[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
 DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND 
        INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        THURSDAY, MARCH 20, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Christopher S. Bond (chairman) 
presiding.
    Present: Senators Bond, Craig, Mikulski, and Leahy.

                    ENVIRONMENTAL PROTECTION AGENCY

STATEMENT OF HON. CHRISTINE TODD WHITMAN, ADMINISTRATOR
ACCOMPANIED BY G. TRACY MEHAN III, ASSISTANT ADMINISTRATOR, OFFICE OF 
            WATER

            OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Good morning. The Senate VA-HUD 
Appropriations Subcommittee will come to order. My 
distinguished Ranking Member is out temporarily and asked that 
I begin, so on her behalf let us welcome EPA Administrator 
Christine Todd Whitman and our other guests from EPA who have 
joined us here today to testify on the President's fiscal year 
2004 budget request for the Environmental Protection Agency.
    Let me say that because of many other activities going on 
today we are going to have to go through this hearing as 
quickly as we can. Senator Mikulski and I both have several 
other commitments but we will not ignore you. However, we will 
submit questions for the record if we do not have time to ask 
them.
    Madam Administrator, let me begin by saying that the EPA 
has one of the most important and difficult missions of any 
Federal agencies, with responsibilities from the cleanup of 
Superfund and brownfields sites to the funding of clean water 
and drinking water infrastructure to the enforcement of 
environmental laws to representing our Nation with regard to 
issues of global climate change.
    More recently, as part of the Federal Government's homeland 
security efforts, EPA has been named as the lead Federal agency 
for reducing the vulnerability of the chemical industry and the 
hazardous material sector of the Nation's critical 
infrastructure. I applaud you and EPA for your commitment to 
this responsibility.
    This year the administration has requested some $7.63 
billion in budget authority. This is a reduction of some $450 
million for the fiscal year 2003 funding level that I do not 
agree with. However, assuming a number of adjustments, if you 
put back in the administration's reduction of $460 million in 
congressionally designated EPA water and sewer grants and 
programs, the EPA funding level is approximately equivalent to 
the fiscal year 2003 level.
    Unfortunately, many of these designated grants go to 
communities with significant water infrastructure challenges as 
well as to programs administered by nonprofits that provide key 
support for many of EPA's programs and activities. I am 
convinced that the EPA would be very troubled if we failed to 
fund many of these nonprofit programs which are not included in 
the budget request, and I know that our environment would 
suffer significantly if these were not made available.
    I want to call your attention particularly to something 
that is a major crisis, identified in yesterday's copy of an 
article from yesterday's Springfield, Missouri, News Leader. In 
rural Christian County, Missouri, there are 12 trailers at the 
Starlight Mobile Home Park which flush their human waste into a 
pit that fails to meet even the minimum wastewater treatment 
standards. The untreated green sludge eventually oozes into a 
creek that is a tributary of the James River which feeds Table 
Rock Lake, which is one of our Nation's prime resource areas, 
and because it sits on limestone with cheese-like openings the 
water is traveling underground and what does not pollute the 
lake is polluting the underground water system.
    This is the State Department of Natural Resources' primary 
responsibility, but it is a situation that is intolerable, and 
it is as serious in Springfield, Missouri, as pollution of 
Chesapeake Bay is to all of my friends who live on and around 
the Chesapeake Bay.
    But, having said that, back to the broader issues. The VA-
HUD Subcommittee is facing even more difficult funding 
decisions in 2004 than we faced in 2003. We have to balance the 
funding needs and priorities among other programs and agencies, 
VA medical care, HUD low-income housing, and in NASA reacting 
to the tragic loss of the Columbia orbiter.
    Particularly, without relief from the full committee in our 
subcommittee's allocation, we will have to make up a shortfall 
of some $1.1 to $1.4 billion in VA medical care and shortfalls 
of upwards of a billion dollars in a variety of other HUD 
programs. Also, as we face the onset of war, our first 
obligation will be to pay for the costs associated with the 
preservation and protection of our freedoms from the threat of 
terrorism and terrorist nations.
    I am gratified that the EPA budget request for 2004 
continues our Nation's commitment to a better environment and 
meets the primary funding needs of EPA's missions, programs and 
goals. I think it is generally a good budget that stays the 
course set in the administration's 2003 budget request and our 
appropriations for that year. I am glad EPA is focusing on 
meeting its primary programs and legal obligations rather than 
creating a new set of programs and responsibilities when we 
have not done enough to fund our existing top priority 
programs.
    I am very much concerned, however, one more time, about the 
failure to maintain the 2003 funding level of $1.35 billion for 
the Clean Water SRF. The administration proposes funding of 
$850 million, a reduction of half a billion dollars from 2003. 
Now, I understand that the Clean Water SRF has been capitalized 
since 1987 for a total of some $42 billion, including $19 
billion in Federal funds. But the Nation faces some $540 
billion in Federal funding needs alone for new and existing 
water infrastructure needs over the next 20 years.
    In addition, there are a number of other significant EPA 
infrastructure priorities. The EPA budget does not address 
that. It does not address the combined and separate sewer 
overflows funding needs which are a priority for some 772 
municipalities or the funding needs of many small communities 
in the West that must reconstruct their water systems because 
of the new arsenic water standards. We cannot mandate that 
people do things and not give them some help in getting them 
done.
    The bottom line is that, in addition to the EPA's 
environmental enforcement requirements, water infrastructure 
needs must be a much higher priority for EPA.
    The EPA also faces significant challenges with regard to 
new requirements for total maximum daily load, TMDL, of 
pollutants that impact public health and the environment by 
large animal feeding operations, statutory requirements for the 
protection of wetlands, and continued demands to expedite the 
cleanup of Superfund sites.
    With respect to TMDL, I plan to reintroduce this year a 
bipartisan Fishable Waters Act, which is widely supported by 
conservation and outdoor groups, fishing and hunting groups, 
that I think can begin to make a difference in some of the 
runoff streams using voluntary activities, and I would welcome 
EPA's support on the announcement of the Act.
    I am also concerned about issues relating to air quality 
standards under the Clean Air Act, including the status of 
implementation of new source review of the Clean Air Act, which 
authorizes the EPA to set standards for certain facilities for 
the installation of air pollution equipment. Substantial 
progress has been made since last year, this remains an 
important issue as we seek to maintain the economic viability 
of U.S. producers of energy while meeting the air quality 
standards of the Clean Air Act.
    Congress, I think, also needs to move forward on the 
administration's proposed Clear Skies legislation that will 
reduce emissions and encourage investments in new plants by 
providing certainty regarding future regulatory requirements.
    I would add one other thing. As an avid supporter of plant 
biotechnology, I am gratified that EPA has approved the use of 
a new genetically-engineered corn developed by Monsanto. This 
corn includes a gene from a soil bacteria that allows the roots 
of the corn plant to secrete a protein that kills the corn 
rootworm, the crop's number one pest. To reduce the chance that 
the rootworm will develop resistance to the corn, EPA has 
required growers to set aside 20 percent of the planted acreage 
for non-transgenic corn. I think this is a major breakthrough 
in the development of genetically-engineered crops and 
represents another significant step towards eliminating our 
Nation's dependence on harsh chemical pesticides.
    More importantly, as we develop heartier and more 
nutritious crops through genetic engineering, we are going to 
be able to feed starving people in developing countries in 
Africa and Asia and throughout the world that face unforgiving 
environmental conditions, including droughts and soils that are 
not productive for crops unless they are modified.
    Madam Administrator, I thank you for your inspired 
leadership and commitment to EPA's mission. I look forward to 
working with you on the challenges you face.
    Senator Bond. I now turn to my Ranking Member Senator 
Mikulski for her opening statement.

                STATEMENT OF SENATOR BARBARA A. MIKULSKI

    Senator Mikulski. Thank you very much, Mr. Chairman. I want 
to welcome Administrator Whitman to her fifth hearing before 
the subcommittee. I look forward to during her tenure calling 
her ``Secretary'' because I do believe it should be a cabinet 
agency. I want to thank her for her continual availability to 
not only testify in the usual and customary hearings, but to be 
available for meetings and hearings related to the anthrax 
contamination of not only the Hart Building, but also of the 
Brentwood Post Office. So many of those workers there are my 
constituents, but even if they were not, they are our people. 
You have also been available for hearings pertaining to toxic 
cleanup in Anniston, Alabama.
    So we have worked together from arsenic to anthrax and so 
on. I feel we have had a very productive relationship. When I 
look, though, at the submittal of the budget, I am troubled at 
the 2004 budget request for EPA. The total of $7.6 billion is 
actually a $450 million decrease from the 2003 level. This is a 
cut of almost 6 percent, when we have such compelling needs to 
protect the environment and to protect public health.
    I am very, very, very troubled that the major cuts seem to 
be in water infrastructure funding and everything else is kept 
at the status quo. I believe that OMB in its work with EPA was 
not prepared to be bold about the administration's commitment 
to the environment.
    The budget is a planned budget. Instead of using it as a 
tool to help protect health and the environment, it seems that 
we are going to maintain the status quo, except in water and 
sewer programs. I want to just confirm the comments that the 
chairman has made about water and sewer. Governor Ehrlich, our 
new Governor of Maryland, says that his new number one priority 
is water and sewer projects and Maryland getting its fair 
share. Well, there is not a lot of fair share to get.
    We in Maryland, because we have a Republican Governor for 
the first time in 37 years, Senator Sarbanes and I want to do 
partnership politics because on issues like water and sewer, 
there is no politics. In the Chesapeake Bay alone, 
Administrator Whitman, there is a $4 billion list of water and 
sewer projects that could be funded this afternoon that meet 
the State priorities. That just shows the magnitude of what 
Governor Ehrlich is facing in just one State on a waterway that 
I know impacted you in New Jersey while you were Governor and 
in which you have had a very keen interest.
    Much is made about these earmarks that the Senate comes up 
with. Speaking for myself, I know that the number one request I 
get for earmarks from Members goes to water and sewer projects 
and as part of the mandate from the committee they have to be 
on the State priority list. So this is not about pork. It is 
about failed water systems.
    We could probably have a $50 billion bill of just water and 
sewer projects. So we are really going to be working on this, 
and you need to know that the subcommittee is very troubled 
about this and I am going to come back to it in my questions. 
Senator Bond has spoken very eloquently about it.
    This is partnership politics because water and sewer 
improvements could contribute to economic stimulus and add 
value for the dollar. It is federal funds working at the local 
level with a 45 percent match that could have an impact on 
creating jobs from the civil engineers to the people who will 
be digging the ditches. It will have value for protecting 
public health and the environment, and it will also impact on 
the ratepayers.
    Mayor O'Malley is under a decree from your agency, which I 
am not disputing, to fix the Baltimore water and sewer system 
for $900 million. Baltimore City does not have $900 million. We 
are going to have a 10 percent rate increase, so from our 
standpoint the EPA mandate is helping increase taxes. I am not 
trying to jackpot you, but I think you should know what we are 
facing.
    I think Senator Bond and Senator Craig have been outspoken 
on concern about the regulations on arsenic, but they need 
help. Those little communities that the Senator stood up for on 
the Senate floor need help.
    The second issue that I want to emphasize is brownfields. I 
know you are a brownfields baby as a past Governor of New 
Jersey. We feel that brownfields can be turned into green 
fields and, though the budget has been increased, we would 
really hope that we could move to the authorized level of $250 
million, because it is one of the major tools, I believe, for 
cleaning up the environment and again making grounds ready for 
economic development.

                           PREPARED STATEMENT

    There are other issues that I could raise, but I think we 
do need to get on with the hearing. But you see where the 
subcommittee is headed, towards those things that protect the 
environment, create the jobs, help local taxpayers, and also 
create an environment for even additional government. If you 
want to help a new Republican Governor, help me get water and 
sewer grants.
    [The statement follows:]

           Prepared Statement of Senator Barbara A. Mikulski

    EPA serves the very important mission of protecting human health 
and the environment. So I am troubled that the 2004 budget request for 
EPA totals just $7.6 billion, a $450 million decrease from the 2003 
level. This is a cut of almost 6 percent. I believe that instead of 
using the budget as a tool to protect public health and the 
environment, this administration prefers to make changes through the 
regulatory and legislative process.
    In the past few months, EPA has made a series of changes to 
environmental regulations and has proposed new legislation. This 
subcommittee provides the funding for EPA to develop these proposals. 
So it is our duty, on behalf of our taxpayers, to ensure that these 
proposals will protect public health and the environment. Maryland's 
taxpayers want clean and safe air and water and they want the 
Chesapeake Bay cleaned up. Specifically, I want to know how EPA's new 
Water Quality Trading Policy and Clear Skies legislation will 
accomplish these goals. We need to protect children and the elderly, 
who are most vulnerable to the health effects of air pollution. Many 
water quality problems in the Chesapeake Bay are due to air pollution. 
We must be sure that we are not backtracking on public health and 
environmental gain under the Clean Air and Clean Water Acts.
    I am puzzled about many areas of this budget proposal. I know that 
EPA didn't get everything it wanted from OMB but I really question some 
of the priorities. The most glaring example is water infrastructure. 
The budget request cuts over $800 million in critical water and sewer 
project funding. The budget cuts $500 million from the Clean Water 
State Revolving Loan Fund and $300 million targeted water projects. 
Congress funds these projects because there is no national framework 
that even comes close to addressing the national needs. This just 
doesn't make sense--for two reasons. First, our communities have 
enormous needs. Over the next 20 years, there will be a funding ``gap'' 
for our communities of $540 billion. These needs have been studied and 
restudied. In April 2000, the Water Infrastructure Network reported 
that our Nation's water and wastewater systems will face a funding gap 
of $23 billion a year over the next 20 years. In November 2001, the 
General Accounting Office (GAO) reported that costs could range from 
$300 billion to $1 trillion over the next 20 years. In September 2002, 
the Environmental Protection Agency reported that over the next 20 
years, demands for improved sewer and drinking water systems will 
outstrip current levels by $535 billion. And in November 2002, the 
Congressional Budget Office (CBO) reported that water and sewer costs 
could average as much as $40 billion each year. The results are 
conclusive and the need is real.
    We can't expect communities to comply with growing regulations like 
arsenic, radon, and new requirements related to security to name just a 
few without increased financial assistance. If we don't help, the 
entire burden falls on local rate payers in many urban and rural low-
income areas and rate increases are just not affordable.
    Second, the economy lost 300,000 jobs in February. Water 
infrastructure funding creates jobs: for every $1 billion we spend on 
water infrastructure up to 40,000 jobs are created. So I am puzzled why 
the budget skimps on this priority. I know this was probably a funding 
decision by OMB. But this cut really signals a failure in that we don't 
have a comprehensive national policy to address our communities' needs. 
We need new thinking on a new national policy to help communities pay 
for water and sewer projects.
    In January, EPA convened a conference on how to ``close the gap'' 
including State and local officials, business, and other experts to 
exchange ideas about how to meet water and sewer challenges. I would 
like to hear what happened at that conference and what the next steps 
will be. I want to know what is EPA doing to develop new ideas to help 
communities meet these challenges and I want to know what EPA, as an 
advocate for the environment, is doing to make this a national priority 
and develop solutions for our communities.
    The authorizing committee is working to reauthorize the water loan 
funds at much higher levels in the future. And there are discussions 
underway about creating a Trust Fund for water infrastructure. Even 
though I have serious concerns about the new formula that has been 
proposed, I have applauded Senator Jeffords' leadership in seeking 
additional resources for critical water infrastructure improvements. 
But I hope that some new thinking can be incorporated into those 
efforts.
    I am also very concerned that EPA may be getting back into the 
business of allowing retired Navy and Maritime administration ships to 
be exported to developing countries for dismantling. In 1997, Pulitzer 
prize-winning series of articles in the Baltimore Sun exposed the 
dangerous conditions created at home and abroad because these ships 
contain PCBs, asbestos, and lead. In 1998, I began worked with the 
Defense Department to make sure that we dispose of these ships in a way 
that is: efficient, orderly, environmentally sensitive, and keeps the 
work in American shipyards where environmental and safety standards can 
be met and monitored. But a recent Washington Post article reported 
that EPA may be assisting the Maritime Administration to once again 
begin exporting ships to be dismantled overseas. I want to know what 
EPA's role will be. Does EPA think that these ships should be exported 
and if so, what has improved since 1997 when the Baltimore Sun first 
exposed this story?
    I also want to follow up on EPA's budget to enforce environmental 
laws. Over the last two years, the subcommittee has rejected EPA's 
proposals to shift enforcement funding to the States. The subcommittee 
had serious concerns that reductions in Federal enforcers would result 
in more polluters ignoring the law. We need both a strong Federal and 
strong State enforcement to achieve compliance with our environmental 
laws, not one or the other. I am pleased that this year's budget does 
not make the same mistake.
    Now, I would like EPA to tell us how priorities are being set 
within the enforcement funding we provided. We need to know how EPA is 
managing enforcement to ensure that the Agency is recruiting and 
retaining the experts needed to enforce environmental laws.
    Finally, Senator Bond and I have always taken the position that the 
VA-HUD bill should not be a vehicle for environmental riders. I hope 
that as we move a bill through the Committee this year, we can continue 
this policy. I thank Administrator Whitman for her testimony today and 
I look forward to hearing from her.

    Senator Bond. Wow, what a compelling reason. Thank you, 
Senator Mikulski.
    Senator Craig.

                    STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Thank you very much, Mr. Chairman, and let 
me thank Barbara for her kind statements also and our concerns 
that we jointly share on this committee.
    Madam Director, welcome again before the committee. We 
appreciate your presence here. I have to go chair another 
committee in a few moments, but I did want to make a couple of 
comments reflective of some of the work we have done jointly 
this past year that I think is tremendously positive.
    I have been able to secure funding for about $800,000 in 
the omnibus bill that passed a few months ago for the National 
Academy of Science to undertake a review of the science behind 
EPA's decision in the Coeur d'Alene basin area, in Superfund 
sites in northern Idaho. That is to bring the science together, 
to have a third party review of it, and we think to modernize 
some of the overall adjustments.
    Of course, we did come with a record. Your regional 
administrator up there, John Iani, agreed that once the study 
had gelled that there could be possibly some adjustment in the 
record based on that science. So I think what is important for 
the whole of our record-setting agreement--and I mean this, Mr. 
Chairman, in the sense that EPA and the State of Idaho jointly 
are approaching something that I think is a model for other 
States for broader cleanup of the Superfund area and setting 
guidelines and some cooperative financing and joint 
decisionmaking that is very helpful. The director led in that, 
the Administrator. We are very pleased that you would do so.
    But it is also important we gel the balance of it. So your 
help in getting the National Academy's work under way is 
important, and I certainly appreciate the work of your 
administrator in Region 10. That is going to be awfully 
important.
    But, as is typical, Madam Administrator, we have what I 
call embedded bureaucrats, and I will be very blunt, in our 
Region 10 Seattle office, who are not asking, are not following 
your approach to applying common sense solutions to 
environmental challenges within current regulatory constructs. 
I would urge you to continue to pressure that recalcitrant and 
sometimes resistant bureaucracy to get with it. I think it is 
awfully important that they do for the sake of our children and 
a clean environment.
    You have had the privilege of being in the beautiful part 
of north Idaho where we think Mother Nature and EPA and the 
State in cooperation have made significant headway in cleaning 
up that site. The solution in this cooperative effort, Mr. 
Chairman, is the avoidance of literally hundreds of millions of 
dollars spent potentially in the downstream and also the 
reality that when you do all the right things in a timely 
fashion in concert with Mother Nature's great effort you can 
clean up a major site without it being so terribly disruptive 
as some might choose it to be, or for it to be a lifelong 
pursuit of somebody who is administering it who just happens to 
like to live in a beautiful area in which they are pursuing the 
end game.
    Thank you, Mr. Chairman.
    Madam Administrator, I must say in all sincerity we do 
greatly appreciate your cooperation and we think we have 
established a record out there and a model that other States 
and regions ought to take a look at, how you get it done in a 
cooperative fashion.
    Senator Bond. Thank you very much, Senator Craig, for your 
very informative statement.
    Senator Leahy.

                 STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Thank you, Mr. Chairman.
    Administrator Whitman, welcome. It is good, as always, to 
have you here. It is said that you have one of the most 
difficult jobs in Washington and I am sure there are days you 
believe that. But you also have one of the most enviable jobs, 
a job where you can make decisions that have profound effects 
on our Nation's environment, not just for today but the 
Nation's environment that our children and our grandchildren 
will inherit.
    It is the mission of your agency, to safeguard our Nation's 
precious lands, air, water, protect the health of our citizens, 
especially our children. As we all know, our children are 
affected more than anybody else.
    I always enjoyed working with the EPA. I've done this for 
years. Under your leadership, EPA has been very responsive to 
my office and I appreciate that, and I might say responsive, 
respectful, and nonpartisan, and I think that reflects the 
direction they get from you, Governor.
    In my home State of Vermont, EPA has been instrumental in 
helping Vermont citizens restore the health of Lake Champlain 
and the Connecticut River watershed, the two bodies of water 
that border us on either side. Your New England regional office 
is working with local Vermont communities and my Vermont office 
to ensure the Elizabeth Mine Superfund site is properly 
maintained and cleaned.
    Just last week, EPA highlighted the immediate need for 
additional resources. There is a dam that holds back copper 
tailings. If there were a breach it would be catastrophic, 
there would be great loss of life, as well as environmental 
degradation, all the way down into the Connecticut River, and 
would also affect other States below us.
    So I see this and I see wonderful help and all, and then I 
worry about other things. The administration put forth 
proposals that I believe would reduce the objective oversight 
for the U.S. Fish and Wildlife Service and the National Marine 
Fisheries Service of the Endangered Species Act. We have all 
relied, both Republicans and Democrats, on their impartial 
oversight, and I am afraid that objectivity may be diminished 
and that would create a real problem for us and our own debates 
up here.
    The administration is delaying the issuance of a document 
which shows the impact of mercury on children in this Nation, 
something that I am very worried about and I know you are. I 
wish we could get the document issued.
    Most recently the administration suggested the Clean Water 
Act only applies to a fraction of our Nation's wetlands. And 
all this takes place in such rapid succession that I am afraid 
that the balance, the balance that has come up over the years, 
with the balance that we have seen in EPA programs, may come 
unglued. I express that to you as one who has great respect for 
you as a person and great respect for the EPA, as one who has 
seen the very good things you can do, but also one who worries 
very much if the EPA steps back from either objectivity or 
involvement.

                           PREPARED STATEMENT

    That is all my statement, Mr. Chairman. If I am not here at 
the time, I will have questions, especially on the Elizabeth 
Mine matter, because I want to know whether you will fully fund 
the plan to clean up that mine. Maybe you can answer that yes 
or no.
    Ms. Whitman. We are awaiting a record of decision on that. 
As you know, they did request the additional money for the dam, 
but we are waiting to have the full record of decision to know 
what the plan is and what the ultimate costs will be of doing 
that. But it is on the national priority list. It is clearly a 
priority for us as well as for the State.
    Senator Leahy. I appreciate that.
    I appreciate it, Mr. Chairman.
    Senator Bond. Thank you very much, Senator Leahy. We always 
appreciate your participation.
    [The statement follows:]

             Prepared Statement of Senator Patrick J. Leahy

    Welcome Administrator Whitman. Thank you for taking the time to 
come to the Senate and testify.
    It has been said that you have one of the most difficult jobs in 
Washington, but it is also one of the most enviable. It is a position 
where the decisions you make today can have profound effects on the 
Nation's environment tomorrow. A successful Administrator will meet the 
EPA's mission of safeguarding our Nation's precious lands, air, and 
water and protecting the health of our citizens, particularly our 
children, from environmental pollutants.
    I have always enjoyed working with the EPA, and under your 
leadership, EPA has been respectful and responsive to my office. In my 
home State of Vermont, EPA has been instrumental in helping Vermont 
citizens restore the health of Lake Champlain and the Connecticut River 
watersheds.
    Even as we speak, your New England Regional Office is actively 
working with local Vermont communities and my Vermont offices to ensure 
that the Elizabeth Mine Superfund site is properly maintained and 
cleaned. Just last week, the EPA highlighted the immediate need for 
additional resources to ensure that a catastrophic breach of a dam, 
which holds back copper tailings, does not occur at the site.
    With that as a backdrop, Madam Administrator, I must tell you that 
I continue to be disappointed at how vigorously this administration has 
worked to emasculate over 30 years of environmental law that has 
significantly improved the nation's environmental health. Recently, the 
administration has put forward proposals that could reduce the 
objective oversight by the U.S. Fish and Wildlife Service and National 
Marine Fisheries Service of the Endangered Species Act; the 
administration has delayed the issuance of a document that shows the 
impacts of mercury on the children of this nation; and most recently, 
the administration suggested that the Clean Water Act only applies to a 
fraction of our Nation's waters.
    The careful balancing required to protect the public's health has 
been unbalanced at the EPA as the fingers of special interests are 
invited to shape this administration's environmental policy. I fear 
that the health of our environment has not markedly improved since the 
last time you testified here, Madam Administrator, and as the 
environment has suffered, so has the health of American citizens.

    Senator Bond. Now, Madam Administrator, if you would give 
your opening statement and then we will move on. Thank you very 
much.

                  STATEMENT OF CHRISTINE TODD WHITMAN

    Ms. Whitman. Thank you, Mr. Chairman, and I appreciate the 
opportunity to be here once again to discuss the President's 
proposed budget for fiscal year 2004. I do, with your 
permission, Mr. Chairman, have a longer statement to submit for 
the record.
    Senator Bond. Thank you, if you would.
    Ms. Whitman. I would like to begin by first congratulating 
you on assuming the chair. I also want to thank you for your 
leadership and attention earlier this year to the funding 
issues we discussed as you were wrapping up the fiscal year 
2003 appropriations. And all the members of the committee for 
that, your assistance was very much appreciated. I am looking 
forward, obviously, to working with you and members of the 
committee on the appropriations process to advance our shared 
goals of cleaner air, purer water, and better protected land.
    The President's budget request of $7.6 billion for EPA 
provides the funding that we need to advance these goals and to 
meet the Agency's mission of protecting human health and 
safeguarding America's precious environment. It is a fiscally 
responsible request that recognizes the many competing 
priorities that, as you mentioned, Mr. Chairman, on taxpayers' 
resources, particularly with respect to homeland security, a 
time of war, without shortchanging our commitment to 
environmental protection.
    This budget request also advances our commitment to 
building strong partnerships with State, local, and tribal 
governments. More than 40 percent of our budget request, some 
$3.1 billion, will go directly to provide assistance to our 
non-Federal partners.
    I would like to take just a few minutes to point out some 
of the highlights of the President's budget request and then I 
would obviously be happy to take any questions that you might 
have. To promote cleaner air, the President's budget requests 
$617 million in the next fiscal year. These funds will allow us 
to improve air monitoring and analysis and provide $16.5 
million in grants to States, tribal and local governments for 
air toxics monitoring. They will also allow us to raise to 
$23.9 million, a $3 million increase, our funding efforts to 
combat children's asthma.
    In addition, the President's budget supports the 
administration's Clear Skies proposal. Clear Skies would 
require a mandatory reduction in power plant emissions of 
sulfur dioxide, nitrogen dioxide, and mercury by 70 percent. It 
is the President's most important environmental legislative 
initiative of this year and I look forward to working with you 
and the committee on getting it to his desk for his signature.
    To promote purer water, the President's budget places a 
strong emphasis on our core water programs which have proven so 
successful over the years. We propose to increase spending on 
these programs by $55 million, for a total of $470 million. 
This includes $20 million in the Clean Water Section 106 grants 
and $12 million for public water system supervision grants for 
our non-Federal partners.
    Our proposed budget also includes a $5 million increase in 
grants to help State, local, and tribal governments protect 
wetlands and $20 million to again fund the program we began 
last year to advance protection efforts in 20 additional 
threatened wetlands around the Nation.
    This budget also seeks $850 million for the Clean Water 
State Revolving Fund, which is less than was requested last 
year, as has been pointed out by several Members. However, the 
administration is committed to financing the Clean Water SRF at 
this level through fiscal year 2011, 6 years beyond any 
previous commitment. This means that the long-term revolving 
level of the fund will be at $2.8 billion, a 40 percent 
increase over the $2 billion commitment made under the previous 
administration. We also propose to fund the drinking water SRF 
at $850 million a year through 2018, so it can revolve at $1.2 
billion a year or a 140 percent increase over the previous goal 
of $500 million.
    Given our proposed increase in our core water programs, the 
current fiscal restraints, and the variety of innovations we 
are pioneering, I believe that this budget does fully support 
the commitment to pure water across our country. To better 
protect the land, this budget includes two significant 
increases. The first, an additional $150 million for Superfund 
cleanup; these additional funds will allow us to start an 
additional 10 to 15 construction projects at Superfund sites 
nationwide. The second, a $10.7 million increase over last 
year's record request for brownfields programs, brings our 
request to $210.7 million.
    Over the years, both the Superfund and the brownfields 
program have demonstrated their value, not just in restoring 
the environment and protecting the health of America's 
families, but in revitalizing neighborhoods and communities in 
every part of our country.
    In addition to our traditional environmental mission, EPA 
plays an important role in homeland security. The President's 
budget requests $123 million for our homeland security efforts. 
These funds will allow us to carry on the work we are doing to 
help protect our Nation's water infrastructure and will give us 
the resources that we need to enhance our emergency response 
capabilities.
    Given our time constraints, Mr. Chairman, I would like to 
just briefly mention several other areas that are fundamental 
to our ability to meet our mission, our ability to use the best 
available science, and our ability to enforce the law. The 
President's budget requests a total of $607 million to develop 
and apply strong science to address both current and future 
environmental challenges.
    It also asks for $503 million, the largest ever requested, 
for enforcement and a $21 million jump from our request last 
year. This will allow us to add an additional 100 FTEs to our 
enforcement efforts.

                           PREPARED STATEMENT

    Mr. Chairman, I am confident that our budget request 
supports our obligation to be both good stewards of the 
Nation's environment and good stewards of the taxpayers' 
dollars. It gives us the resources we need to help ensure that 
we leave America's environment cleaner and healthier than we 
found it.
    Thank you very much for your time.
    [The statement follows:]

              Prepared Statement of Christine Todd Whitman

    Mr. Chairman and Members of the Committee, I am pleased to be here 
to discuss President Bush's fiscal year 2004 budget request for the 
Environmental Protection Agency (EPA). The President's fiscal year 2004 
budget request of $7.6 billion provides funding necessary for the 
Agency to carry out our mission efficiently and effectively--to protect 
human health and safeguard the natural environment. Given the competing 
priorities for Federal funding this year, namely the War on Terrorism 
and Homeland Security, I am pleased by the President's commitment to 
human health and environmental protection.
    I would like to begin, Mr. Chairman, by emphasizing that the 
President's budget request for EPA reflects the Agency's commitment to 
cleaning, purifying, and protecting America's air, water, and land. The 
request promotes EPA's goals in a manner consistent with fiscal 
responsibility by strengthening our base environmental programs, 
fostering stronger partnerships, and enhancing strong science.
    This Agency remains committed to working with States, tribes, and 
other entities to protect human health and the environment. Of the $7.6 
billion budget, $3.1 billion would provide direct assistance to States, 
tribes, universities, local governments, and other partners. The 
President and I both believe that these partnerships are a vital part 
of effective environmental management and stewardship. Our budget 
request reflects that.
    As EPA continues to carry out its mission, I look forward to 
building upon a strong base of environmental progress. This budget, Mr. 
Chairman, will enable us to carry out our principal objectives while 
allowing us to react and adapt to challenges as they arise.

                              CLEANER AIR

    The budget requests $617 million to fund our clean air programs, 
thereby helping to ensure that air in every American community will be 
clean and safe to breathe. This includes $7.7 million more for modeling 
and analysis to strengthen the Agency's clean air programs. 
Furthermore, this budget supports the President's Clear Skies 
initiative, an aggressive plan to cut power plant emissions by 70 
percent. Clear Skies legislation would slash emissions of three power 
plant pollutants--nitrogen oxide, sulfur dioxide, and mercury--by 35 
million tons over and above what would be obtained under current law. 
Such emissions cuts are an essential component of improving air quality 
and thus environmental and human health. The Clear Skies initiative 
would build upon the 1990 Clean Air Act's acid rain program by 
expanding this proven, innovative market-based approach to clean air. 
Many counties could be brought into attainment with new ozone and 
particulate matter air quality standards based solely on Clear Skies. 
Clear Skies would significantly improve air quality conditions even in 
counties that would require additional emission reductions. Such a 
program, coupled with appropriate measures to address local concerns, 
would provide significant health benefits even as energy supplies are 
increased to meet growing demand and electricity rates remain stable. I 
look forward to working with you, your fellow members of Congress, and 
the President on this landmark legislation.
    The budget also includes $16.5 million for air toxics monitoring 
grants to State, Tribal, and local entities, a $7 million increase from 
last year, aimed at improving our understanding of air toxics exposures 
to help implement EPA's comprehensive air toxics strategy. The budget 
dedicates $23.9 million, an increase of $3 million, to the Agency's 
efforts combating children's asthma. The successful Tools for Schools 
Program, which helps schools assess and improve the quality of air 
students breathe, and other such efforts will benefit from the added 
funding.

                              PURER WATER

    EPA's budget request places a strong emphasis on core water 
programs to improve our water management framework, program 
implementation, and information sharing. The President's request boosts 
resources to States, tribes, and various entities to provide technical 
assistance, guidance, training, and additional funding. Our core water 
programs will increase by $55 million for a total of $470 million. This 
includes $20 million for Clean Water Section 106 Grants to help States 
improve implementation of the Clean Water Act (CWA) and $12 million 
aimed at enhancing State and Tribal drinking water program capacity 
through Public Water System Supervision (PWSS) grants. Other efforts 
reflected in the budget to provide clean and safe water to the American 
public include:
  --Additional Great Lakes Funding.--This budget nearly doubles the 
        Agency's Great Lakes commitment. EPA is requesting $15 million 
        in support of the Great Lakes Legacy Act to bolster 
        contaminated sediment cleanup activities. In 2004 the Agency 
        plans to begin cleanup on two to three new sites. Some of this 
        funding will also be used for assessment and analysis, 
        resulting in additional cleanups.
  --Extending the Federal Commitment to the Clean Water State Revolving 
        Fund (SRF).--The President's budget is committed to funding the 
        Clean Water SRF well above the previous administration's $2 
        billion average annual revolving goal. It finances the Clean 
        Water SRF at $850 million through 2011 and increases the long-
        term revolving level by $800 million to $2.8 billion, a 40 
        percent increase over our previous goal. At present, there is 
        $42 billion on loan or available for loans to States and 
        tribes. The expanded commitment is projected to make $63 
        billion available over 20 years thus allowing States and tribes 
        to finance an additional 15,000 projects over that period.
  --Extending the Federal Commitment to the Drinking Water SRF.--EPA 
        also proposes to fund the Drinking Water SRF at $850 million 
        through 2018 so it can revolve at $1.2 billion per year, an 
        increase of 140 percent above and beyond our prior goal of $500 
        million.
  --Protecting Wetlands.--Due to a 2001 Supreme Court decision, tens of 
        thousands of acres of isolated waters and wetlands may be 
        subject to development that no longer requires a permit under 
        the CWA. EPA's budget provides a $5 million increase for State 
        and Tribal wetland protection grants to help them protect these 
        waters and move the U.S. closer to no net loss of wetlands.
  --Helping States Address Nonpoint Source Pollution.--The President's 
        budget allows EPA to work closely with State water quality 
        agencies, USDA, conservation districts, and others to 
        accelerate national efforts to reduce nonpoint source 
        pollution. In light of significant increases in Farm Bill 
        resources, EPA will shift the program's emphasis in 
        agricultural watersheds from implementation of pollution 
        reduction projects to planning, monitoring, and assisting in 
        the coordination and implementation of watershed-based plans in 
        impaired and threatened waters.
  --Safer Drinking Water in Puerto Rico.--To ensure public health 
        protection, the Agency requests $8 million to design necessary 
        infrastructure improvements to Metropolitano, Puerto Rico. When 
        these infrastructure improvements are completed, EPA estimates 
        that about 1.4 million more people will have access to safer 
        and cleaner drinking water.

                         BETTER PROTECTED LAND

    To immediately reduce potential human health and environmental 
threats, this budget continues our long-standing commitment to clean up 
contaminated sites. Superfund, funded at $1.39 billion, includes a $150 
million increase over the President's fiscal year 2003 budget request 
to start an additional 10-15 construction projects at Superfund sites 
nationwide. By strengthening Superfund, one of our base programs, this 
budget will continue the progress we have made in completing cleanups 
at more than 800 National Priority List (NPL) sites. Cleanup has either 
begun or been completed at over 93 percent of Superfund NPL sites.
    EPA is committed to building and enhancing effective partnerships 
that allow us to safeguard and restore land across America. To do so, 
this budget provides $210.7 million, $10 million above last year's 
funding request, for the Brownfields program, one of the 
administration's top environmental priorities. The Brownfields program 
will draw on these additional resources to enhance State and Tribal 
response programs that restore and reclaim contaminated sites. By 
protecting land and revitalizing contaminated sites throughout the 
United States, EPA continues to expand efforts to foster healthy and 
economically sustainable communities and attract new investments to 
rejuvenated areas.

                           HOMELAND SECURITY

    EPA plays a vital role in preparing for and responding to terrorist 
or other intentional incidents because of our unique expertise and 
experience in emergency preparedness and response to hazardous material 
releases. To meet our obligation to protect America's homeland we are 
asking for $123 million and 142 FTEs. This request would allow the 
Agency to continue providing leadership and guidance for the protection 
of the nation's critical water infrastructure while upgrading and 
enhancing our emergency response capabilities.
    The President's budget reflects EPA's role in protecting public 
health and critical water infrastructure in the event of terrorist or 
other intentional acts. To ensure the safety and integrity of America's 
water infrastructure, resources would be dedicated to working with 
States, tribes, drinking water and wastewater utilities, and other 
entities to assess the security of these water facilities and develop 
emergency response plans where appropriate.
    Incorporated in this request are targeted investments to strengthen 
the Agency's readiness and response capabilities, including the 
establishment of a ``decontamination team,'' state-of-the-art 
equipment, and highly specialized training for On Scene Coordinators 
(OCSs). Meanwhile, EPA will conduct research and provide guidance and 
technical support for Federal, State, and local governments, and other 
institutions in the areas of building contamination (chemical and 
biological) prevention, treatment and cleanup activities, water 
security, and rapid risk assessment.
    This budget would also expand our radiological contamination 
detection ability across the country and enhance our capacity to 
provide near real-time biosurveillance information should a biological 
incident occur. In addition, this request provides resources for 
Antimicrobials Scientific Assessments, Acute Exposure Guideline Levels, 
IT management for vulnerability assessments, environmental crimes 
expertise, as well as resources to enhance the Agency's physical 
infrastructure security.

                        ENHANCING STRONG SCIENCE

    Sound science is a fundamental component of EPA's work. The Agency 
has long relied upon science and technology to help discern and 
evaluate potential threats to human health and the natural environment. 
Much of our decision-making, policy, and regulatory successes stem from 
reliance on quality scientific research aimed at achieving our 
environmental goals. The budget request supports EPA's efforts to 
further strengthen the role of science in decision-making by using the 
best available sound scientific information and analyses to help direct 
policy and establish priorities. We have requested $607 million to 
develop and apply strong science to address both current and future 
environmental challenges. Our budget supports a balanced research and 
development program designed to address administration and Agency 
priorities and meet the challenges of the Clean Air Act (CAA), Safe 
Drinking Water Act (SDWA), Federal Insecticide, Fungicide, and 
Rodenticide Act (FIFRA), Food Quality Protection Act (FQPA), and other 
environmental statues.
    This budget supports increases to funding for research of sensitive 
populations such as children and the elderly, our new Aging Initiative, 
programs such as Computational Toxicology research, which integrates 
modern computing with advances in genomics to help develop alternatives 
to traditional animal testing approaches, and the Agency's Integrated 
Risk Information System (IRIS). We propose to nearly quadruple our 
funding for the modernization and expansion of IRIS--an EPA database of 
Agency consensus human health information on environmental 
contaminants.
    Additionally, the Agency is taking steps to ensure a high quality 
scientific workforce. To do so, we are requesting resources for the 
Science Advisory Board (SAB), the newly established Science Advisor, 
and the STAR Fellowship program. EPA will expand its support for the 
SAB, an independent council to Congress and the Administrator on 
scientific, engineering, and economic issues that underpin EPA 
policies. Like the SAB, the Science Advisor will be responsible for 
ensuring the availability and use of the best science to support Agency 
policies and decisions and advise the Administrator. To help us educate 
new environmental scientists we have requested $5 million for the STAR 
Fellowship program. This grant program has funded some of the country's 
best scientists and engineers. In addition, we have asked to expand our 
post-doc initiative which has encouraged environmental scientists and 
engineers to join EPA.

                              ENFORCEMENT

    Since EPA's inception nearly thirty years ago, many environmental 
improvements in our country can be attributed to a strong set of 
environmental laws and our efforts to ensure enforcement of those laws. 
State, Tribal, and local governments bear much of that responsibility. 
EPA partners with those governments and other Federal agencies to 
promote environmental protection and restoration. This budget requests 
$503 million, the largest amount ever and a $21 million increase over 
last year's request, for EPA's environmental enforcement program. These 
additional funds, coupled with our proposed 100 Full Time Equivalent 
(FTE) enlargement of the Federal enforcement workforce, would help the 
Agency maximize compliance and achieve environmental results through an 
integrated program of assistance and compliance assurance.

                   QUALITY ENVIRONMENTAL INFORMATION

    Information gathering, processing, and delivering are fundamental 
to EPA's work because of our reliance on scientific and analytical data 
and our close collaboration with external partners. Our goal is to 
provide the right information, at the right time, in the right format, 
to the right people. To achieve this goal, improve the Agency's 
information infrastructure, ensure that the American public has easy 
access to environmental information, and expand E-Government in support 
of the President's Management Agenda (PMA), we have proposed an 
additional $30.5 million investment for a total investment of $202 
million in EPA's Environmental Information office.
    We will continue development of the National Environmental 
Information Exchange Network. The Exchange Network is an electronic 
method of sharing environmental data using secure points of exchange. 
The primary components of the Exchange Network are the National 
Environmental Information Exchange Network Grant Program and the 
Central Data Exchange (CDX). The grant program assists States and 
tribes in evaluating their readiness to participate in the Exchange 
Network, enhances their efforts to complete necessary changes to their 
information management systems to facilitate Network participation, and 
supports State information integration efforts. The CDX is the focal 
point for securely receiving, translating, and forwarding data to EPA's 
systems--the electronic reporting gateway to the Agency's information 
network. This year the CDX will service 46 States and at least 2,000 
private and local government entities.

                           ENSURING SAFE FOOD

    The President's request includes $119.0 million to help ensure that 
all Americans will continue to enjoy one of the safest and most 
affordable food supplies in the world. To do so, EPA will continue 
implementation of the Food Quality Protection Act (FQPA) which focuses 
on new science-driven policies for pesticides review, seeks to 
encourage the development of reduced risk pesticides that provide 
alternatives to older versions, and develop and deliver information on 
alternative pesticides/techniques and the best pest control practices 
to pesticide users. The Agency is also working to help farmers 
transition, without disrupting production, to safer pesticide 
substitutes and alternative farming practices. We will reassess 
existing tolerances to ensure food safety, especially for infants and 
children, and ensure that all registered pesticides meet current health 
standards.

                   A COMMITMENT TO REFORM AND RESULTS

    The President's proposed EPA budget for fiscal year 2004 fully 
supports the Agency's work. The request demonstrates EPA's commitment 
to our principal objectives--safeguarding and restoring America's air, 
water, and land resources--by strengthening and refining our base 
environmental programs, fostering stronger partnerships, and enhancing 
strong science. As we look to the future, I am confident that this 
funding will ensure the Agency's fulfillment of our responsibilities to 
the American public.
    With that, Mr. Chairman and members of the Committee, my prepared 
statement is concluded. I would be pleased to answer any questions you 
may have.

    Senator Bond. Thank you very much, Madam Administrator.

                  CLEAN WATER SRF--PRESIDENT'S REQUEST

    As both my colleague from Maryland and I indicated, water 
infrastructure funding is an extremely high priority. We oppose 
the reduction in the Clean Water State Revolving Fund. The EPA 
gap analysis concluded the United States will need $540 billion 
over the next 40 years. Other estimates indicate that these 
costs could top $1 trillion.
    How does the administration justify reducing funding for 
clean water and when, where, and how are we going to be able to 
find the resources to meet our water infrastructure needs?
    Ms. Whitman. Well, Mr. Chairman, the Clean Water State 
Revolving Loan Fund has reached the previous revolving goal of 
around $2 billion as a long-term annual revolving level. Rather 
than saying that is where we are going to stay and nothing 
further will be committed, the administration has, through this 
budget, decided to increase this commitment effectively to an 
annual long-term revolving level of $2.8 billion through 2011, 
which will provide $4.4 billion more over those 6 years.
    When the legislation was initially enacted, there were no 
promises made and no assumptions made beyond the fact that this 
was eventually going to be something that was going to be taken 
over by the States. It is clear that there is always going to 
be the need of a Federal participation and there is a need for 
a substantial commitment to that, which is why the 
administration proposes taking it to 2011.
    There are also a number of other areas where we are 
providing funds to State, local, and Tribal governments for 
water, clean water, and drinking water infrastructure needs, 
and we are working with the States and trying to be as flexible 
as possible to allow them to move dollars from some of their 
other programs to address what may be their most pressing need 
on water infrastructure.
    But it is clear that we have dollar needs that are beyond 
any one part of government to meet. We had a conference--last 
month was it, Tracy?
    Mr. Mehan. Yes.
    Ms. Whitman [continuing]. In January, bringing together the 
stakeholders of various water systems representatives, as well 
as ratepayers and other State experts, to talk about some of 
these needs and identify things that we could do beyond just 
the straight dollars.
    But we believe that by providing a comprehensive program 
with dollars from a number of different sources, and the 
flexibility for States to apply these where their needs are the 
greatest, and by making the commitment to 2011, that we will in 
fact be able to continue to move this program forward.

                 COMBINED AND SANITARY SEWER OVERFLOWS

    Senator Bond. We need to do something more than just 
continue. I appreciate your mentioning Tracy. I know he has 
probably fished in Christian County and knows the problem and 
knows the area that I spoke about earlier.
    But while we are speaking about needs, the combined and 
separate sewer overflows, there are 772 municipalities that 
combine domestic sanitary sewage, industrial waste, 
infiltration from groundwater, and storm water collected, and 
they are overloaded and they result in tremendous pollution 
when they are overloaded. What is the cost to address these 
needs and how should these needs be paid?
    Ms. Whitman. What cost estimates do we have on sanitary 
sewer overflows, Tracy? I am looking to the expert on this one, 
Senator.
    Senator Bond. Why don't you get that answer for the record.
    Ms. Whitman. We would be happy to get you that answer for 
the record.
    [The information follows:]

               Cost Estimates of Sanitary Sewer Overflows

    The Clean Watersheds Needs Survey (CWNS) does not include a 
category specifically for correction of sanitary sewer overflows 
(SSOs). Therefore, EPA is using a model to develop a SSO estimate for 
the CWNS 2000 Report to Congress. The model is based on reducing wet 
weather overflows within a collection system to every 5 years. This is 
a level of control that could be reasonably estimated by a model at 
this time using available information.
    The modeled estimate of SSO costs is $88.5 billion in January 2000 
dollars. This is an estimate of the capital investment required. The 
actual of capital investment needed can only be determined by a case-
by-case analysis of each system. The modeled estimate does not include 
the cost of improved collection system management and operation and 
maintenance, which can be a significant factor in estimating SSOs.

                            ARSENIC STANDARD

    Senator Bond. Let me ask you another impossible question.
    Ms. Whitman. It's that Princeton education.
    Senator Bond. What steps is EPA taking to make sure that 
communities with water that exceeds the current standards for 
arsenic will be able to convert or rebuild the water systems to 
meet the----
    Ms. Whitman. Actually, Senator, we are doing a great deal 
on that. We have put out a request for willing communities to 
serve as hosts for pilot projects. We have had about 117 
responses. By the end of this year, we hope we will be 
beginning pilot programs, eight to ten pilot programs. Those 
will be in different States around the country.
    Really what we are looking for is we are testing new 
technology. A great deal of new technology has come forward to 
us that purports to be effective in reducing arsenic and will 
give us the opportunity to find less expensive methods, a host 
of methods.
    But we also recognize that there are geologic factors, 
there are different water concentrations, that impact how the 
arsenic is getting in the water. So we are looking for sites 
that represent both the different kinds of problems that we 
face on the ground and the different types of technology. We 
are providing additional money, with working with the 
Department of Agriculture. And we have also given a 3-year 
extension that is almost automatic for all the water companies 
to meet the goal. Then smaller water facilities can continue to 
get 2-year extensions, three more 2-year extensions. So we will 
give them time to meet these needs.
    Senator Bond. Well, I was going to try to sneak in another 
question. But let me turn now to my Ranking Member, Senator 
Mikulski.

                  CLEAN WATER SRF--PROPOSED REDUCTION

    Senator Mikulski. Well, as you can see, Madam 
Administrator, we are really focused on water quality. I am 
going to ask some of my questions and then leave others for the 
record because the Senate is working to draft a resolution in 
support of our troops. Today is a very tense day in the world. 
I know our thoughts are with our troops and the people with 
responsibility for leading them. I know, too, that you have 
been working very hard on homeland security.
    Let me go, though, to the water infrastructure issues. I 
just want to pick up again on what Senator Bond said. There is 
a group called the Water Infrastructure Network and they 
estimate there is a funding gap of $23 billion for a year. GAO 
says over the next 20 years there could be $300 billion. EPA 
itself said that over the next 20 years demands for improved 
sewer and drinking water could outstrip current levels by $535 
billion.
    Now let me go to this year's request for appropriations. 
The budget cuts $500 million from the Clean Water SRF and $315 
million in targeted water projects. How many water projects 
will not be funded as a result of these cuts and what will be, 
do you estimate, the impact on the environment?
    Ms. Whitman. Well, Senator, we have no way of knowing how 
many projects will not be funded because we have not set out a 
budget. We do not have all the requests in and we do not know 
how the States will be using those dollars. These are dollars 
that the States get to put toward their needs. So it would be 
difficult for us to say that.
    I think the important thing to remember here is this is a 
revolving fund. Over the long term, it will be revolving at 
better than $2 billion a year, which is where it was 
anticipated to be. And we are trying to make the commitment to 
ensure that that anticipation is going to be met in the out 
years as well.
    Senator Mikulski. Could you tell me, what was the rationale 
of going from, with water projects, from $1.3 billion to $850 
million? What was the rationale behind it?
    Ms. Whitman. Again, the assumption was that when you added 
together the fact that we were extending the Clean Water SRF to 
2011 and increasing the annual long-term revolving commitment 
to $2.8 billion, from the previous annual revolving level of $2 
billion, that would address those needs, understanding that 
there was no way we were going to have all the money to be able 
to do all of the projects that were out there. By putting that 
together with the other pots of money that we have for States 
and the other increases there is a very, as we say at the 
Agency, robust water program. There are a significant amount of 
dollars available to States and local districts to meet their 
needs.
    But the understanding is that we do not have all the money 
to do it.
    Senator Mikulski. State and local governments are really 
hurting and they are hurting because of, one, their own budget 
issues, which I know you have heard about from the Governors. 
Number two, they are hurting because, particularly in the 
coastal states, they are tremendously impacted by these cuts on 
water and because of the increased costs of homeland security. 
But they are also calling me and my colleagues about money to 
protect water infrastructure issues for homeland security. Then 
they see that their water and sewer projects are hurting.
    So I do not know what to tell them and how we are going to 
help them.
    Ms. Whitman. Well, I think it's important to note----
    Senator Mikulski. If you were with the Mayors Council or 
the National Association of Counties what would you tell them 
on how the Federal Government is on their side and how we are 
going to help them?
    Ms. Whitman. Well, I think it is important to note that we 
are proposing a $32 million increase in core water programs 
over the total budget of the Agency as it deals with water 
programs for States, local governments, and tribes. In 
addition, we are also increasing EPA's resources to provide 
guidance and technical assistance to local governments and to 
tribes.
    Over the nearly 30 years of the Clean Water Act and the 
Drinking Water Act we have worked together at all levels and 
made incredible progress. There is no question that there 
continue to be extraordinary needs, but with an increase of $32 
million overall in our core water programs and the guarantee of 
the revolving nature----
    Senator Mikulski. Excuse me, but that $32 million could be 
used by about five States and use it right up.
    There are other questions that I have, one of which is, I 
know in January EPA convened a conference on closing the gap 
with local officials on how to meet water and sewer challenges. 
Could I have for the record what came out of that meeting so we 
can have the best guidance of your own consultations?
    Ms. Whitman. Certainly.
    [The information follows:]

 Summary of Discussions From the Closing the Gap: Innovative Solutions 
              for America's Water Infrastructure Forum \1\
---------------------------------------------------------------------------
    \1\ This document is a summary of discussions during a public 
meeting and does not necessarily represent EPA's position.
---------------------------------------------------------------------------
                            JANUARY 31, 2003

                              INTRODUCTION

    In an effort to facilitate and stimulate a national dialogue on the 
importance of finding innovative ways of enhancing and sustaining the 
Nation's water infrastructure which is vital for protecting public 
health and the environment, U.S. EPA Administrator, Governor Christine 
Todd Whitman, and the Assistant Administrator for Water, G. Tracy 
Mehan, convened a forum on Closing the Gap: Innovative Solutions for 
America's Water Infrastructure on January 31, 2003, in Washington, DC.
    The emerging theme from the forum was that Federal, State and local 
governments and the private sector, working with the public should 
extend their efforts in supporting the necessary water infrastructure. 
This infrastructure is critical for protecting public health and the 
environment, and maintaining local and national economies.
    Over the past several years, a number of studies have highlighted 
the need for substantial investment in the Nation's drinking water and 
wastewater infrastructure. (U.S. Environmental Protection Agency 1998, 
2001, and 2002; General Accounting Office 2002; Congressional Budget 
Office 2002; Water Infrastructure Network 2000 and 2001; American Water 
Works Association 2001.) While the estimates of the cost of this 
investment vary greatly, each study concludes that a significant 
increase in spending above current levels will be necessary to meet 
this investment need. In response, the U.S. Environmental Protection 
Agency (U.S. EPA) convened a forum of water system experts from 
industry, government, and academia to discuss options for meeting this 
investment need. While Federal subsidies for investment in drinking 
water and wastewater infrastructure would help finance needed 
investment, Federal support will not address the entire need; 
therefore, the U.S. EPA wants to consider other innovative responses to 
ensure the investment need is met in an efficient, timely, and 
equitable manner. These approaches could include improvements in 
management systems and water use, a watershed approach to resource 
management, and efficient pricing of drinking water and wastewater 
services.
    The forum was convened by the U.S. EPA Administrator, Governor 
Christine Todd Whitman, on January 31, 2003, in Washington, DC. The 
Assistant Administrator for Water, G. Tracy Mehan III, opened the forum 
and introduced Governor Whitman, who welcomed the participants and 
explained the purpose of the forum: to exchange information and views 
on innovative management and sustainable financing of the Nation's 
water and wastewater infrastructure. Following the Governor's remarks, 
the Assistant Administrator summarized the issues to be addressed 
during the day by two panels comprised of water system operators, 
regulators, environmentalists, and academics, focusing on four areas: 
better management, smarter water use, full-cost pricing, and a 
watershed approach. (The forum's agenda, the introductory remarks, and 
the list of panel members are appended at the end of this report.) The 
first panel focused on management of water and infrastructure assets. 
The second panel focused on infrastructure financing. In addition to 14 
panelists, more than 250 people attended the forum. The forum concluded 
with an open discussion with the Assistant Administrator for Water and 
panel members.
    The difference between the projected level of spending on drinking 
water and wastewater infrastructure and the projected level of spending 
required to meet future investment needs is referred to as the ``gap.'' 
While the gap is a useful construct, it has limitations. The gap is a 
static estimate of a dynamic phenomenon; the level of investment 
required will change over time, depending on a wide range of variables 
and the actions of water and wastewater systems. The estimates are 
sensitive to the assumptions made regarding economic growth, population 
growth, and future spending on operations, maintenance, and investment. 
Finally, the high end estimates do not take into account how systems 
will use less water; adopt new, more efficient technologies; or better 
manage their assets.
    On the other hand, the gap analyses focus attention on the 
additional resources--financial, technical, and managerial--necessary 
to ensure water remains clean and safe. The issues raised by the forum 
can be organized into the following themes:
  --System management;
  --Technology;
  --Finance;
  --Efficient pricing;
  --Public education.
    This report summarizes the discussion and presents the basic 
conclusions of the forum. It presents the issues raised by the two 
panels and the public discussion that followed. It does not represent 
EPA policy; rather, it presents the issues and ideas raised during the 
forum about approaches for addressing the water and wastewater 
infrastructure needs.

              AN INTEGRATED APPROACH TO SYSTEM MANAGEMENT

    Effective management integrates approaches across assets in 
watersheds and is coordinated with financing, including pricing, and 
public education to address clean water needs. Drinking water and 
wastewater systems need good management systems such as asset 
management and environmental systems management programs. Good 
watershed management can minimize the cost of future investment. 
Watershed management also requires regulatory flexibility to deal with 
a range of conditions that exist in different systems and watersheds.
Asset Management
    Water systems need to conduct a full accounting of the costs to 
manage their assets, both for current operations and future investment 
needs. This accounting is also necessary to substantiate pricing water 
to cover the full cost to treat and deliver to consumers (addressed 
below). Asset management is an approach for an integrated assessment of 
future capital and operating needs and ensuring investments are made 
efficiently. By appropriately managing its assets, a system may be able 
to reduce its overall investment needs. The key focus of asset 
management is on improving the quality of information on which 
decisions are made. Asset management requires an information system 
that characterizes the risks associated with failure to repair or 
replace elements of infrastructure and a decision-making approach that 
uses risk assessment to measure the benefits of alternative approaches 
to infrastructure rehabilitation and replacement. Asset Management 
processes and techniques can be adapted to the complexity and scale of 
the organization's systems. For more complex systems, asset management 
is neither inexpensive nor easy to implement, but it can be a cost-
effective means of closing the gap.
    Asset management is an inventory-based approach to planning. 
Systems must define the service levels required for end uses, from fire 
flow to residential water use. They then account for the physical 
assets in their inventory by assessing the age, condition, and 
importance of each asset. Age will give a sense of the condition of the 
asset, but its physical condition also must be evaluated. Condition 
assessments are focused on parts of the system that are most critical 
to continuing successful provision of the services. Physical 
inspections (such as walking through pipe or sending in cameras) may be 
needed. Other means also may be available. For example, systems can 
measure iron pick-up in the water in the distribution system over time 
as is done in England, which would indicate potential corrosion of the 
iron pipes. Use of operational data and statistical approaches also can 
be used to identify trends in performance.
    Systems also must determine how critical the asset in question is. 
For example, not all pipe of similar age and condition needs to be 
replaced at the same time. In some cases, a pipe break would have 
severe consequences: it could disrupt service for thousands of 
customers for several days, and it could be very expensive to fix. In 
other cases, a break can be repaired in several hours, with little 
impact on customers. By classifying how critical each asset is to 
service provision, a system can focus its investment where it is needed 
most.
    Based on this assessment, systems can then plan for the replacement 
of its assets. As with pricing, this may require changes in culture and 
attitude. In many cases, the approach towards public infrastructure is 
to build it and operate it, with minimal maintenance, until it wears 
out. Asset management entails a more proactive approach, looking at the 
asset over its entire life cycle. In addition to technological needs 
like fiber optics, cameras, and flow meters, system operators need 
training to implement asset management. Asset management requires a 
significant amount of information, and a major commitment on the part 
of the system to collect the data and manage the system. Seattle with 
more than 1,000 employees was able to commit four staff to asset 
management. Smaller systems may require outside assistance.
Watershed Management
    A watershed approach that involves both institutional and physical 
integration of wastewater management, storm water management, water 
use, and land use could lower costs all around. A watershed approach 
would entail broad stakeholder involvement, hydrologically defined 
boundaries, and coordinated management across all aspects of policy 
that affect water. Through increased efficiency in water use and water 
reuse, water withdrawals can be lowered, reducing the need for new 
source development and reducing the amount of wastewater to be 
processed. By protecting source water, it may be possible to reduce the 
need for expensive treatment plants. Some regionalization of systems, 
through actual consolidation; sharing of management resources, computer 
systems, and information; or interconnection, can help lower costs for 
small systems and enhance the management of the watershed.
    One example of this type of integration happened in 1974 in the 
United Kingdom. Responsibility for all water and sewer policies was 
vested in ten new authorities that were defined by hydrological 
boundaries. The oversight of these regional authorities by national 
agencies concerned about water quality and the cost of service created 
the conditions for strong asset management policies. The United States 
is not the United Kingdom; therefore, there will not be a real 
opportunity for national watershed planning. But there are 
opportunities within States, as some States are moving forward in 
consolidating entities into larger units for decision-making on water 
beyond political boundaries.

Regulatory Flexibility
    The regulatory regime also can have an impact on system planning 
and watershed management. Inflexible regulations can lead to 
inefficient management of the watershed. For example, controlling and 
managing non-point sources of pollution are very important to improve 
water quality and will require significant attention. But these sources 
are not the focus of current regulations, which force systems to put 
most of their resources towards curbing point sources of pollution. 
Increased regulatory flexibility may let systems meet clean water and 
drinking water standards at a lower cost. For example, Seattle was able 
to save a significant amount of money when it was allowed to invest in 
source water protection rather than install a filtration plant to 
comply with drinking water standards.
    Regulators tend to favor the traditional approaches, even though 
new approaches can be more cost effective. Seattle has experimented 
with using swales on both sides of a street and has succeeded in 
reducing runoff by 97 percent. This kind of ``thinking outside the 
box'' may be expensive at the beginning, but can produce significant 
savings in the long run from reduced maintenance costs.

The Role of Technology
    Water infrastructure ranges from relatively simple pipe to complex 
treatment facilities. The need to replace infrastructure is the source 
of the funding need; technological innovations may provide a means for 
reducing the cost of the future investment. The use of fiber optics can 
help assess the condition of buried infrastructure, as has been done in 
the United Kingdom. Cleaning out and lining old pipes provide low-cost 
alternatives to replacement of distribution mains and sewer lines. New 
pipe material that reduces leaks will reduce water demand. Computers 
can free operators from monitoring dials to managing assets and other 
tasks. New membrane technologies will be useful, at least on a small 
scale. A host of decentralized wastewater technologies are very cost-
effective for small communities compared to conventional sewers. Some 
of these technologies can be blended with conventional systems for 
urban and suburban areas.
    Not all promising innovations are complex technologies. Coca-Cola 
reduced water consumption by 25 percent in a matter of days by 
capturing wastewater onsite and using it to wash the company's trucks 
and crates. Other small technology changes, like replacing an old 
chlorinator with a state-of-the-art model, can yield significant cost 
savings as the Narragansett Bay Commission discovered.
    However, regulators, engineers, and drinking water and wastewater 
system operators tend to be conservative when it comes to adopting new 
technologies. The technology must be in use for it to even be 
considered. Laboratory testing likely will not be adequate to encourage 
operators to adopt new technologies; rather, full-scale demonstrations 
may be necessary. The Federal Government plays an essential role in 
promoting research, development, testing, and evaluation of new 
technologies and then in disseminating information about proven 
technologies. This role will remain important in the future.

                  FINANCING INFRASTRUCTURE INVESTMENT

    EPA's gap analysis (U.S. EPA, September 2002), like other studies, 
focuses on projected estimates of the cost of future investment in 
water infrastructure without identifying the source of funds to pay for 
this investment. While not the focus of the forum, funding was an 
underlying theme. Clean and safe water is a public good; therefore, the 
central question is to what extent taxpayers or rate payers will pay 
for the needed investment. The forum raised several issues with regard 
to the means of financing infrastructure investment.
    First, the drinking water and wastewater systems themselves--and by 
extension, their customers--will pay for the vast majority of the 
investment. Some argue that systems should move towards full-cost 
pricing that accounts for needed future investment to generate the 
necessary funds and to impart a clear signal of the cost of water to 
their customers. As mentioned earlier, many systems do not adequately 
account for their investment needs and charge rates below cost; 
therefore, they generate insufficient revenue to finance investment, 
and will need to increase their rates. Because water consumes a 
relatively small share of household income, most households may be able 
to afford a rate increase. To minimize rate payer backlash, systems 
must back-up rate increases with solid information on costs of service. 
Programs also will need to address affordability issues through 
mechanisms such as lifeline rates for low-income customers. It was also 
mentioned that accounting/financial reporting is needed to regulate the 
industry economically to press the case for proper rates.
    Second, the Federal Government will continue to play an important 
role. Appropriate incentives can promote improved management practices. 
The Federal Government can provide incentives to encourage systems to 
implement asset management, full-cost pricing, technological 
innovation, and water saving programs. The Federal Government also 
remains an important source of funds for water and wastewater 
infrastructure improvements. Some panelists called for additional 
resources by the Federal Government, including an increase in the 
Federal contribution to the Drinking Water State Revolving Fund and the 
Clean Water State Revolving Fund. Several panelists recommended that 
States should leverage these funds to generate additional resources. 
Some States leverage these funds, others do not. One controversial 
suggestion was the establishment of a Federal water trust fund, with 
dedicated funds tied to a water-related fee. Other panelists believed 
that increased Federal funding should not be the answer.
    To encourage sustainable financing, some argued that steps should 
be taken to level the playing field so that anyone interested in 
investing in public infrastructure for the public good has access to 
tax-exempt financing, which often is limited even for public utilities. 
This access can be provided by lifting the restrictions on tax-exempt 
financing for many communities and allowing private activity bonds. 
Municipal bond reform could generate additional funds by providing 
preferential tax treatment for water-related bonds issued by both 
publicly or privately owned systems. ``Green'' bonds--below market 
interest rate bonds to support water infrastructure and other 
environmental programs--also could be created to finance water 
projects. Also, many systems cannot float bonds for political or rating 
reasons, limiting access to capital markets.
    Creative measures are available for systems' rate structures as 
well. Connecticut and Pennsylvania allow water utilities to recover 
infrastructure investment through monthly bills for a particular period 
of time. The Elizabethtown Water Company can segment their market by 
charging for specialized services (e.g., insurance for line breaks 
between the curb and the house); these funds can then be used to 
finance infrastructure investment.
    The issue of financing sustainable infrastructure can be viewed in 
the framework of capacity development. While some systems may be able 
to meet their needs through a combination of increased rates, improved 
water use, and asset management, other systems--especially low-income 
small systems--may not be able to implement improved management 
techniques or raise sufficient funds. Many low-income small systems may 
not have the managerial, technical, or financial capacity to meet the 
investment challenge or national environmental and drinking water 
standards. Often these systems may not know what their needs are; in 
some cases, the State or other regional authority assesses the needs of 
the system and makes recommendations. Regionalization provides a means 
of upgrading assets at lower costs. For regionalization to succeed, a 
third party may be needed to provide an unbiased analysis of the 
situation. Regionalization will not always be the answer, however. 
Small, isolated systems should be screened to determine whether a 
structural solution is warranted, or if technical or financial support 
would address the system's needs.

                          THE ROLE OF PRICING

    Pricing water appropriately is important for water providers and 
consumers to get the right market signals. Like other utilities, 
drinking water and wastewater systems are typically either regulated 
monopolies or publicly owned. One of the key challenges facing systems 
under these circumstances is to provide their services in an 
economically efficient manner. Prices play an important role, but the 
price signal often is muted in publicly owned systems or regulated 
monopolies. The price of drinking water and wastewater services is 
rarely equal to marginal cost (i.e., the cost to the system of 
producing an additional unit of water), and is often below the average 
cost per unit of water service (implying some form of subsidy).
    It was discussed that switching to a pricing approach that recovers 
the full cost of water and wastewater services could address the 
infrastructure funding gap in two ways. First, full-cost pricing would 
tend to increase system revenue. Moving to full-cost pricing may 
require changes in accounting and management to ensure the rate covers 
the cost of future investment needs as well as current operations (see 
the discussion of asset management, above). With these changes in 
place, the revenue generated through full-cost pricing can provide 
systems with much of the funding necessary to finance infrastructure 
investment. Second, full-cost pricing can reduce future investment 
needs. The elimination of rate subsidies (explicit or otherwise) will 
send a clear signal of the value of water to consumers. The clear price 
signal can play an important role in demand-side management, 
encouraging conservation. Reduced demand, in turn, can reduce or delay 
planned investments.
    This dual effect of raising funds for investment and reducing the 
level of investment required is a theme that was present throughout the 
forum. The gap is analogous to the open jaw of an alligator. The top of 
the jaw represents the projected investment need over the next 20 
years, which, if not addressed, threatens to imperil the service level 
of existing water infrastructure. The bottom jaw represents the 
projected level of funding available to finance this investment which, 
if not sufficient, will not mobilize the necessary resources. The 
challenge for systems (and for public policy) is to close this jaw. It 
was argued by some that full-cost pricing works on both the top and 
bottom of the jaw, generating funds for investment, and reducing the 
amount of investment required.
    Appropriate economic incentives can encourage efficient allocation 
of resources for both publicly and privately owned water systems. 
Because of the requirements of the market, privately owned systems are 
more likely to use full-cost pricing. Privately owned systems tend to 
charge higher rates than publicly owned systems, because they must 
provide a return for investors and pay taxes. (Privately owned systems 
also are regulated by State public utility commissions, which approve 
their rates and hence provide political support not necessarily 
available to publicly owned systems.) Full-cost pricing helps make 
privately owned systems self-sustaining by providing them with the 
means for necessary infrastructure investment.
    It often is assumed that private companies are very good at project 
delivery and management. But privatization is not a panacea; it is not 
appropriate in all circumstances and must be evaluated on a case-by-
case basis, considering service received for the price paid. Private 
firms can produce good results, but a bad contract can leave a 
community worse off. Whether publicly or privately owned, drinking 
water and wastewater utilities must recognize both the public service 
and business aspects of their systems. Some argue that publicly owned 
systems can benefit by using private sector management approaches, 
including full cost-pricing and asset management. The public has 
demanded input into decisions of privately owned systems regarding 
traditional public-sector issues like land use. A privately owned or 
operated system must provide service that is at least as good as a 
publicly owned and operated system. If service is not as good, it will 
be penalized; if it performs better than the public system, it may 
benefit.
    The issue raised by pricing is not simply one of ownership, but the 
incentives facing the system. Many publicly owned systems recover their 
costs through full-cost pricing. On the other hand, some privately 
owned systems do not face the incentive needed to adequately plan for 
investment. For example, a smaller privately owned system did not 
adequately plan for investment until it was acquired by a larger 
company and changes were made that affected how management made 
investment decisions. Both publicly and privately owned systems will 
need to address issues raised by more efficient operations, including 
operators' fear of job loss, changes in relationships with unions and 
other institutions, and the cost impact for households.
    Some systems have moved to full-cost pricing, and many systems have 
dramatically increased rates. For most households, water remains 
relatively inexpensive, comprising less than 1 percent of household 
income. However, many households will not be able to afford higher 
water rates. Furthermore, some households may be able to reduce water 
expenses through conservation, but others will not. For example, some 
systems have found that successful conservation programs can create 
revenue shortfalls, necessitating rate increases. As consumers had 
already implemented conservation measures, they could not further 
reduce their water use in response to the rate increase, and they saw 
their monthly water bill increase. The increased expenses can have a 
substantial impact, especially on low-income households which may have 
an inelastic demand for water and may not be able to reduce consumption 
further. Rate reduction programs are needed to cushion the impact of 
rate increases on low income households. These programs may include 
direct assistance for low-income households, similar to the U.S. 
Department of Health and Human Services' Low-Income Home Energy 
Assistance Program (LIHEAP). They also may include the use of lifeline 
rates or other rate structures that can reduce the cost of water to 
low-income households.

                            PUBLIC EDUCATION

    While full-cost pricing may be a necessary component of addressing 
the funding gap, public education is needed to explain to rate payers 
the need for rate increases. In fact, the move to full-cost pricing is 
itself part of public education, as it provides information to rate 
payers about the cost of the provision of drinking water and wastewater 
services. But other educational efforts also are needed. The need for 
rate increases may be promoted for water systems and accepted by 
consensus because they systems provide a high quality, reliable product 
at a relatively low price. Household spending on water is a fraction of 
what is spent on cable television, telecommunication services, or even 
bottled water. With public education and outreach, customers may be 
willing to pay higher rates for maintaining and improving their water 
infrastructure. Unfortunately, many of these improvements, such as 
replacement or repair of pipes, are installed below ground and cannot 
be seen or appreciated by the public. There are ways that utilities can 
create positive value as part of their infrastructure projects by 
making people aware of the importance of the projects.
    On the other hand, marketing water can be difficult. Regulated 
systems may not be allowed to expend funds to market because they are 
monopolies. Publicly-owned systems may find it politically difficult to 
launch an advertising campaign as well. And while households spend a 
larger share of their income on other goods and services, the 
comparison of water costs to other services is not simple. Furthermore, 
systems will ask customers to pay higher rates to maintain what may be 
perceived to be the same level of service (reliable, safe water), 
rather than to receive a new improved service in the form of higher 
quality water or more reliable but less (conserved) water supply. 
Finally, the public usually pays attention only when things go wrong. 
Utilities need to find opportunities to promote themselves when things 
go right.

                               CONCLUSION

    Drinking water and wastewater systems, local regulators, the 
States, and the Federal Government will face many challenges over the 
next 20 years as they try to meet the Nation's water infrastructure 
investment need. Innovative responses are needed by both water systems, 
government authorities and consumers to close the gap. These may 
include the use of changes in system management, the adoption of new 
technologies, increases in external funding and full-cost pricing by 
systems. Public education also can play an important role as systems, 
the States, and the Federal Government all address the Nation's water 
infrastructure need. These responses can be divided into managerial, 
financial and technical approaches for closing the gap.

  SUGGESTIONS DISCUSSED BY FORUM PARTICIPANTS FOR MANAGERIAL RESPONSES

    Promote Asset Management Through Incentives and Assistance.--
Integrated approach to management of water systems can help reduce the 
need for future investment in infrastructure. Asset management can help 
systems plan for needed investment and ensure the investment is timely 
and cost-effective. While asset management involves a substantial 
commitment by systems to develop and maintain information about the 
age, condition, and criticality of their systems, it presents an 
important source of potential savings. The government may play an 
important role by facilitating the adoption of asset management and by 
providing technical assistance to help systems implement an asset 
management program.
    Integrate Watershed Management with Asset Management.--An 
integrated approach to the management of an entire watershed also can 
help reduce the cost of future investments. A watershed approach that 
coordinates management across all aspects of policy that affect water 
can help ensure systems provide water that is clean and safe at the 
lowest possible cost. This may require additional regulatory 
flexibility by both the Federal Government and State regulators.
    Support Public Education on Water Value and Costs.--An important 
component of effective system management will be public education. To 
close the infrastructure gap, customers may be asked to pay higher 
rates and to take steps to use water more efficiently. Water systems 
need to inform their customers about the overall value of water as well 
as the systems' investment needs to garner their support for the steps 
needed to meet the Nation's water infrastructure needs.

  SUGGESTIONS DISCUSSED BY FORUM PARTICIPANTS FOR FINANCIAL RESPONSES

    Provide Incentives from Government.--Some argued that the 
government can play an important role in helping systems adopt full-
cost pricing by providing incentives to encourage its adoption, 
technical assistance with rate design, and financial assistance to help 
cushion its impact on low-income households.
    Continue Low-interest Government Loans.--The public sector will 
continue to play an important role in funding water infrastructure 
investment. The Drinking Water and Clean Water State Revolving Funds 
will continue to be an important source of funds for systems, providing 
loans at below-market rates.
    Increase Leveraging Funds by States.--States may leverage the funds 
more aggressively to increase the funding available for investment in 
infrastructure; it was argued by some that the Federal Government 
should consider an increase in the level of capitalization of these 
funds.
    Establish a Water Infrastructure Trust Fund.--The idea was brought 
up that the Federal Government also may want to consider the 
establishment of a water trust fund, funded through water-related fees.
    Change Tax Laws to Increase Access to Capital.--Some participants 
brought up that other changes, including changes in tax laws, should be 
considered to level the playing field and increase systems' access to 
capital markets.
    Price Water at Full Cost.--Discussion included the idea that full-
cost pricing could be one of the main tools available to systems to 
help address future investment needs. Full-cost pricing can help raise 
the revenue needed to finance infrastructure investment; it also may 
reduce the amount of investment required by encouraging efficient use 
of water.
    Incorporate Equity Considerations for Low-income Households--Some 
form of assistance may be needed to cushion the impact of rate 
increases on low-income households, through either innovative rate 
design or direct financial assistance.

SUGGESTIONS DISCUSSED BY FORUM PARTICIPANTS FOR TECHNOLOGICAL RESPONSES

    Research and Develop Innovative Technologies.--New technologies may 
help reduce the cost of replacing existing infrastructure. Systems may 
need to explore innovative technologies when upgrading their 
infrastructure and managing their assets. Additional research and 
development, including full-scale demonstration of new technologies, 
can help reduce future investment needs. The public sector can play an 
important role in promoting this research and in disseminating its 
results to systems.

                                SUMMARY

    The integrity of the Nation's water infrastructure is critical to 
public health, environmental quality, and economic vitality across the 
country. The forum focused on the challenges faced by water suppliers, 
wastewater managers, State and local officials, the Federal government, 
and consumers in addressing the growing needs to maintain, replace, and 
improve water infrastructure. In addition to identifying some of the 
myriad of challenges facing water systems, it fostered a discussion of 
innovative approaches for meeting these challenges. New management 
practices, consolidation, asset management, water conservation, public-
private partnerships, environmental watershed management, full-cost 
pricing, and consumer education are some of the promising tools 
available to help meet future investment needs.

                                 ______
                                 
   Remarks of Governor Christine Todd Whitman to the National Water 
                          Infrastructure Forum

    Thank you, Tracy (Mehan), for that introduction and for convening 
this forum. I hope this meeting will provide the opportunity to 
explore--and perhaps even begin to solve--some of the challenges posed 
by America's aging water infrastructure.
    About 2,300 years ago, the Roman Empire began construction of its 
amazing aqueduct system. By the time the system was completed--some 500 
years later--Rome's 260 miles of water infrastructure were capable of 
delivering 85 million gallons of water a day to the 1 million citizens 
of the ancient city.
    Yet, within about 100 years of the creation of this engineering 
marvel of the ancient world, Rome's ability to maintain its water 
infrastructure began to erode. The aqueduct system fell into disrepair, 
and eventually people who once had their water piped right into their 
homes had to dig wells and haul water from nearby rivers and lakes.
    The decline of Rome's water infrastructure and the fall of its 
Empire followed parallel tracks. For a whole host of reasons, that's 
history we do not want to repeat--and we won't.
    A safe, affordable, and abundant supply of drinking water is 
something we take for granted in America. We turn on the tap, and we 
don't have to worry whether what comes out will make us or our families 
sick. But there's no doubt that America's water infrastructure faces 
some critical needs in the years ahead.
    The full dimension of those needs is outlined in the Clean Water 
and Drinking Water Infrastructure Gap Analysis EPA released last fall. 
Our report takes a good, hard look at what America's water 
infrastructure needs will be through the year 2019.
    This report looks at infrastructure in the broad sense--everything 
it takes to deliver clean, safe water to America's homes and businesses 
and then remove and treat the waste water that results. From the water 
intake valve to the tap, from the kitchen sink drain to the outflow at 
the treatment plant, we looked at the entire picture.
    As you know, the funding gap we identified from now through 2019 is 
significant. Assuming no growth in revenues, the total needed for clean 
water--in both capital and operations and maintenance--exceeds $270 
billion. For drinking water, the gap approaches $265 billion.
    The size of the projected gap can be reduced substantially if we 
project real growth in revenues over the same period. Assuming a 3 
percent annual real growth in revenues, for example, the gap shrinks by 
nearly 90 percent on the clean water side and by about 80 percent on 
the drinking water side.
    The actual gap may end up somewhere in between these numbers--and 
there are an enormous number of considerations that will go into 
determining exactly how big the gap will be over time. But what's 
important now is that we begin the discussion of how to close the gap 
with a better understanding of what the dimensions of the challenge 
really are.
    As I said when I announced this forum last September in Chicago, 
the purpose of the forum is not simply to ask for more money from 
Washington. Instead, we've convened this meeting to give all the 
interested parties the opportunity to discuss how best to close the 
gap.
    One thing is clear--the challenge we face is clearly beyond the 
ability of any one entity to address. It will require the participation 
and contribution of government at all levels, utilities, and users.
    There's no doubt that this administration is committed to doing its 
part. We will continue to ensure the State Revolving Funds are robust 
and up to the job.
    After all, history has shown the SRFs to be the most effective tool 
we have to support your work. To date, the Federal Government has 
provided more than $19.7 billion in capitalization funding to States 
for the Clean Water SRFs and $3.6 billion for the Drinking Water SRFs.
    Because of the revolving nature of these funds, each Federal dollar 
invested leverages considerably more loans and assistance than would a 
traditional grant program. In fact, for every Federal dollar invested 
in the SRFs, we see a return on investment of $1.90. In addition, the 
SRF program gives the States flexibility to direct money to where it is 
most needed.
    The Bush Administration is committed to ensuring that the Federal 
Government does its fair share, and I know Congress is also considering 
various methods to address the situation. Of course, States, 
municipalities, and utilities will also need to do their part. Given 
the gap, we estimate that utilities will have to increase their own 
investment at an annual real rate of growth of 3 percent.
    Of course, money alone is not the answer. We need to tap into the 
creative, innovative thinking of the water community to find less 
costly and more efficient ways to narrow the gap. Only by embracing 
innovations that have been resisted by some in the past can we make the 
progress we need.
    Adopting new, innovative management practices is one way to help 
ensure the resources are available to meet our future infrastructure 
needs. Such practices include taking an asset management approach, 
forging a new public-private partnership, consolidating ownership or 
management, or starting an Environmental Management System.
    Another area of innovation that holds promise is reaching across 
existing local political boundaries to promote intergovernmental 
cooperation across entire watersheds. There are 168,000 public drinking 
water systems in the United States and 16,000 waste water utilities. 
EPA will continue to encourage utilities to consider ways to work 
together to achieve economies of scale or to ensure that they are 
working together to promote the health of the watershed they share.
    The innovations we need should also include efforts to promote 
conservation and smart water use, not just by the user, but by the 
utility as well. A faucet in someone's home that leaks just a drop 
every 3 seconds wastes more than 1,000 gallons of water a year. But a 
leaky water delivery system can waste billions of gallons of water 
annually.
    In the Detroit area, for example, it is estimated that every year 
more than 35 billion gallons of clean, fresh water leaks from water 
delivery pipes before it ever reaches the consumer. That's enough water 
to fill Yankee Stadium to overflowing more than 130 times. And while 
that probably wouldn't bother Tiger fans--or this Mets fan--if it would 
keep the Yankees out of the playoffs, there's got to be a better way.
    When we come down to it, that's why we're here today, to begin to 
find the better way to close the water infrastructure gap, not just 
through a flood of money, but through a tidal wave of good, creative 
ideas.
    The great Roman poet, Horace, who enjoyed the water brought to his 
city by the aqueducts I spoke of earlier, said, ``To have begun is half 
the job: be bold and be sensible.'' That would be my charge to you. We 
have begun the job of addressing the infrastructure gap by defining it. 
Now is the time to be both bold and sensible in tackling the next half 
of the job that confronts us.
    I look forward to learning from Tracy the results of this forum. 
And while neither Rome--nor its water infrastructure was built in a 
day--I believe today's efforts will help ensure that here in the United 
States, we will continue to provide all our people with a clean, safe 
water system that is the envy of the world--both ancient and modern--
for many decades to come. Thank you.

                                 ______
                                 
                  Sustaining Our Water Infrastructure

 REMARKS DELIVERED BY G. TRACY MEHAN III, AT THE EPA FORUM ON CLOSING 
   THE GAP: INNOVATIVE RESPONSES FOR SUSTAINABLE WATER INFRASTRUCTURE
                            JANUARY 31, 2003

    On behalf of the Office of Water, I want to thank you for your 
willingness to participate in this crucial dialogue on the future of 
America's water infrastructure.
    First, I want to thank the Administrator for convening this forum. 
Her leadership on this issue is very much appreciated by all of us in 
the national water program, especially her focus on innovation as one 
element of the solution to our investment needs in the years ahead.
    Let me build on the Administrator's introduction and sketch for you 
some of the promising developments in the public and private sector 
that will enhance our management of the infrastructure that ensures the 
protection of our water and the delivery of safe drinking water. These 
innovations will either reduce the need for infrastructure or bring 
down the costs of infrastructure--and hence ``close the gap'', the 
title of today's forum.
    Before we talk about ways of closing the ``gap,'' let's talk about 
what the ``gap'' is. This term ``gap'', I'm afraid, may be more a term 
of bureaucracy than a commonly understood phenomena. Two years ago, 
U.S. News and World Report (6/12/00) called it the ``sickening sewer 
crisis'' in an article that began with a description of an ordinary 
suburban family waking up to a basement flooded by a broken sewer line. 
U.S. News suggested that, without preventive action, this scenario 
represents our future all across America. Other magazines and 
newspapers across the country have published a number of stories on the 
emerging problems in the Nation's plumbing.
    EPA's report issued a few months ago was a bit more clinical.\1\ We 
talked about ``a gap between projected clean water and drinking water 
investment needs over the 20-year period from 2000-2019 and current 
levels of spending.'' Wall Street might call it an ``investment gap.'' 
An economist might even call it a ``pricing gap.'' There are also 
different estimates of the size of this gap--the magnitude of our 
investment needs. But whatever our numbers and whatever our language, 
the problem we're here to discuss today is that our water and sewer 
systems are aging--even as our population is growing; and our clean 
water and drinking water rules are tightening.
---------------------------------------------------------------------------
    \1\ EPA-816-R-02-020, The Clean Water and Drinking Water 
Infrastructure Gap Analysis, Office of Water, September 2002. Website: 
http://www.epa.gov/owm/gapreport.pdf.
---------------------------------------------------------------------------
    Our hope is that today's forum will cover a range of solutions that 
will speak to everyone--whether you're from a small system facing new 
drinking water standards requiring treatment for the first time, a 
large system with a billion dollar combined sewer overflow (CSO) repair 
bill or a system in the arid West facing the worst drought in a decade. 
Today's challenges demand a multi-faceted approach to managing and 
sustaining our infrastructure assets. Not only are we going to have to 
manage better in both the public and private sectors, we're going to 
have to use less water and, yes, pay an adequate price for our 
infrastructure in our role as ratepayers. There is, as the saying goes, 
no free lunch in our future.
    The subjects I'd like to offer up for today's discussion include 
(but are not limited to) the following four areas.
    Better Management.--Better management practices like asset 
management, environmental management systems, consolidation, and 
public-private partnerships offer significant savings.
    Smart Water Use.--We need to create incentives to conserve and to 
protect our sources of drinking water.
    Full Cost Pricing.--Full cost pricing and rate restructuring can 
capture the actual costs of our water systems, raise revenues and 
provide incentives to conserve.
    The Watershed Approach.--We need to use a watershed approach, 
looking more broadly at water resources in a coordinated way.

Better Management
    The 1996 Safe Drinking Water Act Amendments stressed capacity 
development--the proposition being that when drinking water utilities 
possess adequate technical, financial, and managerial capacity, they 
are better able to provide safe drinking water. States are using the 
capacity development provisions in the law to improve utility 
management. More recently, in the Office of Water, we've been looking 
at the potential for asset management techniques to reduce a utility's 
long-term costs and improve performance. This is a structured 
management approach that is based on information about the condition of 
a system's assets. Knowing the condition of your assets and linking 
that information to inventory, service levels, useful life, and repair 
costs will provide the information needed to make optimal management 
decisions--including decisions about funding future renewal and 
replacement.
    Recently, working with Australian and U.S. consultants, the Orange 
County Sanitation District approved an investment of $22-38 million, 
over a 6-year period, to implement its Asset Management Plan, as part 
of a $2 billion investment strategy over the next 20 years. This front-
end investment in manpower, planning and assistance, information 
systems, software, training and other process changes will yield a 20-
year return on investment (ROI) in the range of 9:1 to 16:1. This 
translates into a reduction of $150 million in their capital 
improvements program and a total life cycle cost savings of at least 
$200 million.
    This 10 percent savings from just one utility, admittedly a very 
large one, is equivalent to the current full amount of the Federal 
contribution to California's Clean Water State Revolving Fund (SRF) 
over 2 years!
    Environmental management systems (EMS) are another important tool 
to help utilities manage better and reduce costs. The EMS approach 
involves a comprehensive assessment of an organization's impact on the 
environment followed by specific targets and objectives and continual 
checking to make sure the desired results are achieved. EMS and asset 
management can complement each other and give utilities a powerful way 
to continually manage for better results and greater efficiency.
    EPA has also looked at cost savings that can be achieved by small 
systems through consolidating ownership or management with other small 
systems. Although consolidation is not always a viable option, by 
combining resources, systems can achieve a more sustainable level of 
technical, financial and managerial capacity. For instance, the system 
serving the city of Panora, Iowa consistently violated the public 
health standards for nitrate in drinking water. Rather than incur the 
cost of installing treatment, the city decided to purchase raw water of 
a higher quality from a neighboring system. In addition, the city 
pursued a partnership agreement with another neighboring system to 
assist with operating and monitoring its water treatment plant. This 
agreement enabled the city to take advantage of the other system's 
technical expertise and reduced the need for on-site operators.
    Public-private partnerships have helped a number of communities 
provide water and wastewater treatment at reduced cost. Whether 
providing basic wastewater treatment supplies (e.g., chemicals), 
maintaining a portion of the collection or treatment system under a 
contract, or providing contract operation and maintenance for all of a 
municipality's facilities, the private sector can serve an important 
role in the effort to control water pollution across the country. Over 
the past decade, we've seen an increased interest in using the private 
sector to meet water and wastewater funding needs. In fact, a 
Presidential Executive Order (12803) was issued in 1992 directing 
Federal agencies to remove obstacles to privatization, which offers one 
approach to improving the efficiency and sustainability of our drinking 
water and wastewater systems.
    The ultimate key to success lies in better management--irrespective 
of ownership.

Smart Water Use
    In addition to managing better, we're going to have to learn to use 
water more efficiently. At the end of 2002, nearly half of the 
continental United States was in drought. In addition to reduced 
rainfall, most of our water systems also face a growing population and 
a growing economy. Moreover, we're reaching the end of the era in which 
we could always expand water supply--the era in which we built large 
dams and conveyance systems. Just this month, Secretary of Interior 
Gale Norton had to step in to reduce California's withdrawals of water 
from the Colorado River. As our waters are more stretched across 
competing demands, our supply side approach will have to be coupled 
with demand side management. During the next 100 years, we're going to 
have to become experts on the demand side of the equation: 
conservation, recycling, reuse and improved water-use efficiency. If we 
can reuse our treated wastewater for beneficial purposes such as 
irrigation, manufacturing or groundwater recharge, the environmental 
and economic benefits are manifold. If all communities would implement 
metering to measure their consumption, then there would be a basis for 
price incentives to begin to work. For example, Westfield, 
Massachusetts went from no meters to a fully metered system. The 
installation of meters enabled the city to set a metered water rate 
that allowed for complete cost recovery of its existing and projected 
expenses. Also the city found that it could abandon plans to develop a 
new surface water source, as its customers began to conserve water. 
Imagine the water savings if cities the size of Chicago and Sacramento 
fully metered their systems.
    Metering and reuse aren't the only ways to save water. Many of you 
probably know the other options available for enhancing water 
efficiency: plumbing retrofits, leak detection and repair, irrigation 
improvements, water-saving appliances, landscaping measures and public 
education. Using these measures, a number of American cities have 
reduced their water use by as much as 20 percent and still haven't 
exhausted all their conservation options. Many of these cities are 
featured in our publication, Cases in Water Conservation.\2\
---------------------------------------------------------------------------
    \2\ EPA832-B-02-003, Cases in Water Conservation, Office of Water, 
July 2002. Website: http://
www.epa.gov/OW-OWM.html/water-efficiency/utilityconservation.pdf.
---------------------------------------------------------------------------
    EPA has a number of resources available to assist water efficiency 
efforts. We published the Water Conservation Plan Guidelines in 1998 
for public water systems and we sponsor a voluntary partnership program 
for businesses and institutions called WAVE (Water Alliances for 
Voluntary Efficiency). On our website \3\ you can also find a number of 
other publications and links to our water conservation clearinghouse 
and software.
---------------------------------------------------------------------------
    \3\ The Office of Water's website is http://www.epa.gov/ow.
---------------------------------------------------------------------------
Full Cost Pricing
    In addition to managing better and using less, I believe we're 
going to have to pay more of the actual costs of maintaining our water 
systems over time. The Congressional Budget Office recently issued a 
report entitled Future Investment in Drinking Water and Wastewater 
Infrastructure \4\ which points out that increased future 
infrastructure costs will either have to be paid by taxpayers or 
ratepayers. To quote CBO: ``Ultimately, society as a whole pays 100 
percent of the costs of water services, whether through ratepayers' 
bills or through Federal, State, or local taxes.'' CBO raises strong 
efficiency arguments for ratepayers picking up the increased costs 
rather than taxpayers. Certainly the most direct route for funds to 
flow is straight from the ratepayer to the utility. In addition, we 
know that when prices rise, quantity demanded falls. Moreover, in this 
same report, CBO estimates that combined water and sewer bills 
currently average 0.5 percent of income in this country (i.e. one-half 
of 1 percent of average household income). There appears to be room for 
higher water bills among most households. In a recent draft report from 
the Organization for Economic Cooperation and Development,\5\ the 
United States had the lowest percentage of income going to water 
charges among the 18 OECD countries. CBO, in its report, calculated 
that even if future infrastructure needs fall into the very high range, 
average water bills will still only account for 0.9 percent of income 
on average. In a recent article, Harvard economist Robert Stavins 
describes our water prices as ``muffled''.\6\ He suggests that 
ratepayers need to hear stronger price signals so that they see a 
connection between their consumption and their water bill.
---------------------------------------------------------------------------
    \4\ Congressional Budget Office, Future Investment in Drinking 
Water and Wastewater Infrastructure, November 2002, ISBN 0-16-01243-3.
    \5\ OECD, 11-20-02 Draft, ``Social Issues in the Provision of Water 
Services'' Table 2-2.
    \6\ Sheila M. Cavanagh, W. Michael Hanemann, and Robert N. Stavins, 
``Muffled Price Signals: Household Water Demand Under Increasing-Block 
Prices,'' December 31, 2001 ASSA Paper.
---------------------------------------------------------------------------
    This is not to overlook the affordability problems that low-income 
households may face. To alleviate these hardships, communities can 
offer rate structures that mitigate impacts on low-income customers. 
The most prominent example is ``lifeline rates'' where the charge for 
an amount of service considered non-discretionary (the minimum sanitary 
requirement) is kept low, but then higher unit charges are levied on 
water consumption beyond that amount. While affordability programs are 
offered by 14 percent of water utilities,\7\ there is still much to 
learn from the gas and electric utilities in their many years' 
experience in offering low-income assistance. We want rates that are 
affordable for most households, but not so ``muffled'' that we can't 
hear a price signal, a signal which conveys important information on 
the condition of the infrastructure which it supports.
---------------------------------------------------------------------------
    \7\ Survey by Raftelis Environmental Consulting (2002).
---------------------------------------------------------------------------
The Watershed Approach
    Finally, in addition to managing better, using less and adequately 
pricing services, we're going to have to use the watershed approach. 
EPA views watersheds as the basic unit to define and gauge the Nation's 
water quality. The watershed approach is a term generally invoked to 
mean broad stakeholder involvement, hydrologically defined boundaries, 
and coordinated management across all aspects of policy that affect 
water. Leading the way are over 4,000 local watershed organizations in 
the United States working to advocate watershed restoration, source 
water protection, improved site design, erosion control, land 
conservation, stormwater management and many other aspects of water 
resource management. I have asked our senior managers to identify ways 
to advance the watershed approach, including how to increase our 
training and technical assistance for these local, State, and tribal 
watershed partnerships.
    Several facets of the watershed approach can be advanced by 
jurisdictions at all levels to reduce the cost of future 
infrastructure. I'll mention three areas:
    Targeting.--In the 1987 Amendments to the Clean Water Act, Congress 
created the Clean Water State Revolving Fund (SRF), and later, in the 
1996 Amendments, Congress created its sister program, the Drinking 
Water State Revolving Fund, to provide a water infrastructure funding 
resource in perpetuity. To the extent that flexibility is available 
under these Amendments, Federal, State, local and tribal governments 
need to target those watersheds and projects that have the greatest 
impact on human health issues, sources of drinking water and ecosystem 
protection. Some 19 States use integrated planning and priority setting 
so that highest priority water quality problems are addressed first 
with Clean Water SRF funds. This integrated approach helps direct SRF 
funds toward projects with the greatest water quality benefit.
    The Safe Drinking Water Act Amendments of 1996 encourage a 
watershed approach to drinking water protection. As directed by the 
Amendments, each of the States has developed a Source Water Assessment 
Program which analyzes existing and potential threats to the quality of 
drinking water. States may use funds from the Drinking Water SRF to 
conduct source water assessment and protection activities including 
land acquisition and wellhead protection. Protecting drinking water 
sources from contamination in the first place has been shown to reduce 
costs significantly. An EPA study has shown that prevention can be up 
to 40 times more cost effective than remediating or finding new 
drinking water sources.\8\ Clearly, targeting our assistance to control 
nonpoint sources and protect source waters are promising ways of 
bringing down the costs of future infrastructure.
---------------------------------------------------------------------------
    \8\ EPA-813-B-95-005, Office of Water, Benefits and Costs of 
Prevention: Case Studies of Community Wellhead Protection--Volume I. 
1996.
---------------------------------------------------------------------------
    Watershed-based Permitting.--A number of States are adopting a 
State-wide watershed approach and I want to expand our efforts to 
assist those States. I have directed our Office of Wastewater 
Management to accelerate its efforts to support authorized States and 
regions to issue NPDES permits on a watershed basis. Integrating our 
NPDES permitting system into a community's watershed management plan, 
we will have more efficient and environmentally focused management.
    Watershed Trading.--Watersheds are ideal for experimenting with 
market-based incentives; and our Water Quality Trading Policy \9\ 
released on January 13th of this year renews our efforts to pursue 
water-quality trading for nutrients, sediments and other pollutants to 
reduce the cost of compliance with water-quality based requirements. 
With this policy, we're supporting States and tribes in developing 
trading programs that meet the requirements of the Clean Water Act. A 
water quality ``credit'' could be created by reducing pollution loads 
beyond the level required by the most stringent technology requirement. 
For example, an unregulated landowner or a farmer could create credits 
by changing cropping practices and planting shrubs and trees next to a 
stream. A municipal wastewater treatment plant then could purchase and 
use these credits to meet water quality limits in its permit. Trading 
for TMDL (Total Maximum Daily Load) implementation offers particular 
promise for its water quality and economic benefits. Our policy 
supports trading among and between regulated and unregulated sources.
---------------------------------------------------------------------------
    \9\ EPA, Office of Water, Final Water Quality Trading Policy, 
January 13, 2003. Website: http://
www.epa.gov/owow/watershed/trading/finalpolicy2003.html.
---------------------------------------------------------------------------
    In its analysis of the Clinton Administration's Clean Water 
Initiative, EPA concluded that the total potential savings from all 
types of trading range from $658 million to $7.5 billion annually.\10\ 
A current example of a successful trading effort, between point sources 
only, can be found on Long Island Sound where nitrogen trading among 
publicly owned treatment works in Connecticut is expected to save over 
$200 million in control costs.
---------------------------------------------------------------------------
    \10\ EPA-800-R-94-002, Office of Water, President Clinton's Clean 
Water Initiative: Analysis of Benefits and Costs, March 1994.
---------------------------------------------------------------------------
    A study of three watersheds in Minnesota, Michigan and Wisconsin by 
the World Resources Institute (2000) \11\ found that the cost of 
reducing phosphorous from point sources, traditional pipe-in-the-water 
dischargers, was considerably higher than those based on trading 
between point and non-point, or diffuse, sources of runoff which are 
not regulated by the Clean Water Act. The estimates for point source 
controls ranged from $10.38 per pound of phosphorus in the Wisconsin 
watershed to $23.89 in the Michigan watershed. Using trading between 
point and non-point sources, these costs could be lowered to $5.95 per 
pound in Wisconsin, a reduction of over 40 percent, and to $4.04 in 
Michigan, a reduction of over 80 percent.
---------------------------------------------------------------------------
    \11\ Paul Faeth, Fertile Ground: Nutrient Trading's Potential to 
Cost-effectively Improve Water Quality, Washington, DC: World Resources 
Institute, 2000.
---------------------------------------------------------------------------
    Clearly, if we use some or all of these facets of the watershed 
approach--prioritizing, permitting or trading--we can more efficiently 
address clean water and drinking water needs.

Conclusion
    In conclusion, I've suggested four broad directions that will help 
us meet future infrastructure needs: better management, smart water 
use, full cost pricing, and the watershed approach. I invite your 
thoughts on each of four parallel questions:
  --How can we manage better?
  --How can we foster smarter water use?
  --How can we use the price mechanism?
  --How can we use the watershed approach?
    My list is, by no means, all-inclusive; I offer it merely as a 
rough outline for our discussion here today, focusing on the innovative 
aspects of these concepts. I look forward to hearing your thoughts on 
these and other matters. Moreover, I look forward to working with all 
of you to ensure clean and safe water for the 21st century. Again, 
thank you for your contribution of time and expertise to this concerted 
effort to close the gap in America's investment in our water 
infrastructure.

                           HOMELAND SECURITY

    Senator Mikulski. Second, we have looked at homeland 
security and we know that this is a work in progress. Could you 
share with us how we can support EPA, not only for dealing with 
those terrible things like anthrax, but to help EPA help local 
communities with homeland security issues, whether it is water 
and sewer, water protection, or others? We know that they are 
going to turn to you for science, they are going to turn to you 
for expertise on contamination and they are going to turn to 
you for infrastructure protection.
    How can we help you in this appropriation cycle help our 
communities with homeland security? And I thank you for what 
you have already done.
    Ms. Whitman. Well, thank you. I will be happy to give you 
more detail on that for the record, but I do want to thank you 
and thank the committee for the support that you have given the 
Agency in our needs in meeting homeland security.
    We believe that the President's request in the fiscal year 
2004 budget will help EPA and will provide the Agency with what 
we need to be able to continue the outreach that we are doing 
to local communities and to strengthen our response. We have 
established a response, an emergency response team, out west so 
that we have a better distribution of our technology and we 
have provided additional training for ourselves.
    But we are working very closely with the Department of 
Homeland Security as appropriate and coordinating all that 
through them. So we do have additional dollars in this budget 
requested for homeland security. Your support of that obviously 
would be very much appreciated.
    Much of it, as you say, though, comes on an ad hoc basis. 
As people get into a problem, they suddenly look to the Agency. 
Thus far we have been able to meet their needs. We are very 
active in picking up the shuttle disaster debris and we are 
being reimbursed for that through FEMA. That normal process is 
working to date. So our needs are in our budget.
    [The information follows:]

                           Homeland Security

    The Environmental Protection Agency's fiscal year 2004 Annual Plan 
and Budget requests $123 million and 142 FTE to support the Agency's 
Homeland Security responsibilities in accordance with the Public Health 
Security and Bioterrorism Preparedness and Response Act of 2002, the 
National Strategy for Homeland Security, and Presidential Directives 
(PDD) 39, 62, 63. This request allows the Agency to continue providing 
leadership for the protection of the Nation's critical water 
infrastructure while upgrading and improving our emergency response 
capabilities. In addition, EPA will conduct research and provide 
guidance and technical support for Federal, State, local governments, 
and other institutions in the areas of building decontamination, water 
security, and rapid risk assessment.

              PROTECT AMBIENT AND INDOOR AIR ENVIRONMENTS

    Monitoring ambient air plays an important role in detecting and 
responding to threats from potential terrorist actions. In fiscal year 
2004 the Agency is requesting $4.4 million for ambient and indoor air 
monitoring activities. With these resources EPA will enhance its 
capability to collect ambient air monitoring data for all Federal and 
State agencies with threat detection responsibilities. EPA will ensure 
that the Agency's monitoring expertise, standards, capabilities, and 
data will help our partners to detect terrorist threats. EPA will also 
develop mobile air laboratories to provide rapid response support to 
EPA's air monitoring for general population exposures and for 
coordination with local and State monitoring agencies on public health 
protection.
    In addition, the fiscal year 2004 requested resources will provide 
system improvements to prepare and respond to terrorist threats and 
other incidents. The Environmental Radiation Ambient Monitoring System 
(ERAMS) will be expanded and upgraded to increase its reliability and 
population coverage. A telemetry database will be improved to provide 
radiation data to Agency decision-makers and the public if a terrorist 
or other type of radiological incident occurs.

            PROTECT DRINKING WATER AND WASTEWATER FACILITIES

    Protecting critical water infrastructure (drinking water and 
wastewater utilities) from terrorist and other intentional acts will 
continue to be a high priority in fiscal year 2004. As a result, the 
Agency is requesting $32.3 million for critical water infrastructure 
protection in fiscal year 2004. In accordance with the requirements of 
the Public Health Security and Bioterrorism Emergency and Response Act 
of 2002 (hereafter referred to as the Bioterrorism Act of 2002), 
drinking water systems that provide water to more than 3,300 people, 90 
percent of the community water systems, will assess their vulnerability 
to terrorist or other intentional attacks, certify the completion of 
such vulnerability assessments, and submit copies of final 
vulnerability assessments to EPA for secure and confidential storage. 
Based upon the findings of the assessments the systems must prepare or 
revise their emergency response plans and certify to EPA that they met 
the requirement.
    EPA will focus on the approximately 8,000 medium community water 
systems that serve more than 3,300 but less than 100,000 people. These 
systems will conduct vulnerability assessments over the course of the 
year and prepare/revise emergency response plans in fiscal year 2004. 
The vulnerability assessment models and self assessment tools already 
previously used by large and very large drinking will be adapted to 
accommodate the medium systems. Wastewater systems, especially the some 
6,000 systems that serve more than 10,000 but fewer than 150,000 
people, will also conduct vulnerability assessments and develop or 
revise emergency response plans. Medium and small systems may not have 
sufficient technical capacity on hand to carry out the many activities 
related to vulnerability assessments and emergency response plans. 
Consequently, EPA, in collaboration with the States and stakeholders, 
will support the full menu of technical assistance and training 
approaches to ensure that a comprehensive vulnerability assessment and 
a robust emergency response plan have been achieved by all of these 
systems.

          PROMOTE SAFER CHEMICALS AND STRENGTHEN LABORATORIES

    As part of our preparedness efforts, EPA is requesting $2.3 million 
in fiscal year 2004 to promote safer chemicals and strengthen the State 
laboratory network. EPA is working with USDA to identify critical 
pesticides that could be needed to control exotic pests or threat 
agents in livestock, crops, and other food supplies. In addition, EPA 
has increased its lab capability to perform the necessary efficacy 
testing of decontamination products to address bioterrorism agents 
(e.g., anthrax) and to assist in the analyses of samples after 
remediation.
    A critical element of ensuring security for communities is the 
State laboratory network. Along with Federal and local partners, 
adequate State lab capacity is essential to ensuring timely response 
and clean-up of threat agents in America's communities. EPA has been 
working with HHS and other agencies to identify support for this vital 
link.

                   ENHANCE PREPAREDNESS AND RESPONSE

    In preparation for potential multiple terrorist events, the Agency 
has requested $27.9 million in funding for our emergency response 
capabilities. In addition to increasing our overall capacity, the 
Agency plans to form a specialized decontamination team to prepare for 
potential events involving chemical, biological, or radiological 
agents.
    Through the Chemical Emergency Preparedness and Prevention Office, 
the Agency works to provide local communities with information and 
tools to advance local chemical release preparedness and prevention. 
The Agency accomplishes this work primarily through State Emergency 
Response Commissions and Local Emergency Committees. Much of the work 
that communities can do to prepare for and prevent accidental chemical 
releases is relevant to community efforts to prepare and prevent 
deliberate chemical releases. Support for the Agency's ongoing chemical 
accident preparedness and prevention community outreach work will have 
a positive impact on community security needs.

               COMMIT TO STRONG ENVIRONMENTAL ENFORCEMENT

    The Agency's Criminal Enforcement program has lead responsibility 
within EPA for coordinating law enforcement activities and delivering 
environmental crimes expertise necessary to support Federal, State, 
local, and tribal law enforcement homeland security planning and 
operational activities. In fiscal year 2004 the Agency has requested 
$3.8 million for these activities.

                       HOMELAND SECURITY RESEARCH

    The Agency has also requested $29 million for continued Homeland 
Security research. EPA will provide guidance, technical expertise and 
support to Federal, State and local governments and other institutions 
on building contamination (chemical and biological) prevention, 
treatment and clean up activities, water security, and rapid risk 
assessment. The goal of this research is to rapidly develop tools, 
technologies and guidance for use by water system authorities, building 
owners, public officials and emergency responders to prepare for and 
respond to potential attacks.
    EPA will also inventory Agency, Federal Government, and private 
sector expertise to provide quick access to nationally recognized, 
highly specialized experts in areas relevant to Homeland Security for 
more efficient emergency response efforts.

               SAFEGUARD EPA PERSONNEL AND INFRASTRUCTURE

    The fiscal year 2004 request includes $19.3 million to enhance 
security background checks and improve the background investigation 
process for employees, contractors, and grantees as well as activities 
to support increased efforts on strengthening the Agency's physical 
infrastructure security. Since September 11, 2001, many programs and 
offices are re-evaluating position sensitivity designations and 
security levels for staff to determine if a higher security clearance 
is needed to adequately support Homeland Security efforts and 
preparedness for emergency responses. The additional recruitment of 
emergency response personnel and the creation of additional emergency 
response command posts will also increase the number of employees that 
must be processed by the personnel security staff.
    In addition, EPA is currently conducting physical security 
vulnerability risk assessments to develop a baseline on the physical 
security conditions of EPA's facilities. This includes gathering, 
assimilating and evaluating physical security data; identifying and 
documenting the security vulnerabilities, assessing human threat; and 
determining and prioritizing the qualitative risks.

             ADVANCE INFORMATION SECURITY AND COMMUNICATION

    In fiscal year 2004 the Agency has requested $3.8 million to 
strengthen and increase the security of its information infrastructure. 
Accurate information about EPA-regulated facilities and areas of 
environmental interest is critical to EPA's ability to support homeland 
security efforts. The ability to identify and report on regulated 
facilities, their location and spatial coordinates, their materials, 
and their corporate ownership is an important piece of the homeland 
security picture. Part of the Agency's homeland security role is to 
deliver secure, reliable, and timely data access and communications to 
on-scene coordinators, emergency response teams, and investigators in 
the field.

    Senator Mikulski. God bless.
    Senator Bond. Thank you very much, Senator Mikulski.
    Senator Leahy.

                             ELIZABETH MINE

    Senator Leahy. Thank you, Mr. Chairman.
    I am always interested in what you find out on anthrax and 
such issues. When I mentioned Elizabeth Mine earlier, Governor, 
in Thetford, Vermont, the reason why I was concerned, if it did 
breach, I am told there would be a flood wave 8 to 9 feet high 
traveling at a velocity of 10 to 15 feet per second and would 
wipe out homes, property, and of course psychological damage as 
far as the Connecticut River.
    So once a decision has been made on that--and again, I want 
to compliment your EPA people--please let us know, because 
there are a lot of apprehensive Vermonters.
    Ms. Whitman. This has been on the national priority list 
since 2001, and we are very focused on it, Senator. We will 
continue to work closely with you. We appreciate your focus on 
this.

                           MERCURY EMISSIONS

    Senator Leahy. Thank you.
    Governor, we talked about in the past the issues of 
mercury. I look at the report the EPA released--it was delayed 
for I think 8 months, but ``America's Children and the 
Environment''--and I see a serious risk to pregnant women and 
children from mercury exposure.
    Senator Snowe, Olympia Snowe of Maine, and I introduced a 
bill, the Omnibus Mercury Emissions Reduction Act, to control 
mercury emissions from coal-fired power plants and other 
sources. This would provide a tougher standard than the 
administration's Clear Skies proposal.
    An EPA report has estimated 29 tons of mercury emissions 
released per year from coal and oil-fired commercial and 
industrial boiler units. A lot of them are grandfathered in 
under the Clean Air Act and were supposed to have cleaned up 
their boilers by now and have not. EPA is not regulating these 
emissions.
    Within the mercury omnibus bill that we have suggested, it 
would require the EPA to set a maximum achievable control 
technology standard to reduce these emissions by at least 90 
percent. Why didn't EPA just go ahead and regulate these 
emissions? The reason I ask, so many of them are out in the 
Midwest, but they come down along the Atlantic seaboard--your 
own State, my State, Senator Snowe's State, and others.
    Ms. Whitman. Well, certainly, Senator, I am happy to answer 
that. First, just so that you are comfortable, there was not a 
delay. We were not holding back on the children's report. In 
fact, the children's health report that was recently released. 
There were a number of departments and agencies that were 
involved and it went through the normal process.
    But this was the first children's health report that 
mentioned mercury. In the previous one, there had been no 
mention of mercury. So this was a whole new field that we were 
getting into, and it clearly showed an area of concern. We have 
8 percent of women of childbearing age showing elevated levels 
of mercury.
    Senator Leahy. I had the impression that the report came 
out after the New York Times basically reported on the report.
    Ms. Whitman. The report was not held up. I do not remember 
exactly the sequence, whether the Times had written first, but 
they would not have written unless the report was just about to 
go because they would not have had it.
    But anyway----
    Senator Leahy. It happens.
    Ms. Whitman. Oh, it does happen.
    Senator Leahy. We had one of your colleagues before our 
committee, the Attorney General, who was explaining how there 
was no Patriot Act No. 2 because he had not specifically signed 
off on it. Unfortunately, the press had already reported and 
actually reprinted about 80 pages of it. But go ahead. It is 
not your Department.
    Ms. Whitman. It was a different agency. But anyway, it does 
mention it. It is important to note that we have, over the 
years, done a great deal on mercury. In fact, the Agency, 
through regulatory actions, has reduced by 90 percent the 
mercury emissions from municipal waste incineration and medical 
waste incineration, which has reduced that a significant 
amount, leaving now the utilities as the biggest emitters.
    We are in the process of establishing a mercury MACT. That 
process has started and as part of the regulatory process there 
are requirements to get the data.
    There was never any 90 percent required reductions 
established at any time. There has never been any other 
scientific backup yet to establish that. I know it has been 
said in the papers and in fact it has been implied that there 
was a statutory requirement to say that there should be a 90 
percent reduction. We have not set that MACT level yet. We do 
not know where it will come out. But we are moving forward to 
do that.
    However, the best way to get the fastest reduction we 
believe is through Clear Skies, which would require a mandatory 
reduction. If the Congress sets those levels, there is not the 
same recourse to lawsuit that slows up the actual 
implementation.
    We are to put out a preliminary number in December on the 
mercury MACT. We are on track to do that. It then would go 
final in 2004 and it would not be enforceable until 2007, and 
that is without any lawsuits. You know that we will probably be 
sued by both sides on something as controversial as this.
    We believe reducing power plant mercury emissions is a very 
important issue. We believe it is an issue that we need to get 
at. That is why it is included as a major part of the Clear 
Skies legislation, as the best way to ensure that we get an 
immediate reduction. We are, however, continuing as we go 
forward on the mercury MACT to do additional studies on fish 
tissue. It will be the most comprehensive that the Agency has 
done, done in order to better understand pathways, both on how 
fish bioaccumulate mercury and how that may get into the 
bloodstream of people who eat the fish.
    So we are being very active on mercury and we will continue 
to be active on mercury. It is an issue that we think is of 
immense importance.
    Senator Leahy. Thank you, Mr. Chairman. I will submit--I am 
sure the Governor will expect this--follow-up questions on 
this, especially the subject that I want to share some of the 
answers on with Senator Snowe. Thank you, and thank you, Mr. 
Chairman.

                     SUPERFUND--PRESIDENT'S REQUEST

    Senator Bond. Thank you very much, Senator Leahy. We have 
got some questions on mercury as well, on a different problem.
    Let me just clean up a few questions here. Superfund: EPA 
requests a $125 million increase for Superfund while we are 
cutting the Clean Water SRF. What is happening in the Superfund 
account that makes it more important? What is happening with 
the expiration of the taxes? Are you collecting money from 
responsible parties? Please give us a quick update on the 
Superfund status.
    Ms. Whitman. Certainly. Well, Senator, as you know, the 
Superfund sites represent the most problematic and they 
represent those sites that pose the greatest and most imminent 
threat to public health and/or the environment. They really do 
require immediate attention. The additional dollars that we 
have asked for will enable us to begin another 10 to 15 sites 
in the coming year, to begin work on sites that we believe are 
in need of serious immediate attention.
    We continue to go for polluter pays. In fact, last year 71 
percent of the sites were paid for by the responsible parties. 
But as you know--and this has been traditional over the history 
of the Superfund--there are usually about 30 percent of the 
sites for which there is either no responsible party because 
they have gone out of business or we cannot identify them, and 
those have been paid for traditionally through the Superfund 
trust fund.
    That trust fund, because the tax has not been reauthorized 
in a number of years, is diminishing. We are assuring that we 
keep the program moving forward at a healthy rate by including 
additional dollars from general revenues.

                          TMDL--STATUS OF RULE

    Senator Bond. Thank you. I would say that some of our water 
needs also are critically important. Let me turn to TMDLs. We 
are hearing from the States a lack of ability to implement the 
TMDLs because of controversies on costs and burdens. EPA has 
delayed issuing the new TMDL rule until after May 2003.
    What are the primary issues that you are having trouble 
addressing and what is the status of the rule?
    Ms. Whitman. Right now we have repealed the 2000 rule that 
was promulgated under the previous administration because of 
extraordinary difficulties. Almost everyone agreed that the 
ability to----
    Senator Bond. I would agree with that. I would agree with 
that myself.
    Ms. Whitman. It was extremely difficult. We are continuing 
to move forward in establishing TMDLs. That is, they are 
continuing to happen. There has been no let-up on that. We are 
now looking at all the existing regulations that have been 
approved. We approved 6,000 TMDLs in the last 2 years.
    But we are trying now to make a decision. We are looking at 
whether or not we need to put out an additional regulation or 
not. We have told the regions to continue to work with the 
States under the current TMDL program, which, as I said, is 
continuing to work in an ongoing way to approve TMDLs.
    We issued guidance on approving the list and coordination 
of TMDLs. But we are working very closely with the States and 
with the local governments to improve those qualities and 
ensure that we can continue to achieve the water quality goals 
while at the same time determining whether or not we need to 
issue new regulations.

                        CAFO RULE IMPLEMENTATION

    Senator Bond. Thank you.
    Let me turn now to confined animal feeding operations, what 
we affectionately know as ``CAFO.'' The rules become effective 
April 14th. They require CAFOs have to develop nutrient 
management plans. It is going to affect some 15,500 livestock 
operations. I am concerned. The GAO report says neither EPA nor 
the States are equipped to implement the program. How are you 
responding to that?
    Ms. Whitman. Well, the CAFO rule is one that I think shows 
a model of cooperation. We worked very, very closely with the 
Department of Agriculture in establishing these CAFOs in a way 
that recognized the burden that they put on the farmer and the 
operator of these facilities, but at the same time recognized 
the enormous importance of protecting the water supplies and 
the water in those areas.
    We are continuing to work with the Department of 
Agriculture to identify dollars to help with the 
implementation, to work with the States to ensure that they can 
meet the needs, that they will be able to do this. Since we are 
being sued by both the Farm Bureau and the environmentalists, 
we feel we are probably right where we need to be, because we 
are getting it from both sides.
    Senator Bond. Well, as I understand they are both sullen 
but not rebellious, which is I guess the greatest achievement 
one can hope in dealing with something like this.
    I do want to ask that you look at the problems in Christian 
County, Missouri, basically that somebody would get back to us 
on that and see what we can do.
    Speaking of water----
    Ms. Whitman. Senator, I have one piece of information. I 
think the State attorney general is bringing suit against the 
responsible parties there now, but we will continue to look at 
it from an environmental point of view.

                         SRFS--STATE PRIORITIES

    Senator Bond. Suits are fine, but I have never seen a court 
clean up a stinkhole yet. It requires somebody doing the work. 
Lawsuits are great. I used to be a lawyer. But it does not get 
your hands dirty. I want to figure out who is going to get 
their hands dirty to clean it up.
    Does EPA review the State decisions on SRFs to ensure that 
communities with greatest needs are getting needed funds?
    Ms. Whitman. We do not review the States' priority lists. 
We do reviews to make sure that the dollars are reaching 
communities and that they are being spent as they were meant to 
be spent. But as far as prioritizing which community is the 
neediest within a State, that is the priority and prerogative 
of the State.

                      ST. LOUIS--ATTAINMENT STATUS

    Senator Bond. The 11-hour ozone containment date is of some 
concern for St. Louis. On July 26th of 2001, EPA granted St. 
Louis additional time to meet the 1-hour standard and EPA made 
the determination that regional transport was the only way you 
could solve it.
    On November 25 of last year, the U.S. Court of Appeals for 
the Seventh Circuit ruled, and of course all St. Louis is all 
in the Eighth Circuit, so we are a little concerned about why 
the Seventh Circuit was in there, even though it is downwind. 
They remanded the case to EPA to bump up the designation from 
moderate to serious.
    However, St. Louis I think can avoid the additional 
measures because St. Louis is now meeting the 1-hour standard. 
It has been improving since 1991. We will know for certain soon 
if they have met the standard for the 2000 to 2002 data. There 
are other options regarding area redesignations.
    What is the current status of St. Louis' CAA 
classification?
    Ms. Whitman. The current status is that we did have to 
issue that notification of the bump-up. But also, at the same 
time, we have moved forward with the new data that we had 
received that shows that in fact St. Louis is in attainment. We 
expect to take final action to redesignate 3 to 4 months from 
now unless we get some unusual comment back on it. It is out 
there for comment, which is what usually gets us the lawsuits 
that end up on this situation.
    But we are very comfortable with the actions that St. Louis 
has taken and that the data will support and show that it is in 
fact in attainment for this standard, and we are continuing to 
work with the State and we are working with all States on the 
new standards that will come into effect.
    Senator Bond. Thank you very much, Madam Administrator. We 
appreciate the fact that you are staying on to make sure that 
the air is clean and also once they do that they do not suffer 
inappropriate penalties. We want the air cleaned up and we do 
not want the economy killed, and if we can move forward on both 
of them. We appreciate your good work.

                     ADDITIONAL COMMITTEE QUESTIONS

    I will have a number of questions for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Agency for response subsequent to the 
hearing:]
           Questions Submitted by Senator Christopher S. Bond

                       CLEAN WATER SRF: REDUCTION

    Question. How does the Environmental Protection Agency (EPA) 
justify this reduction in funding for the Clean Water SRF?
    Answer. In 1997, the Federal Government promised to help States 
establish a $2 billion projected long-term target annual revolving 
level for building new wastewater treatment plants and other 
infrastructure to keep our waters clean. With the funding appropriated 
by Congress to date, the $2 billion goal has been reached and, in fact, 
exceeded. The fiscal year 2004 budget request expands this commitment 
from $2 billion to $2.8 billion, an increase of 40 percent. This level 
of funding is achieved by an appropriation of $850 million a year from 
fiscal year 2004 through fiscal year 2011. Administration analyses 
using historical information indicate that, by extending Federal 
capitalization of the CWSRF program through 2011 at $850 million per 
year, the President's proposal is projected to increase SRF loan 
assistance by $21 billion in 20 years, equivalent to the 20-year 
additional need identified by the Clean Water and Drinking Water Gap 
Analysis Report. By also utilizing other Federal, State and local 
sources of funding and improved management practices, we believe the 
infrastructure gap can be eliminated.
    With the $800 million increase in the revolving level, States will 
be able to fund nearly 600 more projects each year on a long-term 
basis. In addition to funding more publicly financed projects, EPA will 
continue to focus on ways to utilize private funds to clean waterways 
by encouraging privatization and promoting technology innovation while 
maintaining affordability for consumers.

                       WATER INFRASTRUCTURE NEEDS

    Question. Is there some point in time where we can expect to meet 
our water infrastructure needs? What should be the State role? What 
should be the Federal role?
    Answer. The needs continue to change due to demographic pressures, 
aging infrastructure and new treatment requirements. Generally, it is 
the responsibility of local governments to pay for drinking water 
supply and wastewater disposal. However, Federal programs, including 
the Drinking Water SRF, established by the Safe Drinking Water Act 
(SDWA) and the Clean Water SRF established by the Clean Water Act (CWA) 
help local governments meet the costs of abiding by water quality 
standards and cleaning up waterways.
    The Federal Government and States work together through these 
programs to encourage investment in water and wastewater infrastructure 
that mitigates public health threats and creates sustainable water and 
wastewater treatment systems. Through Federal, State and local 
partnerships, EPA supports affordable, cost-based rate structures and 
encourages technology innovation, smart water use, and watershed-based 
decisionmaking. EPA is pursuing innovative ideas such as watershed-
based trading and sustainable management systems. Together, these 
efforts will meet water and wastewater infrastructure needs and, more 
importantly, will help assure safe and clean water for the Nation.

                       CSO AND SSO INFRASTRUCTURE

    Question. A total of 772 municipalities have combined sewers where 
domestic sanitary sewage, industrial wastes, infiltration from 
groundwater and storm water are collected. These systems serve some 40 
million persons, mostly in older and coastal cities. However, many of 
these systems are becoming overloaded and need to be rebuilt or 
reconstructed.
    What is the cost to address these infrastructure needs and how 
should these needs be paid for?
    Answer. In its 1996 Clean Water Needs Survey Report, EPA reported 
that the estimated national costs to control combined sewer overflows 
was $44.7 billion ($49.6 billion in 2000 dollars). These costs are 
based on controlling CSOs to a level of 4 to 6 untreated overflows 
annually.
    Communities that need to control CSOs can apply for low-interest 
loans under the Clean Water State Revolving Fund. Other sources of 
funding are bonds, loans, grants and privatization. More information on 
the available sources of funding is presented in Combined Sewer 
Overflows: Guidance For Funding Options (EPA 832-B-95-007, August 
1995).

                CSO AND SSO INFRASTRUCTURE: U.S. CITIES

    Question. What are the estimated needs for the U.S. Cities with the 
50 highest populations? Are there individual plans in place for each of 
these cities and what is the status of these plans?
    Answer. The attached table lists, in descending order, the 47 CSO 
municipalities with the largest populations. The table presents the 
status of the municipalities' efforts to develop and implement long-
term control plans (LTCP) for controlling their CSOs. The last column 
of the table, ``Controls Outside LTCP?'', identifies those 
municipalities that developed control plans that predate EPA's 1994 CSO 
Control Policy or have included CSO control measures in other 
wastewater facility plans.
    To develop this table we cross-checked our list of the largest CSO 
municipalities developing LTCPs against the data and information 
collected for the 2000 Clean Watersheds Needs Survey. Forty-seven 
communities appeared in both databases. The estimated cost for these 
communities to control their CSOs is approximately $29 billion (2000 
dollars). These costs are based on controlling CSOs to a level of 4 to 
6 untreated overflows annually.







                   ARSENIC STANDARD: EPA FACILITATION

    Question. What steps is EPA taking to ensure that communities with 
water that exceeds the current standards for arsenic will be able to 
convert and rebuild their water systems to meet these requirements?
    Answer. Following the promulgation of the revised arsenic standard 
in January 2001, EPA has implemented a comprehensive strategy to ensure 
that communities can meet the new standard. This strategy is designed 
to: (1) enhance small systems' access to financial assistance; (2) fund 
the research, development, testing and implementation of effective, 
practical, and affordable treatment technologies to reduce compliance 
costs for drinking water systems affected by the revised standard; (3) 
provide Federal technical assistance and training on the new arsenic 
regulation to small community water systems; and, (4) use a variety of 
approaches to inform communities of their treatment options, and how 
and where to get help building their technical, managerial and 
financial capacity.
    A key component of the Agency's support for small systems is to 
work with our State partners to maximize the availability of financial 
assistance under the Drinking Water State Revolving Fund (DWSRF) 
program. Through the DWSRF program, States may offer principal 
forgiveness, reduced interest rates, or extended loan terms to systems 
identified by the State as serving disadvantaged communities. States 
also have the ability to set aside a portion of their Federal DWSRF 
allocation for technical assistance to small community water systems 
affected by the new arsenic rule. As of June 30, 2002, 74 percent of 
all DWSRF loan agreements, totaling just over $2 billion, have been 
allocated to small systems serving 10,000 or fewer consumers.
    In addition to maximizing the availability of DWSRF funds for 
infrastructure improvement loans and technical assistance, EPA and the 
U.S. Department of Agriculture (USDA) signed a 4-year Memorandum of 
Agreement (MOA) in 2002, under which USDA's Rural Utilities Service 
(RUS) will identify as high funding priorities projects that assist 
small communities in complying with the revised arsenic standard for 
drinking water. Likewise, EPA will strongly encourage State agencies 
administering the DWSRF to coordinate loan funding decisions with RUS 
through Rural Development State staff. Further, under this agreement 
both agencies will make providing technical assistance resources to 
small systems a top priority.
    Fiscal year 2003 is the second year of EPA's 2-year, $20 million 
research and development program to identify more cost effective 
technologies to help small systems comply with the new arsenic 
standard. Also in fiscal year 2003, Congress directed EPA to utilize $5 
million in additional funds to carry out demonstrations of low-cost 
arsenic removal technologies. With this overall funding, the Agency 
anticipates that some 26-32 demonstrations will be conducted at small 
water utilities with arsenic problems under the research program. EPA 
also is verifying the performance of arsenic treatment technologies 
under the Environmental Technology Verification Program to provide 
small utilities information to select technologies appropriate for 
their water quality problem.
    Further, the Agency will continue its ongoing work with States to 
take full advantage of the suite of tools that the Safe Drinking Water 
Act (SDWA) provides to help small systems achieve compliance with the 
new arsenic standard. For example, EPA is phasing in the arsenic rule 
over a longer time-period by encouraging States to use the exemption 
authority provided by the SDWA. Under this authority, States can give 
eligible small systems (those serving fewer than 3,300 people) up to an 
additional 9 years to come into compliance, and allow Point-of-Use 
devices as a treatment option for very small systems.
    Finally, EPA has provided arsenic implementation guidance to State 
regulators, and made fact sheets, plain language guidance documents, 
and technology assistance manuals available to the public. This 
guidance is available both in printed form and electronically at EPA's 
web site, at the National Drinking Water Clearinghouse, and through the 
Local Government Environmental Assistance Network.

                              ARSENIC COST

    Question. What is the estimated cost per State to meet the 
infrastructure requirements of these new standards (i.e. Arsenic)?
    Answer. EPA did not develop a State-by-State cost analysis for the 
arsenic rule. Instead, the Agency developed national cost estimates 
based on arsenic occurrence data from 25 States. EPA used these 
occurrence data to make projections for the number of systems that 
exceed 10  g/L. To make those projections, EPA had to make estimates 
for the 25 States that did not provide occurrence data by using data 
from neighboring States. Because EPA did not have complete data for 
each State, it is not possible to provide an estimated cost per State 
to meet the infrastructure requirements of the new standard.
    Also, a key component of EPA's approach to developing a national 
cost estimate is the compliance forecast, which assigns treatment 
technologies to systems projected to exceed the revised MCL based on 
water quality considerations, system size, and other factors that vary 
significantly by State. There are significant differences in costs 
between ion exchange, activated alumina, and membrane (filtering) 
arsenic treatment technologies. For example, for all but the smallest 
of systems, the cost of disposable activated alumina technology is 
relatively inexpensive compared to other treatment technologies. 
Further, the 2001 arsenic rule allows small systems to comply with the 
standard using a centrally managed Point-of-Use (POU) technology, 
either reverse osmosis or activated alumina units.
    And since January 2001, a number of additional technologies have 
been identified that may be even more cost effective, such as iron-
based adsorptive media, that have demonstrated superior performance in 
removing arsenic in water supplies over a range of water quality 
conditions. The State of Arizona has evaluated these technologies and 
has determined that iron-based media are the lowest cost alternatives 
for many of their systems that must comply with the new arsenic 
standard. These results suggest that the 2001 estimate of the 
infrastructure costs may be overstated, and that any estimate of costs 
per State must take into account improvements in arsenic removal 
technologies.

                    ARSENIC COST: RURAL COMMUNITIES

    Question. Please identify the cost for rural communities (those 
with populations of 20,000 or less)? What is the basis for the 
information requested in these questions?
    Answer. While EPA's capital cost estimates do not break out the 
costs for a category of community water systems serving 10,001-20,000, 
the Agency has estimated costs for those systems serving 10,000 or 
fewer, defined as ``small'' under the Safe Drinking Water Act (SDWA). 
The three small system size categories include those serving: (1) a 
population of 10,000 or fewer but more than 3,300; (2) a population of 
3,300 or fewer but more than 500; and (3) a population of 500 or fewer 
but more than 25. The following table lists the capital costs (cost to 
install treatment technology to comply with the revised arsenic 
standard) for each small system category:

------------------------------------------------------------------------
                                                           Capital cost
                      Size category                             ($)
------------------------------------------------------------------------
25-500..................................................      53,000,000
501-3,300...............................................     165,000,000
3,301-10,000............................................     133,000,000
                                                         ---------------
      TOTAL.............................................     351,000,000
------------------------------------------------------------------------

    The source for these capital cost estimates is the December 2000 
``Arsenic in Drinking Water Rule Economic Analysis.'' The validity of 
the Agency's approach to estimating these costs was supported by the 
independent National Drinking Water Advisory Council in the Fall of 
2001 as part of the Agency's comprehensive review of the science and 
cost data underlying the January 2001 rule.
    As noted above, there are a number of new technologies that have 
come into the marketplace since the arsenic rule was promulgated in 
January 2001. These technologies appear to be more cost-effective than 
some of the technologies identified in the rule, and thus would likely 
result in lower capital costs than those presented in the table.

                       AGING WATER INFRASTRUCTURE

    Question. How should we prioritize the funding needs in the Nation? 
For example, what do we do about the aging and obsolete water 
infrastructure, which is a concern of many cities and communities in 
the East and Midwest?
    Answer. The Agency believes that the touchstone of a long-term 
strategy to close the infrastructure gap should be fiscal 
sustainability. Several basic principles should guide our pursuit of 
fiscal sustainability, including:
  --Utilizing the private sector and existing programs.--Fostering 
        greater private sector involvement and encouraging integrated 
        use of all local, State, and Federal sources for infrastructure 
        financing.
  --Promoting sustainable systems.--Ensuring the technical, financial, 
        and managerial capacity of water and wastewater systems, and 
        creating incentives for service providers to avoid future gaps 
        by adopting best management practices to improve efficiency and 
        economies of scale, and reducing the average cost of service 
        for providers.
  --Encouraging cost-based and affordable rates.--Encouraging rate 
        structures that cover costs and more fully reflect the cost of 
        service, while fostering affordable water and wastewater 
        service for low-income families.
  --Promoting technology innovation.--Creating incentives to support 
        research, development, and the use of innovative technologies 
        for improved services at lower life-cycle costs.
  --Promoting smart water use.--Encouraging States and service 
        providers to adopt holistic strategies to manage water on a 
        sustainable basis, including a greater emphasis on options for 
        reuse and conservation, efficient nonstructural approaches, and 
        coordination with State, regional, and local planning.
  --Promoting watershed-based decision-making.--Encouraging States and 
        local communities to look at water quality problems and 
        drinking water source water protection on a watershed scale and 
        to direct funding to the highest priority projects needed to 
        protect public health and the environment.

             PRIORITIZING WATER NEEDS WITH ARSENIC STANDARD

    Question. How do we prioritize these funding needs with new 
infrastructure requirements, which have been created by the new arsenic 
standards?
    Answer. State DWSRF programs prioritize infrastructure funding 
needs according to SDWA Section 1452 criteria and the amounts and types 
of contaminants occurring in their drinking water supplies. With 
respect to the January 2001 arsenic in drinking water standard, EPA has 
taken several steps to help the 4,100 community and non-transient, non-
community systems that must install arsenic removal technologies comply 
with the revised standard. These steps include: (1) enhancing small 
systems' access to financial assistance; (2) funding the research, 
development, testing and implementation of effective, practical, and 
affordable treatment technologies to reduce compliance costs for 
drinking water systems affected by the revised standard; (3) providing 
Federal technical assistance and training on the new arsenic regulation 
to small community water systems; and, (4) using a variety of 
approaches to inform communities of their treatment options, and how 
and where to get help building their technical, managerial and 
financial capacity.

                SUPERFUND FUNDING: VERSUS CWSRF FUNDING

    Question. What is the justification for this increase as opposed to 
including this additional funding in the Clean Water SRF?
    Answer. EPA has been cleaning up ``orphan'' sites for more than 20 
years. Now that well over half of the sites on the NPL are construction 
complete, many of the most difficult sites remain and these will be 
more challenging and expensive to cleanup. Recognizing this, the 
administration has proposed a $150 million increase for remedial 
action. The immediate benefit in fiscal year 2004 will be the ability 
to initiate an additional 10 to 15 new remedial action projects that 
would have to wait longer for cleanup otherwise. With the support of 
these additional resources, EPA will increase the number of sites where 
potential human exposures and the migration of contaminated groundwater 
are under control, which can help reduce the exposure of people living 
and working in the immediate vicinity of the sites to site 
contaminants.

                 SUPERFUND FUNDING: RESPONSIBLE PARTIES

    Question. While it is not clear that these taxes result in the cost 
of clean-up being paid for by the responsible parties, what is EPA 
doing to collect the cost of these clean-ups from the responsible 
parties and how much funding is collected each year?
    Answer. The administration remains strongly committed to the 
``Polluter Pays'' principle. EPA has been very successful in getting 
responsible parties to clean up a majority of the Nation's worst 
hazardous waste sites (approximately 70 percent over the past several 
years), preserving fund monies for sites where there are no viable 
responsible parties. In instances where settlements cannot be reached, 
EPA prefers to issue unilateral administrative orders (UAOs) instead 
undertaking a fund-lead clean-up. Over the past 3 years, an average of 
24 percent of clean-up agreements reached with responsible parties have 
been the result of EPA issuing UAOs. The cumulative value of private 
party commitments for clean-up and cost recoveries is approximately 
$20.6 billion, $627 million during fiscal year 2002 alone. Since the 
inception of the Superfund program, EPA has achieved $8 in private 
party commitments for every $1 spent on Superfund enforcement.

                     SUPERFUND FUNDING: RECOVERIES

    Question. What has been the amount of recoveries over the last few 
years and what are the projected recoveries for the next few years?
    Answer. Over the past 3 years collections have averaged 
approximately $227,000,000. Recent rates indicate the fiscal year 2004 
budget estimates of $175,000,000 is a conservative estimate.
    Actual collections between fiscal year 1997 and fiscal year 2002 
and estimates for fiscal year 2003 and fiscal year 2004 are as follows:

------------------------------------------------------------------------

------------------------------------------------------------------------
Fiscal year 1997........................................    $313,300,000
Fiscal year 1998........................................     319,600,000
Fiscal year 1999........................................     319,700,000
Fiscal year 2000........................................     230,500,000
Fiscal year 2001........................................     202,100,000
Fiscal year 2002........................................     248,300,000
Fiscal year 2003 est....................................     175,000,000
Fiscal year 2004 est....................................     175,000,000
------------------------------------------------------------------------

                        SUPERFUND: STATE CONTROL

    Question. I understand that some States are pushing for greater 
control over the Superfund program. To what extent [do you] to support 
this approach and what are the pluses and minuses to greater State 
control?
    Answer. EPA Superfund is not aware of any current activity by 
States pushing for greater control over the Superfund program. The 
inception of Governor's letters to support listing on the NPL by States 
and a multitude of work-sharing agreements between EPA Regions and 
States has led to cooperative and less adversarial relationships, which 
are generally beneficial to site-cleanup. EPA's impression is that, in 
general, the States consider their degree of involvement and control is 
appropriate, especially considering their resource constraints in 
dealing with contaminated waste sites.

                           NEW SOURCE REVIEW

    Question. While the New Source Review rules were only recently 
issued on December 31, 2002, what benchmarks will EPA use to measure 
the success of the program?
    Answer. The New Source Review Program is one part of a State's 
overall plan to achieve or maintain attainment. Accordingly, the 
overall measure of success for the program is whether it is working 
collectively with other Clean Air Act programs to assure that 
nonattainment areas reach attainment, and that attainment and 
unclassifiable areas see no significant degradation in ambient air 
quality. Other measures for the program include whether the program is 
creating barriers to environmental improvement or the right incentives 
for such improvements, the level of resource burden it imposes for 
implementation on all parties, and how the public is involved in the 
process of issuing permits. Congress recently directed the National 
Academy of Science to conduct a study regarding the effectiveness of 
the recent improvement made to the NSR program. We plan to use this 
study and other measures as a starting point for evaluating future 
approaches for measuring the long-term success of the program.

    NEW SOURCE REVIEW IMPROVEMENT RULES: PETITIONS FOR REVIEW FILED

    Question. I understand that on the day the new regulations were 
issued some 9 northeastern States filed a lawsuit to block 
implementation of the new changes. What is the status of the lawsuit 
and what is the basis of the lawsuit?
    Answer. On December 31, 2002, the day the final New Source Review 
Improvement rules were published in the Federal Register, 9 
northeastern States filed a petition for review of those rules in the 
United States Court of Appeals for the District of Columbia Circuit. 
Since then, a number of additional petitions for review have been filed 
by additional State and local governments, environmental groups, and 
industry groups, for a total of 19 petitions for review. In addition, 9 
States and a number of industry groups have intervened on EPA's behalf 
against the State and environmental petitioners, and most of the State 
and environmental petitioners have intervened on EPA's behalf against 
the industrial petitioners. The State petitioners filed a motion for a 
stay of the effectiveness of the final rules pending the outcome of the 
litigation. EPA opposed this motion, and the court denied it on March 
6, 2003, while at the same time ruling that the case met the criteria 
for expedited consideration.
    Until the briefs of the parties are filed, we will not know 
precisely which issues they intend to raise. However, the parties have 
filed non-binding statements of issues, and we are enclosing copies of 
all such statements that we have received to date.

                        MTBE CONTAMINATION ISSUE
 
   Question. As you know, under the Clean Air Act Amendments of 1990, 
numerous areas with poor air quality standards were required to add 
``oxygenates'' to gasoline as a way to improve combustion and reduce 
emissions. The most commonly used oxygenate was MTBE. However, there 
has been significant controversy over the use of MTBE over the last few 
years, fueled by concerns that MTBE is contaminating groundwater, 
especially in California. What is the current status of this issue?
    Answer. Although MTBE is a high quality blending component of 
gasoline, significant concern persists about its contamination of 
drinking water in many areas of the country. Most MTBE contamination is 
the result of leaks from underground storage tanks (USTs), but some 
contamination has resulted from fuel spills. We now know that MTBE, if 
leaked or spilled, can contaminate water supplies more readily than 
other components of gasoline. Public concern has focused on the issues 
of taste and odor associated with MTBE contamination. Current data on 
MTBE in ground and surface waters indicate numerous detections of MTBE 
at low levels that may affect taste and odor of drinking water. Some 
contamination has resulted in closure of both public and private wells. 
EPA is conducting research to determine potential effects of MTBE 
exposure to susceptible populations as well as evaluation of treatment 
technologies.
    EPA and the States are working together to prevent future releases 
from USTs by identifying causes of releases and educating owners and 
operators about properly maintaining their UST systems to prevent 
future leaks.
    MTBE can be a major impediment to completing LUST cleanups because 
it is complex, costly, and time-consuming to remediate. A national 
survey of leaking underground storage tank (LUST) State programs found 
that 23 States report MTBE contamination at more than 60 percent of all 
LUST sites. This survey is undergoing an update to include data on 
other fuel oxygenates. EPA has provided over $5 million in assistance 
to States with significant MTBE contamination. Information from these 
State pilots will be shared with other regulators, responsible parties 
and communities faced with similar problems to promote efficient use of 
resources and to reduce duplication of effort.
    Additionally, EPA provides approximately 81 percent of its LUST 
Trust Fund annual appropriation to the States to address contamination 
from leaking USTs. Collectively, States use approximately $1 billion 
each year from their own revenues to address MTBE and other petroleum 
contamination. EPA will continue to assess the impact of MTBE 
contamination on the cost and duration of cleanup efforts. This 
assessment will enable the Agency to more effectively address the 
complex nature of groundwater and MTBE contamination cleanup efforts.
    As a result of existing MTBE contamination and the potential for 
future occurrences, 17 States have taken action to ban the use of MTBE 
as a gasoline additive in the future. Over the next year, MTBE bans go 
into effect in the States of California, Connecticut and New York. At 
least 6 additional States are considering similar bans. At the Federal 
level, EPA published an Advance Notice of Proposed Rulemaking in 2000 
requesting comments on a phase down or phase out of MTBE from gasoline 
under Section 6 of the Toxic Substances Control Act (TSCA). While the 
Clean Air Act allows for MTBE to be used as a fuel additive, TSCA is 
the only administrative mechanism available to EPA for limiting or 
eliminating the use of MTBE. TSCA gives EPA authority to ban, phase 
out, limit or control the manufacture of any chemical substance deemed 
to pose an unreasonable risk to public health or the environment. But 
the TSCA process is cumbersome and lengthy at best.

                                  TMDL

    Question. The Clean Water Act requires States to identify 
pollution-impaired water and develop ``total maximum daily loads'' that 
set the maximum amount of pollution that a water body can receive 
without violating water quality standards. Unfortunately, States lack 
the ability to effectively implement TMDLs and because of a number of 
controversies concerns costs and burdens, EPA has delayed issuing a new 
TMDL rule until after May 2003.
    What is the status of this rule and what are the primary issues 
that EPA is attempting to address?
    Answer. The Agency has prepared a draft proposal which is 
undergoing an informal review at OMB in order to determine what 
significant issues this proposal may pose for other Federal agencies. 
At the end of this process, the Agency will make a determination 
whether to go forward with the rulemaking or rely on additional 
guidance to continue shaping the TMDL program.
    The primary issues the Agency is attempting to address are:
  --How to improve monitoring and increase scientific rigor of water 
        quality standards attainment determination;
  --How to facilitate trading and enhance locally driven watershed 
        efforts; and
  --How to improve and streamline State water quality management 
        planning processes to ensure that TMDLs are integrated with 
        other all water program activities and result in water quality 
        improvement.

                 CONCENTRATED ANIMAL FEEDING OPERATIONS

    Question. EPA issued final, revised CAFO rules on December 16, 
2002. The final rules, effective April 14, 2003, will require CAFOs to 
develop nutrient management plans that are intended to keep livestock 
waste from entering nearby waters. The new rule will apply to some 
15,500 livestock operations across the country. A recent GAO report 
concluded that neither the EPA nor the States are equipped to implement 
this program. What is the EPA doing to respond to the GAO concerns?
    Answer. The Agency is developing a comprehensive national 
implementation plan that ensures the new regulations are effectively 
implemented and enforced by EPA and the States. The plan is a 
comprehensive strategy that addresses key goals including communication 
and outreach, development of supplemental implementation guidance, 
revision of State programs, permit issuance, compliance assistance and 
enforcement. We are working in close partnership with our Regions and 
States as we develop this plan. We also expect that many elements of 
our implementation plan will be coordinated and integrated with efforts 
by United States Department of Agriculture (USDA), particularly with 
respect to tool development, technical support, and funding. A key part 
of this implementation plan will be the expectation that EPA Regions 
work closely with each of the States to develop a corresponding plan 
that includes activities and milestones to ensure that States revise 
their Concentrated Animal Feeding Operations programs and carry out the 
needed permitting, inspection and enforcement activities.

                         NEW CORN PEST CONTROL

    Question. On February 25, 2003, EPA approved the use of a new 
genetically engineered corn developed by Monsanto. This new corn 
includes a gene from a soil bacteria that allows the roots to secrete a 
protein that kills the corn rootworm, the crop's number one pest. This 
is an important initiative. What other genetically engineered crops are 
being considered for approval by EPA?
    Answer. The Environmental Protection Agency (EPA) regulates the 
pesticide produced by genetically engineered crops such as the 
insecticidal protein that controls the corn rootworm. Besides the 
product developed by Monsanto, other insecticidal proteins to control 
corn rootworm are being developed and tested by Dow AgroSciences 
(Mycogen Seeds) and Dupont (Pioneer Seeds). Monsanto also is testing a 
new variety of its corn rootworm product. Dow AgroSciences has a new 
variety of its corn borer control product being tested under an 
Experimental Use Permit which was just issued. Dow is also testing a 
new product to control tobacco budworm, bollworms, and other pests in 
cotton and Syngenta has applied for an Experimental Use Permit for a 
new type of insecticidal protein for use in cotton to control several 
important pests. There is also an Experimental Use Permit for an 
insecticidal protein in tomatoes. This protein is already registered 
and has a tolerance exemption for use in all crops.

           APPROVAL PROCESS FOR GENETICALLY ENGINEERED CROPS

    Question. What is the process for EPA to consider and approve a new 
genetically engineered crop?
    Answer. The Environmental Protection Agency (EPA), the U.S. 
Department of Agriculture (USDA), and the Food and Drug Administration 
(FDA) have shared responsibility for regulating agricultural 
biotechnology in the United States. EPA regulates the pesticidal 
component of genetically engineered crops, called plant-incorporated 
protectants or PIPs. These pesticides created through biotechnology are 
addressed through the agency's regulatory jurisdiction over all 
pesticides marketed and used in the United States. Statutory authority 
for this regulation comes under the Federal Insecticide, Fungicide and 
Rodenticide Act (FIFRA), the Federal Food, Drug, and Cosmetic Act, and 
the Food Quality Protection Act. All pesticides that pass EPA's 
evaluation under FIFRA are granted a license or ``registration'' that 
permits their sale and use according to the requirements set by EPA to 
protect human health and the environment. In making regulatory 
decisions, EPA evaluates the risks of pesticide use and balances these 
risks with the benefits derived from pesticide use. PIPs are handled 
this same way.
    EPA has tailored its basic regulatory framework to fit the 
distinctive characteristics of these genetically engineered biological 
pesticides. Data required for the review of PIPs include product 
characterization, mammalian toxicity and allergenicity, and potential 
impacts on non-target organisms including birds, fish, earthworms, and 
many invertebrates that are either beneficial or representative of 
species that might be exposed to the PIP. EPA has developed these data 
requirements through a public process and after considering 
recommendations from the FIFRA Scientific Advisory Panel (SAP). The SAP 
is often consulted before EPA completes its risk assessment and makes a 
regulatory decision.

                      HUDSON RIVER DREDGING DELAY

    Question. A recent article indicated that EPA was delaying the 
dredging of PCBs from the Hudson River until Spring 2006. What are the 
reasons for the delay?
    Answer. The main causes of delay are due to project complexity, 
particularly the time required for negotiations with General Electric, 
and the need for meaningful community involvement with residents whose 
communities will be affected by the dredging operation. This means an 
additional year will be needed for planning and designing beyond the 3 
years already allotted in the February 2002 Record of Decision.
    A detailed discussion of the dredging start date adjustment can be 
found on EPA's web-site: www.epa.gov/hudson. The current issues section 
contains a hot link to a recently released document titled, ``Hudson 
River Project Design Fact Sheet 2002-2006,'' which highlights the 
project schedule milestones, upcoming activities on the Hudson River, 
and opportunities for public involvement. The fact sheet includes a 
schematic for the sequence of key events from 2002-2006.

                NEW CANCER RISK GUIDELINES FOR CHILDREN

    Question. As I understand it, EPA issued proposed new guidelines on 
March 3rd for evaluating cancer risks to children on the grounds that 
the very young may be some 10 times more vulnerable than adults to 
certain chemicals. I understand that the final guidelines are to be 
reviewed by the EPA science advisory board in May. How would these 
guidelines be expected to be implemented?
    Answer. EPA's draft final cancer guidelines set forth recommended 
principles and procedures to guide EPA scientists in assessing the 
cancer risks from chemicals or other agents in the environment. They 
are intended to promote high technical quality and Agency-wide 
consistency in the human health risk assessment process. EPA published 
final cancer guidelines in 1986 and is in the process of revising them 
to reflect advances in scientific understanding as well as experience 
in using the 1986 guidelines as well as the 1999 Interim Guidelines. As 
you noted, EPA's Draft Final ``Guidelines for Carcinogen Risk 
Assessment'' were released for public review and comment on March 3, 
2003. Because previous draft versions of the guidelines have been 
reviewed by EPA's Science Advisory Board (SAB), this draft final 
version has not been re-submitted to the SAB. After addressing public 
comments, EPA plans to release final revised Guidelines.
    On March 3, 2003, EPA also released an associated draft document 
for public review and comment entitled, ``Supplemental Guidance for 
Assessing Cancer Susceptibility from Early-Life Exposure to 
Carcinogens.'' The draft supplemental guidance describes possible 
approaches that EPA could use to address certain aspects of cancer risk 
assessment, specifically focusing on assessing cancer susceptibility 
that may arise from exposure to carcinogens early in life. The EPA SAB 
began reviewing the draft supplemental guidance in May 2003. EPA will 
carefully consider SAB recommendations and public comments in revising 
the draft supplemental guidance.
    The draft supplemental guidance proposes to adjust risk estimates 
that pertain to early-life exposure to certain kinds of carcinogens 
when specific data on risks from early life exposure are unavailable. 
The adjustment factors are meant to be applied only when data indicate 
that the carcinogens operate by a mutagenic mode of action (i.e., cause 
cancer by directly interacting with DNA). For carcinogens that act 
through other modes of action, or where the mode of action is unknown, 
no adjustment factors are recommended at this time due to insufficient 
information for such carcinogens.
    The proposed adjustment factors do not address childhood cancers, 
but rather address risks of cancers during adulthood due to early-life 
exposures. The analysis of animal data presented in the draft 
supplemental guidance indicates that higher risks typically result from 
a given exposure to mutagenic carcinogens occurring early in life when 
compared with the same amount of exposure during adulthood. Information 
derived from human radiation exposures supports this finding. The 
biological differences between children and adults are believed to be 
greatest during the first years of life. To account for these 
differences, the document proposes a 10-fold adjustment for exposures 
before 2 years of age and a three-fold adjustment for exposures between 
2 and 15 years of age. For exposures after 15 years of age, no 
adjustment factor is proposed. As noted previously, the proposed 
adjustment factors, as well as the entire guidance document, are being 
reviewed by the SAB.
    Question. Are there any other EPA special guidelines being examined 
for implementation just for children?
    Answer. No. There are no other Agency-wide risk assessment 
guidelines being examined for implementation just for children. The 
draft supplemental guidance document is designed to supplement the 
Guidelines for Carcinogen Risk Assessment. Issues involving pregnancy 
and the developing young are covered in EPA's 1991 Guidelines for 
Developmental Toxicity Risk Assessment and 1996 Guidelines for 
Reproductive Toxicity Risk Assessment; developmental neurotoxicity is 
addressed in the 1998 Guidelines for Neurotoxicity Risk Assessment. In 
terms of other documents that may assist in using the risk assessment 
guidelines, EPA is also in the process of preparing draft guidance on 
identifying the appropriate age groups for assessing childhood exposure 
to environmental contaminants.

                           HOMELAND SECURITY

    Question. Please explain the role of EPA in the President's 
National Strategy for Homeland Security?
    Answer. Under the President's National Homeland Security Plan, EPA 
has three primary areas of responsibility: Critical Infrastructure 
Protection; Preparedness, Response, and Recovery; and Communication and 
Information. EPA has developed specific tactics to accomplish each 
goal, which will be coordinated with the Department of Homeland 
Security, other Federal agencies, and EPA's partners at the State, 
local, and tribal levels. Additionally, as the responsibilities of the 
various agencies evolve, including the Department of Homeland Security, 
EPA will coordinate with those agencies to effectuate homeland 
security.

Critical Infrastructure Protection
    EPA has unique programmatic responsibilities and expertise related 
to the water and wastewater industries; the use, handling, storage, 
release, and disposal of chemicals and chemical wastes at industrial 
facilities; and indoor air quality. In these areas, EPA is committed to 
assessing and reducing vulnerabilities and strengthening detection and 
response capabilities for critical infrastructures. In addition, EPA 
will contribute to similar efforts led by other Federal agencies 
addressing food, transportation, and energy industries, and will 
provide environmental expertise to support Federal law enforcement 
activities.

Preparedness, Response, and Recovery
    EPA's role under the National Strategy for Homeland Security is to 
develop, disseminate, and exercise the use of new and improved tools 
and techniques to respond to chemical, biological and radiological 
releases that would protect public health and the environment through 
prevention and clean up of contamination. EPA is remaining vigilant in 
its readiness State and is training a larger cadre of personnel that 
will respond quickly in the event of multiple threats. EPA is also 
focusing its efforts on enhanced coordination within the Agency, 
regionally and with other Federal agencies.

Communication and Information
    Comprehensive, accurate, well-organized, and timely information is 
critical to sound decision making. EPA possesses unique capabilities to 
collect, synthesize, interpret, manage, disseminate, and provide 
understanding to complex information about environmental and human-made 
contaminants and the condition of the environment. Effectively managing 
and sharing this information within the Agency and with our partners at 
all levels of government and industry will contribute to the Nation's 
capability to detect, prepare for, prevent, protect against, respond 
to, and recover from terrorist incidents.

                 HOMELAND SECURITY: CHEMICAL COMPANIES

    Question. What is EPA doing to address the risks posed by chemical 
companies?
    Answer. First, EPA monitors safety-related issues that are designed 
to prevent an accidental release of chemicals at facilities. EPA has 
worked in coordination with the Federal Bureau of Investigation's 
National Infrastructure Protection Center to provide the chemical 
industry with a number of site security advisories. In the months 
following September 11, 2001, EPA distributed advisories to the 
chemical industry primarily through the cooperation of chemical trade 
associations. More recently, the Agency has compiled an e-mail database 
for the purpose of rapidly sharing security advisory information with 
over 10,000 chemical facilities regulated under the Agency's Risk 
Management Program.
    Over the last year, EPA has also visited 31 high-risk chemical 
facilities to discuss their efforts and to share information on 
assessment and vulnerability reduction. EPA selected facilities based 
on their Risk Management Plan data, geographic location, and other 
factors. These visits were conducted with the voluntary consent and 
cooperation of the chemical facilities.
    Administrator Whitman has joined the Secretary of the Department of 
Homeland Security (DHS) in recognizing the need for new legislative 
authorities to address chemical site security concerns. Such concerns 
include employee training and background checks, protection of 
perimeters, intrusion detection of both physical plant and data 
systems, and securing and controlling chemical stores and potential 
release points. EPA is working with the Office of Homeland Security and 
DHS to produce draft legislation, which we anticipate will soon be 
transmitted in the Senate for its consideration.

                       GROUND ZERO AIR STATEMENTS

    Question. Recent articles have indicated that ground zero tests in 
the days immediately after the WTC terrorist attacks did not support 
the EPA's statements that the site was safe to breathe. What tests did 
the EPA conduct and what statements were made?
    Answer. EPA activities at or near the World Trade Center (WTC) site 
include air quality monitoring, air model development, meteorological 
measurements, laboratory analysis of WTC samples, analyses of the 
toxicological effects of fine particulate matter derived from the 
destruction of the WTC, and an assessment of the potential health risks 
associated with exposures to air pollutants released during the WTC 
disaster. Pages B-13 through B-22 of the attached report, A Preliminary 
Survey of Air Quality and Related Health Studies Conducted in the 
Vicinity of Ground Zero, describe these activities in detail. 
Information and results from these activities are available at the web 
sites included in the report.
    EPA conducted an inhalation risk assessment based on the data from 
the activities described above and on numerous other air measurement 
efforts conducted by other Federal agencies and New York State and 
local government agencies. This assessment was released as an external 
review draft in December of 2002 and will be finalized during 2003 
pending the completion of an external peer panel review.
    EPA has maintained that people living and working in lower 
Manhattan were not exposed to levels of contaminants in the outdoor air 
that would pose a significant long-term health threat. The Agency 
further advised people experiencing acute health problems to see their 
physician. In addition, EPA stressed that workers at the site faced a 
higher risk and must wear protective respiratory gear, which was 
supplied by EPA and other agencies. We also emphasized that people 
returning to dusty homes and workplaces should have these spaces 
professionally cleaned by asbestos contractors.

                          WATER INFRASTRUCTURE

    Question. I would like a breakdown on the amount of EPA funds, 
especially for infrastructure needs, are invested in rural areas as 
opposed to urban areas?
    Answer. For the Clean Water SRF, the information EPA receives from 
the States on number of projects is broken out only by population size. 
Communities under 10,000 population might serve as a proxy for rural, 
or at least suburban, but this is a rudimentary way to report rural 
versus urban funding for wastewater infrastructure. For our most recent 
national data set (fiscal year 2002), about $9 billion has been made 
available to finance over 7,000 wastewater treatment projects serving 
communities with populations under 10,000.
    Considering that rural communities often lack centralized 
wastewater treatment and rely on alternative technologies, such as 
septic systems and other on-lot decentralized treatment systems, it is 
reasonable to assume that a percentage of the projects funded to 
correct polluted sources of runoff also support rural wastewater 
treatment needs. While EPA lacks specific numbers of the various 
categories of nonpoint source projects, from surveys taken previously 
we know that about 54 percent of the projects comprising about 4 
percent of the funds are for correction of septage problems. Of the 
$1.6 billion of CWSRF funds, representing about 3,400 loans, that have 
been spent on correction of polluted runoff, EPA estimates that $64 
million in approximately 1,800 loans might be attributable to serving 
the needs of rural communities. Because the alternative technologies 
that many employ in service to rural areas are less expensive than 
traditional centralized wastewater treatment systems for urban areas, 
numbers of loans are a more sensitive indicator than dollars spent.
    Through June 30, 2002, $2 billion or 40 percent of DWSRF loan 
dollars were provided to drinking water projects serving communities 
with populations under 10,000, accounting for 74 percent of all DWSRF 
loans. The Safe Drinking Water Act also allows DWSRF funds to be used 
to help disadvantaged communities. Of the $5.1 billion in DWSRF 
assistance, $838 million has been provided to disadvantaged systems, 
however, the distribution between rural and urban communities is not 
known.
    In addition to the SRF programs, rural communities receive 
financial support through the Clean Water Indian Set-aside Program; the 
Alaskan Native Villages program; the Mexican Border program; and Rural 
Water Technical Assistance activities for both water and wastewater.

                       CWSRF AND DWSRF OVERSIGHT

    Question. What oversight is provided by EPA to ensure that the 
Clean Water SRF and the Drinking Water SRF are allocated within States 
based on need?
    Answer. The Clean Water SRF (CWSRF) has no statutory oversight 
responsibility for allotment of funds to the States based on need. That 
allotment formula was developed by the Congress and is contained in 
statute. However, EPA believes it is very important that funds used 
within the States for high priority water quality projects. We provide 
oversight and encouragement to States to develop and use integrated 
planning and priority setting systems to make CWSRF funding decisions. 
EPA regions review, as part of each State's annual capitalization grant 
application, the long and short-term goals for the program and how 
their intended use plans relate to those priorities. They also assess 
during their annual oversight process for each State program how well 
the State adhered to its intended uses of funds.
    The Safe Drinking Water Act requires EPA to assess the capital 
investment needs of water systems eligible to receive DWSRF assistance, 
which covers approximately 54,000 community water systems and 21,400 
not-for-profit non-community water systems. The survey includes all 
infrastructure needs for systems to provide an adequate quality and 
quantity of drinking water. By law, EPA conducts the survey every 4 
years and uses the latest results to allocate DWSRF funds to the 
States. Each State is allotted its proportional share of the total 
needs with the proviso that each State receives a minimum of 1 percent.
    To determine how best to allocate its allotment, every year each 
State DWSRF program establishes short- and long-term infrastructure 
funding goals and priorities through Intended Use Plans (IUPs), as 
required by statute. These IUPs specify how each State's funding 
priorities are consistent with section 1452(b)(3) of the SDWA, which 
requires that States give funding priority to infrastructure projects 
that: (1) address the most serious human health risks; (2) are 
necessary to ensure compliance with the SDWA; and (3) assist systems 
most in need, on a per household basis, according to State 
affordability criteria. EPA reviews the IUPs to ensure that they are 
consistent with SDWA requirements.

                            GLOBAL POLLUTION

    Question. Global and Cross-Border Environmental Risks. What is EPA 
doing to minimize pollution in the United States from pollution hazards 
originating outside the United States, such as from Mexico or Canada?
    Answer. EPA is actively engaged in a range of activities intended 
to prevent, reduce, or otherwise minimize the impacts on the U.S. 
environment and public health from sources of pollution originating 
outside of our borders. The broad responses address a wide range of the 
contaminants of concern, a diversity of pollution source types and 
media transport mechanisms. EPA's activities include working along our 
borders with Canada and Mexico and cooperation with a substantial 
number of other countries across a wide area of the globe, for example 
by participating in multi-lateral agreements to address identified 
regional and global transboundary pollution threats. Many of EPA's 
major program offices, regional offices and laboratories are involved 
in these efforts and, in many of its endeavors, the Agency cooperates 
with other Federal and State agencies, non-governmental organizations 
and multilateral bodies.
    EPA's international efforts include environmental protection 
capacity building, technical assistance, technical information 
exchange, international monitoring and assessment, cooperative research 
and development, and negotiation of international agreements. The 
specific efforts are a function of addressing a particular pollutant's 
chemical behavior, media transport mode, nature of the source types, or 
circumstances of the foreign involvement. The Agency also conducts 
research and assessments of new or unaddressed risks and improving the 
scientific basis of our general understanding of the known 
transboundary environmental threats, such as the global flows of 
mercury. EPA has both domestic and international cooperative efforts 
aimed at improving our understanding of the problems, including 
research into the chemical and physical processes involved in long-
range transport and transformation of pollutants. The Agency also 
engages in technology development addressing international problems.
    EPA's major efforts in addressing transboundary pollution impacting 
the U.S. mainly fall into the following four broad categories: (1) the 
U.S. border areas with Mexico and Canada and cooperation with these 
immediate U.S. neighbors on transboundary contamination problems; (2) 
addressing regional Arctic contamination and potential threats to 
Alaska and indigenous populations, mostly from pollution sources in 
Russia; (3) international cooperation and agreements addressing global 
sources of persistent organic pollutants (POPs) and other toxic 
substances; and (4) very long-range air transport of a variety of 
pollutants and the problem of global cycling of mercury.
    Please refer to the Attachment for program specifics.

                      ATTACHMENT--GLOBAL POLLUTION

U.S. Border Areas with Mexico and Canada and General Transboundary 
        Contamination Cooperation with These Immediate U.S. Neighbors
            United States-Mexico
    The United States and Mexico cooperate on a number of programs to 
protect the United States from transboundary pollution. Formal 
cooperation dates back to 1983, when the United States and Mexico 
signed the La Paz Agreement to promote cooperation for the protection 
and improvement of the environment in the border region. This agreement 
serves as the basis for joint activities to protect public health and 
the environment in both the United States and Mexico. Two formal 
``environmental plans'' have been completed by EPA and its Mexican 
counterpart, SEMARNAT, and a new plan that will cover the next 10 
years, called Border 2012, was announced on April 4, 2003. Detailed 
information on Border 2012 is available on the EPA website 
(www.epa.gov/usmexicoborder) and previous activities are described in 
the U.S.-Mexico Border XXI Program-Progress Report 1996-2000. Although 
not all activities under the new border program have yet been 
identified, examples of some are provided below:
  --Air.--Bi-national air quality planning and management activities 
        have been conducted in the sister cities of San Diego-Tijuana; 
        Imperial Valley-Mexicali; Nogales-Nogales; and Douglas-Agua 
        Prieta. Recent efforts have concentrated on establishing and 
        operating air quality monitoring networks in Tijuana and 
        Mexicali, similar to those operating in San Diego and Imperial 
        Valley. The Joint Advisory Council for the Improvement of Air 
        Quality in the Ciudad Juarez/El Paso/Dona Ana County Air Basin 
        (JAC) was created to provide locally-based recommendations to 
        the Air Workgroup on how to manage air quality in the region.
  --Hazardous Wastes.--The EPA and Mexico's National Ecology Institute 
        (Instituto Nacional de Ecologia, or INE) have operated the 
        Hazardous Waste Tracking System (Haztraks) for several years. 
        In 1998, Haztraks was replaced in Mexico with INE's version of 
        a hazardous waste tracking system, known as SIRREP (Sistema de 
        Rastreo de Residuos Peligrosos). The use of both systems has 
        considerably improved the ability to monitor transboundary 
        hazardous waste shipments in the U.S.-Mexico border region. It 
        is worth noting that a 1999 study conducted by the Texas 
        Natural Resources Conservation Commission (TNRCC) determined 
        that the operation of SIRREP and the Haztraks systems is the 
        most effective way of tracking the movement of hazardous wastes 
        between the two countries.
      A Consultative Mechanism for the Exchange of Information on New 
        and Existing Facilities for the Management of Hazardous and 
        Radioactive Waste within 100 Kilometers of the U.S.-Mexico 
        Border has been developed. This mechanism serves to address 
        public concern on both sides of the border as it relates to the 
        siting and operation of hazardous and radioactive waste 
        facilities in the border region. The agreement will allow for 
        both countries to exchange data and other information on new 
        and existing treatment, storage, and disposal facilities for 
        these types of waste in the border region.
    In addition to the activities under the border plan, two bi-
national institutions were set up between the United States and Mexico 
under a supplemental agreement to the North American Free Trade 
Agreement (NAFTA). These institutions are the North American 
Development Bank (NADBank) and the Border Environment Cooperation 
Commission (BECC), which were established to develop and finance solid 
waste, waste water and drinking water infrastructure in the border area 
to reduce the possibility of cross border pollution. To date, 55 
projects have been certified and more than 30 are either operational or 
under construction. When all 55 projects are completed they will serve 
more than 9 million people. In Juarez, Mexico, a city of over 1 
million, the first wastewater treatment systems are now operational. 
Since 1994, EPA has spent over $770 million on water and wastewater 
infrastructure in the Mexico Border area.
    EPA also has a number of programs and activities concerned with the 
transport of agricultural products across the border. These actions 
have contributed to the reduction of pesticide residues on the imported 
agricultural products.

            United States-Canada
    The United States and Canada cooperate extensively on monitoring, 
assessment, reporting, and control of chemical, physical, and 
biological pollution, including increasing their focus and cooperation 
on biological pollution (e.g., invasive species of concern). A great 
deal of this cooperation includes overarching goals to better protect 
many diverse, shared ecosystems and the public health of populations 
(including indigenous peoples) particularly along the shared extensive 
border areas, but also in the inland areas of both countries. In 
addition, bi-national cooperation has been underway since the early 
1990s to better protect U.S.-Canada marine regions such as the Gulf of 
Maine.
    The United States and Canada have a long history of working 
together to control, reduce, and prevent cross border pollution. The 
Boundary Water Treaty of 1909, which applies along the entire 5,500-
mile inland border area, was in part designed to protect transboundary 
waters and U.S.-Canada watersheds, including protecting the public 
health of populations in both countries from the adverse effects of 
water pollution. Many major projects and activities addressing actual 
or potential pollution of transboundary waters continue to be conducted 
under the water pollution control and prevention requirements of the 
1909 treaty.
    Specifically, cooperation is underway to fulfill the treaty 
requirements for bi-national surface waters: e.g., St. Croix River, 
Lake Champlain, Great Lakes Basin including the Upper St. Lawrence 
River, Rainy River, Red and Souris Rivers system, Poplar River, 
Flathead River, Columbia River, Puget Sound-Georgia Basin, Taku River, 
and the Yukon River. The U.S.-Canada International Joint Commission 
(IJC) assists both countries with boundary waters management and 
protection for a number of the listed watersheds. 1909 Treaty 
cooperative efforts protect the U.S. portions of many shared U.S.-
Canada watersheds.
    From the 1970's to the present, the United States and Canada have 
steadily increased their bi-national cooperative frameworks and 
attendant activities along the common border area. These activities, 
concerned with improved management and prevention of transboundary 
pollution, have been conducted between Federal, provincial, State, 
tribal, and some local governments, and frequently include involvement 
of the NGO community, the private sector and the general public as 
well.
    Cooperation with Canada under the Great Lakes Water Quality 
Agreement, beginning in 1972, has resulted in substantial progress in 
restoring the quality of these important natural resources. Lake Erie, 
once considered an ecological wasteland, is now substantially restored, 
with fish eating birds, like eagles and ospreys, having made strong 
recoveries. DDT and PCB contamination has been reduced by 80 or 90 
percent. U.S.-Canada cooperation to protect and restore the Great Lakes 
Basin ecosystem includes many goals that serve to better protect U.S. 
public health and the U.S. parts of the shared aquatic ecosystems.
    Unfortunately, although a lot of progress has occurred, many large 
Great Lakes fish are still unsafe to eat due to their accumulating 
burden of toxic pollutants. The fiscal year 2004 President's Budget 
requests $15 million for the new Great Lakes Legacy program, which will 
help reduce toxic pollutant levels further through contaminated 
sediment remediation. Also, the Great Lakes basin ecosystem is 
subjected to harmful changes due to the effects of a substantial number 
of foreign alien invasive species, so that the two countries continue 
to address new challenges. During 2002 and 2003, the United States and 
Canada, in consultations at the IJC, started active consideration of 
measures to improve efforts addressing aquatic invasive species in the 
Great Lakes Basin.
    Under the 1991 U.S.-Canada Air Quality Agreement, emissions of 
sulphur dioxide and nitrogen oxides (key contributors to acid rain) 
have been substantially reduced, benefiting the Northeastern United 
States. An annex to the Agreement, signed in December 2000, will lead 
to reductions in ground level ozone pollution. Priority cooperation 
under the Agreement also covers particulate matter, ensuring certain 
existing or proposed point sources of air pollution along the common 
area do not cause significant transboundary air pollution which can 
harm one side or the other. Efforts are also underway to protect 
visibility in natural areas along the border.
    EPA also is furthering the existing bilateral agreements concerning 
mercury and other toxic substances, such as the 1997 Great Lakes Bi-
national Strategy, with the goal of 50 percent reduction in use and 
emissions of mercury by 2006. The Northeast Mercury Study of the U.S. 
Northeast States and Eastern Canadian Provinces has focused on 
reduction of uses and emissions of mercury and safe management of the 
mercury life cycle. In 1997, Canada and the United States signed an 
agreement for the Virtual Elimination of Persistent Bioaccumulative 
Toxic Substances (PBTs) in the Great Lakes. The strategy sets long-term 
goals to promote emissions reductions of these toxic substances. EPA 
coordinates the U.S. activities by engaging all relevant stakeholders, 
developing action plans, coordinating reduction activities and 
reporting on progress.
    The two governments have established three bi-national agreements 
that cover preparedness and response to pollution release accidents/
emergencies that could arise along the border. These agreements could 
also be used by one country, in certain emergency instances, to call 
upon the other country to assist with a response to an emergency that 
may occur inland away from the bi-national border. One of the three 
agreements covers the four U.S.-Canada marine water regions and Great 
Lakes waters for oil and hazardous materials. Another one covers the 
rest of the inland border for oil and hazardous materials. The more 
recent one covers radiological emergencies.

            North American Trilateral Cooperation Between the United 
                    States, Mexico and Canada
    In the 1990s, the United States and Canada developed new trilateral 
cooperation with Mexico to increase multilateral cooperation on major 
issues such as PBTs, their sources, air transport, fate and deposition. 
Long-standing shared goals by the United States and Canada under their 
Great Lakes Water Quality Agreement on PBTs helped catalyze and focus 
larger trilateral efforts. The three countries are focusing together on 
PBTs and other pollutants, their environmental transport and other 
pathways. The United States, Canada and Mexico have increased their 
consultations and cooperation on the northward migration, or 
introduction, of animals, plants, and pathogens not native to North 
America (i.e., invasive species), with the shared goal of improving 
protection of the biological integrity of many North American 
ecosystems, and in the case of some invasive species, to protect the 
public health of populations of North America.
    In 1993, Canada, Mexico, and the United States established the 
Commission for Environmental Cooperation (CEC) under the North American 
Agreement on Environmental Cooperation (the NAAEC) to address regional 
environmental concerns. The NAAEC complements the environmental 
provisions of the North American Free Trade Agreement (NAFTA). The CEC 
is facilitating tri-national coordination and cooperation on matters of 
cross-border flows of air pollutants, as well as invasive biological 
species. Capacity building, public participation, and facilitation of 
risk management actions through pollution prevention, market-based 
incentives, and technological controls are priorities of the 
organization.
    In 2001, two meetings of air quality experts were sponsored by the 
CEC to address the exchange of emissions information for criteria air 
pollutants and greenhouse gases and to address air quality impacts of 
transboundary trade and transport corridors. To support environmental 
capacity building, a Mexican association of air quality experts has 
been established and a newsletter has been created to inform 
stakeholders in Mexico about the air quality program. The CEC is also 
providing funding for Mexican participation in the meetings of North 
American air quality experts addressing problems common to the three 
countries.
    Under the auspices of the CEC, in 1995, Mexico, Canada and the 
United States developed a regional initiative on the sound management 
of chemicals. Under this initiative, CEC established regional action 
plans for PCBs, DDT, and chlordane and is developing an action plan for 
dioxins, furans and hexachlorobenzene. EPA provides technical input to 
these plans and coordinates relevant capacity building activities, such 
as providing support for dioxin measurements, and assisting Mexico with 
obtaining international funding to address DDT stockpiles.
    In 2001, the CEC air program collaborated with the Sound Management 
of Chemicals (SMOC) program and developed a national mercury air 
emissions inventory in Mexico. It is being combined with the national 
inventories in Canada and the United States to give a continental 
perspective for the globally cycling pollutant. Data comparability and 
information access are key to its success.
    In addition to mercury, air quality experts in the three countries 
are developing inventories for sulfur dioxide, nitrogen oxides, carbon 
monoxide, volatile organic compounds, particulate aerosols, and 
greenhouse gases. They are also developing plans to obtain the needed 
information through monitoring and other implementation tools for any 
significant data gaps that may be identified.
    Workshops facilitate the progress in the assessments and capacity 
building, and a leveraging of funds supports the implementation for 
phase 2 of the mercury NARAP, and those for DDT and PCBs, dioxins, 
furans and hexachlorobenzene. This year the NARAP on chlordane was 
completed, stopping production and use of chlordane in North America. 
Also building on NARAP activities, the DDT Task Force solicited and 
received funding from the Global Environmental Facility (GEF) to 
support a regional project to phase out DDT in Mexico and throughout 
Central America in 2000.
    Consideration also is being given to how the CEC, and particularly 
SMOC, could facilitate the regional implementation by the Parties to 
the 2001 Stockholm Convention on Persistent Organic Pollutants. The 
effects of persistent toxics on wildlife are being monitored, as well 
as human health endpoints. A North American Pollutant Release and 
Transfer Register project addresses the sources, handling and 
stewardship of toxic chemicals from industrial activities in North 
America, and allows for better management of these transboundary 
pollutants.

Regional Cooperation Addressing Contamination Threats to Alaska and the 
        Arctic, Including Indigenous Populations
    The fragile Arctic environment and ecosystems, Alaska and 
indigenous populations are threatened by transboundary contamination 
mostly from sources in Russia. Transboundary transport mechanisms 
include atmospheric and ocean circulation and biological transmission 
through the Arctic food chain. The Russian contaminant sources are 
largely a legacy of the Soviet Union's armaments and military 
activities in the far North, the Cold War era industrial/agricultural 
infrastructure and practices, and related un-managed waste. The 
principal contaminant sources of concern include radioactive waste and 
spent nuclear fuel, PCBs mostly from the power grid system, dioxins/
furans from incinerators and industrial sources, obsolete pesticides 
from huge collective farm era stockpiles, and heavy metals such as lead 
and mercury from industrial activities.
    In the 1990's Russia had the highest concentrations of unsecured 
Cold War legacy radioactive waste in the world, and very little waste 
management infrastructure to address the deteriorating situation. The 
problems mounted rapidly as the nuclear submarine dismantlement program 
obligatory under the START treaty continued to generate large amounts 
of radioactive waste and unsecured spent nuclear fuel. Russia dumped 
the low-level liquid radioactive waste produced in the submarine 
decommissioning and dismantlement process in the Arctic, while the 
spent nuclear fuel accumulated in unsecured circumstance at Arctic 
coastal sites in Northwest Russia.
    Under an EPA initiative responding to a Russian request for 
assistance, the United States (EPA, DOS/AID, DOD, and DOE) undertook in 
1994 a multilateral project with Russia and Norway to upgrade and 
expand Russia's only operational radioactive liquid waste processing 
facility (originally developed for the Russian nuclear icebreaker 
fleet) to process the low-level liquid waste from the nuclear submarine 
disarmament program. Russia has terminated all ocean dumping of 
radioactive liquid waste since the start of the project and continues 
to work toward formal acceptance of the global ban on ocean disposal or 
radioactive waste under the London Dumping Convention.
    Because unsecured spent nuclear fuel in the Russian Northwest 
constitutes 95 percent of the high level radioactive waste threat to 
the Arctic environment, EPA proposed the development of a prototype 
transportable spent nuclear fuel dry storage cask as a means of 
securing Russia's inventory of spent nuclear fuel arising from the 
decommissioning and dismantlement of large portions of their strategic 
submarine fleet under START. The U.S. nuclear power industry pioneered 
dry cask storage, and the EPA proposal was to develop a low-cost 
prototype transportable storage cask for use in Russia, based on a 
unique Russian concrete-metal cask concept.
    The Transportable Spent Nuclear Fuel Storage Cask Project was 
organized as a trilateral effort between the United States, Russia and 
Norway under a military environmental cooperation declaration involving 
the three countries and lead by their respective defense 
establishments. For the United States, the effort has involved 
cooperation among DOD, EPA, DOE and DOS. The successful testing of the 
prototype cask has resulted in serial production to start under 
separate programs within Russia and, bilaterally, as part of the 
cooperative threat reduction efforts between Russia and the United 
States. A prototype concrete storage pad was proposed by EPA to hold 
the loaded casks. This portion of the cooperative program is also 
nearing completion and a completion event is scheduled in Murmansk, 
Russia, in the last half of 2003.
    Since 1998, the EPA multilateral strategy on Arctic contamination 
has shifted emphasis to the problem of non-radioactive chemical threats 
to the Arctic environment and Alaska emanating from Russia's Cold war 
era legacy. The United States proposed a three phased project to the 
Arctic Council to assist Russia in addressing its PCB problems: (1) 
development of a PCB inventory for the Russian Federation, with 
emphasis on sources potentially impacting the Arctic; (2) assessment/
feasibility of available technologies to address the particular major 
source problems identified by Russia; and (3) selection and 
demonstration of at least one technology addressing one or more major 
source categories.
    The Russian PCB Project was endorsed as an official project of the 
Council's new Arctic Council Action Plan (ACAP) and EPA was asked to 
provide the project technical lead. The project has received funding 
from EPA and DOS plus all other Arctic nations and the Netherlands. The 
first (inventory) phase was completed in October 2000, with the results 
openly available. The second phase technology assessment and 
feasibility study concerned with evaluating alternative dielectric 
fluids to replace PCBs, as well as PCB decontamination and destruction 
technologies for application to the specific PCB source problems 
identified in the first phase effort was completed in October 2002. In 
2003, work has started on the third and last phase of the project, to 
develop the first prototype demonstration for destruction of up to 200 
tonnes of PCB liquids from electrical transformers and 200 tonnes of 
PCBs contained in 12,000 capacitors in Russia.
    The project model is being applied to other Russian POPs problems 
under the Arctic Council: (1) ``Russian Sources of Dioxin/Furans'' 
under Swedish project lead and U.S./EPA co-lead, and (2) ``Obsolete 
Pesticides in Russia'' under U.S./EPA project lead. The Obsolete 
Pesticides project in Russia will assist Russia with management of its 
extensive stockpiles of Soviet Era pesticides, many of which are 
migrating into the Arctic. This is a cooperative project with Canada, 
Finland, Norway, Russia, Sweden and UNEP Chemicals. The three phases 
involve: (1) developing the inventory of obsolete pesticide stockpiles 
in the 19 priority Russian regions impacting the Arctic; (2) developing 
a strategy for safe interim storage and stabilization of stockpiles--
this will include performing risk assessments for highest contaminated 
areas, evaluating destruction technologies, and designing a prototype 
storage facility that can be used throughout Russia; and (3) 
implementing a prototype demonstration for environmentally safe 
destruction of those pesticides stocks of greatest risk to the Arctic, 
including Alaska, and construction of a prototype storage facility.
    The cooperative project, Reduction of Dioxins and Furans Releases 
in the Russian Federation, has as its primary objective the reduction 
of dioxins/furans releases to the Arctic from key industrial sectors, 
with particular focus on the pulp and paper industry and landfill 
incinerators. Initial activities completed include: translation into 
Russian of the UNEP Chemicals ``Standardized Toolkit for Identification 
and Quantification of Dioxins and Furans Releases''; development of a 
draft Dioxins/Furans Fact Sheet for use in Russia; and a Workshop on 
Harmonization of Laboratory Methods between Russia and Western 
countries. This project also consists of three phases: (1) identify and 
verify sources of dioxins and furans in Russia, verify emissions and 
refine emission factor estimates, and modernize and harmonize Russian 
sampling and analytical techniques; (2) feasibility studies for 
technological improvements in the pulp and paper industry and 
industrial incineration; and (3) pilot demonstration project.

International Cooperation and Agreements Addressing Global Sources of 
        Persistent Organic Pollutants (POPs) and Other Toxic Substances
    Many Persistent Organic Pollutants (POPs) are subject to long-range 
transport processes, and consequently pose a common threat to human 
health and the environment (particularly sensitive ecosystems), all 
over the world. The United States is working to reduce and/or eliminate 
POPs and their releases on a regional and global basis. In 2001, the 
United States signed the Stockholm Convention on POPs and is working to 
ratify the treaty. The Stockholm Convention requires parties to ban or 
restrict manufacture, use and release of 12 selected chemicals. The 
agreement also includes provisions on export and import restrictions, 
waste management, and the selection of additional substances for 
coverage.
    Since the early 1990's, EPA has been involved with activities 
concerned with identifying and quantifying sources of contamination 
impacting the Arctic environment, ecosystems and populations under the 
Arctic Environmental Protection Strategy (AEPS). Subsequently, the AEPS 
was subsumed under the Arctic Council, a consultative mechanism whereby 
the eight Arctic nations collaborate and, for example, provide 
assistance to Russia in meeting environmental goals.
    In 1998, the United States signed with other member nations of the 
United Nations Economic Commission for Europe (UNECE) a regional 
protocol on POPs under the Convention on Long-Range Transboundary Air 
Pollution and is working to ratify the Protocol. This regional 
agreement seeks to eliminate production and reduce emissions of POPs in 
the UNECE region and addresses 11 of the Stockholm Convention POPs and 
5 additional chemicals. EPA would be involved in ensuring the United 
States meets the obligations of the protocol and is actively engaged in 
the scientific assessment of potential additional chemicals. The EPA 
also continues activities under the Convention on Long-Range 
Transboundary Air Pollutants (LRTAP Convention) Heavy Metals Protocol, 
signed by the United States in June 1998 and ratified in January 2001, 
whereby nations of the UN Economic Commission for Europe agree to 
control emissions of mercury, lead and cadmium.
    EPA has initiated activities (previously described) under the 
Arctic Council/Arctic Council Action Plan (ACAP) intended to assist 
Russia in accepting and implementing the LRTAP protocols, as well as 
the Stockholm Convention. Russia has now signed the Stockholm 
Convention. The United States has also provided technical and financial 
assistance for POPs-related activities to a variety of countries 
besides Russia and regions other than the Arctic, including Mexico, 
Central and South America, Asia, and Africa. Examples of this 
assistance include projects led by the EPA on the development of dioxin 
and furan release inventories in Asia, the Chemicals Information 
Exchange and Networking Project for chemical managers in targeted 
countries in Africa and Central America, the destruction of pesticide 
stockpiles in Africa and Russia, and the reduction of PCB sources in 
the Philippines.

Very Long-Range Air Transport of Pollutants and Global Cycling of 
        Mercury
    Very long-range air transport of pollutants and the global cycling 
of mercury is a rapidly growing area of attention for the United States 
and other countries. At the present time these matters are heavily 
concerned with research, monitoring and development. EPA has taken many 
steps to better understand the sources and mechanisms of long-range 
transport of persistent bioaccumulative toxic (PBT) substances and 
other air pollutants, as well as undertaking some initial steps in 
developing co-benefit technologies for emissions control, promoting 
pollution prevention.
    In July 2000, EPA sponsored the First International Conference on 
Trans-Pacific Transport of Atmospheric Contaminants, involving 
scientists from both sides of the Pacific Basin, including China, 
Japan, Russia, South Korea, Canada, and the United States. The 
conference discussed the state of science on long-range atmospheric 
transport in the North Pacific region, identified uncertainties and 
gaps in our knowledge, and promoted a network of individuals and 
organizations interested in these issues to further international 
collaboration.
    In June 2001, EPA co-sponsored a workshop with Environment Canada 
entitled ``Photo-oxidants, Particles, and Haze Across the Arctic and 
North Atlantic: Transport Observations and Models.'' This conference 
was conducted as part of the U.S. participation in the Convention on 
Long Range Transboundary Air Pollution (LRTAP Convention) and the 
Arctic Monitoring and Assessment Program (AMAP) under the Arctic 
Council. The meeting focused on identifying the research needed to 
quantify the sources-receptor relationships for ozone and fine particle 
transport across the North Atlantic and Arctic.
    For mercury specifically, the Agency priority pollutant that cycles 
globally, EPA was instrumental in developing new methods for measuring 
the various species to assess long-range transport mechanisms. EPA is 
also developing state-of-the-art knowledge about transformation of 
mercury into various species in the atmosphere and the transport 
consequences. The species determines distance traveled and ultimate 
fate. Research utilizing these new analytical methods has been ongoing 
in South Florida, Cheeka Peak, Washington; Barrow, Alaska; and Mauna 
Loa, Hawaii to distinguish local sources of mercury from external 
sources. These studies have involved the first aerial measurements and 
studies at elevation as well as at ground level.
    In regard to pollution emissions minimization abroad, EPA is 
sponsoring a mercury-SO2 co-benefit demonstration project at 
a small coal-fired facility in Russia, in order to evaluate the 
effectiveness of emissions reduction using an electrostatic 
precipitator (ESP) add-on system. If the expected minimum of 50 percent 
reduction in mercury is achieved, it will be possible to utilize this 
low-technology approach in many countries where similar Russian ESP 
systems are in place. Additionally, a higher technology, although 
higher cost, approach has also been identified which is expected to 
reduce mercury by 99 percent in conjunction with SO2 
reduction, is being considered for application in China.
    In conjunction with the Department of State Cooperative Threat 
Reduction Program, EPA has initiated development of a proposal for 
mercury bioremediation at a former chloralkali facility in Kazakhstan, 
and in preparation for this project, sponsored a meeting in May 2002 of 
all scientists engaged in mercury research and pollution prevention in 
Kazakhstan and the neighboring countries of Kyrgystan, Azerbaijan, and 
Russia.
    EPA also played an instrumental role with Department of State 
during the UNEP Governing Council session in February 2002, at which 
UNEP launched a global mercury assessment, with a technical report and 
set of alternatives for decisions presented to the February 2003 UNEP 
Governing Council.

                      OVERSIGHT AND ACCOUNTABILITY

    Question. Most or all Federal agencies continue to have problems 
with ensuring that Federal funds are being used in a manner consistent 
with program requirements or grants requirements. What steps has the 
EPA taken in the last 2 years to improve accountability in the use of 
EPA funding?
    Answer. Obligating appropriated funds in accordance with 
Congressional intent is something we have always emphasized in Agency 
communications, training and guidance. We have not noted a problem in 
this area at EPA. Nonetheless, the following steps have been taken in 
the last 2 years or are currently being undertaken to further 
underscore the proper utilization of funds for program and grant 
requirements:

Cost Accounting/Program Project
    EPA developed approaches to provide greater program and project 
detail in the Agency's accounting system. Utilizing the principles of 
Cost Accounting, this additional level of reporting enables program 
managers to monitor more closely programmatic spending against budget 
targets and further serve to integrate the Agency's planning, budgeting 
and accountability systems.
    To further integrate EPA's planning, budgeting and accountability 
systems, the Agency reached agreement on a plan to provide greater 
program and project detail in the Agency's accounting system. Critical 
elements of the approach have been agreed to by the Agency. As a 
result, Agency program managers will be better able to monitor 
programmatic spending against the goal/objective structure of the 2003 
Strategic Plan and to link their operating budget to performance 
results.
Accountability
    Agency budget estimates emphasizes prior year progress and the use 
of performance information as a key element in resource decision 
making. The Office of the Chief Financial Officer has been working with 
Agency managers to more clearly show the links between day-to-day 
activities and outcomes, to improve accountability between Headquarters 
and Regions, to build capacity of managers to use performance-based 
processes, to improve performance measures, and to expand Regional 
strategic planning.
    EPA established a Managing for Improved Results Steering Group to 
come up with a comprehensive set of reforms on improving the Agency's 
use of performance and results information in all stages of the 
planning and budgeting process.
    EPA launched an Agency-wide competition to support the development 
of improved performance measures. Forty proposals were submitted from a 
wide range of programs and Regional offices.
    Program evaluations and performance measurement improvement 
projects that were competitively funded last summer yielded returns on 
the investment of extramural dollars and staff time.
    For example, the Office of Solid Waste completed a program 
evaluation in April 2003, which identifies inefficiencies in the 
biennial reporting of hazardous waste generation, storage, transport 
and disposal by industry. Results include options for reducing States' 
and industries' reporting burdens by, for example, standardization of 
data and reporting protocols.
    In another example, recommendations for Brownfields environmental 
indicators were developed for use by the Office of Brownfields Cleanup 
and Redevelopment as that program implements provisions of new 
legislation.
Grants Competition
    With regard to grants requirements, EPA has aggressively promoted a 
new grants competition policy. The Agency also finalized and published 
guidance covering all areas of the EPA Order, published guidance 
clarifying the definition of Assistance programs, and continued to 
promote competition and provide technical support within the Agency.
                                 ______
                                 
            Questions Submitted by Senator Pete V. Domenici
             arsenic standard: epa funding for communities

    Question. Would you discuss what resources, if any, are being 
marshaled by EPA to assist communities faced with the extraordinary 
costs in meeting the new standards?
    Answer: After promulgating the revised arsenic standard in January 
2001, EPA has implemented a comprehensive strategy to assist 
communities that must install treatment technology to comply with the 
standard. This strategy is designed to: (1) enhance small systems' 
access to financial assistance; (2) fund the research, development, 
testing and implementation of effective, practical, and affordable 
treatment technologies to reduce compliance costs for drinking water 
systems affected by the revised standard; (3) provide Federal technical 
assistance and training on the new arsenic regulation to small 
community water systems; and, (4) use a variety of approaches to inform 
communities of their treatment options, and how and where to get help 
building their technical, managerial and financial capacity.
    A key component of the Agency's support for small systems is to 
work with our State partners to maximize the availability of financial 
assistance under the Drinking Water State Revolving Fund (DWSRF) 
program. Through the DWSRF program, State SRF programs may offer 
principal forgiveness, reduced interest rates, or extended loan terms 
to systems identified by each State as serving disadvantaged 
communities. States also have the ability to set aside a portion of 
their Federal DWSRF allocation for technical assistance to small 
community water systems affected by the new arsenic rule. As of June 
30, 2002, 74 percent of all DWSRF loan agreements, totaling just over 
$2 billion, have been completed with small systems serving 10,000 or 
fewer consumers.
    In addition to maximizing the availability of DWSRF funds for 
infrastructure improvement loans and technical assistance, EPA and the 
U.S. Department of Agriculture (USDA) signed a 4-year Memorandum of 
Agreement (MOA) in 2002. Under this agreement, USDA's Rural Utilities 
Service (RUS) will identify as high funding priorities projects that 
assist small communities in complying with the revised arsenic standard 
for drinking water. Likewise, EPA will strongly encourage State 
agencies administering the DWSRF to coordinate funding decisions with 
RUS through Rural Development State staff. Further, under this 
agreement both agencies will make providing technical assistance 
resources to small systems a top priority.
    Fiscal year 2003 is the second of EPA's 2-year, $20 million 
research and development and technical assistance program to identify 
more cost effective technologies to help small systems comply with the 
new arsenic standard. Also in fiscal year 2003, Congress directed EPA 
to utilize $5 million in additional funds to carry out demonstrations 
of low-cost arsenic removal technologies. With this overall funding, 
the Agency anticipates that some 26-32 demonstrations will be conducted 
at small water utilities with arsenic problems under the research 
program. EPA also is verifying the performance of arsenic treatment 
technologies under the Environmental Technology Verification Program to 
provide small utilities information to select technologies appropriate 
for their water quality problem. Four arsenic treatment technologies 
have been verified under the program.
    Further, the Agency will continue its ongoing work with States to 
take full advantage of the suite of tools that the Safe Drinking Water 
Act (SDWA) provides to help small systems achieve compliance with the 
new arsenic standard. For example, EPA is phasing in the arsenic rule 
over a longer time-period by encouraging States to use the compliance 
extension authority provided by the SDWA. Under this authority, States 
can give eligible small systems (those serving fewer than 3,300 people) 
up to an additional 9 years to come into compliance, and allow Point-
of-Use devices as a treatment option for very small systems
    Finally, EPA has provided arsenic implementation guidance to State 
regulators, and made fact sheets, plain language guidance documents, 
and technology assistance manuals available to the public. This 
guidance is available both in printed form and electronically at EPA's 
web site, at the National Drinking Water Clearinghouse, and through the 
Local Government Environmental Assistance Network.

                ARSENIC STANDARD: LEGISLATIVE ASSISTANCE

    Question. Would it be appropriate to try and assist those 
communities faced with debilitating costs in trying to meet the 
standard through some legislative means, perhaps in targeted assistance 
in treatment facility construction?
    Answer. EPA believes the SDWA already provides the Agency and its 
partners with the appropriate flexibility to target resources to 
systems in need of compliance assistance, especially to small and 
disadvantaged communities. Under EPA's Drinking Water State Revolving 
Fund (DWSRF) program, States provide federally funded low-interest 
loans to eligible public water systems for infrastructure improvements 
or replacements. Collectively, these efforts help all public water 
systems, but they are particularly aimed at helping small systems, 
those that struggle the hardest to meet the demands placed on them. Of 
all DWSRF loan agreements completed since 1997, 74 percent have been 
established with small water systems that serve 10,000 or fewer 
persons, totaling 40 percent ($2 billion) of funds, well above the SDWA 
requirement that States provide a minimum of 15 percent of available 
funds to small systems.
    Of the total DWSRF loans, 26 percent went to systems that States 
identified as serving disadvantaged communities. States provide 
disadvantaged assistance in the form of lower interest rates, principal 
forgiveness and extended loan terms of up to 30 years.
    The Agency also has implemented a $20 million research and 
development program over the past 2 fiscal years to identify more cost 
effective technologies to help small systems comply with the new 
arsenic standard. The preliminary results of this research are 
encouraging: Since January 2001, a number of highly cost effective 
arsenic removal technologies have been identified, such as iron-based 
adsorptive media that have demonstrated superior performance in 
removing arsenic in water supplies over a range of water quality 
conditions. The State of Arizona has evaluated these technologies and 
has determined that iron-based media are the lowest cost alternatives 
for many of their systems that must comply with the new arsenic 
standard.
    Further, the Agency will continue its ongoing work with States to 
take full advantage of the suite of tools that the Safe Drinking Water 
Act (SDWA) provides to help small systems achieve compliance with the 
new arsenic standard. For example, EPA is phasing in the arsenic rule 
over a longer time-period by encouraging States to use the exemption 
authority provided by the SDWA. Under this authority, States can give 
eligible small systems (those serving fewer than 3,300 people) up to an 
additional 9 years to come into compliance, and allow Point-of-Use 
devices as a treatment option for very small systems.
    In addition to maximizing the availability of DWSRF funds for 
infrastructure improvement loans and technical assistance, in 2002 EPA 
and the U.S. Department of Agriculture (USDA) signed a 4-year 
Memorandum of Agreement (MOA). Under the MOA, USDA's Rural Utilities 
Service (RUS) commits to assigning high funding priority to projects 
that assist small communities in complying with the new arsenic in 
drinking water standard. Likewise, EPA will strongly encourage State 
agencies administering the DWSRF to coordinate funding decisions with 
RUS through Rural Development State staff. Further, under this 
agreement both agencies will make providing technical assistance 
resources to small systems a top priority.

            CAFOS RULE: REGION 6 VERSUS NATIONAL RULE NO. 1

    Question. Would you please comment on why Region 6 would, through 
its general permit, overrule the final CAFO national rule representing 
5 years of work and millions of dollars in cost?
    Answer. EPA issued revised CAFO regulations, on February 12, 2003, 
to take effect as of April 14, 2003. The regulations were developed 
with significant public input and with substantial involvement by the 
United States Department of Agriculture (USDA). EPA is currently in the 
process of working at the State and EPA Regional levels to implement 
the revised regulations. A key element of this implementation includes 
the development and issuance of permits consistent with the revised 
regulations. EPA Region 6 is currently in the process of preparing to 
develop a general permit consistent with the revised regulations for 
New Mexico and Oklahoma, but has not yet actually drafted a CAFO permit 
for public notice and comment.
    In recent meetings, representatives of the livestock industry and 
Region 6 agreed that proper operation and maintenance of well-designed 
and constructed lagoons (the basis of the technology standard for CAFO 
production areas) could alleviate most concerns regarding violations of 
water quality standards resulting from lagoon overflows. Region 6 and 
the livestock associations committed to work together to develop best 
management practices to ensure that water quality standards are met. 
EPA believes that this collegial approach will be constructive and 
effective.

            CAFOS RULE: REGION 6 VERSUS NATIONAL RULE NO. 2

    Question. Would it make sense for Region 6 to require a General 
Permit for Concentrated Animal Feeding Operations (CAFOs) in New Mexico 
that is more stringent than the national rule to protect water quality?
    Answer. The revised regulations include technology standards for 
CAFOs, but do not specifically address water quality standards. In some 
cases, greater restrictions to ensure that water quality standards are 
met may be necessary and appropriate in permits to further control 
overflows that result in a discharge to surface waters. In order to do 
so, EPA would need to determine that the application of technology 
standards for specific facilities would not be adequate to protect 
water quality in surface waters where such facilities discharge.
    However, EPA believes that going beyond the technology-based 
requirements of the revised CAFO regulations would generally not be 
required where facilities are adequately designed, constructed, 
operated, and maintained in accordance with accepted practices and 
guidelines that implement the technology-based standards. This may be 
particularly true in New Mexico, and other arid areas of Region 6, 
where there is minimal rainfall.

                  CAFOS RULE: REGION 6 GENERAL PERMIT

    Question. Does it matter that the Region 6 rule is a general permit 
instead of one specifically tailored for watershed and riparian areas?
    Answer. National Pollutant Discharge Elimination System (NPDES) 
general permits are often issued for State-wide coverage of one or more 
classes of facilities. The permits may be written to include 
requirements and conditions that are specific to certain watersheds or 
certain types of circumstances, and which would not be applicable to 
other dischargers covered by the permit. Alternatively, the permit may 
exclude coverage for facilities located in particular watersheds or 
meeting certain types of conditions, and require such facilities to 
seek coverage under an individual permit or another general permit. In 
particular, water quality-based limitations included in a permit are 
often designed to fit the specific conditions of a particular watershed 
or particular set of conditions, and would not be generally applicable 
to all permit holders covered by a State-wide general permit unless 
those ambient water quality conditions were common to all such permit 
holders throughout the State.
    EPA strongly believes that the watershed approach, tailored within 
hydrologically defined boundaries, offers the most cost-effective 
opportunity to protect and restore our aquatic resources and 
ecosystems. Watershed-based permitting may be the preferred approach 
for the next Region 6 general permit. Region 6 will continue to work 
with diverse stakeholders to develop successful strategies to implement 
the Clean Water Act.

                    CAFOS RULE: NEW MEXICO PRODUCERS

    Question. Would enforcement of the Region 6 rule unnecessarily harm 
otherwise nationally compliant producers in New Mexico?
    Answer. The final CAFO rule establishes technology-based standards 
and permitting requirements in general. The technology standards are 
not designed to protect water quality. Rather, they are developed based 
on installing the ``best available technology'' that is economically 
achievable by the industry. In issuing permits, the permitting 
authority performs an analysis of the technology standards and then 
looks to see if any additional requirements based on a State's water 
quality standards are necessary. This process is the same for all 
States and Regions issuing permits and the requirements will vary 
depending on each State's water quality standards. Compliance is 
determined based upon the permit issued for the facility. Dischargers 
in New Mexico should not be at a competitive disadvantage, because all 
permit authorities evaluate water quality issues when developing permit 
requirements.
                                 ______
                                 
           Questions Submitted by Senator Barbara A. Mikulski

                          CORE WATER PROGRAMS

    Question. Your written testimony says that the budget increases 
funding for ``core water programs'' by $55 million. But the Clean Water 
SRF is cut by $500 million. Is the SRF a ``core water program''? If 
not, what are considered ``core'' programs? How are these priorities 
decided?
    Answer. States are currently struggling with budget pressures in 
their water quality and drinking water programs and are facing 
expanding workloads and challenges to their programs (e.g., permit 
backlogs, TMDL court challenges, and petitions to withdraw State 
program authorizations). In recognition of the impact of budget 
pressures on implementation of core water programs and resulting 
challenges States and tribes are facing, EPA is requesting a $55 
million increase focused on water quality standards, water quality 
monitoring and assessment, total maximum daily loads (TMDLs), national 
pollutant discharge elimination system permits (NPDES), drinking water 
implementation, and oceans and coastal protection. Most of this 
increase ($32 million) would be provided to States and Tribes through 
Clean Water Act Section 106 Grants and public water systems supervision 
(PWSS) Grants. The remaining increase ($23 million) will help EPA 
provide guidance and technical assistance to States and Tribes in each 
of the core program areas.
    In addition to the requested increase in the core water programs, 
the administration plans to provide an additional $4.4 billion to the 
Clean Water SRF by extending funding through 2011. This increase in 
commitment is expected to increase the long-term target revolving level 
of the Clean Water SRF from $2 billion per year to $2.8 billion per 
year, a 40 percent increase.

                 WATER INFRASTRUCTURE: GAP FUNDING CUT

    Question. In December, I joined 37 of my colleagues in writing to 
President Bush to request that the 2004 budget increase funding for 
water infrastructure to $5.2 billion--which is $3.5 billion more than 
the budget request. After the budget came out, Mitch Daniels wrote back 
to us and said that the President's budget request will be ``sufficient 
to close, over the next 20 years, the projected infrastructure gap.'' 
Can you please explain to the subcommittee how cuts to water 
infrastructure will close the gap?
    Answer. Previous administrations had set a target for the CWSRF to 
provide average annual assistance of $2 billion per year, based on 
capitalization through fiscal year 2005. With the funding appropriated 
by Congress to date, the $2 billion goal has been reached and, in fact, 
exceeded. Nonetheless, the fiscal year 2004 budget request expands this 
commitment from $2 billion to $2.8 billion, an increase of 40 percent. 
This level of funding is achieved by an appropriation of $850 million a 
year from fiscal year 2004 through fiscal year 2011. Administration 
analyses using historical information indicate that, by extending 
Federal capitalization of the CWSRF program through 2011 at $850 
million per year, the President's proposal is projected to increase SRF 
loan assistance by $21 billion in 20 years, equivalent to the 20-year 
additional need identified by the Clean Water and Drinking Water Gap 
Analysis Report. By also utilizing other Federal, State and local 
sources of funding and improved management practices, we believe the 
infrastructure gap can be eliminated.
    With the $800 million increase in the revolving level, States will 
be able to fund nearly 600 more projects each year on a long-term 
basis. In addition to funding more publicly financed projects, EPA will 
continue to focus on ways to utilize private funds to clean waterways 
by encouraging privatization and promoting technology innovation while 
maintaining affordability for consumers.

                  WATER INFRASTRUCTURE: GAP CONFERENCE

    Question. In January, EPA convened a conference on how to ``close 
the gap.'' The conference included State and local officials, business, 
and other experts to exchange ideas about how to meet water and sewer 
challenges. What happened at this conference? What were the 
conclusions? What are the next steps?
    Answer. Attached is a copy of the summary from the January 
infrastructure forum ``Closing the Gap: Innovative Solutions for 
America's Water Infrastructure.'' This summary is also available at the 
following web address: http://www.epa.gov/water/infrastructure/
forum__summary.html

             WATER INFRASTRUCTURE: WATER AND SEWER FUNDING

    Question. As the protector of the environment, how is EPA working 
to make water and sewer funding a national priority?
    Answer. EPA's new strategic plan features strong water quality and 
public health goals intended to assure linkage of our programmatic 
efforts to environmental gains. EPA, in partnership with the States, 
has set strong goals and objective to achieve these gains. Today's 
challenges demand a multi-faceted approach to managing and sustaining 
our infrastructure assets.
    In addition to managing better, using less, and adequately pricing 
services, water and wastewater utilities may use a watershed approach 
to address the challenges. The CWSRF is a powerful tool for fostering 
and funding watershed projects. States can also use their flexibilities 
to support sustainable infrastructure, drinking water source 
protection, and efficient water use.

                          WATER INFRASTRUCTURE

    Question. Communities like Baltimore are facing enormous costs to 
deal with crumbling water and sewer systems while meeting increased 
regulations. These are worthwhile challenges, but they are also 
unfunded mandates. We need new thinking on a national policy to help 
communities pay for water and sewer. What is EPA doing to develop new 
ideas?
    Answer. The provision of clean and safe water in the 21st century 
is sufficiently challenging as to demand the energy, talent and 
creativity of both the public and private sectors. EPA has offered to 
collaborate with the Congress and the water and wastewater 
infrastructure industry and utilities to address the challenges of 
infrastructure financing. Following release of our report on the gap 
between water and wastewater infrastructure investment needs and 
current levels of spending, EPA sponsored an Infrastructure Forum in 
January 2003 to seek ideas from a broad array of experts. This Forum 
addressed, not only the financial needs of the Nation's water and 
wastewater infrastructure, but also needed innovations and efficiencies 
to help manage costs and achieve better results. Information on the 
forum can be found on the EPA website at: http://www.epa.gov/water/
infrastructure/forum__summary.html. In response to the ideas and 
concerns expressed by these experts, EPA is continuing to challenge the 
Nation through articles, presentations and stakeholder discussions. In 
particular we are focusing on the ideas of sustainable management, 
efficiency, full cost pricing and watershed-based decision making. We 
are also examining approaches taken in other countries and seeking to 
find and publish best practices in use in U.S. communities.

                      CLEAR SKIES: BUDGET REQUEST

    Question. The budget proposes $7.7 million for a Clear Skies 
research program. How does this new program relate, if at all, to the 
Clear Skies legislation that EPA sent to Congress?
    Answer. Most of the $7.7 million increase EPA is requesting for the 
Clear Skies Initiative is not for a research program, but for 
development, enactment, and pre-implementation of the Clear Skies Act. 
The proposed 2004 budget requests $1.5 million in new funds for Clear 
Skies research that will support both implementation and assessment of 
market-based approaches such as those proposed in the Clear Skies 
legislation to reduce multiple air pollutants, with an emphasis on 
mercury, from utility boilers under the auspices of EPA's Office of 
Research and Development (ORD); $5.0 million in new funds for 
technical, analysis, and outreach activities in EPA's Office of Air and 
Radiation (OAR) to support enactment and/or pre-implementation of Clear 
Skies (depending on the progress of the legislation); and $1.2 million 
of reprogrammed funds for staff resources. The requested funds for OAR 
would be used for legislative support activities such as assessing 
monitoring and control technology options; analyzing costs and benefits 
of control levels and timing options; economic and technical analysis 
supporting the Regulatory Impact Analysis (RIA); emissions and air 
quality modeling; and establishing baseline indicators for tracking the 
environmental effects of reductions in sulfur, nitrogen, and mercury 
deposition.

                   CLEAR SKIES: LEGISLATION DEPENDENT

    Question. Does the Clear Skies research depend on the enactment of 
Clear Skies legislation?
    Answer. As noted above, much of the budget request is not for Clear 
Skies research. The proposed 2004 budget requests $1.5 million in new 
funds for Clear Skies research that will support both implementation 
and assessment of market-based approaches such as those proposed in the 
Clear Skies legislation.

                   CLEAR SKIES: LEGISLATION ENACTMENT

    Question. Is the purpose of the budget item to work toward 
enactment of Clear Skies legislation?
    Answer. The proposed 2004 budget requests $1.5 million in new funds 
for Clear Skies research that will support both implementation and 
assessment of market-based approaches such as those proposed in the 
Clear Skies legislation, with an emphasis on mercury, from utility 
boilers under the auspices of EPA's Office of Research and Development 
(ORD); $5.0 million in new funds for technical, analysis, and outreach 
activities in EPA's Office of Air and Radiation (OAR) to support 
enactment and/or pre-implementation of Clear Skies (depending on the 
progress of the legislation); and $1.2 million of reprogrammed funds 
for staff resources. The requested funds for OAR would be used for 
legislative support activities such as assessing monitoring and control 
technology options; analyzing costs and benefits of control levels and 
timing options; economic and technical analysis supporting the 
Regulatory Impact Analysis (RIA); emissions and air quality modeling; 
and establishing baseline indicators for tracking the environmental 
effects of reductions in sulfur, nitrogen, and mercury deposition.

                      CLEAR SKIES: FUNDING REQUEST

    Question. What will the $7.7 million in the budget buy?
    Answer. The proposed 2004 budget requests $1.5 million in new funds 
for Clear Skies research that will support both implementation and 
assessment of market-based approaches such as those proposed in the 
Clear Skies legislation to reduce multiple air pollutants, with an 
emphasis on mercury, from utility boilers under the auspices of EPA's 
Office of Research and Development (ORD); $5.0 million in new funds for 
technical, analysis, and outreach activities in EPA's Office of Air and 
Radiation (OAR) to support enactment and/or pre-implementation of Clear 
Skies (depending on the progress of the legislation); and $1.2 million 
of reprogrammed funds for staff resources. The requested funds for OAR 
would be used for legislative support activities such as assessing 
monitoring and control technology options; analyzing costs and benefits 
of control levels and timing options; economic and technical analysis 
supporting the Regulatory Impact Analysis (RIA); emissions and air 
quality modeling; and establishing baseline indicators for tracking the 
environmental effects of reductions in sulfur, nitrogen, and mercury 
deposition.

                              CLEAR SKIES

    Question. Is this research that EPA is already doing? Or is it new 
research? How will the research be used?
    Answer. EPA's fiscal year 2004 Clear Skies Research Initiative 
proposes new research to support both assessment and implementation of 
market-based approaches (i.e. a ``cap and trade'' system) to reduce 
multiple air pollutants from utility boilers as proposed in the Clear 
Skies legislation. This will include field testing mercury continuous 
emission monitors (CEMs), which have proven to be an important element 
of cap and trade programs where they are demonstrated to be efficacious 
and can be deployed at a reasonable cost. Such long-term testing has 
not been done and is not part of EPA's existing research program. EPA 
will, where possible, characterize compliance application performance 
at Department of Energy (DOE) control technology performance evaluation 
sites, where DOE currently focuses on using CEMs to characterize 
control technology performance and not testing them as compliance 
tools.
    In addition, EPA will initiate new efforts to develop tools and 
approaches that can be used to determine the atmospheric fate of 
mercury. This will include development of an improved method to measure 
dry deposition of mercury deployment in routine monitoring networks and 
field studies to better define atmospheric processes impacting the 
forms of mercury present in the atmosphere. In addition to providing 
direct measurements, this research will also be used to evaluate and 
apply improved air quality models. Ultimately, the results of this 
research will lead to a better understanding of the atmospheric fate of 
mercury that will allow EPA to more accurately measure the 
environmental response to risk mitigation activities and to evaluate 
the effectiveness and progress of mercury programs with more certainty. 
The CEM and atmospheric fate research will be useful to individual 
States or regions of the country that decide to move forward with their 
own market-based programs that include mercury allowances under a cap 
and trade system.

                    CLEAR SKIES VERSUS CLEAN AIR ACT

    Question. As I understand it, the Clear Skies legislation would set 
up a phased system to cap emissions from power plants. How does this 
proposal differ from the existing Clean Air Act? Does the proposal 
repeal any parts of the Clean Air Act?
    Answer. The Clear Skies Act builds on the successes of the Clean 
Air Act and would significantly improve air quality across the Nation 
by requiring power plants to cap and reduce their emissions of 
SO2, NOX and mercury by 70 percent. Our analyses 
from last year project that power plants would emit 35 million fewer 
tons of SO2 and NOX over the next decade under 
Clear Skies than they would under the current Clean Air Act. As a 
result, we expect that the health and environmental benefits over the 
next decade from Clear Skies would be markedly greater than could be 
expected under the current Clean Air Act. These emissions reductions 
and health and environmental benefits would be achieved at a 
considerably lower cost, and with greater certainty, than would occur 
under the current Clean Air Act. This is due in large measure to the 
major innovation of Clear Skies--a multi-pollutant cap and trade 
strategy for power generation based on the proven successful Acid Rain 
Program.
    After the next decade, under the current Clean Air Act, it is clear 
that power plants would be required to reduce emissions as a result of 
EPA and States regulatory actions. However, there are great 
uncertainties (regulatory development, litigation, implementation time, 
etc.) regarding the exact timing and level of these reductions.
    Clear Skies would get greater reductions of SO2 and 
NOX than we expect from the current Clean Air Act power 
plant regulations that would be replaced or modified by Clear Skies 
(e.g., new source review (NSR), regional haze (or BART), the Acid Rain 
program, and the NOX SIP Call). The changes Clear Skies 
would make to the NSR, BART and NOX SIP call programs would 
only apply to sources covered by Clear Skies.
    As for mercury, we expect less mercury to be emitted by power 
plants over the next 5 years if Clear Skies is enacted, but cannot 
predict what mercury emissions would be under the current Clean Air Act 
after that. This is because we are currently engaged in a rulemaking 
process (utility MACT) to set a standard for mercury emissions from 
power plants which will go into effect for existing sources no sooner 
than the end of 2007. As with other regulations, this rule will likely 
be litigated, increasing uncertainty regarding implementation and the 
emissions reductions it would achieve.
    Clear Skies would not replace the fundamental protections afforded 
by the health-based air quality standards for ozone and fine 
particles--those standards will still have to be met. In setting the 
legal deadlines by which areas must attain the fine particle and ozone 
standards, the ``attainment dates,'' Clear Skies relies on the common-
sense principle that we should not require local areas to adopt local 
measures if their air quality problem would be solved in a reasonable 
time frame by the reductions in power plant emissions required by Clear 
Skies. The same philosophy was reflected in a 1997 Presidential memo 
governing implementation of the ozone and fine particle NAAQS. It 
recognized that where cost-effective emission reductions were required 
through regional controls, additional controls should not be imposed on 
local businesses where they were not needed to meet the NAAQS in a 
reasonable timeframe.
    Under Clear Skies, areas that are projected to meet the ozone and 
fine particle 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. Clear Skies would provide two avenues for an 
area to become a transitional area: (1) EPA modeling completed after 
Clear Skies' enactment projects that Clear Skies would bring the area 
into attainment by 2015, or (2) the State adopts and EPA approves by 
December, 2004 additional measures sufficient to bring the area into 
attainment by 2015.
    EPA expects that many Clear Skies Act transitional areas would meet 
the standards prior to the attainment date of 2015 because Clear Skies 
would provide certain, early emission reductions. Areas that qualify as 
``transitional'' areas would receive that designation instead of 
``nonattainment'' or ``attainment.'' They would not have to adopt local 
measures (except as necessary to quality for transitional status) and 
would have reduced air quality planning obligations. These areas would 
not be subject to transportation conformity, nonattainment New Source 
Review, rate of progress, RACM or RACT requirements in most 
circumstances.

                       CLEAR SKIES: MERCURY MACT

    Question. Mercury is linked to developmental delays in children. 
Before the administration announced Clear Skies, EPA was on track to 
release a rule, under the existing Clean Air Act, that would have 
required mercury reductions to be in place by 2007. Clear Skies does 
not require the first phase of mercury reductions until 2010, and full 
reductions are not required until 2018. How is waiting 10 extra years 
to reduce mercury emissions more protective of public health?
    Answer. Due to the nature of the market-based trading and banking 
program, the mercury reductions under Clear Skies are expected to begin 
almost immediately upon enactment--as early as this year. By building 
on the existing acid rain trading program for SO2, Clear 
Skies provides a mechanism to reward companies for early SO2 
reductions. Thus, we expect additional SO2 reductions to 
begin immediately. SO2 controls also reduce mercury 
emissions, so mercury reductions will also begin immediately. Existing 
Clean Air Act provisions and current schedules relating to utility MACT 
rules only require some level of mercury reductions from existing 
sources beginning on December 15, 2007. The nature, extent, and timing 
of these reductions are subject to the uncertainties associated with 
this rulemaking and litigation, so it is difficult to compare relative 
emissions reductions between the current program and Clear Skies. 
Litigation in this instance is highly likely, as both industry and 
environmental groups have signaled their intention to litigate, and 
such litigation might push compliance dates further into the future. In 
any event, although the ultimate mercury reductions in Clear Skies 
occur over an extended time period, the program does not wait 10 years 
before effecting more protective emissions reductions.

              NOX AND SO2 REDUCTIONS

    Question. Fine particulate matter, or soot, causes asthma, chronic 
bronchitis, and is linked to lung cancer. If Clear Skies is not 
enacted, can EPA require reductions of Sulfur and Nitrogen oxides under 
the existing Clean Air Act?
    Answer. 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 is designed to go 
into effect immediately upon enactment. Power plants would immediately 
understand their obligations to reduce pollution and would be rewarded 
for early action. As a result, public health and environmental benefits 
would begin immediately. Given Clear Skies' design, it is unlikely that 
litigation could delay the program (particularly since Congress would 
decide the two most controversial issues--the magnitude and timing of 
reductions). In contrast, under the current Clean Air Act, power plants 
would not know what their obligations would be until after EPA and 
States started and completed numerous rulemakings.
    Past experience suggests that litigation delays on the regulatory 
path are likely. Our experience with two cap-and-trade programs--the 
legislatively-created Acid Rain Trading Program and the 
administratively-created NOX SIP Call--illustrates the 
benefits of achieving our public health and environmental goals with 
legislation rather than relying solely on existing regulatory 
authority.
    Though we project a great number of benefits will arise from 
implementation of the NOX SIP call, the journey has been 
difficult and is not yet over. The NOX SIP call was designed 
to reduce ozone-forming emissions by 1 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.
    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 that may further delay 
significant emissions reductions. Under this scenario, there are few 
incentives to reduce emissions until rules are final, posing 
potentially significant delays in achieving human health and 
environmental benefits. Even once EPA issues a final rule, sources' 
incentive to make plans for compliance may be reduced by litigation.
    The Clean Air Act contains several provisions under which EPA will 
be required to impose further emission controls on power plants in 
order to allow States to meet the new national ambient air quality 
standards (NAAQS) for 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 rulemaking 
and litigation, with resulting uncertainty about reduction targets and 
timetables.

                  CLEAN AIR: PROTECTING PUBLIC HEALTH

    Question. In the meantime, is EPA doing everything possible to use 
existing authority to reduce soot and smog in order to protect public 
health?
    Answer. EPA has made reducing particulate matter and ozone among 
its highest priorities. This includes reducing particulate matter (PM), 
sulfur dioxide (SO2), nitrogen oxides (NOX), and 
volatile organic compounds (VOCs), as well as taking steps to implement 
the new National Ambient Air Quality Standards (NAAQS) for these 
pollutants. Furthermore, reducing these pollutants as quickly as 
possible is a principal reason for expeditious passage of the Clear 
Skies Act.
    We recently promulgated new rules to reduce NOX, VOC, 
PM, and SO2 from cars, trucks, heavy-duty engines, and large 
industrial sources. We have just proposed rules on non-road engines 
which will provide significant reductions in ambient levels and risk 
from particulate matter and ozone.
    We are also moving forward to implement the revised standards for 
these pollutants. Implementation of the 1997 NAAQS for ozone has been 
slowed by litigation. Implementation of the 1997 PM2.5 NAAQS 
had to await deployment of new ambient monitors and the collection of 3 
years of data. With those hurdles largely behind us, EPA is now taking 
the steps required under existing authorities to implement the new 
standards.
    In moving forward on the fine particle standards, on April 1, 2003, 
we proposed Guidance for Determining Boundaries of PM2.5 
Attainment and Nonattainment Areas. States and tribes should submit 
their recommendations to EPA by February 15, 2004. EPA expects to 
designate areas as attaining or not attaining the PM2.5 
standard by December 31, 2004.
    We proposed a rule this spring to guide States in implementing the 
8-hour ozone standard. The public, including interested stakeholders, 
will have an opportunity to comment on the implementation strategies in 
the proposed rule before EPA finalizes the rule by early 2004. The 
process for designating areas for the 8-hour ozone standard has already 
begun. In late 2000, States provided recommendations for ozone 
designations and EPA has asked them to revise and update those 
recommendations by July 2003. The EPA will make final designations for 
the 8-hour ozone standard by April 15, 2004.

                 INTERSTATE TRANSPORT OF AIR POLLUTION

    Question. Under Clear Skies, if facilities in one State are harming 
air quality in a neighboring State, what recourse would the polluted 
State have?
    Answer. By requiring 70 percent reductions in power plant emissions 
of SO2 and NOX, Clear Skies would significantly 
reduce the amount of pollution transported from one State to another. 
Instead of requiring the States and EPA to go through the Clean Air Act 
section 126 process and/or the section 110 interstate transport 
rulemaking process before requiring reduced power plant emissions in 
neighboring States (reductions that could be delayed further by 
litigation), under Clear Skies, power plants would begin to power plant 
emission reductions immediately. Enacting Clear Skies effectively gives 
States even greater reductions than they could have obtained through 
the sections 110 or 126 processes over the next decade, without making 
States go through the uncertain and contentious procedures necessary to 
obtain that relief under the current Act. We do not believe the current 
Clean Air Act interstate transport procedures (sections 110 and 126) 
could provide greater emission reductions over the next decade than 
those under Clear Skies because our analysis indicates it would not be 
feasible to install more control technology over the next decade than 
what we expect under Clear Skies.
    If States needed additional upwind power plant reductions, under 
Clear Skies they could file a section 126 petition seeking additional 
reductions starting in 2012. Clear Skies revises the standard for 
granting petitions under section 126 of the Clean Air Act so that it 
incorporates cost-effectiveness and air quality considerations. EPA 
believes this revision is appropriate because the cost-effectiveness of 
reductions should be determined in accordance with effects on air 
quality. (A provision of the Act eliminates this requirement if it is 
not technically feasible to implement.)

                  WATER QUALITY TRADING PROGRAM: CAPS

    Question. I understand that this new policy is ``modeled'' after 
the Acid Rain trading program, which has been successful. Trading for 
acid rain has worked well because there is an overall cap on pollution 
levels, and trades must be under the cap. Will there be a cap on water 
pollution?
    Answer. The policy does call for trading under a cap. The form of 
the cap will vary depending on whether trading is occurring under a 
Total Maximum Daily Load (TMDL) or not and whether trading is being 
used on a watershed scale or to offset the impact of a single 
discharger:
  --Trading Under a TMDL.--For impaired waters for which a TMDL has 
        been approved or established by EPA, the cap is set by the TMDL 
        at a level necessary to meet water quality standards. The 
        policy (Section III.E.3.) supports trading that is consistent 
        with the assumptions and requirements upon which the TMDL is 
        established. ``EPA does not support any trading activity that 
        would delay implementation of a TMDL . . . or that would cause 
        the combined point source and nonpoint source loadings to 
        exceed the cap established by the TMDL.''
  --Trading in Impaired Waters Pre-TMDL.--The policy (Section III.E.2.) 
        ``supports pre-TMDL trading in impaired waters to achieve 
        progress towards or the attainment of water quality 
        standards.'' This may be accomplished by individual trades that 
        achieve a net reduction of the pollutant traded or by a 
        watershed-scale trading program that ``reduces loadings to a 
        specified cap supported by baseline information on pollutant 
        sources and loadings.'' For individual trades that involve 
        point sources, the cap in most cases would be the sum of the 
        trading partners' original water quality based effluent 
        limitations, which under CWA Sec. 301(b)(1)(C) must be 
        established at a level necessary to achieve water quality 
        standards. Where a point source trades with a nonpoint source, 
        the cap would be the point source effluent limitation and the 
        nonpoint source load that is either ``derived from'' or 
        ``consistent with water quality standards.''
  --Trading in Unimpaired Waters.--The policy also supports trading to 
        maintain levels of water quality higher than that necessary to 
        protect and support designated uses consistent with Federal 
        antidegradation policy (Section III.E.1.) In this way trading 
        could be used to offset new or increased discharges through 
        actual pollutant reductions obtained from other sources--so 
        that no lowering of water quality occurs. In this case, the cap 
        (under a State's antidegradation policy) would be the high 
        level of water quality that was present in the receiving water 
        before the introduction of the new or increased load.
    Question. How do you know that water trading will not increase 
pollution?
    Answer. First, trading will take place bounded by caps. Second, 
water quality standards established to protect designated uses are the 
baseline for generating pollution reduction credits. (See Section 
III.D). The policy contemplates that a pollution reduction credit may 
be created whenever a point source achieves reductions greater than 
those required to meet water quality based limitations. These 
``surplus'' reductions could form the basis of a trade. For example, 
where a TMDL has been established, the point source waste load 
allocation and nonpoint source load allocation would establish the 
baseline for generating a credit. A source generating a credit not only 
would need to reduce to the level set by the TMDL but also surpass that 
level before a tradable credit could be created. A source buying a 
credit therefore would be able to exceed its original allocation only 
in the amount of the ``surplus'' originally generated, with the result 
that the post-trade sum of loadings from the two sources would be equal 
to (or, depending on cap and program design, less than) the total 
amount of loadings that would have been discharged by the two sources 
in the absence of a trade.
    The policy ``does not support any use of credits or trading 
activity that would cause an impairment of existing or designated uses, 
adversely affect water quality at an intake used for drinking water 
supply or that would exceed a cap established by a TMDL.'' (Section 
III.F.5.).
    In addition, EPA's policy includes other features important to the 
integrity and environmental outcomes of a trading program: 
incorporating provisions for trading into permits issued to point 
sources (Section III.F.1. & 2.), addressing antibacksliding (Section 
III.F.6.) and antidegradation (Section III.F.7.), establishing nonpoint 
source accountability (Section III.G.1.) addressing uncertainty in 
nonpoint source pollution reductions (Section III.G.4.), emphasizing 
the importance of compliance and enforcement (Section III.G.5.) and 
encouraging public participation and access to information (Section 
III.G.6.). The policy supports program evaluations, including ambient 
monitoring, to assess progress and make revisions as needed (Section 
III.G.7.). EPA's oversight role is set forth in Section III.H, 
including the veto of permits, review and approval of TMDLs, and 
approval of revisions to State and tribal water quality standards.

              WATER QUALITY TRADING PROGRAM: PERMIT LEVELS

    Question. Wouldn't it be more protective of the environment to 
instead ensure that all facilities meet the levels in their permits?
    Answer. All point source dischargers must meet the limits specified 
in their NPDES permits. These limits must be established at levels as 
stringent as necessary to achieve water quality standards established 
under CWA Section 303. See CWA Sec. 301(b)(1)(C); 40 C.F.R. 
Sec. 122.44(d)(1)(vii)(A). The policy supports trading as a means of 
complying with permit limits in a more cost effective manner, providing 
that no use of credits or trading activity would cause an impairment of 
designated uses, adversely affect a drinking water supply or exceed a 
TMDL cap. For point sources that trade, the policy calls for trading 
provisions to be incorporated into the permit (Section III.F.2.). In 
this way the public is given information and notice of a trade, the 
permit is written to allow limits to be met through trading, and 
compliance with the permit is enforceable.

             WATER QUALITY TRADING PROGRAM: SENSITIVE AREAS

    Question. How will this new policy help sensitive areas like the 
Chesapeake Bay meet aggressive pollution reduction goals?
    Answer. EPA's Water Quality Trading Policy can help meet voluntary 
pollution reduction goals and facilitate implementation of TMDLs by 
providing economic incentives for voluntary reductions from unregulated 
sources, encouraging early reductions and reducing the cost of 
achieving water quality goals.
    For example, Connecticut's Nitrogen Credit Exchange Program is 
creating faster-than-expected reductions under a TMDL established for 
Long Island Sound. Discharges from 79 municipal facilities, in 
aggregate, must be reduced by approximately 64 percent. The Nitrogen 
Credit Exchange Program provides incentives for point sources to reduce 
loadings sooner than required. The program is expected to meet the TMDL 
years ahead of the 14-year compliance schedule at a projected savings 
of approximately $200 million.
    Trading can also help achieve pollution reduction goals by 
generating information on the cost and benefit of various control 
options. This information can be important in facilitating the 
development of TMDLs where voluntary efforts may not be sufficient to 
achieve water quality standards.

            WATER QUALITY TRADING PROGRAM: MONITORING TRADES

    Question. Who will be responsible for monitoring the trades?
    Answer. Monitoring is essential to the credibility of any water 
quality trading program. EPA believes that the responsibility for 
monitoring trades should be shared by the States and sources that 
engage in trading. EPA's Water Quality Trading Policy calls for 
periodic assessments to evaluate the effectiveness of trading and serve 
as a basis for making program revisions. EPA believes this adaptive 
management approach is important for successful implementation of 
trading and other watershed initiatives. The policy specifically 
recommends ambient monitoring to ensure that impairment of uses does 
not occur and to document water quality. The policy also supports 
monitoring (Section III.G.4) and studies (Section III.G.7.) to quantify 
nonpoint source load reductions, validate nonpoint source control 
efficiencies, and determine if water quality objectives have been 
achieved. The policy supports the results of these evaluations being 
made available to the public and an opportunity being provided for 
public input on program revisions.
    The policy calls for point source dischargers to conduct monitoring 
where required by regulations and specified in their permits. This is 
essential to provide clear and consistent measures for determining 
compliance and to ensure that appropriate enforcement action can be 
taken (see Section III.F.4. of the policy).

              QUALITY TRADING PROGRAM: INCREASED POLLUTION

    Question. How will we be sure that trades will not end up 
increasing pollution?
    Answer. The Clean Water Act (CWA) and its implementing regulations 
establish the legal basis for controlling pollution and supply the 
framework for trading to occur.
    CWA Section 303(c) requires States and tribes to adopt water 
quality standards for waters within their boundaries. The level of 
water quality that must be attained and protected is established by 
water quality standards. (Emphasis added). Water quality standards are 
composed of three parts: (1) designated uses, e.g., protection of fish 
and wildlife, recreation and drinking water supply (40 C.F.R. 
Sec. 131.10); (2) water quality criteria to protect those uses (40 
C.F.R. Sec. 131.11); and (3) an antidegradation policy (40 C.F.R. 
Sec. 131.12). A State must submit to EPA for review and approval/
disapproval any new or revised water quality standards it adopts (CWA 
section 303(c)(2)). If EPA approves the water quality standard, it 
takes effect and becomes a basis for establishing water quality based 
effluent limitations in National Pollutant Discharge Elimination System 
(NPDES) permits and establishing total maximum daily loads (TMDLs). (40 
C.F.R. Sec. 131.21.)
    The second critical concept and foundation for water quality 
trading is the requirement under the CWA that National Pollutant 
Discharge Elimination System (NPDES) permits contain water quality-
based effluent limits as stringent as necessary to meet water quality 
standards (CWA Section 301(b)(1)(C)). These water quality-based 
effluent limitations provide the baselines for point sources to 
generate a credit. A baseline is the level below which a reduction is 
made to create a pollutant reduction credit. The Water Quality Trading 
Policy (Section III.D.) encourages sources to create pollutant 
reduction credits by making reductions greater than necessary to meet a 
regulatory requirement. A point source may do so by reducing its 
discharge below the level necessary to comply with a water quality-
based effluent limit based on a TMDL or other analysis.
    All water quality-based effluent limitations, including alternate 
or variable limits that would apply where trading occurs, are subject 
to CWA section 301(b)(1)(C). EPA has promulgated regulations specifying 
when such water quality-based effluent limitations are necessary and 
how such limitations are to be derived. Among other things, EPA's 
regulations require the permitting authority to ensure that:
  --The level of water quality to be achieved by limits on point 
        sources established under this paragraph is derived from, and 
        complies with all applicable water quality standards; and
  --Effluent limitations developed to protect a narrative water quality 
        criterion, a numeric water quality criterion, or both, are 
        consistent with the assumptions and requirements of any 
        available wasteload allocation for the discharge prepared by 
        the State and approved by EPA pursuant to 40 CFR 130.7. (40 
        C.F.R. Sec. 122.44(d)(1)(vii) (emphasis supplied).
    Taken together the foregoing provisions of the CWA and implementing 
regulations provide a basis for ensuring that trades are consistent 
with water quality standards established to protect all existing and 
designated uses.
    EPA's Water Quality Trading Policy includes provisions to be 
consistent with water quality standards (Section III. A., B. and D.). 
It also does not support trading that would cause an impairment of 
designated uses, adversely affect a drinking water supply or exceed a 
cap established by a TMDL (Section III. F.5.).

                   SHIP SCRAPPING: DISPOSING OF SHIPS

    Question. What is EPA's current role in helping the Navy and the 
Maritime Administration dispose of obsolete ships? Can ships be 
exported? What is the process for export, and what is EPA's role? How 
many ships must be dismantled?
    Answer. EPA has approved the export of 13 vessels owned by the 
Maritime Administration (MARAD) for dismantling and recycling at the 
AbleUK facility in Teesside, England. EPA and MARAD have visited and 
evaluated the AbleUK facility, and have also consulted with British 
government officials. We have determined that the work necessary to 
dismantle these vessels can be done in a manner that is protective of 
worker safety and health and the environment at this facility.
    The AbleUK facility has substantial experience in deconstruction 
and demolition of large off-shore structures and has a strong history 
of environmental compliance based on regular inspections over the past 
7 years. Provisions have been put in place to assure that AbleUK will 
manage all hazardous materials in an environmentally sound manner.
    There are currently approximately 130 vessels in MARAD's National 
Defense Reserve Fleet (NDRF) that are designated for disposal. MARAD 
has been evaluating several options for disposal, including domestic 
dismantling, foreign dismantling, and preparation of ships to be sunk 
as artificial reefs.
    The National Defense Authorization Act for fiscal year 2003 directs 
the Secretary of Transportation, Secretary of State, and Administrator 
of the Environmental Protection Agency to jointly carry out one or more 
pilot programs to explore the feasibility and advisability of 
alternatives for exporting these obsolete U.S. government vessels for 
scrapping. An important element of the legislation is that any pilot 
project involving export must be able to demonstrate that the work can 
be accomplished abroad in a manner that appropriately addresses 
concerns regarding worker health and safety and the environment.

                SHIP SCRAPPING: INTERNATIONAL CONDITIONS

    Question. On March 12, 2003, the Washington Post recently reported 
that U.S. officials planned to China to check out possible yards for 
scrapping ships. Did EPA staff participate in this travel? If so, did 
EPA staff find that conditions have changed since 1997, when a Pulitzer 
prize-winning series of articles in the Baltimore Sun exposed dangerous 
working and environmental conditions in ship scrapping abroad?
    Answer. An EPA staff person accompanied the Maritime Administration 
(MARAD) officials on a visit to several sites in China in March. The 
visit was designed to screen potential scrapping facilities for further 
assessment of their capabilities to conduct ship scrapping in a safe 
and environmentally sound manner. The visit revealed a range of 
conditions at the various sites. Since EPA did not visit these yards in 
1997, we cannot comment on whether conditions have changed since then.

                             SHIP SCRAPPING

    Question. The same Washington Post article (March 12, 2003) 
referenced a 1994 ruling by EPA that these ships are too toxic to 
export, and that this ruling would have to be amended or waived by EPA 
to make export an option. What is the 1994 ruling? What would be the 
process for changing this ruling? Is EPA considering this?
    Answer. EPA is not aware of the ``ruling'' cited in the Post 
article. EPA's stated position in 1994 (59 Federal Register 62817; 
December 6, 1994) was that it wanted to ``allow export for disposal of 
PCB waste . . . on a case-by-case basis unless EPA has reason to 
believe that the PCBs in question will not be properly managed'' in the 
receiving country. In allowing export, EPA also would look to whether 
other standard administrative procedures, similar to those required by 
the Basel Convention on transboundary shipment and disposal of 
hazardous wastes, were followed. While this proposal was not finalized, 
EPA has no plans at present to take any regulatory action related to 
the export of PCB waste for disposal.

                       ENFORCEMENT: PROPOSED CUTS

    Question. In 2002 and 2003, EPA proposed cuts in the budget for 
Federal enforcement. The subcommittee rejected these cuts, and restored 
funding for ``environmental cops on the beat.'' How many enforcement 
personnel did the Agency have in 2001, before the cuts were proposed? 
How many enforcement personnel does the Agency have now?
    Answer. In fiscal year 2001, the Agency's enforcement program 
included 1,661.3 FTE in the Environmental Programs and Management (EPM) 
appropriation. The Agency's proposed enacted operating plan for fiscal 
year 2003 includes 1,632.3 FTE in EPM.

                   ENFORCEMENT: PERSONNEL BY ACTIVITY

    Question. What is the breakout by activity (for example, civil 
enforcement, compliance monitoring, etc)?
    Answer. The Agency's fiscal year 2003 budget includes 1,482.4 FTE 
for the enforcement program in the EPM appropriation. The following 
table identifies the programs that make up the enforcement program. 
This information only reflects the EPM appropriation.

------------------------------------------------------------------------
                                            Fiscal year     Fiscal year
                 Program                   2003 request    2004 request
                                               (FTE)           (FTE)
------------------------------------------------------------------------
Compliance Monitoring...................           419.3           464.4
Civil Enforcement.......................           848.2           915.1
Criminal Enforcement....................           190.9           190.1
Homeland Security.......................            24.0            24.0
                                         -------------------------------
      TOTAL.............................         1,482.4         1,593.6
------------------------------------------------------------------------

      ENFORCEMENT: PERSONNEL BY ACTIVITY--FISCAL YEAR 2004 BUDGET

    Question. How many will the agency have under the 2004 budget? What 
is the breakout by activity?
    Answer. The Agency's fiscal year 2004 Request includes 1,593.6 FTE 
for the enforcement program in the EPM appropriation. The fiscal year 
2004 Request includes an overall increase of 100 FTE over the fiscal 
year 2003 President's Budget Request.

------------------------------------------------------------------------
                                            Fiscal year     Fiscal year
                 Program                   2003 request    2004 request
                                               (FTE)           (FTE)
------------------------------------------------------------------------
Compliance Monitoring...................           419.3           464.4
Civil Enforcement.......................           848.2           915.1
Criminal Enforcement....................           190.9           190.1
Homeland Security.......................            24.0            24.0
                                         -------------------------------
      TOTAL.............................         1,482.4         1,593.6
------------------------------------------------------------------------

               ENFORCEMENT: EPA'S FISCAL YEAR 2004 PLANS

    Question. Federal enforcement activities include a number of 
important programs--including civil enforcement and compliance 
monitoring. Over the last 2 years, the subcommittee has worked with the 
Agency to ensure that resources were distributed consistently. Does the 
Agency propose to shift priorities or personnel in 2004? Or are the 
Agency's plans for 2004 consistent with past distribution?
    Answer. The Office of Enforcement and Compliance Assurance (OECA) 
is currently conducting an analysis of workforce-related issues. OECA's 
Assistant Administrator has appointed a Workforce Deployment Executive 
Steering Committee to examine and provide specific recommendations 
regarding the effective deployment of enforcement and compliance 
resources. OECA believes that a more holistic, collective and strategic 
approach to compliance and environmental problem solving is needed to 
respond to our workforce-related challenges. OECA expects to finish its 
analysis in August 2003, with possible implementation in fiscal year 
2004.

                         ENFORCEMENT: VACANCIES

    Question. Last year, EPA had over 100 unfilled enforcement jobs. 
How many vacancies in enforcement are there now? What is EPA doing to 
fill these vacancies?
    Answer. OECA is pursuing an aggressive hiring strategy in fiscal 
year 2003 and continues to hire staff in high priority program areas. 
In fiscal year 2003, OECA received an increase of 154 FTE for 
enforcement. Because the appropriations bill was enacted later in the 
year and OECA only received funding for the FTE increase in late March, 
the Agency estimates that based on current charging OECA may be 50 FTE 
below ceiling. OECA's headquarters and regional offices will 
aggressively hire to the maximum extent possible.

              ENFORCEMENT: GAO'S EVALUATION RECOMMENDATION

    Question. Last year, GAO recommended that EPA do a comprehensive 
workforce study to evaluate whether enforcement resources are adequate 
to meet the need. Has EPA done this study?
    Answer. The Office of Enforcement and Compliance Assurance is 
currently conducting an analysis of workforce-related challenges as a 
result of GAO's recommendation. OECA's Assistant Administrator has 
appointed a Workforce Deployment Executive Steering Committee to 
examine and provide specific recommendations regarding the effective 
deployment of enforcement and compliance resources. The analysis will 
address GAO's concerns and other workforce deployment challenges.

                     ENFORCEMENT: EPA'S EVALUATION

    Question. Does EPA's evaluation include the needs of headquarters 
and regional offices?
    Answer. Yes. The evaluation does consider the needs of headquarters 
and regional offices.

                  ENFORCEMENT: FISCAL YEAR 2004 BUDGET

    Question. If the study has not been completed, how can the 
subcommittee be sure that EPA's 2004 budget request is adequate to 
ensure enforcement of our environmental laws?
    Answer. The Agency's fiscal year 2004 Request for the Enforcement 
and Compliance Assurance program represents the highest funding level 
in that program's history and reflects this administration's strong 
commitment to the vigorous enforcement of our Nation's environmental 
laws. The request includes an increase of 100 FTE over the fiscal year 
2003 Request to enhance inspection and enforcement coverage to better 
identify and address persistent noncompliance in an expanding regulated 
universe. Based on recommendations from OECA's workforce deployment 
Executive Steering Committee, OECA plans to target deployment of these 
resources to ensure a holistic and integrated approach to compliance, 
serving as a powerful deterrent to would-be violators.

                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy

                             ELIZABETH MINE

    Question. Last year, the administration dropped the Elizabeth Mine 
in Strafford, Vermont from the Superfund funding list. A recent mine 
safety inspection and analysis has shown that a potential failure of 
mine tailing piles could occur. This would result in a flood wave 8' to 
9' high, traveling at a velocity of 10-15' per second (7-10 miles per 
hour). This would result in serious environmental and property damage, 
causing public health and safety risks and long term ecological damage 
as far downstream as the Connecticut River.
    The New England Region has invoked their emergency response 
authority and recommended to EPA headquarters that their proposed 
Superfund remedy be implemented and funded. This is a very serious 
situation. Can you assure me that EPA will fully fund the remedy at the 
Elizabeth Mine?
    Answer. The Elizabeth Mine site is being addressed by both: (1) an 
on-going emergency removal action; and (2) a long-term remedial cleanup 
action.
    EPA authorized an emergency removal action in March, 2003, to 
address the potential failure of the tailings piles due to an unlikely 
sudden snow pack melt or unexpectedly large (4-6'') rain event. As you 
noted, a recent report raised the possibility of a failure of a mining 
tailings pile.
    Emergency removal activities to address potential failure of the 
tailings pile:
  --EPA has taken and will continue to take emergency action at this 
        site to minimize the immediate threat posed to downstream 
        residents. EPA has installed stand-by pumps and a debris rack 
        to prevent the accumulation of large amounts of standing water 
        behind the tailings pile. EPA will continue to install graded 
        filters to repair internal dam erosion. EPA has increased site 
        monitoring.
  --We have met with residents and continue to work with experts from 
        the Vermont Department of Environmental Conservation and the 
        U.S. Army Corps of Engineers to address dam erosion issues and 
        improve the stability of the site as part of the emergency 
        response removal action.
  --Funding for emergency action and site monitoring are separate and 
        distinct from the Superfund program's long-term remedial 
        cleanup funding.

Long-term Remedial Action
    For fiscal year 2003, the Agency continues to evaluate the 
Elizabeth Mine site, and other sites nationwide to determine how long-
term remedial cleanup funds should be allocated in the coming year.
  --When considering Elizabeth Mine, please be assured that the Agency 
        will consider all the new information gathered about the 
        conditions at the site.
  --Each year EPA reviews funding requests for site cleanups and weighs 
        funding decisions against needs for CERCLA sites across the 
        country. This site will soon be re-evaluated through this 
        process and ranked against other response actions for sites 
        across the country to determine the relative priority for 
        funding this project in whole or in part.
  --Funding decision criteria include relative risk, potential for 
        human exposure to site contamination, potential for ecological 
        impacts, and the status of overall site progress.

                           MERCURY EMISSIONS

    Question. Administrator Whitman, we have talked about the issue of 
mercury in the past, but I find it disconcerting when you consider the 
findings in the EPA long-overdue report, America's Children and the 
Environment, which outlines serious risks to pregnant women and 
children from mercury exposure. Last month, I along with Senator 
Olympia Snowe (R-Maine) introduced a comprehensive bill, ``The Omnibus 
Mercury Emissions Reduction Act'', to control mercury emissions from 
coal-fired power plants and other sources. This bill will provide 
tougher standards than the administration's Clear Skies proposal in 
reducing mercury pollution. In an EPA Report (2000) it was estimated 
that 29 tons of mercury emissions are released per year from coal- and 
oil-fired commercial and industrial boiler units. Yet, the EPA has not 
yet decided to regulate these emissions. Within the Mercury Omnibus 
bill it would require the EPA to set a maximum achievable control 
technology (MACT) standard that would reduce mercury emissions by at 
least 90 percent. Why did the EPA elect not to regulate these 
emissions?
    Answer. The Agency has regulated mercury emissions from a number of 
important source categories, including Municipal Waste Combustors, 
Medical Waste Incinerators, and Hazardous Waste Combustors. In 
addition, we have proposed mercury limits for both new and existing 
solid fuel-fired industrial/commercial/institutional boilers and 
process heaters in a MACT standard that was proposed on January 13, 
2003. The EPA expects the Clear Skies proposal to provide additional 
reductions from coal-fired utilities. We continue our work on the 
utility MACT, which is expected to be proposed in December 2003 and 
will include limits on mercury emissions from electric utility boilers.

                   CLEAR SKIES ACT VS. CLEAN AIR ACT

    Question. According to the EPA, approximately 200 counties with 
more than 80 million people would not be able to meet the fine 
particulate matter standard expected to take effect in 2010. Under the 
Clear Skies initiative, power companies would be able to continue to 
emit tens of thousands of tons of sulfur dioxide by buying pollution 
credits from cleaner plants and thus avoid having to control older and 
dirtier plants. The initiative would allow significantly more air 
pollution, including: a 68 percent increase in nitrogen oxide over 
current law and standards that would take effect 8 years later than the 
current Clean Air Act; a 125 percent increase in sulfur dioxide and 
standards that would take effect 6 years later; and a 420 percent 
increase in mercury and standards that would take effect 10 years 
later. The administration purports that this will improve the efforts 
under the current Clean Air Act, how will this be by pushing back 
already much needed reductions to protect the American public from 
continually breathing dirty air?
    Answer. Clear Skies would improve upon the Clean Air Act providing 
greater reductions from power plants over the next 10 years than would 
the current Clean Air Act. Our analysis indicates that the cumulative 
health and environmental benefits over the next decade from Clear Skies 
are markedly greater than could be expected under the current Clean Air 
Act. Last year's EPA estimates for Clear Skies project that, over the 
next decade, all the programs of the existing Clean Air Act would 
reduce power plant emissions of SO2 and NOX by 
approximately 23 million tons. Over the same time period, Clear Skies 
would reduce emissions of these same pollutants by 58 million tons--a 
reduction of 35 million tons of pollution beyond what can be achieved 
under current law.
    Beyond the next decade, we cannot really predict what will happen 
under the Clean Air Act. We know that EPA and States will need to issue 
regulations to reduce power plant emissions, but we do not know for 
sure what the levels will be or when the reductions will be achieved. 
There are great uncertainties regarding regulatory development, 
litigation, and implementation time that affect reductions. Under this 
scenario, there are few incentives to reduce emissions until rules are 
final, posing potentially significant delays in achieving human health 
and environmental benefits. Litigation may further delay these 
benefits.
    In contrast, the mandatory emissions caps at the heart of Clear 
Skies are a sure thing and guarantee that reductions will be achieved 
and sustained over time. The Clear Skies Act builds on the successes of 
the Clean Air Act and would significantly improve air quality across 
the Nation by requiring power plants to cap and reduce their emissions 
of SO2, NOX and mercury by 70 percent. Also, 
because cap and trade programs include economic incentives for early 
action, Clear Skies would begin improving public health immediately. 
The Clear Skies Act would not replace the fundamental protections 
afforded by the national air quality standards. Where the Clear Skies 
Act is not sufficient to achieve attainment of the standards, States 
will still be required to attain those standards.
    Our experience with the Acid Rain Program has demonstrated that the 
largest, highest emitting sources often achieve the greatest emissions 
reductions. Our analysis of the Clear Skies Act of 2002 projects that 
results under Clear Skies will be similar.
    [Note.--The results herein are based on analyses of the Clear Skies 
Act of 2002 conducted in 2002.]

                    FISCAL YEAR 2004 BUDGET PROPOSAL

    Question. Last year you proposed $7.621 billion, while Congress 
eventually appropriated $8.2 billion to assist you in addressing the 
numerous environmental issues this Nation faces. Now today you are 
requesting $7.63 billion for fiscal year 2004, a $570 million decrease 
over what was appropriated in fiscal year 2003. It is my understanding 
this will result in across the board cuts on water quality, reducing 
the enforcement branch by 100 employees (as compared to fiscal year 
2001), and while you propose an increase of $60 million for the 
Superfund toxic waste cleanup program, this comes from requiring the 
American taxpayer to pay for the increase, not the polluter. At a time 
when the Nation needs increased vigilance in protecting the 
environment, you elect to reduce numerous programs and increase the 
costs to the taxpayer; what is the rationale for such proposals?
    Answer. The President's fiscal year 2004 budget request of $7.6 
billion provides the funding necessary for the Agency to carry out its 
mission efficiently and effectively--to protect human health and 
safeguard and restore the natural environment. Given the competing 
priorities for Federal funding this year, namely the War on Terrorism 
and Homeland Security, the request reflects the Agency's commitment to 
cleaning, purifying, and protecting America's air, water, and land. The 
request promotes these goals in a manner consistent with fiscal 
responsibility by strengthening our base environmental programs, 
fostering stronger partnerships, and enhancing strong science.
    The increases requested in the Fiscal Year 2004 President's Budget 
Request will result in improvements to the Nation's water quality. 
Included in the fiscal year 2004 request is a $50 million increase for 
EPA's core water programs. The increased funding will support 
strengthening and integrating EPA's water programs and allow for 
increased technical assistance and direct resources for State drinking 
water and clean water programs. Specifically, the resources will target 
improving monitoring programs, setting water quality standards, 
establishing Total Maximum Daily Loads (TMDLs), drafting permits, and 
implementing State clean water and drinking water programs. There is 
also a $5 million increase to the wetlands program that will help 
States protect wetlands and isolated waters no longer under the 
jurisdiction of Section 404 of the CWA as a result of recent court 
decisions. In addition, for fiscal year 2004 the administration 
extended the Federal commitment to capitalizing the Clean Water State 
Revolving Fund through 2011 at $850 million per year. Extending the 
period of capitalization will significantly increase available 
resources to meet water infrastructure needs.
    The Agency's Fiscal Year 2004 Request for the Enforcement and 
Compliance Assurance program represents the highest funding level in 
that program's history and reflects this administration's strong 
commitment to the vigorous enforcement of our Nation's environmental 
laws. The fiscal year 2004 request includes an increase of 100 FTE 
above the fiscal year 2003 President's request to enhance inspection 
and enforcement coverage to better identify and address persistent 
noncompliance in an expanding regulated universe.
    The administration strongly supports Superfund's ``polluter pays'' 
principle and continues to make parties responsible for the hazardous 
waste sites clean them up. Typically, 70 percent of Superfund site 
cleanups each year are financed and cleaned up by the polluters. The 
remaining sites are cleaned up by EPA, but EPA sues any financially 
viable private parties after the cleanup to recover costs. EPA 
collected nearly $250 million last year through these cost recoveries. 
EPA only pays for the ``orphan'' sites where no viable responsible 
party can be found. All viable polluters pay their share of cleanup, 
either through cost recovery or by cleaning up the sites themselves. 
The requested increase will allow EPA to cleanup 10 to 15 additional 
``orphan'' sites that would have to wait for cleanup otherwise.

                 CHILDREN'S HEALTH REPORT & CLEAR SKIES

    Question. The EPA sat on the ``American Children and the 
Environment'' report for 8 months until an article by the New York 
Times forced it to come out to see the light of day. The report 
documents numerous threats of mercury to children and pregnant women. 
In particular the report notes that there is a ``growing concern about 
exposure by women of childbearing age,'' yet the agency is attempting 
to further slow the need for cleaner air through its Clear Sky 
Initiatives. Shouldn't the EPA have a goal of protecting the 
environment, rather than rolling back environmental laws?
    Answer. ``America's Children and the Environment: Measures of 
Contaminants, Body Burdens, and Illnesses'' is the U.S. Environmental 
Protection Agency's second report on trends in environmental factors 
related to the health and well-being of children in the United States. 
The report brings together, in one place, quantitative information from 
a variety of sources to show trends over time in levels of 
environmental contaminants in air, water, food, and soil; 
concentrations of contaminants measured in the bodies of children and 
women; and childhood illnesses that may be influenced by exposure to 
environmental contaminants.
    The report revealed that the potential for mercury exposure in the 
womb is of growing concern because prenatal exposure to methylmercury 
can cause adverse developmental and cognitive effects in children. The 
report states that in 1999-2000, 8 percent of women of childbearing age 
had mercury blood concentrations at or above EPA's reference dose, a 
level of exposure beyond which EPA has concern (5.8 parts per billion).
    ``America's Children and the Environment: Measures of Contaminants, 
Body Burdens, and Illnesses'' contains a large amount of technical 
information that relates to the scientific expertise and programs of 
numerous Federal agencies. Therefore, in order to ensure the quality of 
the report, it underwent an extensive interagency peer review process. 
The report was released upon completion of the interagency review.
    Last year the President announced a legislative plan, Clear Skies, 
to control mercury, NOX and SO2 from electric 
power plants. Clear Skies compliments existing Clear Air Act programs, 
such as the new national air quality standards, by specifically 
addressing the harmful pollutants released from power plants. If 
enacted, Clear Skies would reduce mercury emissions from coal fired 
power plants through a cap and trade program that would cut emissions 
of mercury by almost one-half by 2010 and would cap mercury emissions 
by nearly 70 percent in 2018. Based on an analysis completed in 2002, 
Clear Skies would remove 35 million more tons of pollution over the 
next decade than under current law. EPA is also currently regulating 
mercury emissions from municipal waste and medical waste incinerators. 
EPA regulations require that these two types of sources reduce their 
emissions by over 90 percent.

                             LAKE CHAMPLAIN

    Question. In 2002, Vermont and New York completed the revision of 
the 1996 comprehensive pollution prevention, control and restoration 
plan for Lake Champlain, the original 1990 Lake Champlain legislation 
was reauthorized by Congress and signed into law and the 7-member 
Vermont and New York Congressional delegation wrote to you requesting 
additional appropriations for this important work. In fiscal 2004, we 
will again be seeking a significant increase in Lake Champlain funding. 
What are the agency's plans for Lake Champlain related efforts in 2004?
    Answer. The Lake Champlain Basin Program is a very successful 
interstate, interagency, and international partnership. We intend to 
continue our support and funding for the program--our 2004 request 
includes $955,000 for Lake Champlain, which is level funding from the 
2003 President's Budget.
    Activities will focus on several priorities identified in the draft 
revised management plan for Lake Champlain (``Opportunities for 
Action''), including: reducing phosphorus loadings through point and 
nonpoint source control measures and implementation of the recently 
approved TMDL for the lake; increased measuring and monitoring of 
ecological and environmental parameters in order to help gauge 
progress; controlling toxic substances by developing and implementing a 
comprehensive toxic substance management strategy which would emphasize 
pollution prevention opportunities; minimizing human health risks such 
as from blue-green algae; controlling the introduction, spread, and 
impact of nonnative nuisance species via revision and implementation of 
a comprehensive management plan in order to preserve the integrity of 
the Lake Champlain ecosystem, such as by reducing the introduction of 
non-native fish through angler education; and increasing the presence 
of the program in New York State.

                          SUBCOMMITTEE RECESS

    Senator Bond. Since my colleagues have gone on to their 
other responsibilities, I hereby declare this hearing recessed. 
Thank you.
    [Whereupon, at 11:02 a.m., Thursday, March 20, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
