NSR process, but 
some aspects of the process would still apply. Although we believe that 
with a tight cap on emissions, new sources will always install good 
controls, we did not want to run the risk that a new source would be 
uncontrolled. Therefore, as a backstop, Clear Skies would require all 
new power plants to meet New Source Performance Standards (NSPS) that 
are set in the statute at levels significantly more stringent than 
current NSPS levels.
    In addition, new power generators locating within 50 km of a Class 
I area (e.g., national parks or wilderness areas) would still be 
subject to the current NSR requirements for the protection of those 
areas. Finally, new power plants will also have to meet the current NSR 
requirements that they will not cause or contribute to a violation of 
the national ambient air quality standards.

                       IV. WINDOW OF OPPORTUNITY

    Because of the lessons learned over the last decade, there is 
increasing support for legislation such as Clear Skies that would 
significantly reduce and cap power plant emissions and create a market-
based system to minimize control costs. From environmental groups to 
coal companies, there is increasing broad-based support demonstrating 
that multipollutant legislation is a preferable path to cleaner air. 
Such an approach would address an array of air pollution concerns 
associated with power generation--including fine particles, smog, 
mercury deposition, acid rain, nitrogen deposition, and visibility 
impairment--at lower cost and with more certainty than currently 
allowed by the Clean Air Act.
    There is no better time for Congress to be considering 
multipollutant legislation. President Bush has indicated that Clear 
Skies is his top environmental priority. The number of proposals being 
considered by Congress also indicates a consensus behind the basic idea 
of a multipollutant cap-and-trade approach. Organizations including the 
National Governors Association, U.S. Conference of Mayors, National 
Association of Counties, Large Public Power Council, Edison Electric 
Institute, Adirondack Council, and numerous individual utilities have 
all expressed support for the scope and framework of Clear Skies. If 
legislation passes quickly, we will begin achieving emissions 
reductions and related health benefits now, not years from now. 
Congress needs to act now so that we do not lose a decade's worth of 
health and environmental benefits from reducing fine PM pollution, 
smog, acid deposition, nitrogen deposition, and regional haze. Further, 
as EPA continues to implement additional forthcoming regulations under 
the existing framework of the Act, the likelihood of our ability to 
pursue an integrated program diminishes--and with it diminish the 
numerous advantages that I have delineated today of an approach like 
Clear Skies.
    Legislation is also needed now to help states with their air 
quality planning and provide incentives for industry innovation, which, 
in turn, would lower costs and emissions. Such incentives are 
particularly compelling this year as we approach the task of reducing 
mercury emissions from the power industry. If designed correctly, 
legislation could provide the incentive that spurs technological 
innovation. When stringent yet flexible mechanisms exist, substantial 
technological improvements and steady reductions in control costs can 
be expected to follow.
    I hope this Congress will concur that there is no better time to 
pass this important legislation. Every day that passes represents a 
lost opportunity to reduce emissions and reap human health and 
environmental benefits. The ``regulatory window'' is open now, allowing 
Congress to pass Clear Skies, based on a proven program, before EPA and 
the states must embark on a more complex and expensive traditional 
regulatory process. Clear Skies provides a balanced approach that our 
nation needs for meeting clean air goals, while safeguarding our 
economy and promoting energy security. In short, Clear Skies is a clear 
win for the American people.

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    Mr. Barton. I thank the gentleman for his testimony.
    Before we begin, I want to comment on what Mr. Waxman said, 
because I think it is important that we go by the rules, 
because we are going to have a number of these hearings. I am 
reading from page 2 of the committee rules where it talks about 
requirements for testimony. It talks about rule 4(b)(1), that 
each witness has to provide their testimony at least 2 works 
days in advance. This was done. Each witness is given an 
opportunity to provide a brief oral summary of their testimony.
    Then it says the chairman of the subcommittee or the 
presiding member may waive the requirements of this paragraph 
or any part thereof, and I did waive the requirement that he 
had to provide a brief summary, because obviously Mr. Waxman is 
correct that 15- or 20-minute dissertation is not a brief 
summary, but I did specifically give him that waiver in my 
opening welcome to him.
    Now, we are going to have a lot of hearings on the Clear 
Skies Initiative, and I think it is imperative that we comply 
with the rules, and I also think that we need to keep our wigs 
on tight and not get all bent out of shape the very first crack 
out of the box. So the gentleman, Mr. Holmstead, has said he is 
going to stay and we are going to have at least two rounds of 
questions and perhaps more if there is an interest in that, 
because we are going to get the facts on the record.
    So the Chair is going to recognize himself for the first 5 
minutes of questions. Please start the clock.
    Mr. Holmstead, the Clear Skies Initiative, for the first 
time, regulates mercury, which was not regulated under the 
Clean Air Act amendments of 1990. Now, when we regulated sulfur 
dioxide and nitrogen oxide or NOX and 
SO2, we were talking about millions of tons, 
millions. Mercury from power plant sources, according to your 
testimony, is right now, in its entirety, 48 tons, not 480 
tons, not 48,000, not 480,000, not 4.8 million, not 48 million, 
48 tons. So it is completely different order of magnitude in 
terms of the emissions.
    Under the Phase 1 cap under this initiative, it is expected 
that the requirement for the mercury reduction 2010 which is 7 
years from today goes from 48 to 26 tons or a reduction of 22 
tons.
    Now, when the initiative was put into play, I was told by 
administration officials that to go from this 48 to 26 ton 
reduction in 7 years could be done by cobenefits. As utilities 
put in additional control technology for sulfur dioxide and 
nitrogen oxide, they would automatically get a cobenefit that 
would get them down to this 26-ton limit without any extra 
expenditure. But in testimony to the Senate on June 5, the 
President's Council of Economic Advisers, represented by Mr. 
Randall Kroszner, backed away from that and said the cobenefit 
reduction for mercury wasn't going to take place, that the 
cobenefit might get down to as low as 34 tons, but might also 
be as high as 46 tons. Obviously that is a much tougher 
standard to meet if the industry then has to go in and 
explicitly put in explicit control technology measures for 
mercury which currently don't exist.
    So what is the deal there? Can we get down to 26 tons in 
2010 with cobenefits or are we going to have to come up with 
some control technology which doesn't yet exist to try to get 
down to that Phase 1 cap for mercury?
    Mr. Holmstead. We now believe that there will be some 
additional costs in order to get down to the 26 tons. It is not 
purely a matter of, as you say, cobenefits. Our analysis 
suggests that we get almost all the way there with controls. As 
you point out, the focus is getting the early NOX 
and SO2 controls, which also get mercury reductions, 
and we think by--if you do the pure cobenefits, which means, at 
least the way we think of it, that you have a requirement to 
control NOX and SO2, but you don't have 
any--you don't even care about mercury. That gets you to 
roughly 34 tons.
    If you are also trying to get mercury, there are things 
that you can do to optimize those technologies and to change 
your dispatch and to--maybe some early scrubbings, some early 
SCRs. That gets you down more in the neighborhood of about 28 
tons, but to go from 28 to 26, there clearly is--we estimate 
about 2 gigawatts worth of activated carbon injection, and I 
think we think that the true cost of that 26-ton cap is in the 
neighborhood of $700 million a year; and both we and EIA have 
looked at it. I think we agree it is somewhere in the 
neighborhood from $700 to $900 million a year to get those 
additional tons of mercury in----
    Mr. Barton. Well, if we decide to move forward with this 
legislation, is the administration open on continuing to look 
at the mercury issue and come up with some ways to either meet 
this cap or to give some flexibility on the cap if, in fact, 
the only way to do it is to develop technology which doesn't 
yet exist and which is very expensive? If we are going to have 
a market-based approach, which is the core of Clear Skies, we 
certainly ought to have a market-based approach on the new 
pollutant that we are trying to reduce.
    Mr. Holmstead. Yeah. What I think we have said all along is 
it is really important that we don't just focus on one 
pollutant. We want to focus on the most effective way of 
reducing the overall air impacts from the air utility sector, 
and we believe that the President's proposal is the right one. 
We do want to work with you and others to make sure that we get 
a bill that we can get broad support for.
    I would mention that it is--for mercury a market-based 
approach is very important, because perhaps for mercury more 
than any of these other pollutants, the ability to achieve the 
reductions where they are most cost-effective means that you 
can get greater reductions at lower cost. Say, if you were to 
try to get 26 tons on a plant-by-plant basis, it would be 
substantially more effective than getting it through a cap-and-
trade system.
    Mr. Barton. Substantially more effective or substantially 
more expensive?
    Mr. Holmstead. I am sorry. Expensive.
    Mr. Barton. You said effective.
    Mr. Whitfield. Effectively expensive.
    Mr. Barton. My time has expired.
    The gentleman from Virginia is recognized.
    Mr. Boucher. Well, thank you very much, Mr. Chairman. We 
think a lot alike on this subcommittee. The questions I have 
prepared for Mr. Holmstead were on precisely the same subject. 
Let me inquire in a slightly different vain about the rule that 
EPA will release and draft form in December of this year that 
the goal of having a final rule published by the following 
December. This rule also relates to mercury reduction, and I 
wonder if you could tell us today if your proposed rule for 
December of this year will have a cap on mercury emissions that 
is consistent with the cap that you are recommending in the 
Clear Skies Initiative, and that cap is 26 tons. Can you tell 
us what your proposed cap is going to be, and if it is going to 
be different, why would it be different in your rule than it is 
in your bill?
    Mr. Holmstead. Let me answer first and say because of the 
way the Clean Air Act works today, we can't do a cap on mercury 
emissions. For instance, with our proposal there would actually 
be a national cap that would maintain emissions below a certain 
level. The way it works under the current Act is we set an 
emissions standard for every plant, and so as new plants come 
up, as plants expand their capacity, they could come up again 
over time. So there is no cap under the current Clean Air Act.
    The current Clean Air Act also gives us--unlike the 
President's bill which looks at all three pollutants, the 
current Clean Air Act makes us look basically at mercury in 
this case, and there is a question about other hazardous air 
pollutants. And we go through an analysis that requires us to 
look at the total sector, to figure out how to subcategorize 
that sector into different pieces. For instance, there is a 
number of different ways to do it, by coal type, by boiler 
type, and then for every subcategory, we have to look at the 
data we have on how effective they are now at reducing 
emissions, and we have to look at the best performing 12 
percent, and then we have to set the MACT Standard Act, at 
least the best--at the average of the best performing 12 
percent.
    I give you all this detail to say there is not necessarily 
a relationship between the way we go about setting the standard 
under the MACT as we go about it under the Clean Air Act, and 
we are still working through that process now, look at options, 
looking at different ways of doing the subcategorizing, looking 
at the data we have because there is a lot of variability in 
the data.
    So even though I am the one, and my staff are the people 
who are working on this, I can't tell you now what our proposal 
will look like. I can say that we are committed to meeting the 
schedule to get a proposal out by December 15, but in terms of 
how that will relate to the proposal in Clean Skies, it is sort 
of an apples-and-oranges comparison.
    Mr. Boucher. Okay. So we are going to have to wait.
    Mr. Holmstead. And I just honestly don't--at this point, we 
are still working through some difficult issues.
    Mr. Boucher. Let me ask you this, and this is really a 
broader question. When the Clear Skies Initiative was proposed, 
the administration basically said that the goal was to achieve 
reductions in criteria pollutants in a way that would provide 
flexibility for industry to meet the new targets, and there was 
much said about cobenefits, and the fact that when technology 
is imposed that will reduce SO2 emissions or 
NOX emissions or both, that a collateral benefit 
from the use of that technology would be to reduce mercury 
emissions as well, and that it was intended that the mercury 
emission reductions largely be taken through the use of 
cobenefits so that there would not be a separate additional 
cost for taking mercury reductions.
    But the numbers that I am saying that the chairman 
indicated, and which I have also in my notes, suggests that you 
are not going to get even close to your cap of 26 tons for 
mercury reduction in the bill, in the Clear Skies bill, through 
the use of cobenefits. The Department of Energy says that you 
get almost no cobenefit from a current emission level of 48 
tons down to only 46, a 2-ton improvement and your numbers, 
while dramatically different, still only get you down to 34 
tons from the current level of 48. And that is still a very 
long way from 26 tons.
    So very costly activated carbon injection has to be used to 
get the balance, and I hear you confirming that in response to 
the chairman's question today.
    So that being the case, you know, it just seems to me that 
this reality is a major departure from the intent that the 
administration announced at the time that the Clear Skies bill 
was introduced. Why this major departure?
    Mr. Holmstead. It is certainly true that as you noted, as 
we--we work very hard to make sure that our analysis is up to 
date with the most recent information that we have, and in the 
case of mercury, as you mentioned, there was currently no 
program that requires mercury reductions, and so there is not a 
lot of data out there. And as we updated the data over the last 
year, we did discover that we were not getting the level of 
cobenefits that we believed we were getting in the first phase. 
Now, we continue to believe that those--that the majority of 
those reductions in the first phase will be achieved by the 
installation of NOX and SO2 controls, and 
that it is not going to be--it is about--that we do see about 2 
gigawatts worth----
    Mr. Boucher. Where active carbon injection is going to be 
needed. Well, given the fact that you have just said the----
    Mr. Barton. This will have to be your last.
    Mr. Boucher. This is absolutely the last one, Mr. Chairman. 
Given the fact that the level of reduction from cobenefits is 
not what you initially had thought it would be, does that fact 
argue for an upward revision in the target in the bill here 
from 26 tons, perhaps up to 34, which is the level that you now 
believe you can get from cobenefits, or maybe even to some 
higher number that might correspond with the Department of 
Energy projection?
    Mr. Holmstead. We continue to support the President's 
proposal, although we do acknowledge that our analysis suggests 
something different than it did when we first introduced that 
proposal.
    Mr. Boucher. Thank you, Mr. Holmstead.
    Mr. Barton. The gentleman from Kentucky is recognized for 8 
minutes.
    Mr. Whitfield. Mr. Chairman, thank you very much, and I am 
delighted that we are embarking on this discussion of the Clean 
Skies Initiative, and that is as you said the first of many 
hearings on this subject. I would like to point out as we begin 
this exploration that--I know there has been a lot of 
criticism, for example, of the Clear Skies Initiative due to 
the fact that it will be controlling efforts to control only 
sulfur dioxide, nitrous oxide and mercury, and it is not going 
to do anything about carbon dioxide, and frequently whenever we 
have hearings on environmental issues, Clean Air Act 
specifically, or Clean Skies Initiative, people seem to speak 
with great certainty of the exact causes of global warming and 
climate change, and I think as we enter this, it is important 
for us to remember that more and more literature is coming out 
questioning the certainty of the causes of climate change and 
global warming.
    For example, we have books out now entitled ``The Skeptical 
Environmentalist'' that many of us on this side have been 
reading, a new book that has come out by one of the leading 
greens in Europe questioning the models being used. We have One 
Moment on the Earth written by Esterbrook, who was one of the 
environmental writers for the New York Times questioning the 
models being used. And then in yesterday's Washington Post, 
James Schlesinger, who was the Secretary of Energy in the 
Carter administration, wrote an article entitled ``Climate 
Change, the Science is Not Settled.''
    And I think it is important that we focus on that just a 
little bit in these hearings, because certain use media outlets 
and many involved in these issues speak as if the science is 
settled, there is no question about it, and yet I would point 
out that Mr. Schlesinger, in his article, raises serious 
questions about any certainty on this issue.
    As a matter of fact, he points out that--in this article, 
that since the start of the 20th century, the mean temperature 
at the earth's surface has risen about 1 degree Fahrenheit, 
which sounds like global warming, but then he goes on to say, 
and yet during the Middle Ages, the earth's temperature was 1 
to 2 degrees warmer than it is today. And then he goes on to 
point out that science remains unable either to attribute past 
climate changes to changes in CO2, or to forecast 
with any degree of precision how climate will change in the 
future.
    And then he points out that of the rise in the temperatures 
during the 20th century, the bulk occurred from 1900 to 1940, 
and that was followed by the aforementioned cooling trend from 
1940 to around 1975. So warming between 1900 and 1940, cooling 
between 1940 and 1975. And then he went on to say that the 
global warming, the CO2 emissions--wait a minute, 
now. Let me find this a minute. I get so excited about this 
that I lose my place here every once in a while. Yeah. Just 
like----
    Mr. Barton. Just like I tell Mr. Waxman, we want you to 
keep your wig on too, now. We are going to have a lot of these 
hearings.
    Mr. Whitfield. Anyway, he points out, moreover, through 
much of the earth's history, increases in CO2 have 
followed global warming rather than the other way around. And 
then he summarizes this article with the--he says, there is an 
idea among the public that the science is settled, aside from 
very limited facts, that remains far from the truth. Today we 
have a far better instruments, better measurements and better 
time series than we have ever had. Still we are in danger of 
prematurely embracing certitude and losing open-mindedness, and 
I think that is vitally important for us to remember as we 
proceed, that we do need to have an open mind on some of this, 
because some of the policies that we are looking at can 
dramatically obviously change this country. If we move from our 
most abundant resource of coal to natural gas, which, as my 
friend from Illinois has indicated, the price continues to 
escalate. The capital involved in building additional natural 
gas plants at a time when utilities are constrained in their 
capital formation.
    Let me just ask this question. I know that--it is my 
understanding that EPA, in its new modeling, includes an 
additional 159 gigawatts of mainly gas-fired capacity projected 
to go online by the year 2005, and it is my understanding also 
that these are not speculative plans. They either are already 
under construction, or they have obtained financing, and the 
effect of building these is going to make--I guess it is 
designed to make the country less dependent upon coal, and in 
doing that, will certainly reduce emissions at many existing 
coal plants. And the hope is that that will reduce the cost to 
meet the CSA's emission caps and will produce a lower base case 
level of ozone and particulate matter 2.5.
    But if this gas capacity does not come online, for whatever 
reason due to high prices, lack of capital formation, I was 
just wondering if you all have given any thought to how much 
this increase in cost might be for meeting these Clear Sky 
Initiative emission caps.
    Mr. Holmstead. That is an excellent question, and one that 
a number of people have asked us. In our modeling, we have 
projections of a number of things, including future natural gas 
prices, demand for the growth rate and the demand for 
electricity, and those obviously are important to predicting 
the cost of Clear Skies at any particular period in the future.
    In order to sort of test the robustness of this whole idea, 
we also included other analyses that are much more pessimistic, 
for instance, that have a lot more coal going in, have much 
higher prices for natural gas, higher demand for electricity, 
and it changes--it certainly does change the cost but not 
substantially. Because of the trading feature and the fact that 
we are using this cap and trade approach, the market continues 
to find the most cost-effective ways of meeting these caps, and 
so we can provide you with the exact number, but I am quite 
sure that even using very conservative assumptions, we show 
that the total price is maybe about 10 percent higher in 2020 
than it would be under our scenario.
    So we really think that although--you know, a model is a 
model. It is pretty robust in terms of how confident we are. So 
it could be slightly higher, but we don't think it is going to 
be significantly higher.
    Mr. Barton. The gentleman's time has expired.
    Mr. Whitfield. Mr. Chairman, I am shocked that my time is 
already up, but if he would provide me with that information, I 
would appreciate it very much.
    Mr. Barton. The gentleman is so excited, he gave a 6\1/2\-
minute opening statement.
    The gentlelady from California is recognized for 5 minutes.
    Mrs. Capps. Mr. Holmstead, in late summer of 2001 before 
the so-called Clear Skies Initiative was introduced, EPA 
proposed a plan entitled ``A Comprehensive Approach to Clean 
Power, otherwise known as the straw proposal. Like Clear Skies, 
the straw proposal included caps on power sector emissions of 
sulfur dioxide, nitrogen oxide and mercury. However, the straw 
proposal reduced air pollution to much lower levels than under 
the so-called Clear Skies plan, because the cap levels were 
lower, and under these lower caps, you would have many fewer 
health effects.
    For example, the straw proposal would establish a target 
cap for SO2 at 2 tons in 2010. Clear Skies would cap 
SO2 at 4.5 million tons in 2010. And that is a 2.5 
million ton difference. EPA's own benefit analysis demonstrates 
that the earlier and stronger straw proposal would result in 
clear benefits to public health, 100,000 fewer premature 
deaths, 2 million or more fewer unnecessary asthma attacks, 15 
million or more fewer lost workdays, tens of thousands of fewer 
unnecessary hospitalizations between now and 2020.
    Comparing EPA's own benefit cost analysis demonstrates that 
the earlier and stronger straw proposal would result in clear 
economic and health benefits to the public, $60 billion in more 
benefits and avoided health care costs per year at an 
incremental cost of only $3.5 billion per year in 2020 at full 
implementation.
    Mr. Holmstead, the difference between what you call the 
Clear Skies proposal, and the straw proposal in public health 
terms is enormous. Even a few more deaths would be cause for 
concern, in my view, but allowing thousands more deaths, how 
can that be justified, especially when the cost would be 
greatly outweighed by the benefits, as I just mentioned?
    My question is what is your justification for changing the 
straw proposal?
    Mr. Holmstead. We think that the best comparison, the one 
that we think is most relevant, is to look at the current Clean 
Air Act compared to anything else, and so what I have tried to 
do today is to show you how much better than the current Clean 
Air Act, at least over the next decade, Clear Skies would be. 
Someone else asked me this question the other day, and I point 
out that it is sort of a truism that we could achieve 
substantial health and environmental benefits by closing down 
all the power plants. No one is seriously considering that, and 
so the question is between one extreme of doing nothing and the 
other extreme of closing everyone down, where do you strike the 
right balance?
    The straw proposal that we worked on, that I worked on 
extensively over a number of months, was specifically designed 
to be that, a straw proposal to get discussion started, and 
over the course of learning--I mean, for instance, one of the 
things that we heard repeatedly after the straw proposal was 
out on the street was, it is just not feasible for a number of 
reasons, and when people raise those concerns, we don't take 
them at face value. We go and study them, and so we now have an 
engineering study that is up on our Web site. We have a 
financial study that is up on our Web site, and we determine as 
you look at feasibility issues, as you look at things like fuel 
diversity, energy security, you have to strike the right 
balance, and I would point out that the end goals are not that 
different.
    Mrs. Capps. Well, I want that----
    Mr. Holmstead. It is the timing because they just need more 
time to----
    Mrs. Capps. Right. I want to push that a little bit 
further. It was a serious proposal, I am assuming, the straw 
proposal, but under the Clear Skies, not everyone comes into 
compliance, not even under your most recent modeling. Some 
areas would not come into attainment with the standards. As a 
result, some people would still suffer health effects. A 2.5 
million ton difference between Clear Skies and this straw 
proposal would certainly have a public health impact. Have you 
modeled the public health impacts of the straw proposal as well 
as the costs of which--at which these additional reductions 
would be achieved?
    Mr. Holmstead. There is no doubt that you would get greater 
reductions under the straw proposal, but remember it is very 
important that under the current Clean Air Act, our ability, or 
anyone's ability to regulate on a regional basis is very 
limited, so it is really the responsibility of States and local 
governments. And for each of those areas that are not in 
compliance in our modeling, we are actually going out today to 
look at other sources that contribute to that, and as I 
mentioned, most of those areas are within a microgram per cubic 
meter of reaching attainment. So if you are looking for local 
steel plants, other local industries, we think that the 
combination of Clear Skies and other local controls will get us 
there.
    The other thing I would point out is we get more than 70 
percent of the counties into attainment by 2010.
    Mrs. Capps. May I just make----
    Mr. Holmstead. We can't do that under the current Clean Air 
Act.
    Mrs. Capps. But you are asking us something very seriously 
here, and I want to submit that we need to see an analysis of 
the lower cap levels under the straw proposal so that we can 
determine--we hear whether we are striking the right balance 
for environmental and health protection at a reasonable cost.
    Mr. Holmstead. Okay.
    Mrs. Capps. That is my question.
    Mr. Holmstead. I am sorry. I believe--in fact, I know that 
we have given that to you already. We did do an analysis of the 
straw proposal which we have provided to the committee. So that 
is out there, the analysis that we did of the straw proposal.
    Mrs. Capps. And a comparison between that and the Clear 
Skies Act?
    Mr. Holmstead. Yes. You can look at--I think we have----
    Mrs. Capps. I guess I haven't seen it on the Web site.
    Mr. Holmstead. I don't think it is on the Web site, but we 
have provided it to you and to your staff, and the committee 
has that.
    Mrs. Capps. So that we can make accurate comparisons 
between the two?
    Mr. Holmstead. Absolutely. Yes.
    Mrs. Capps. Thank you very much.
    Mr. Barton. The gentleman from Illinois is recognized for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. I am going to at 
least initially talk with my colleague, Congressman Whitfield, 
and mention the book that both he and I have read, the 
Skeptical Environmentalist, which it is a pretty good book. I 
was--it was like a textbook, but it is an easy read. He is a 
statistician but also an environmentalist who just was 
challenged to look at the stats from the beginning of time when 
statistics were kept about all these issues of the environment, 
and he basically says--comes to the conclusion that things 
aren't perfect, but they are much better than a lot of people 
would embrace. So I think prematurely embracing certitude, 
which my colleague mentioned, is an important point, because it 
affects cost.
    I asked your staff if they would help me, if you would put 
that slide up on coal production, and I just want to highlight 
for folks that--it is--if you look at that big blue spot that 
you can see in the middle, that is the Illinois Basin, and the 
Illinois Basin is pretty much the entire State of Illinois, 
hence the reason why members from Illinois are somewhat 
interested in continuing to use this resource.
    There is as much energy there as oil in Saudi Arabia, and 
that is what people have to remember, and it is an important 
aspect of why we are trying to--the Clean Air Act, 13 mines 
were closed, 3,000 United Mine workers lost their jobs, and 
that is not just those immediate jobs. Just think what it does 
to small communities in rural Illinois. It wipes them out. The 
local downtown areas, the town squares, the supermarket, it is 
a devastating effect, and that is also one of the costs of the 
Clean Air Act. People have to understand that there are 
benefits and costs to any type of legislation, and what folks 
from--who are from coal areas of this country just want to make 
sure that under additional proposals, there are promises being 
made that coal production will not be harmed and actually 
production increases. And we are going to take the EPA at its 
word. I was going to ask you to comment on that, but I want to 
move quickly to another slide.
    The regional air pollution problem, if we would go there. 
And the question really is, Mr. Holmstead, that yellow area is 
the thing that you said, that local regions could affect, and 
it is my understanding that people have said they affect it by 
changing the fuel mixture in automobiles for a lot of aspects; 
is that correct?
    Mr. Holmstead. There is a number of ways to do it. 
Automobile emissions tend to be a big one. Others----
    Mr. Shimkus. But isn't the automobile emission one of the 
most easiest ones for States and regions to try to put into 
place to affect that yellow area?
    Mr. Holmstead. No, and the reason----
    Mr. Shimkus. Good.
    Mr. Holmstead. And the reason is when you are dealing with 
this problem of fine particles, SO2 is the biggest 
part of it, and there is relatively little SO2 
emission from----
    Mr. Shimkus. So why are there 24 different fuel mixtures 
across this country and three from St. Louis to the Metro East, 
two different fuel mixtures there, and then Springfield 
Illinois, another fuel mixture? So why is, in essence, the 
debate on the balkanization of fuels, which increases the cost, 
especially when there are price disruptions?
    Mr. Holmstead. That is a very serious issue that we have 
looked at. There are different types of fuels largely to comply 
with these ozone standards that have been in place now for many 
years, and so different formulations can lower the vapor 
pressure and reduce evaporative emissions, but those aren't the 
kind of emissions that are necessarily shown in this graph.
    Mr. Shimkus. But will that be effective under the Clear 
Skies? I mean, if we move to a cap and trade system, would 
that, in essence, limit the amount of the balkanization of the 
fuel?
    Mr. Holmstead. There are other things that will do that, 
including proposals that both the House and the Senate will 
looking at now.
    Mr. Shimkus. That's right, but they haven't passed those 
yet.
    Mr. Holmstead. But Clear Skies isn't really going to 
directly affect that problem that you have raised.
    Mr. Shimkus. In my 25 seconds left, let me ask--because I 
also mentioned the mercury MACT rule, and I do believe it will 
we have got to keep our focus that there's a problem with 
natural gas in this country. We have had hearings. The 
Secretary of Energy has talked about it. In your testimony, you 
mentioned that the litigation would unlikely delay Clear Skies.
    What impact would litigation have on the propose mercury 
MACT rule? Everybody is assuming things are going to roll out 
per the time line. What affect does litigation have on these 
requirements?
    Mr. Holmstead. There is a great deal of uncertainty, both 
on the levels of the MACT and the timing, because any time we 
do a rulemaking of this magnitude, we get at least one round 
litigation, and in some cases we get litigation up to the 
Supreme Court, and it gets sent back down again, so it could be 
no delay at all, but the likelihood is that there would be some 
delay, and there could be a significant delay. It depends a lot 
on what we do--what the litigation strategy of the various 
groups is. But the one thing I can guarantee you is that there 
will be litigation about a mercury MACT standard if we need to 
do one.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Barton. Thank you.
    The Chair recognizes the gentleman from California for at 
least 5 minutes, perhaps 15 for a series of questions.
    Mr. Waxman. Thank you very much, Mr. Chairman. I appreciate 
your willingness to let me explore some of these issues.
    Mr. Holmstead, you are a very effective witness.
    Mr. Holmstead. Thank you.
    Mr. Waxman. You made a presentation that had I just 
listened to you alone, I would think that is wonderful. We are 
going to have a modernization of the law, which will bring 
about greater certainty, both for the environment and industry 
at lower costs for consumers. We all want that. None of us 
would, in any way, move away from those goals. What bothers me 
is that Congress has to rely not just on your good will and 
excellent presentation and strong support for your position; we 
have to rely on data and information and modeling, which the 
EPA has traditionally given to the Congress about various 
alternative proposals.
    We have to rely on that information, but to rely on it, we 
need to get it. If EPA would have given us information--now, 
let me just talk about one point. Senator Jeffords and I 
introduced a bill. It was a bipartisan bill to deal with the 
power plant pollution. EPA has been unwilling to provide us 
with information. In May 2001, Senator Jeffords requested EPA 
provide him with benefits analysis of his Clean Power Act. Two 
years later, EPA still hasn't complied with that request.
    In April 2002, over a year ago, I requested copies of 
materials from industry groups that form the basis for the 
administration's decisions to change that straw proposal to 
make it weaker. We haven't gotten that information yet. You 
answered Mrs. Capps by saying that you had given the 
information to us, but we never got an update on modeling for 
both the straw proposal and this so-called Clean Skies 
proposal. That would give us the basis for evaluating which is 
a better proposal.
    It is hard to trust the administration when they don't give 
us this information. In effect, you make an effective 
presentation of telling us to trust you. There are a lot of 
other groups that feel they don't want to go along with this 
trust, and I would like to put in the record a May 7 letter 
from 205 State and local conservation organizations, 
businesses, elected officials informing us that they don't 
agree with your proposal.
    I would also like to introduce a letter from an ad hoc 
coalition calling themselves Americans for Clean Air. They 
vigorously opposed the President's air pollution plan, because 
they say it weakens and delays the existing Clean Air Act. It 
is a very diverse group. The Northeast States for Coordinated 
Air Use Management, has serious concerns. The Association of 
State and Local Air Agencies, these are the people who have to 
enforce this law, they say your proposal is going to do more 
harm than good. On top of all that, I have, for the record, 
more than 75 newspaper editorials from all across the country 
that express strong concern over the President's proposal.
    [The information referred to follows:]

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    Mr. Waxman. So Mr. Holmstead, this is the problem we have 
in looking at the proposal that is before us. Why is it that we 
haven't been able to get the analysis? For example, why haven't 
we been able to get the information about those two items that 
I requested, the Senator Jeffords bill that we have introduced 
together and the industry analysis that EPA says they relied on 
in evaluating the straw proposal and changing it?
    Mr. Holmstead. Let me take the second one first, because in 
anticipation of the hearing, I sat down with our staff to go 
over requests that had come in from members of this committee, 
and I believe what you asked for was information that we have 
received from industry groups and unions. That was one of the 
reasons that we revised the straw proposal to the Clear Skies 
Act. And I can say that we have given you everything that we 
have, and I think it would be useful just--what we provided you 
with is I think a copy of every meeting that I had. You know, I 
meet with dozens of people every week, and we provided you with 
that, and we also--just so you know, we searched all of my 
records, my staff searched all of their records. We don't have 
materials, but what we do have----
    Mr. Waxman. Let me interrupt you, because I really don't 
want to know about your meetings. EPA adopted a proposal called 
a straw proposal. It had deadlines and achievable goals. It 
would have reduced air pollution, as Mrs. Capps pointed out in 
her questions to you, and it went to the White House, and the 
White House changed it and weakened everything into this 
proposal that we have before us today. And you were asked why 
that happened, and your response to the press was, well, we did 
an analysis that industry presented to us showing that our 
proposal was better. Well, we ask for that analysis.
    Mr. Holmstead. No----
    Mr. Waxman. Was there no such analysis?
    Mr. Holmstead. No. There is analysis. And essentially what 
happened, the straw proposal, as I said before, was a proposal 
to get the discussion started. It is not correct to say that 
that went to the White House and the White House changed it. We 
engaged in a number of months of very thoughtful discussions 
with not just the White House, but the Department of Energy, 
the Department of Interior. We met with environmental groups. 
We met with industry groups. We met with union folks. I 
provided you with a list of all those meetings, but then based 
on the concerns that people raised, we went and did our own 
analysis. We didn't rely on an industry analysis, and we have 
provided that. It is on our Web site. We have a feasibility and 
sort of an engineering feasibility analysis, and what that told 
us was that given----
    Mr. Waxman. But modeling, did you do modeling?
    Mr. Holmstead. I am not sure what kind of modeling we could 
have----
    Mr. Waxman. Well, modeling is a basis in which we can see 
whether we are going to achieve objectives, and you did 
modeling for your proposal but not the straw proposal.
    Mr. Holmstead. No. We did do modeling for the straw 
proposal.
    Mr. Waxman. We haven't been able to----
    Mr. Holmstead. We provided that to you. You have all the 
modeling we did on the straw proposal.
    Mr. Waxman. I have to differ with you. It is not in the 
data. It is not on your Web site. It has not been given to the 
Congress. These are important to us because----
    Mr. Holmstead. Just to be clear, I mean, I want to be sure, 
because I feel badly about this. We have provided you on CD 
ROMs all of the runs that we did, all of the summaries that we 
did for the straw proposal. You----
    Mr. Waxman. The straw proposal was not updated the way----
    Mr. Holmstead. No. The straw proposal was not updated. And, 
again, just to give you a perspective, we have used up our 
entire budget plus some other funds that we could get from the 
administrator to go through the most--as I say, the most 
comprehensive and sophisticated air modeling study ever done.
    Now, we----
    Mr. Waxman. Well, this couldn't have been the most--it 
couldn't have been that effective and rigorous an evaluation if 
we haven't been able to get the updates on the models. And you 
send us a list of your meetings. That doesn't give us the 
information in which we can evaluate why a proposal that came 
out of EPA that was considered reasonable and had goals and 
reasonable timeframes ended up with a proposal that pushed out 
the timeframes, eliminated most of the requirements under the 
Clean Air Act to make sure that the goals were actually met and 
achieves a far greater reduction from the analysis we get from 
people who don't have the resources of EPA.
    But let me have that sitting out there because I don't want 
to argue with you about it, and maybe you can give us--I want 
to ask you about a specific provision, because I think it 
illustrates the point.
    If you examine what you do in this proposal on mercury, 
under the Clean Air Act, EPA has to look at these power plants 
and make sure they reduce emissions from toxic air pollutants 
to the maximum degree achievable, taking costs and other 
factors into account. That was what the Congress adopted into 
law on a strong bipartisan basis.
    Now, my staff was briefed from the White House Council of 
Economic Advisers, the Energy Information Administration, DOE 
and EPA, and according to their briefings, both the EPA model 
and the EIA model assumed that if a plant installs activated 
carbon and fabric filters, it will get a 90 percent mercury 
reduction on all coal types.
    Do you agree with the EIA and the EPA models that a 
technology is available to reduce mercury emissions by 90 
percent from all types of coal?
    Mr. Holmstead. I don't think we can say categorically from 
all types of coal. There is a difference between--as you well 
know, there is a lot of complexity in all of these things. We 
have good data if you use--if you burn bituminous coal, and you 
have ACI with a bag house, I think we actually have some 
commercial--in practice, we can get 90 percent. We have less 
data. We have some pilot projects on subbituminous. We have 
even less information on lignite. So I am not quite sure that 
we are at this point, but we do----
    Mr. Waxman. Well, the point is that we have a lot of data 
from a lot of different sources that say you can achieve a 90 
percent reduction, but the Clear Skies legislation would repeal 
this mercury MACT requirement, and it would only aim for a 45 
percent reduction in the first phase, and it would only achieve 
a 69 percent reduction sometime after 2020, and even that is 
somewhat uncertain. So what we are left with is an existing 
Clean Air Act that can achieve these reductions that everybody 
else says would be accomplished, and in its place, a proposal 
that would, in effect, achieve far less on something as serious 
as mercury.
    Mr. Barton. Okay. This will have to be the last question in 
this particular round.
    Mr. Holmstead. I would be happy to--we have been very 
careful to say a couple of things. We think the most important 
thing is to look at the reductions that we can get in all these 
pollutants, and we have tried to do it in a sensible way that 
gets us very substantial reductions, not only in mercury, but 
also in SO2 and NOX in ways that we 
couldn't do under the Clean Air Act.
    So we think that it is just not very--we think that a 
better way to look at it environmentally is not to look at one 
pollutant at a time, but to look at all three.
    The other thing is, as you well know, the way we do MACT 
standards is not quite as simple as what is--I mean, the 
acronym as you point out is MACT, but the process that under 
the law we have to go through to determine the MACT involves a 
much more complicated way of doing it, and in doing that, we 
have to ensure that no matter how we subcategorize every plant 
in that subcategory can achieve the MACT standard. And that 
makes it much more difficult than a cap and trade approach 
where we can--for instance, we are much more confident in 
relying on these innovative technologies in a cap and trade 
approach because of the flexibility, but we don't have the 
ability under the Clean Air Act to mandate technologies that 
have been on every plant that have not been proven in practice.
    So it is, as you point out, a complicated issue, but what 
we have tried to do is really look at what we can do with all 
three pollutants and how we can do that in the most effective 
way possible.
    Mr. Barton. The gentleman's time has expired.
    The gentleman from Maine is recognized for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you, Mr. 
Holmstead. I want to continue this conversation, because as I 
understand your, you know, main point, it says Clear Skies 
would cut power plant pollution by approximately 70 percent, 
lower costs with more certainty and faster over the next decade 
within the current Clean Air Act.
    Well, as I understand it, I want to talk about mercury. It 
is a big issue. It is the area where it seems to me we are 
going backward the fastest under the proposed Clear Skies, and 
it is a big deal to me. I mean, 6 years ago the Portland 
newspapers ran a multi-day story on the dangers of mercury. 
Well, 6 years later, and we are sitting here talking about 
giving coal-fired power plants even more time, and it doesn't 
make a lot of sense to me.
    When you talk about benefits, the benefits under Clear 
Skies, or how much it cuts pollution, the obvious question is 
compared to what, and the ``what'' is not evident.
    Let me direct your attention just to mercury. Back in--as I 
said in my opening, back in December 2001, EPA told the Edison 
Electric Institute that the Clean Air Act's MACT standard could 
reduce power plants' mercury emissions by 98 percent from 48 
tons to 5 tons nationwide by 2008. From all that we have read, 
you know, straight out of the American Coal Council, the 
technology is available, and you mentioned activated carbon 
insertion and some sort of fabric filters being the way to go.
    If you do that, you get very quickly to much more 
significant reductions than you are proposing in Clear Skies. 
So here is the question: I think it is simple. Isn't it true 
that if you adopted MACT standards for mercury and abided by 
them in accordance with the settlement agreement that requires 
you to propose MACT standards by December 15 and implement them 
by--or make them final by 2004, December 15, 2004, isn't it 
clear that you would get a greater reduction in mercury if you 
did that than if you implemented Clear Skies?
    Mr. Holmstead. Even if you are looking just at mercury 
alone----
    Mr. Allen. I am just looking at mercury.
    Mr. Holmstead. Which, again, I think is not--I mean, given 
all the other issues--but let's just put those aside, but I 
really hope you will look at all three----
    Mr. Allen. In time, but today it is just mercury.
    Mr. Holmstead. No. I know, but even looking at mercury, 
that is not necessarily clear, and let me tell you why. We are 
spending a lot of time trying to figure out what we can justify 
under the existing law, because at some point, we have to 
look--we have to do something called the MACT floor, and that 
as--as I said before, that involves looking at different types 
of categories, because everyone agrees that an oil-fired plant 
is different from a coal-fired plant and that a lignite plant 
is different from a subbituminous plant. Once we do that, we 
have to look at the data that we have, and we have to array it 
from best performing to worst performing. We go through that 
whole process. Then we propose a rule. We take public comment. 
We have a hearing. We do a final----
    Mr. Allen. Mr. Holmstead, let me interrupt. I understand 
the process is complicated. That isn't my question. My question 
is about the outcome, just the outcome. Isn't it, in fact, the 
case that abiding by a MACT standard would lead to lower 
reductions in mercury than Clear Skies by, pick a date, 2010?
    Mr. Holmstead. Not necessarily. And again that is part of 
my point. We go through this process, and then we go through 
litigation. We will not know either the levels or the timing 
until we go through a regulatory process, until we have final 
litigation and dates in place. In contrast, under Clear Skies, 
we start getting mercury reductions almost right away. We don't 
wait until 2008 or 2009. So you get the early mercury 
reductions before you would get them under MACT.
    Mr. Allen. But you would have to admit that under Clear 
Skies, the incentive to comply, the incentive to develop newer 
technology is less than it would be under a tougher standard.
    Mr. Holmstead. No, the incentive is greater further in the 
future. And that is one of the--several people have talked 
about this issue of the cobenefits. We really--from purely an 
environmental standpoint, it is probably overall most important 
to focus on these technologies that get all three controls. So 
you do scrubbers, you also get mercury controls. In the out 
years, you clearly get more innovation under Clear Skies than 
you would under MACT. There is no doubt about that. So with 
something like this, this place, just given the incentives it 
creates, you are likely to have better technology in the future 
and you also have a cap in place.
    Mr. Allen. I understand the appeal of the cap-and-trade 
system. I am not trying to argue with you about that. What I am 
trying to suggest is that mercury is the most challenging 
pollutant to deal with. And by weakening the standards, by 
allowing more time and more pollutants, more pollution, a 
higher total amount of pollution, it seems to me pretty clear 
you are going to get more pollution for the foreseeable future 
than you are if--than you are if you--than if you don't.
    Mr. Holmstead. I just have to disagree--having lived 
through the regulatory process now for many years, anyone who 
tells you what the maximum standard is going to be, I would 
look at them with a skeptical eye.
    Mr. Allen. One final question. Have you done the modeling 
to develop the MACT standard?
    Mr. Holmstead. In developing a MACT standard?
    Mr. Allen. That is just my question. Have you done the 
modeling to do the MACT standard?
    Mr. Holmstead. We are doing all the analysis that we need 
to do to propose a MACT standard, to do a proposal on time by 
December 15. So we are on track to do everything we need to do 
to get--including the evaluation of options--to get the MACT 
standard out.
    Mr. Allen. As a legislature, can you appreciate how helpful 
it would be to us to have the modeling before this bill gets 
marked up, the Clear Skies bill gets up, so we have something 
to compare it with.
    Mr. Holmstead. I certainly can understand that. But, again, 
part of my point is until we go through this process that--
understandably, you don't want me to go through all the 
details--we can't tell with you any certainty either what the 
level is going to be, what the timing is going to be.
    Mr. Barton. This will have to be the last question.
    Mr. Allen. If I can make just one comment, all I am saying 
is if you did, you did the MACT modeling for mercury before 
Clear Skies comes up, we would have something to compare your 
proposal----
    Mr. Holmstead. I understand. Yes I do.
    Mr. Barton. The gentleman from Ohio, Mr. Strickland is 
recognized for 5 minutes.
    Mr. Strickland. Thank you, Mr. Chairman.
    Mr. Holmstead, I have heard from some the local officials 
and community leaders in my district, which borders the Ohio 
River, eastern and southern Ohio, right in the midst of coal 
country, where we have lots of power plants and chemical plants 
and some steel factories still exist. They are concerned about 
the area being notified that it will fall into nonattainment 
under EPA's 8-hour ozone standard. If we do not pass Clear 
Skies or some other clean air legislation, can you share with 
me the process that local communities and States may face 
regarding ozone and particulate matter under current law? In 
other words, once an area is designated as nonattainment for 
ozone, what is expected of the area, what are--and this is your 
opinion--are the economic consequences? Some of my communities 
have the understanding that no new emissions would be permitted 
without some offsets. Thus, how would a community like Lawrence 
County, Ohio attract business, create jobs and the like?
    Mr. Holmstead. That is one of the issues that we are trying 
to address, obviously, with this legislation. But I understand 
your question as what happens. We certainly do everything that 
we can within the existing Clean Air Act to minimize the 
economic disruption. But under--by statute and now by court 
order, we have to do official nonattainment designations by 
April of next year for ozone, probably by the end of next year 
for PM2.5. Once we do those formal designations, 
that kicks in a whole bunch of things. For instance, there are 
requirements on no new major source could come into the area 
without offsetting emissions from somewhere else. So there is 
that burden. In addition, the State needs to go through, or the 
local area needs to go through, a process of developing 
something called the State Implementation Plan to regulate the 
sources within the jurisdiction, to try to get them down.
    And one of the things that we have collectively as an 
agency discovered in the last few years is we can avoid the 
need to do a lot of those things if we can just get those 
dramatic reductions throughout the whole region. So we think 
that is--we know that is more effective environmentally. We 
believe it is less disruptive economically. And so that is one 
of the reasons why we have the sense of urgency about trying to 
get something done.
    Mr. Strickland. I want to thank you for your answer, but I 
have to tell you, it is not terribly comforting to me. Because 
I serve in an area where one of my fairly significant towns has 
an unemployment rate of 18.2 percent. It is not uncommon for 
several of my counties to have double digit unemployment. And 
if such a community then is found to be a nonattainment area, I 
don't know what they are to do. I think the economic 
consequences could be devastating.
    Do you have an answer for me? Do you have an answer for my 
communities?
    Mr. Holmstead. The real answer is Clear Skies, which gets 
us which avoids those problems, which gets cleaner air to your 
communities without that kind of economic disruption. If we 
have to proceed under current law, our hands are largely tied. 
We will do everything we can to make sure the implementation is 
fair and effective, but I can tell you that almost any decision 
that we make in our office, we are subject to litigation. And 
that largely ties our hands. So we, again, we hope that you and 
others will work with us to pass legislation that can protect 
the environment, do it in a more effective way, and also avoid 
these sorts of economic disruptions.
    Mr. Strickland. I can tell you, from my point of view, this 
could be devastating, absolutely devastating to multiple 
communities in my district, and I assume throughout Ohio and 
across the country.
    One other question, quickly, under Clear Skies, you have 
2018 as the goal for achieving Phase 2 reductions for mercury. 
I wonder if you can explain to me how you arrived at 2018 for 
reductions down to 15 tons? Is there a way you can explain 
having achieved that date and that level of reduction?
    Mr. Holmstead. We did a significant amount of modeling 
which helped us a fair amount with the levels. In terms of the 
timing, we are much more dependent on studies of economic 
feasibility, studies of financial feasibility. I can't say that 
there is anything magic about 2018, other than that seemed to 
strike the right balance between the cost imposed on this 
sector and the need to get those reductions. So at some point, 
the first phase really is very aggressive and our feasibility 
studies suggest that 2 would be very, very costly to go much 
father on the first phase. The second phase, it is much more of 
a balancing act and trying in trying to determine how quickly 
new technologies will develop. And that is the way we went 
about it after a lot of discussion within the administration.
    Mr. Barton. The gentleman's time has expired on the first 
round. The gentleman from Massachusetts is recognized for 5 
minutes.
    Mr. Markey. Thank you, Mr. Chairman.
    Mr. Holmstead, people put on their seat belts, they want 
their family member to put on their seat belts to protect 
themselves, not against themselves because in most instances 
people drive safely, but protect themselves against other 
drivers on the road who may be more of a risk to your family. 
That is what Section 126 of the Clean Air Act is. It is a State 
regulatory seat belt. It allows a State who believes another 
State is polluting them to go to the EPA in order to get 
relief.
    So I have a few questions for you about what your new 
proposal does. Under the Clean Air Act now, Mr. Holmstead, 
isn't it true that Massachusetts can petition the EPA to 
examine the impact of pollution any time? Yes or no?
    Mr. Holmstead. That is largely yes, I believe. It is not 
that easy, but they do have that ability.
    Mr. Markey. They have the right. Isn't it true that EPA has 
60 days to respond to Massachusetts?
    Mr. Holmstead. That is what the statute says, yes.
    Mr. Markey. That is all you have. Isn't it true that if an 
out-of-state polluter is found to be causing problems that they 
have between 3 months and 3 years then to fix the problem?
    Mr. Holmstead. Again----
    Mr. Markey. Is that what the statute says?
    Mr. Holmstead. None of those things have ever been achieved 
in practice.
    Mr. Markey. Is that what the statute says?
    Mr. Holmstead. That is what the statute says.
    Mr. Markey. Isn't it true that the courts have upheld 
Section 126, the States rights, the State seat belt protection?
    Mr. Holmstead. That is correct.
    Mr. Markey. So under current law, isn't it true that 
Massachusetts could petition the EPA about pollution from 
Pennsylvania tomorrow, have a judgment from the EPA by 
September, 60 days, and if there is a problem, have it fixed by 
the latest 2006? Is that what the statute says?
    Mr. Holmstead. That is not the way the statute works.
    Mr. Markey. Is that what the statute says?
    Mr. Holmstead. That is what the statute says.
    Mr. Markey. All right. Now, let's turn to the 
administration's Clear Skies proposal. Under the existing law, 
if Massachusetts petitioned today, they would get a judgment in 
September 2003, and it would have to be fixed by 2006. Now, 
under your scheme, under the Bush Administration's scheme, 
Massachusetts can still petition the EPA about out-of-state 
pollution at any time, but EPA would not have to respond before 
January 1, 2009. Is that correct?
    Mr. Holmstead. That is correct.
    Mr. Markey. Okay. Now, isn't it also true that if there is 
a problem, that the State would not have to implement a 
solution until January 1, 2012, Pennsylvania would not have to 
actually provide a solution until 2012?
    Mr. Holmstead. This----
    Mr. Markey. At the earliest?
    Mr. Holmstead. This is an issue that we have looked at 
extensively. Even if Massachusetts submitted 2 years ago----
    Mr. Markey. I am talking about under your statute.
    Mr. Holmstead. That is what I am talking about.
    Mr. Markey. Does Pennsylvania have until January 1, 2012 to 
provide the relief for Massachusetts from a complaint that it 
filed tomorrow against Pennsylvania?
    Mr. Holmstead. No, because all that pollution would have 
been eliminated already.
    Mr. Markey. Oh, under your bill. I see.
    Mr. Holmstead. Yes.
    Mr. Markey. So even if Massachusetts says a year into your 
proposal this thing isn't working, we have more pollution than 
we have ever had under your statute, they have to wait until 
January 1, 2012 because that will be the statute, that will be 
the way it works, in order to get relief. Is that correct?
    Mr. Holmstead. Mr. Markey, I can----
    Mr. Markey. If it doesn't work, you have a seat belt, you 
put on your seat belt, Mr. Holmstead, in order to protect----
    Mr. Barton. You need to give the witness an opportunity to 
at least answer the question.
    Mr. Markey. I am just asking him is 2012 the earliest that 
Massachusetts could gain relief under the statute as you want 
it to be written.
    Mr. Holmstead. Right. And here is my answer, if you let me 
give it. I can guarantee you that the State of Massachusetts 
will have cleaner air----
    Mr. Markey. You can't guarantee me.
    Mr. Holmstead. I can.
    Mr. Markey. No, you can't. You can't guarantee me that an 
out-of-state polluter is not going to continue on their path. 
You can't guarantee me that. I need relief in the States.
    Mr. Holmstead. That is what I am trying to provide you.
    Mr. Markey. No, you are not. You say until 2012, I can't 
get an answer in Massachusetts. You are telling me your 
theoretical software model is going to work Mr. Holmstead. I 
can do away with all the States rights, you are on your own 
Massachusetts, Maine, Connecticut, good luck. Wait until 
January 1, 2012.
    Mr. Holmstead. Mr. Markey, Massachusetts only can use 
Section 126 if they have nonattainment areas. All of our 
analysis shows that there are no more nonattainment areas by 
2010.
    Mr. Markey. I want to retain the right to bring an action 
in order to protect myself in case something goes wrong with an 
out-of-control driving under the influence of dirty coal plants 
out in the Midwest kind of slips out of your control. Okay? 
During the old coal plants which doesn't----
    Mr. Holmstead. Our track record is pretty good. There is 
not a single one.
    Mr. Markey. I need my seatbelts. You are taking my 
seatbelt, and the health and safety of the people in the 
eastern part of the United States.
    Mr. Holmstead. I am giving you air bags all the way around 
your car.
    Mr. Markey. You are giving me----
    Mr. Holmstead. We are going to give you cleaner air.
    Mr. Markey. You are giving me a software system. I want a 
seatbelt. And I don't trust your dependence upon the NASDAQ 
to----
    Mr. Barton. The District Attorney's time has expired. So we 
are going to start the second round of questions now. The 
chairman will recognize himself for the second round of 5-
minute questions.
    Mr. Holmstead, you attempted to convey to Mr. Markey that 
what the law says is not necessarily the way it is actually 
implemented. As I read this particular section, on 
nonattainment, there actually has to be a finding that it would 
contribute significantly to nonattainment before that 
association of the law could be implemented. If I heard you 
correctly, you said in Massachusetts that you don't think, that 
it is your understanding that data shows there are no 
significant nonattainment areas in Massachusetts; is that not 
correct?
    Mr. Holmstead. There wouldn't be under Clear Skies. Absent 
Clear Skies, there clearly are some nonattainment areas.
    Mr. Barton. Mr. Burr has just arrived. The chairman is 
going to suspend the start of the second round of questions to 
give him an opportunity to ask the first 5 minutes if he 
wishes.
    Mr. Burr. I thank the Chair and indulgence of my 
colleagues.
    Mr. Barton. Mr. Burr is recognized.
    Mr. Burr. I thank you. And my apologies that I didn't stay 
to listen to the other questions. I am sure they were all very 
very good. I will try make sure that----
    Mr. Holmstead. Some were better than others, but they were 
all very good.
    Mr. Burr. Ed, were you out of control?
    Mr. Barton. Mr. Markey was not out of control. He was just 
intense.
    Mr. Markey. I was wearing a seatbelt.
    Mr. Burr. Mr. Holmstead, as you are aware, North Carolina 
took action on the issue of making our air cleaner in 2002 by 
enacting the Clean Smoke Stacks Legislation. This law requires 
our State's 14 largest coal-fired power plants to reduce 
emissions on NOX by 78 percent by 2009, requires 
reductions of SOX in 2009 and again in 2013, that 
will result in 74 percent overall reduction. The new control 
technologies will also reduce mercury emissions. One crucial 
element of our smoke stacks laws is the ability to use 
available means, including ones found in Section 126 of the 
Clean Air Act to pursue pollution reductions from upwind 
sources, mainly from other States, that might not have a 
pollution reduction schedule comparable to the one set in our 
State under the new law. The proposed Clean Skies Legislation, 
however, would prevents the EPA from making any findings under 
126 petition prior to 2009 and prevent any implementation 
action under 126 petition prior to 2012.
    My questions: My primary concern is that the Clean Skies 
Legislation will not in any way undermine the existing 
authority of States to clean up air pollution. Can you commit 
that Clean Skies Legislation, if passed, will not undermine the 
authority of the States?
    Mr. Holmstead. What I can commit to is that Clear Skies 
will solve the out-of-state pollution problem that North 
Carolina has much more effectively than the current law. And, 
again, we have been--we are certainly very aware and following 
very closely the efforts of North Carolina. We commend the 
State at getting reductions that are actually very similar to 
the Clear Skies Act, but our modeling shows that even with 
that, North Carolina, even with that law, there are counties 
that don't meet Federal air quality standards. However, with 
Clear Skies in addition to your law, there are no longer any 
remaining--I don't even think there are any very close to the 
line. I think we get such significant--we are talking about 70 
percent reductions, the bulk of those coming in the first 6 or 
7 years so that North Carolina--so under current law, once you 
are in attainment, you have no ability to petition any upwind 
States. So the problem would be solved--one of the things that 
I have told people that even if North Carolina and 
Massachusetts and every other State along the Eastern Seaboard 
submitted 126 petitions tomorrow, we couldn't get any better 
reductions than you will get under Clear Skies. And that will 
solve North Carolina's nonattainment problem.
    Mr. Burr. But do you agree that the tools, the means that 
we have with the extension or the delay in our ability to use a 
petition under 126, that we have eliminated some of the tools 
that we have got to meet our attainment goals, voluntary goals.
    Mr. Holmstead. I don't think that is an accurate--
effectively, what we are doing is we are granting your 126 
petition right now. If you pass this legislation, that will 
give you far greater reductions than you would get under 126. 
Once you come into attainment, which you absolutely would do in 
North Carolina, you would no longer have any rights under 126 
anyway. So, you know, it is a hard way, but what you are doing 
is, legislatively, effectively granting a 126 petition not only 
from North Carolina but for States throughout the Southeast and 
the mid-Atlantic and Northeast.
    Mr. Burr. Section 116 of the Clean Air Act mandates that 
States have the ability to mandate reductions in specific 
geographic areas and specific sites in order to protect public 
health. Yet there is some concern that Section 116 might be 
amended so as to take away this right. In a May 2003 letter 
from Governor Whitman to North Carolina Governor, Mike Easely, 
the EPA Administrator noted, to avoid any possible confusion on 
this matter, Clean Skies adds several sections. Section 116, 
reiterating that States have the right to impose more stringent 
requirements on power plants. Can you elaborate on these 
addictions? And when you say more stringent controls on these 
power plants, does this mean stationary sources in one's own 
State or upwind areas outside of a State's border?
    Mr. Holmstead. A State under the current Clean Air Act has 
jurisdiction over all the sources within its State borders. It 
has no jurisdiction over upwind States. So what we have done is 
to clarify that absolutely nothing in Clear Skies changes that 
jurisdiction. So North Carolina or any other State would 
absolutely--there is no preemption here that would absolutely 
retain jurisdiction to do anything more stringent than wouldn't 
be required under Clear Skies.
    Mr. Burr. But again tied to the border of their State.
    Mr. Holmstead. That is the way the act works now.
    Mr. Burr. I thank the chairman. I yield back the balance of 
my time.
    Mr. Barton. The Chair now recognizes himself.
    Mr. Burr. Could I ask unanimous consent to enter the 
Secretary's letter and the Governor's letter into the record 
for the purposes of that last question?
    Mr. Barton. Yes. We will show it to the minority and if the 
minority approves, without objection. Also, take this point, 
Mr. Waxman submitted several documents for submission into the 
record. The Chair has reviewed them. We will accept the letters 
that were presented, but the material from the newspaper 
articles is fairly lengthy. We will put that in the committee 
files but not put it in the actual transcript of the hearing.
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    Mr. Barton. The Chair recognizes himself for 5 minutes. I 
had already basically asked the question under the current law 
if there is really not significant nonattainment then the 
States don't have the right that Mr. Markey was referring to; 
is that correct?
    Mr. Holmstead. That is absolutely correct. So a State that 
has no ability whatsoever to file a 126 petition if it doesn't 
have nonattainment areas? And if it is not--it has to be 
projected to have future nonattainment areas. Even if it does 
have a nonattainment area, there has to be a showing that an 
out-of-state source or group of sources contributes 
significantly to the nonattainment problem in that State.
    Mr. Barton. Isn't it also correct that this particular 
chart that we put up that shows all the various milestones 
under the current Clean Air Act, even in this chart the 
disclaimer at the bottom is: In developing the time line of 
current and Clean Air Act requirements, it is necessary for EPA 
to make assumptions about rulemakings that have not been 
completed or in some cases not even started. EPA's rulemakings 
will be conducted to the usual notice and comment process and 
the conclusions may vary from these assumptions.
    So, in point of fact, under the Clean Air Act, you can have 
all the statutory language that you want, but there are 
numerous, numerous examples of statutory requirements under the 
current Clean Air Act that have never been met; isn't that 
correct?
    Mr. Holmstead. That is correct.
    Mr. Barton. In fact, one of the few things that actually 
has worked better than expected was a cap-and-trade provision 
for SO2. That has worked more quicker and more cost-
effectively than anybody thought at the time we passed it. You 
have a chart that showed that in terms of the cost.
    Mr. Holmstead. That is also correct.
    Mr. Barton. So it would be logical to assume that if we 
went to a cap-and-trade program for NOX, 
SOX and mercury for the first time, if history is a 
teacher, that kind of a flexible program with specific targets 
but given the market the opportunity to meet those targets, in 
whichever way they felt most appropriate, might actually work 
better than expected too, at least that is a logical 
conclusion.
    Mr. Holmstead. Yeah, we are confident in the projections 
that we have made, but markets and technology tends to improve 
in unexpected ways when you let them.
    Mr. Barton. Well, I do want to share some of Mr. Markey's 
skepticism about EPA models. I have found in my time that some 
times the EPA can't even model the past correctly, much less 
the future. So I have a healthy skepticism there also.
    I want to get back to the mercury issue that Mr. Strickland 
has raised and Mr. Boucher has raised. The 26-ton Phase 1 
target for mercury under the pending bill, it is my 
understanding when you ran the EPA model on NOX and 
SOX, it showed that you would get a cobenefit 
reduction from 48 tons to 26 tons, so that is where the 
standard was set; is that not correct.
    Mr. Holmstead. Actually, that is not quite correct.
    Mr. Barton. Okay.
    Mr. Holmstead. We knew even in the first year we did 
modeling that that 26-ton cap was more than pure cobenefits. 
And what we had tried to----
    Mr. Barton. How much more?
    Mr. Holmstead. Probably at least three tons. We thought at 
that point that cobenefits was around 29 or 30 tons, and the 
cap was set at 26.
    Mr. Barton. But the basic assumption was, we are going to 
put this cap-and-trade standard in for NOX and 
SO2 which we have a history of and we are going to 
get some cobenefit, and we are going to take that reduction of 
cobenefit, make that the target for Phase 1 for mercury, and 
according to what you just said, make it a little bit tighter.
    Mr. Holmstead. That is correct.
    Mr. Barton. Now, you have got new modeling, and you have 
briefed, you have had this program researched by other 
interested parties out in the affected community, and so the 
testimony in the Senate and other places is now, well, there 
really won't be as much of a cobenefit. So we are going to 
further that a little bit, we are going to back away from 
saying you get a cobenefit, but we are not going to back away 
from the 26-ton target. If Mr. Boucher and myself and others 
decide to legislate and buy the argument that there is a 
cobenefit, it is logical that we would set that cap, that Phase 
1 target, at where that cobenefit is. And maybe further it a 
little bit. But, if 26 tons is just the result of a 
manipulation or a modeling and the other two, the other two 
pollutants, it is reasonable to assume that we have got new 
modeling on mercury. We can set the Phase 1 target for mercury 
where that new modeling says it ought to be based on a 
cobenefit reduction. That is at least logical.
    Mr. Holmstead. I certainly understand that point of view.
    Mr. Barton. Okay. That is good enough for now. The Chair 
would recognize Mr. Boucher for 5 minutes.
    Mr. Boucher. Thank you very much, Mr. Chairman. We have no 
objection to the entry into the record of the material that 
Representative Burr submitted.
    Mr. Barton. Without objection.
    Mr. Boucher. Mr. Holmstead, I want to pursue a parochial 
topic with you in this time that I have. And it relates to your 
predictions of coal production by the year 2020 under the Clear 
Skies Initiative. Your overall reduction is that there will not 
be any substantial decrease in coal production as a consequence 
of enactment of the bill, but that production varies by region. 
It also varies by coal type. You have different predicted 
production levels based upon those variations. For example, you 
suggest that Western low sulfur coal will not fare as well as 
coal generally would fare. You also predict that what you call 
interior coal, and this is coal from the central portion of the 
U.S., that is predominantly high sulfur coal, will fare better 
than the norm. And that favorable performance for the interior 
coal tends to drive the overall prediction up to the point that 
you say no substantial overall effect.
    With regard to the Appalachian region you are predicting 
essentially flat production so no basic effect from Clear Skies 
on Appalachian coal. But within the Appalachian region we have 
two different kinds of coal. We have low sulfur coal found in 
southern West Virginia and in my district in the western part 
of Virginia, there is high sulfur coal found in the northern 
part of West Virginia, in Pennsylvania and adjoining regions. 
And I am just wondering if your analysis takes you to an 
examination of the effect of the bill by 2020 on these two 
different kinds of coal within the Appalachian region. Your 
gross calculation is no overall effect with regard to 
Appalachian to coal, but I am primarily interested there what 
your study would show with regard to the effect on low sulfur 
coal which is what we have in my area. Do you happen to have 
that prediction?
    Mr. Holmstead. I don't have it here with me, but we can 
provide it. Our modeling isn't detailed enough that we can 
tease that out of the model. Just if I could note two quick 
things that I think will be reassuring to you. Our modeling 
suggests that in the Appalachian region, coal production does 
go up not nearly as much as it does in the interior but does go 
up at least modestly. The thing that really drives the fact 
that--and certainly production stays flat in the west. The 
reason I believe that we see that is because we see scrubbers 
coming into virtually all of the major plants throughout the 
country, especially in the Midwest and the East. Once those 
scrubbers are in place, it becomes logical for most of those 
plants to go ahead and buy coal locally rather than incur the 
transportation cost to get it from Wyoming. So there is no 
incentive to switch away from low sulfur coal, especially if it 
is produced locally. There is still a benefit. If you scrub low 
sulfur coal, you get fewer reductions than scrubbing high 
sulfur coal. So I don't think we would expect any significant 
change, but we can provide that data to you in the next--my 
staff says soon.
    Mr. Boucher. Soon is fine. I would appreciate your 
providing it. What gives rise to my concern, specifically, is 
your prediction that low sulfur coal in the West will not fare 
well, the higher-sulfur coal found in the interior will fare 
very well. And an extrapolation from that subject is that low 
sulfur coal in the East is going to fare about the same way 
that low sulfur coal in the West does, which is not very well. 
By your explanation, what drives your analysis is the reality 
of the installation of scrubbers presumably to meet some of the 
standards under the Clear Skies legislation that the incentive 
then is to buy high sulfur coal if that is what you have 
locally.
    Mr. Holmstead. Whatever you have locally.
    Mr. Boucher. Whatever you have locally. Of course, a lot of 
the plants that are using Appalachian low sulfur coal today 
happen to be situated in the Ohio valley. They buy the low 
sulfur coal because it is compliant under existing law. So I am 
concerned. I would very much like to see the results of that 
analysis. I appreciate your making that available.
    Mr. Holmstead. We will provide those. The other thing we 
hope people keep in mind is the real comparison here should be 
between what happens under Clear Skies and what happens under 
the existing Clean Air Act.
    Mr. Boucher. That is correct.
    Mr. Holmstead. I think our view is under the existing Clean 
Air Act, coal would actually fare worse because of--I would be 
happy to provide more detail on that.
    Mr. Boucher. That comparison would be very helpful. So 
break it out high versus low sulfur in the Appalachian region 
and then under Clear Skies as compared to under current law.
    Thank you, Mr. Chairman.
    Mr. Barton. The gentlelady from California is recognized 
for 5 minutes.
    Mrs. Capps. Thank you. Mr. Holmstead, I want to ask you 
please to give me a yes or no answer, and I will give you more 
time to respond later, but I want to establish something. Using 
the model established for the so-called Clear Skies Act, have 
you remodeled the straw proposal?
    Mr. Holmstead. No.
    Mrs. Capps. Okay. I am concerned about this. And I am 
concerned that we need to see whether as we are contemplating 
what you call a major change in the EPA in the Environmental 
Protection Act, Clean Air Act, we need to see whether there are 
significant health benefits and to see about this balance 
between the benefits and the costs. And I wonder how we would 
be asked to make a judgment if there is no comparison, not just 
with the underlying Clean Air Act, but have you modeled what 
the costs and benefits would be, for example, of an additional 
10 percent onto the baseline or 20 percent or 40 percent 
reduction beyond the level that is you chose in your bill?
    Mr. Holmstead. We can--as I indicated before, it would not 
be possible for us to do the kind of comprehensive modeling of 
every proposal, but we can extrapolate from what we have done 
to other things. With regard to the straw proposal, I would 
just like to caution you that we--again, this analysis is 
available on our Website--we believe that the timetables in the 
straw proposal are simply not feasible largely because of the 
investment that is already required under the NOX 
SIPCOL. If you try--it's just not feasible to get those 
reductions by 2010. And that is--especially if you look at the 
labor constraints and other things. But we can provide that to 
you. As I say, it is available on the Website.
    Mrs. Capps. I submit that, as it has been provided, it is 
very difficult to make that kind of comparison. I believe it is 
worth the effort to expend to do that. We need to see results 
of different levels of improvement or benefit however you are 
looking at it, because we are talking about people's lives in 
the balance here. And not just the economic--but the economic 
costs of their health as well. I would like to move on 
because--and I will give you time to respond.
    I am taken with the example from your presentation on the 
marginal costs for SO2 and NOX reductions 
and how far along this path you can go with making--and making 
quite substantial benefits before the costs escalate. That is 
the kind of balance between apples and apples that I really, as 
one member of this committee, really ask you for some help in 
getting. Your current modeling shows that you can achieve 
reductions at levels like the straw proposal for, well, under 
$2000 per ton for both SOX and NOX. And 
that is my concern. Do you think that $2000 per ton is an 
unreasonable cost to achieve the public health benefits that I 
have spoken of earlier?
    Mr. Holmstead. It is hard to say that without knowing the 
benefits.
    Mrs. Capps. But those are the questions that I am asking 
you.
    Mr. Holmstead. I think we would be pleased to sit down with 
your staff and sort of work through all of those issues. We 
continue to believe that the key comparison is the current 
Clean Air Act compared to what is feasible legislatively. And 
we hope that you will focus on that fact. That is really what 
we are trying to accomplish here. We are happy to provide you 
with the kind of information that you are talking about to the 
extent that we can.
    Mrs. Capps. That is what I believe this remodeling should 
do. Because we are comparing the Clean Air Act, so-called, with 
allowing tens of thousands of people to either die prematurely 
or suffer respiratory illnesses. I think we need to know basic 
information about any levels besides the ones that we have--you 
have decided to put in your bill. You have made that decision, 
and that is the presentation we get. But there is no--there 
aren't various scenarios which really would be useful to us.
    Mr. Holmstead. I understand.
    Mrs. Capps. You agree.
    Mr. Holmstead. As I say, we can certainly sit down with you 
and provide--and figure out, show you what we have done.
    Mrs. Capps. I would hope that information that everyone on 
this committee would want to have. I think you are taking some 
very serious risks with the public health you are charged with 
protecting. You want us to essentially replace the Clean Air 
Act. You say, trust us to this level. You have produced an 
analysis of your levels but not of any other levels, even 
slightly more stringent levels. From what I can tell, you can't 
provide us with any assurances that a lower level would not 
result in a significant public benefit, one that would greatly 
outweigh the costs. You say your current modeling will get us 
nearly all the way to attainment. If that is so, why wouldn't 
you model it at the level that would get us all the way to 
attainment so we can compare that with the cost that it would 
entail?
    Let me finish one more paragraph. I think you are leaving a 
substantial portion of our citizens at risk of significant 
health effects like premature death and you can't even tell us 
why. Why don't you model different cap levels and then we can 
make that determination. And the American people can see what 
is at stake. Businesses can see what their benefits are and 
what the costs are.
    Mr. Barton. The gentlelady's time has expired.
    Mrs. Capps. I think before we throw out the existing Clean 
Air Act, which has served us well, the public deserves to know 
what they are going to get in exchange for this. I think that 
it does deserve that. I think it is within our possibility to 
achieve the information that is going to be useful to us.
    Mr. Holmstead. Could I take 1 minute to answer?
    Mr. Barton. Briefly. We have one more gentlemen who has 
waited very patiently, Mr. Strickland. We want to give him an 
opportunity.
    Mr. Holmstead. Just to make sure, we have provided you 
modeling of four different results, one of which is more 
stringent than the Clear Skies Act. So you can get a sense from 
all of these four things. The one thing that I tried to say 
categorically, and I stake my reputation and the reputation of 
my agency on it, at least over the next decade, we will provide 
substantially greater environmental benefits under Clear Skies 
than we could under the Clean Air Act.
    Mrs. Capps. To everyone?
    Mr. Holmstead. If you pass this legislation, the total 
number of lives saved, of hospital visits avoided, of heart 
attacks avoided will be substantially lower under Clear Skies 
than they would under the current Clean Air Act. That I can 
state categorically.
    Mrs. Capps. In California as well?
    Mr. Holmstead. Clear Skies has almost nothing to do--the 
major benefit of Clear Skies for California----
    Mr. Barton. Mr. Waxman is now back. He actually has 
priority over Mr. Strickland. So Mr. Waxman is recognized for 5 
minutes.
    Mr. Waxman. I yield to Mr. Strickland.
    Mr. Barton. Mr. Strickland is recognized for 5 minutes.
    Mr. Strickland. Thank you, Mr. Waxman. I will try to be 
short here. We have a Nuclear Waste Fund that exists to help 
management appropriate disposal of nuclear waste. And I 
emphasize that because ratepayers contribute to this fund. I 
wish Mr. Markey was here because he was talking about 
Pennsylvania, but he could have been talking about my district 
in Ohio in terms of the pollution that he accuses us of sending 
his way. This is the question I have for Mr. Markey, and I want 
your response.
    Mr. Holmstead. I would be happy to answer on behalf of Mr. 
Markey.
    Mr. Strickland. I thought you did a pretty good job with 
the airbag analogy. Why should the cost of cleaning up Mr. 
Markey's State rest solely on the backs of Appalachian coal 
miners? Why should those who use the products that come from 
the dirty midwestern power plants, why shouldn't they pay? Now, 
to bolster my rationale for this, I see this chart that says 
under Clear Skies, by 2010 we can avoid 7,900 premature deaths, 
17,000 hospital ER visits and so on. These are national 
benefits. So why shouldn't the cost of achieving them be a 
responsibility that is shared not just by coal miners in 
Appalachia or communities where these power plants exist, but 
why shouldn't we have some national contribution to achieving 
these results? I want Boston's air to be clean too, but I don't 
want his--the Boston cleanup to be financed solely by poor 
communities scattered along the Ohio River. Doesn't it make 
sense that--am I--tell me I am wrong or right or punch a hole 
in my argument.
    Mr. Holmstead. The way Clear Skies works because it is 
truly a national cap-and-trade program for SO2 which 
is the primary issue for coal, the costs really are borne 
nationwide and they are borne in several different ways. They 
are borne by ratepayers. Even though the incremental rate 
increase is small, it is shared by ratepayer, the costs aren't 
passed through in the rates, they are borne by the shareholders 
of those companies who tend to live nationwide as well. And it 
is even more shared than that because to the extent that any of 
those costs go into goods and services, those are borne 
equally. So I can't tell you exactly what the distribution is, 
but I can tell you that the costs don't fall exclusively on 
coalminers. This is one of the issues that we have tried to 
look at. We actually believe there will be an increase in coal 
jobs in Appalachia as a result of Clear Skies for this simple 
reason. When the utility sector has the certainty of what--
right now, they don't know what they are going to have to do 
for mercury. They will--they don't know what to do for 
NOX, for the SO2. On top of that, there 
is visibility issues and other things. So they have very little 
regulatory certainty. There is a great deal of concern about 
investing hundreds of millions of dollars in control technology 
when they are not sure what the next issue that will come along 
is going to do. If we can provide that with our certainty all 
of our analysis and DOE's analysis suggest that at the levels 
and timing we are talking about, what they would do is install 
advance pollution controls on all that coal. So they can 
continue to burn the coal, they just burn it much more cleanly. 
I think we are all sympathetic to the concern have you raised, 
but we think this is the way to deal with them.
    Mr. Strickland. I would like to point out that, you know, I 
have heard the pleas of my colleagues from the East for years, 
and they talk about these dirty power plants. But the fact is 
their citizens are reaping some of the benefits of those dirty 
power plants in terms of electricity and some of it that comes 
from these coal plants is fairly inexpensive electricity. It 
seems to me those who are receiving the benefits of the product 
of these plants should at least share in some the costs that 
may be involved in making them cleaner.
    I yield back my time. Thank you, Mr. Waxman, for your 
generosity.
    Mr. Barton. The gentleman from California is recognized for 
5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Holmstead, in answering Representative Capps, you 
implied that Clear Skies is the most that is technically 
feasible. I would like to introduce for the record a letter 
from the Institute of Clean Air Companies that shows we can do 
much more, much faster. I have introduced legislation with 
Representative Boehlert that was supported by over 130 Members 
in the last Congress, and this bill is much tougher than Clear 
Skies and can deliver clean air above and beyond the current 
law. The ICAC says we have the technologies and resources to 
implement our bill.
    Mr. Chairman, I would like to place this in the record.
    Mr. Barton. We will show it.
    Mr. Holmstead. Can I clarify? What I said is our analysis 
shows that the first phase of Clear Skies really is about as 
far as we can go. And our analysis is up on the Web. We have an 
economic or we have an engineering feasibility study.
    Mr. Waxman. As I hear your analysis, as you present it 
today, every deadline under Clean Air Act you say well may not 
ever be met because there could be litigation. You have argued 
that the law won't be enforced and won't be met. I think that 
is not a fair argument to make to us. I think that we can go 
much further.
    Now, the other thing I want to put in the record was a 
follow up on some of the questions about Section 126. Mr. 
Markey you told me asked you--you told him we have never needed 
Section 126 because it would be in attainment. Now, if Section 
126 will never be used under Clean Skies, why must we delay and 
amend it?
    Mr. Holmstead. The real issue is--what we have tried to 
provide here is to make sure that there is the right incentives 
for companies to install control technology is regulatory, 
certainty. If you--if there is a concern about what 126 may do, 
then that--there continues to be uncertainty and litigation 
costs and other things. And what we have already determined, as 
I told Mr. Markey, is even if we had 126--even if we had 126 
petitions 2 years ago from his State and Mr. Burr's State and 
every other State east of the Mississippi, even if we had those 
2 years ago and we were in a position today to grant those 
petitions, we could not get any better emission reductions than 
we would get under Clear Skies. And----
    Mr. Waxman. That is hard to believe though. Because the 
States want to be able to enforce requirements on others where 
they don't have control in their own jurisdiction to make sure 
that their neighboring States or regions are reducing the 
emissions. Under existing law, they can do that. Under your 
proposal, that tool is removed.
    Now, there are a lot of tools that are thrown out in your 
proposal on the basis that your modeling is going to achieve 
the results. But if your modeling is going to achieve the 
results, then 126 is not going to be invoked. But on the other 
hand, if your modeling were incorrect, then we have that tool, 
and many other tools, to make sure that we achieve the Clean 
Air goals. Otherwise, it is as almost a faith-based idea of how 
we are going to achieve Clean Air. We got to have the faith. If 
it doesn't work out well, then we will have to have more faith.
    Mr. Holmstead. Let me give you just I think what will be 
helpful to you, that the only time Section 126 has ever been 
used in the history of the Clean Air Act was beginning in the 
mid-90's when there was a real effort by the Northeastern 
States to control upwind emissions of NOX. That 
effort began in a very serious way in 1995. It was pursued very 
aggressively by the Clinton Administration throughout their 
whole tenure. By the time they evaluated those petitions, they 
did a rulemaking, they did a proposed rule, they did public 
hearings, they did a final rule, they went through at least two 
rounds of litigation, that effort that began in 1995 and was 
pursued aggressively at every step of the way including under 
our administration, the effective date for the first reductions 
is 2004 for some of the States and we don't yet have an----
    Mr. Waxman. You can't evaluate the pressure that some of 
these tools under the Clean Air Act brought on some industries 
to force them to reach compromises and voluntarily do things 
that they might not otherwise have done. I would like to 
introduce for the record two letters, the first is from the 
Ozone Transport Commission, they say that the OTC States have 
grave concerns about the 126 provisions because it effectively 
eliminates use of 126 petition as a constructive tool for the 
States. And the second letter is from NESCAUM which states that 
your proposal creates a, ``perhaps insurmountable roadblock to 
any future Section 126 action.''
    Mr. Chairman, the point I want to make is that Mr. 
Holmstead said if you look at the acid rain proposal with all 
the caps-and-trades that we achieve the goals. I think it is a 
great success, but we didn't eliminate all the tools that made 
sure that it worked. We didn't eliminate the new source review 
for local power plants. We didn't eliminate the deadlines. We 
didn't eliminate all the things that this bill would have us 
throw out of the Clean Air Act, which then relies solely on a 
belief that cap-and-trade will succeed without the tools to 
make sure that there is a back up so that we can actually 
achieve what we promise to achieve in the law.
    Mr. Barton. I thank the gentleman. The Chair has reviewed 
the last letter you asked to be put in the record and has no 
objection. We will put that in the record.
    We now want to turn to the cover boy of yesterday's roll 
call magazine, Mr. Bass, who is not a member of the 
subcommittee but, as is the tradition of the committee, once 
all members of the subcommittee have had an opportunity to ask 
questions, we give members of the full committee such an 
opportunity. And the gentleman from New Hampshire, our cover 
boy of the week, is recognized for 5 minutes.
    Mr. Bass. I thank the distinguished chairman of the 
subcommittee for giving me the courtesy to speak for a minute 
or 2 on an issue that is extremely important. Coming from New 
Hampshire, I find myself in the same situation as my friend 
from Massachusetts and from Maine. I would only point out a 
couple of items. First of all, New Hampshire like North 
Carolina apparently has passed its own three-point--in fact, 
four-point pollutant limits on NOX, SOX, 
and mercury which are considerably more stringent than those 
which are contemplated under Clear Skies. We are, as a State, 
an exporter of energy. We have coal-fired facilities that are 
prepared to meet these standards, and we also provide--produce 
a significant amount of nuclear power.
    Secretary Holmstead, I am also confused and concerned about 
the apparent lack of clarity between the status quo, the 
current Clean Air Act law and the provisions contemplated under 
Clear Skies. This straw proposal that has been mentioned did 
indeed outline goals that might be attained under current law 
by 2010, which vary greatly from those contemplated under Clear 
Skies. I thoroughly understand your point that is because the 
current Clean Air Act does not establish overall caps, you have 
NOX way of knowing whether you reach attainment or 
not in a given area. Yet there is this conflicting information 
about a proposal that was sent to the administration which did, 
in fact, do or try to do what is now more difficult to do. I 
think you have to conclude that under the current law, there is 
a pretty good chance that NOX, SOX and 
mercury levels would be lower under current law than they might 
be under Clear Skies, although there are some good things about 
the concept of having national caps to reach standards versus 
doing it on a piecemeal basis.
    I don't have a question to ask, Mr. Chairman, but I would 
agree that the national cap model is a good one, but--and I 
support caps-and-trade, the problem is setting those standards 
and setting them at the appropriate levels so that so that 
regions of the country, such as my State, that are actually 
exporters of energy but in nonattainment in having serious 
systemic problems meeting air quality standards, can see 
significant improvements over the next 10 years. Would you 
agree with that?
    Mr. Holmstead. Yeah. And if I could just reiterate 
something, and again, just very personally assure you that if 
you were to pass Clear Skies exactly as it is tomorrow, I can 
guarantee you that your State would have significantly cleaner 
air, at least over the next decade, than you would have under 
the current Clean Air Act. NOX emissions would be 
lower, SO2 emissions would be lower, mercury, the 
emissions start sooner, exactly what happens under the existing 
law I can't tell you. But certainly for NOX and 
SOX, I can guarantee you for the next decade you 
will have much cleaner air in New Hampshire than you would have 
under the current law.
    Mr. Bass. I thank the chairman.
    Mr. Barton. That concludes all of our questions. I want to 
make a clarification before we adjourn this first hearing. The 
straw proposal that has been talked about at some length, my 
understanding is that was an alternative that was put together 
within the EPA and the administration while you were 
determining what, if any, legislative proposal to put forth and 
it was just that, it was a scenario that was debated and you 
looked at the cost benefit analysis, you may have looked at 
some of the political consequences and where the votes might 
be, but ultimately it was decided that the proposal that was 
put forward in the Clear Skies Initiative, for a number of 
reasons, was superior to that. So there is really no reason to 
extensively model it, because it was just an alternative that 
was reviewed in the normal give and take of preparing a 
legislative initiative. Is that not correct?
    Mr. Holmstead. That is absolutely correct.
    Mr. Barton. We wish to thank you for your attendance. I 
think you can look forward to future requests for your 
attendance. We are going to do a number of hearings on the 
Clear Skies proposal. Our next hearing will be interested 
parties that are not a part of the administration. This hearing 
is adjourned.
    [Whereupon, at 4:55 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

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