[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 2005

                              ----------                              


                        THURSDAY, MARCH 25, 2004

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-628, Dirksen 
Senate Office Building, Hon. Christopher S. Bond (chairman) 
presiding.
    Present: Senators Bond, Craig, Domenici, Mikulski, and 
Leahy.

                    ENVIRONMENTAL PROTECTION AGENCY

STATEMENT OF MICHAEL O. LEAVITT, ADMINISTRATOR
ACCOMPANIED BY:
        STEPHEN L. JOHNSON, ACTING DEPUTY ADMINISTRATOR
        BENJAMIN H. GRUMBLES, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF 
            WATER
        PAUL GILMAN, ASSISTANT ADMINISTRATOR, OFFICE OF RESEARCH AND 
            DEVELOPMENT
        MARIANNE L. HORINKO, ASSISTANT ADMINISTRATOR, OFFICE OF SOLID 
            WASTE AND EMERGENCY RESPONSE
        PHYLLIS HARRIS, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF 
            ENFORCEMENT AND COMPLIANCE ASSURANCE
        MICHAEL W.S. RYAN, DEPUTY CHIEF FINANCIAL OFFICER
        MARYANN B. FROEHLICH, ASSOCIATE CHIEF FINANCIAL OFFICER
        DAVID A. BLOOM, DIRECTOR, OFFICE OF BUDGET
        ANNA WOLGAST, PRINCIPAL DEPUTY GENERAL COUNSEL
        NIKKI L. TINSLEY, INSPECTOR GENERAL
        JUDITH AYRES, ASSISTANT ADMINISTRATOR, OFFICE OF INTERNATIONAL 
            ACTIVITIES
        JEFFERY R. HOLMSTEAD, ASSISTANT ADMINISTRATOR, OFFICE OF AIR 
            AND RADIATION
        SUSAN B. HAZEN, PRINCIPAL DEPUTY ASSISTANT ADMINISTRATOR, 
            OFFICE OF PREVENTION, PESTICIDES AND TOXIC SUBSTANCES
        KIM T. NELSON, ASSISTANT ADMINISTRATOR, OFFICE OF ENVIRONMENTAL 
            INFORMATION
        DAVID O'CONNOR, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF 
            ADMINISTRATION AND RESOURCES MANAGEMENT
        DONA DELEON, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF 
            CONGRESSIONAL AND INTERGOVERNMENTAL RELATIONS

            OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Good morning. The subcommittee will come to 
order. My apologies. Due to the elevator service around here, 
we are running a little bit late.
    Senator Mikulski has another hearing, which she has to 
attend briefly, but I am going to get started, because it looks 
like we have a number of members here. This morning, the VA-HUD 
Independent Agency Subcommittee will conduct its hearing on the 
fiscal year 2005 budget request for the Environmental 
Protection Agency.
    It is a pleasure to welcome Governor Michael Leavitt, 
Administrator of the EPA to this subcommittee to testify on the 
President's Budget request for fiscal year 2005.
    Governor Leavitt, since this is your first appearance and 
only your fourth month on the job, I look forward to hearing 
your initial impressions of the Agency and its mission.
    We thank you very much for being here today, and assure you 
that the EPA is one of the most important and difficult 
missions of all the Federal agencies. The jurisdiction ranges 
from clean up of Superfund and Brownfield sites to funding 
clean water and drinking water infrastructure programs, as well 
as the very important enforcement of environmental laws.
    A presidential directive issued in December 2003 continues 
to identify the EPA as the lead agency in protecting our 
Nation's water infrastructure from terrorist attacks. I think 
the EPA has provided strong leadership thus far within the 
Federal Government regarding critical homeland security issues. 
There is much more to be done, and we will have some ideas that 
will be considered for legislation in that area.
    Not to put a damper on this morning's proceedings, but 
before I delve into the budget request for EPA for the coming 
year, I should notify you and everybody else that we are 
operating in a very tight budget year. This subcommittee, in 
particular, faces a very steep challenge, with substantial 
funding shortfalls for a number of key programs within our 
jurisdiction, including VA Medical Care, Section 8 Housing 
Assistance, and EPA Clean Water State Revolving Fund.
    Before we get this bill off the floor, we are going to have 
to address all of those, and that means, given the tight budget 
we have, that other things are going to be very difficult to 
fund.
    The administration has asked for an almost $900 million 
increase for the NASA budget in fiscal year 2005 in order to 
implement a very ambitious and costly redirection of resources 
for future manned missions to the moon and Mars.
    It is obvious that we are going to have to make some tough 
decisions, and we look forward to working with you, as members 
of this committee, and for your findings going forward.
    The administration requested $7.76 billion total budget 
authority for the coming year. This is a $606 million decrease 
from the fiscal year 2004 enacted level.
    As with other funding shortfalls in the jurisdiction of 
this subcommittee, the 7 percent reduction in EPA funding 
concerns me greatly, particularly in places where OMB took the 
money out.
    In particular, in both my role as the chairman of the VA-
HUD Appropriations Subcommittee and as a member of the 
Committee on Environment and Public Works, I have made 
investments in our Nation's water infrastructure a priority. I 
can assure you that my colleague, Senator Mikulski, feels the 
same way. Unfortunately, OMB, once again, didn't get the 
message. They have proposed reducing the Clean Water State 
Revolving Fund from $1.35 billion in 2004, to $850 million in 
2005, a reduction of nearly $500 million below the fiscal 2004 
enacted level. That just isn't going to work. I am pleased that 
OMB has at least maintained a level request of $850 million for 
the Drinking Water SRF in 2005.
    Eight hundred fifty million dollars for the Clean Water SRF 
is simply not enough. I cite the EPA's own document, Clean 
Water and Drinking Water Infrastructure Gap Analysis published 
in 2002, indicating a substantial gap in funding will develop 
even if the Nation's current clean water/drinking water systems 
maintain current spending levels.
    The Gap Analysis estimates that the United States will need 
to spend $450 billion--billion dollars in capital needs for 
clean water and drinking water in the next 20 years. I think we 
need to find additional resources and perhaps new approaches to 
address these important needs. Nevertheless, at a minimum, we 
need to maintain funding for both of these revolving funds, at 
least at the current year's level.
    I am also interested in the most prominent air quality 
issue in the last few months, which has been what to do about 
emissions from coal-fired electric power plants.
    The administration has proposed changes to New Source 
Review, and has asked Congress to modify the Clean Air Act 
requirements for power plants by passing Clear Skies or 
multipollutant legislation. Further, EPA proposed a rule 
permanently to cap and reduce mercury emissions from power 
plants. I congratulate the administration on submitting both 
legislation and regulations which seek to maintain the economic 
viability of U.S. energy producers, while meeting the air 
quality standards of the Clean Air Act; nevertheless, this will 
remain an area of great concern and controversy where, despite 
continued improvements to the quality of our Nation's air, as 
of December 2002, some 107 areas, with a combined population of 
almost 100 million people, were classified as non-attainment 
areas for one or more of the national ambient air quality 
standards.
    I look forward to your leadership in this area. We are 
obviously going to have to develop new technologies to deal 
with this problem, because we cannot afford misguided Federal 
policy forcing coal out of our electric generating capacity, 
using instead natural gas, because natural gas is a vital 
component. The excessive demand imposed on our natural gas 
supplies by providing new electric generating only from natural 
gas has resulted in a significant problem.
    This high price and limited supply of natural gas is 
outsourcing natural gas industry jobs from the United States. 
Make no mistake about it, we are driving jobs out of the United 
States, because natural gas is in such short supply. Industries 
are moving overseas and taking their jobs with them because 
other countries do not artificially inflate the demand for 
natural gas and constrict the supply.
    We are hearing about a number of new possible means of 
developing clean burning coal. I have been presented 
information on electrocatalytic oxidation technology, which has 
the potential for reducing all these pollutants at less cost 
and less environmental damage than the current scrubbers, but 
make no mistake about it, we have 250 years supply of coal. 
We've got to learn how best to do it.
    EPA also faces significant challenges in cleaning up the 
1,240 Superfund sites on the National Priorities List (NPL), 
and the 65 sites proposed to make the NPL.
    The administration is requesting $1.381 billion for the 
Superfund program in fiscal year 2005, which is $124 million 
above the fiscal year 2004 level. The bulk of the $124 million 
increase will be used for additional construction starts. There 
is no question, the Superfund program could use increased 
funding of clean-up sites currently on the NPL, and those 
waiting to make the list.
    Last year, I pointed out that only 16 percent of the funds 
in the Superfund program go to cleaning up sites. And I have 
asked in the last year's Senate report that the EPA find out 
how we could put more money into cleaning up. I know there has 
to be money for enforcement, and that provides money for the 
cleanup, but I look forward to working with you to find out how 
we can make sure that these dollars we appropriate for 
Superfund are actually cleaning up the Superfund sites. Failure 
to do so is causing significant problems in the Superfund 
program.
    I hope EPA will make every effort to allocate the resources 
within the Superfund program with a goal of both diminishing 
immediate health risks to the communities surrounding these 
hazardous sites, and completing construction as swiftly as 
possible.
    I note that an internal review of the Superfund program is 
taking place currently at the EPA to determine whether 
resources are being used efficiently. I look forward to being 
briefed on the results of this review. Governor, I look forward 
to working with you on ways to make this program more 
efficient.
    I plan to introduce an Environmental Enforcement and 
Security Act of 2004 within the next several days. The 
legislation is intended to address concerns raised by a recent 
EPA Inspector General report, internal EPA reviews, and 
numerous press reports that EPA is straining to meet its 
environmental enforcement duties and its new post-9/11 Homeland 
Security responsibilities.
    I think that the EPA's efforts should be funded from the 
robust Homeland Security budget, because it doesn't look like 
we're going to have the resources we need with our budget 
allocation to get the job done solely in this Committee.
    The bill would authorize additional funds to add 50 new 
criminal enforcement agents and 80 new Homeland Security 
special agents. It would authorize EPA to fund $100 million in 
grants for physical security measures to protect our Nation's 
water systems. Again, I think much more will need to be done 
but I am concerned that we first need a comprehensive 
assessment of our water infrastructure security needs, and then 
a comprehensive plan that will ensure the necessary funds will 
be used effectively and efficiently.
    Finally, I want to turn to a critical issue, to jobs, very 
briefly. Last year we had an issue, with proposed California 
air regulations to require catalytic converters on all small 
engines. This would have raised significant safety concerns, 
because the Fire Marshal's Fire Chiefs, even in California, 
said that a 1,100 degree catalytic converter on a leaf blower, 
chain saw, or lawn mower causes significant fire danger.
    We added an amendment that would say to EPA: Before you 
approve California's rule, you must take into consideration the 
safety concerns. But beyond that, and just as important, we 
believe that the EPA could achieve the goals sought by the 
California Air Regulation Board, and do it on a nationwide 
basis by proposing an effective, workable rule for all small 
engines.
    Were the California Air Resources Board regulation to go 
into effect nationwide, it would outsource 22,000 jobs that 
would be moved to China the next day as the small engine 
manufacturers had to build new plants, and they would build 
them in China, not in the United States. We don't need another 
governmental forced outsourcing of jobs.
    So, Governor, I ask that the EPA pay special attention to 
this, make sure we clean up the air, but don't drive jobs out 
of the country as we do it.
    With that, I normally would turn to my Ranking Member, and 
I would ask our distinguished Senator from Vermont if he would 
be kind enough to allow me to allow Senator Craig to go 
forward. He has another commitment. If he is brief, can you----
    Senator Leahy. First, I would be happy to say that Senator 
Craig was here earlier than I was. I would be happy to do that, 
but I do have a statement afterward.
    Senator Bond. We are looking forward to your statement. We 
don't want you to be rushed.
    Senator Leahy. The Governor is looking forward to my 
statement.
    Senator Bond. Let me turn to Senator Craig.

                    STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Mr. Chairman, thank you very much. Governor, 
Administrator Leavitt, welcome before the committee. First of 
all, again, let me publicly thank you for taking this position. 
It is a very difficult one to have in any administration 
because of the level of expectation of the American people as 
it relates to our environment, and the reality of implementing 
those expectations. I think our chairman has just spoken to 
some of that.
    I handed him, while he was talking about gas costs and 
clean air, and driving this country to use gas generation, and 
then not allowing us to produce that gas, especially out in 
your part of the country, and in my part of the country, the 
Industrial Energy Consumers of America Report came out a couple 
of days ago.
    In the last 46 months, compared with the prior 46 months, 
because we are not producing gas, we are denying offshore 
development, onshore development all in the name of the 
environment, while demanding gas be used all in the name of the 
environment. This is an interesting statistic.
    The 46-month natural gas crisis has cost U.S. consumers 
$130 billion. How in the world can we get an economy going, and 
everybody wants that to happen, when we are sucking it dry of 
the resources necessary because we are demanding more for gas?
    And that breaks down, it is interesting, to industrial 
consumers $66 billion more, residential consumers $39 billion 
more, and commercial consumers $25 billion more.
    In your State of Utah and my State of Idaho, that means 
that the average farmer's cost of production, as an input cost, 
will go up 30 percent this year. His fertilizer has gone up 100 
percent. Production of food will drop in our country as a 
result of that.
    And guess where those farmers will come? Here, to their 
Nation's capital, to get help. I talked with a banker in Idaho 
yesterday with substantial farm loans, he has called all of his 
branch banks and said: You will need to anticipate increasing 
your lines of credit to your agricultural producers by at least 
25 to 30 percent this year just to offset the cost of energy.
    Shame on us, the Congress of the United States, for 
standing in the way of production in this country in many 
instances fallaciously in the name of the environment.
    Have you got a job to do? Oh, yes, you have, but so do we, 
and we haven't done it.
    Am I passionate about this? Yeah, when it runs people out 
of business, when we are using gas for electrical generation, 
and it ought to be used for heat, one of the most inefficient 
ways to use gas, but the Clean Air Act drove everybody there, 
and then we shut down production. Dumb us. But that is the 
reality of where we are.
    I don't know that I could get anymore passionate about it, 
and if you want to hear more, I'll be happy to deliver. Point 
made.
    Beyond that, a couple of other issues you'll face, 
Governor, as you work. They are not just Western issues, but in 
many instances, they are unique to the geology of the West.
    It's a little thing called arsenic in drinking water, and 
drinking water standards. Now, I know that these new standards 
you've inherited, but in your State of Utah, and in my State of 
Idaho, where the geology oftentimes finds itself ingrained in 
decaying granitics and granitic structures, arsenic levels are 
oftentimes extremely high.
    A little community of Castleford, Idaho, just across the 
border from Utah, is going to see its compliance costs go up 
three times its entire city budget just to comply, and it 
can't, and it won't, unless we help them. And right now with 
the budget the chairman has talked about, we can't help them. 
It just so happens the people in Castleford have one of the 
longest lifespans of any city in our State. Many live there 
into their 90's, but they've been drinking high arsenic levels 
all of their lives because it is natural in the water of that 
community.
    But we got awfully smart here in the emotional politics of 
the word ``arsenic,'' instead of the reality of the science, 
and now the science is coming in, and I would suggest that the 
science does not support the standards. But touch it 
politically, how dare us? Watch the yelling on the floor of the 
United States Senate, and the headlines if you dare touch that, 
Mr. Administrator.
    That is the reality we face, and that is true in Idaho, 
Utah, across the United States. We have asked these communities 
to do something they cannot do. And the question is do they 
need to do it?
    We have not even stopped to ask that, we've just made that 
political assumption, and not a scientific assumption.
    Lastly, the Chairman talked about Superfund. We've got a 
big Superfund site in north Idaho. We battled that issue for 
years. EPA has gone out there, and their people have taken 
residence hoping they could continue to live in that beautiful 
area where the Superfund site is until their kids graduate from 
college.
    The only problem is some of them came with 4- and 5-year-
olds, and so they want to stay for a long time. It is the most 
beautiful part of our State, and it is unique that it is a 
Superfund site, because of the heavy metals that are a product 
of the old mining era.
    I believe they phonied the science, and as a result of that 
I got an appropriation with the help of this committee, we have 
the National Academy of Science out there now in an impartial 
way reviewing the science. Watch us. Watch the National 
Academy, Mr. Administrator. I think it might be a lesson 
learned as it relates to the application of Superfund.
    Oh, yes, we have some problems, and, oh, yes, they ought to 
be cleaned up. But largely the work is done out there, and 
Mother Nature is now doing a better job in her recuperative 
powers than is the human; but yet $400 million still wants to 
be spent by those who want to continue to work there until 
their kids are through college, $400 million of moving earth 
around, and disturbing the environment beyond what man had 
already disturbed. It really is an issue that ought to be 
addressed.
    The prior administrator, Ms. Todd Whitman, did the right 
thing, and did a unique thing, she developed with us a 
cooperative management relationship between EPA and the State 
of Idaho so that we think we can get greater efficiencies than 
if it is simply prolonged and prolonged and prolonged by the 
Federal bureaucracy.
    We hope we can accomplish that. We think we will, and will 
need your help. At the same time, goodness sakes, we need a lot 
of common sense applied to areas where it doesn't exist. That 
is why we've asked the National Academy to come in, and we 
asked EPA to stand down while we review their science to 
determine whether they are right, or whether they are wrong, or 
if it simply fits the agenda of somebody who would like to 
continue to live in that beautiful part of the country.
    Thank you. Glad to see you. Lots of challenges, little 
resource to do it with. Good luck.
    Senator Bond. Thank you very much, Senator Craig. I should 
have noted, when we were talking about natural gas, it is not 
only the cost of energy, but the first number in the three-
number fertilizer, the end number, comes from natural gas we 
are seeing, we are seeing costs of fertilizer going up--I buy 
several hundred pounds, and it is a small amount I buy, I see 
the tremendous increase in the cost of fertilizer because of 
natural gas prices.
    And natural gas-using consumers all across the Nation are 
being hit with huge natural gas bills for heating this year 
because of the natural gas constricted supply and increased 
demand.
    But with that, now let me turn to our friend from Vermont. 
Senator.

                 STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Thank you, Mr. Chairman, and I have--
Governor, I have been looking forward to this hearing. I am 
sure you have, too. Thank you for coming. You probably find 
that we are not all in total agreement on this committee. You 
understand the personal friendships of those of us who are 
here.
    I do want to start off by thanking you for recognizing the 
importance of Lake Champlain by including it in EPA's budget 
proposal. Lake Champlain is the largest body of fresh water in 
this country outside of the Great Lakes. It is a beautiful 
spot. I invite you to come up and visit any time you'd like.
    Cleaning it up has been one of my top priorities and one of 
Vermont's top priorities, Governor.
    There are different political parties, but we stand 
shoulder to shoulder in our efforts to clean it up, and I think 
I could speak for him, too, and say thank you for including it 
in the budget.
    I also applaud you for the tone you set assuming your 
duties at EPA. Tones are important anywhere. For us, the actual 
notes can sometimes be even more important than the music. We 
talked about the Clean Air Act. I was here when it was first 
put together, and it was a bipartisan effort.
    You had Republicans like Senator Stafford of Vermont and 
other lead members of the Republican party, and of the 
Democratic Party working closely together on a series of 
compromises to pass the Bill. Today, I am concerned that the 
administration is trying to roll back the Clean Air Act, and to 
let large pollutants off the hook when it comes to toxic 
emissions like mercury.
    My concerns, if these rollbacks succeed, are that we will 
undermine not only decades of work restoring Lake Champlain, 
but countless other rivers, lakes and streams all over the 
country. And there is, as you have seen in the press, heard on 
the news, there is a strong bipartisan and growing outcry about 
the administration's latest retreat from the Clean Air Act in 
your mercury proposal.
    And these concerns are moving so swiftly, they may reach 
critical mass here on Capitol Hill. Let me give you this chart, 
and this is why the objections are so strong. You could see in 
the dark red, it shows mercury levels across the country.
    Now, this is an EPA chart. The top level, of course, is 
Canada. Here in Vermont, Maine, New England, you can barely see 
us. You can't even see Vermont. We, in the Northeast, have been 
a dumping ground for coal-fired power plants in the Midwest. We 
have been that way for decades.
    In drafting the Clean Air Act, the idea was to work out a 
series of grandfather clauses so that the Midwest power plants 
would have time to improve and cut down emissions. Well, now, 
we see what has happened.
    We all believe in family values, I know you do, I do, but 
it's not a family value to tell a pregnant woman that the 
mercury level may be too high for the child she is bearing. And 
for those of us who have children and grandchildren of a young 
age, they're developing their neurological systems and the 
mercury level that may possibly be safe for you or for me is 
not for them. These are not family values.
    And the EPA's new proposal to reduce mercury emissions from 
these plants was supposed to bring power plants into the 21st 
century, and clean up their emissions. It doesn't do that. It 
falls far short of what is possible and what is necessary. 
There has been a lot of public relations efforts to convince 
Americans that more mercury in their water, food and 
environment over a long period of time is the best we could do. 
That doesn't work.
    All you have to do is pick up any newspaper in this 
country, any article, or turn on the TV, turn on the radio, and 
see the concerns about mercury.
    What has come up is the fact that this administration's 
close collusion with polluting industries in devising its 
policy on mercury. This raises serious concerns. Most of these 
things happened before your tenure, but I'm raising this now. 
I'll be very blunt, I think the administration has a 
credibility problem on its approach to the Clean Air Act and to 
mercury pollution.
    Look at the new warnings about mercury risk from tuna, 
increasing numbers of pregnant women with unsafe mercury 
levels, and newborns with high mercury levels. Now, this is 
bringing about a real strong public demand for action. Mercury 
is the last major toxin without a containment plan.
    I remember back when we talked about removing lead from 
gasoline, we heard more dire predictions from energy companies, 
from everybody else involved. Well, we did it. It turns out it 
was one of the smartest environmental steps we've ever taken.
    If we don't do something now to cut mercury emissions 
quickly, we will look back years from now and ask why we let 
polluters off the hook for so long.
    I am very troubled by what has come forward now about the 
number of things in the mercury proposal that were written by 
industry, not by EPA. You've got an industry-ghostwritten, 
scientifically unjustifiable policy on mercury. Thank you, Mr. 
Chairman.
    Senator Bond. Thank you very much, Senator Leahy. Now, Mr. 
Administrator, our policy is to accept your full written 
statement for the record, which we appreciate receiving, and we 
would ask you to highlight those points that you think are 
particularly appropriate. I commend you and your administration 
for taking the steps for the first time to do something about 
mercury, and I know you have many positive thoughts to share 
with us, and we would welcome your oral testimony. Thank you, 
sir.

                    STATEMENT OF MICHAEL O. LEAVITT

    Administrator Leavitt. Thank you, Mr. Chairman, and Members 
of the committee. We are delighted to be here today to present 
the President's fiscal year 2005 budget. I will be brief, 
because I am anxious to get to the discussion. I am interested 
in pursuing the discussion that the Senator from Vermont, 
Senator Leahy, raised with respect to mercury, and there is 
some interest and passion for me as well. I'm interested to 
share my thoughts with you, and hearing more of yours.
    The President's given me a fairly direct responsibility. He 
told me to clean the air, purify the water, make certain that 
the land was better cared for, but he told me to do it in a way 
that would preserve the economic competitiveness of this 
country. I----
    Senator Bond. I think there is an old joke about the 
alternative is to build a bridge to Hawaii, and that is an 
easier task.
    Administrator Leavitt. It is not without challenges, but I 
am also persuaded that it is achievable. I have been reviewing 
recently the material that will be used in the celebration of 
this agency's 34th anniversary. It was formed on Earth Day in 
1970. Since that time, this country has seen substantial 
environmental progress and economic progress.
    The pioneers of this environmental movement used a command 
and control strategy that may have been the only way at that 
point to move the country toward environmental progress. But 
today in my testimony, you'll hear a mantra that we are using 
at the Environmental Protection Agency: to find a better way.
    We believe a better way is when we use technology to change 
the equation from what before was improbable to what now is 
possible. A better way is when we use market incentives to 
speed the acceptance of new and higher standards. We think a 
better way is when we use collaborative network building to 
solve problems, like some of those that you have spoken of 
today.
    A better way is when we focus on results, and not just 
rewarding programs. Markets, technology, building collaborative 
networks, focusing on results, that is what you'll hear from me 
today. I will use illustrations, like the Interstate Air 
Quality Rule that has been mentioned already, a 70 percent 
reduction on NOX and SOX, and I'll talk 
about the Nation's first effort ever to regulate mercury from 
power plants, the largest source, and using a better way to do 
that.

                           PREPARED STATEMENT

    Again, you'll find me today representing the Agency's 
objective to increase the velocity in environmental progress, 
but to do it in a way that will maintain our Nation's economic 
competitiveness, and I look forward to the discussion.
    [The statement follows:]

                Prepared Statement of Michael O. Leavitt

    Mr. Chairman and members of the committee, I am pleased to be here 
to discuss President Bush's fiscal year 2005 budget request for the 
Environmental Protection Agency. The President's fiscal year 2005 
budget request of $7.8 billion provides funding necessary for the 
Agency to carry out our mission--to protect human health and safeguard 
the natural environment--efficiently and effectively. Given the 
competing priorities for Federal funding this year, 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 our air, cleansing our water, and protecting our land 
efficiently and effectively, while sustaining economic growth. The 
request promotes EPA's goals by facilitating collaboration, harnessing 
leading-edge technology, and creating market-based incentives for 
environmental protection.
    This Agency remains committed to working with our geographic and 
regional partners and focusing on our core programs to protect human 
health and the environment. Of the $7.8 billion budget, $4.4 billion--
the highest level in EPA history--is devoted to the Agency's core 
regulatory, research, and enforcement activities, and State program 
grants. The President and I both believe that enhancing EPA's core 
programs is 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.

                      CLEAN AIR AND GLOBAL CHANGE

    The fiscal year 2005 President's Budget requests $1.0 billion to 
fund our clean air and global change programs, thereby helping to 
ensure that air in every American community will be clean and safe to 
breathe. The budget includes a large increase for EPA's Clean School 
Bus USA grant program to $65 million for projects that reduce diesel 
emissions from school buses through bus replacement or retrofitting. 
Clean School Bus USA helps ensure that school children have the 
cleanest transportation possible. This program is an additional tool 
for communities to develop localized solutions for environmental 
protection to meet new air quality standards for particulate matter.
    This budget also supports the President's Clear Skies initiative, 
which draws on EPA's experience to modernize the Clean Air Act. Clear 
Skies legislation would slash emissions of three power plant 
pollutants--nitrogen oxide, sulfur dioxide, and mercury--by 70 percent. 
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. 
The power plant reductions required under Clear Skies and our new 
diesel engine regulations will bring most of the country into 
attainment with the new ozone and PM air quality standards: by 2020, 
only 27 counties out of 263 will need to take further steps to be in 
attainment for ozone; only 18 counties out of 111 will need to take 
further steps to be in attainment for PM. 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. Next month, I will formally designate 
counties that will be out of attainment with the new ozone standards; 
in December, I will formally designate counties that will be out of 
attainment for particulate matter. These designations start the clock 
ticking on the often controversial and resource-intensive State 
planning process. By 2007, States must have plans to get into 
attainment approved by EPA. So, the budget would also support the 
Interstate Air Quality Rule we proposed in December and intend to 
finalize this year. This rule is similar to Clear Skies in that it 
requires an approximate 70 percent reduction in sulfur dioxide and 
nitrogen oxide from the power sector. However, due to authority under 
the Clean Air Act, its reach is limited to States in the eastern half 
of the United States that contribute pollution to neighboring States. 
Although this rule would allow us to take an enormous step forward in 
providing cleaner air across much of the country, it would not do so as 
fast or as effectively as would Clear Skies.
    EPA's request for clean air programs includes $313 million for 
clean air grants to support our collaborative network of States and 
Tribes. These resources will assist States, Tribes, and local 
governments in devising additional stationary and mobile source 
strategies to reduce ozone, particulate matter, and other pollutants.
    The clean air and global change request also includes $130 million 
to meet our climate change objectives by working with business and 
other sectors to deliver multiple benefits while improving overall 
scientific understanding of climate change and its potential 
consequences. The core of EPA's climate change efforts are government/
industry partnership programs designed to capitalize on the tremendous 
opportunities available to consumers, businesses, and organizations to 
make sound investments in efficient equipment and practices. These 
programs help remove barriers in the marketplace, resulting in faster 
deployment of technology into the residential, commercial, 
transportation, and industrial sectors of the economy.

                          CLEAN AND SAFE WATER

    In fiscal year 2005, this budget requests over $2.9 billion for its 
water programs. EPA's fiscal year 2005 budget focuses on four 
strategies toward achieving the Nation's clean and safe water goals. To 
better address the complexity of the remaining water quality 
challenges, EPA will promote local watershed approaches to execute the 
best and most cost effective solutions to local and regional water 
problems. To protect and build on the gains of the past, EPA will focus 
on its core water programs. To maximize the impact of each dollar, EPA 
will continue to strengthen vital partnerships and collaborative 
networks with States, tribes and local governments, and others in 
working to achieve our shared goal of improving the Nation's waters. To 
leverage progress through innovation, EPA will promote water quality 
trading, water efficiency, and other market based approaches.
    The budget makes a significant investment in a new water-quality 
monitoring initiative to solve water quality monitoring problems. 
Through this investment, EPA can make the most of scarce resources 
through information-based management, using tools such as prevention, 
source water protection, watershed trading, and permitting on a 
watershed basis. Monitoring is the foundation of information-based 
management and it is imperative that the data and information gaps be 
closed as quickly as possible. The budget provides a total of $20 
million to strengthen State and tribal water quality monitoring 
programs, improve data management systems and improve monitoring tools. 
Of that amount $17 million in grants provides direct assistance to 
States and tribes. Three million dollars of this funding will provide 
technical assistance to help States and tribes develop statistically 
representative water quality monitoring programs, a tool that will 
eventually allow EPA to make a national determination of water quality 
and ensure resources target the highest priority problems.
    States are struggling with implementation of the National Pollution 
Discharge Elimination System (NPDES) permitting programs, as 
demonstrated by withdrawal petitions and permit backlogs. Compounding 
the problem is that the regulated universe increased tenfold due to new 
requirements for concentrated animal feeding operations and storm water 
runoff. The Agency requests a $5 million increase in Section 106 Grants 
to help States issue timely and effective NPDES permits. By providing 
additional resources in the form of State grants, EPA will help States 
and tribes meet obligations under the revised rule and help reduce 
pollutants and make necessary improvements in water quality.
    EPA is also advancing water quality trading in voluntary 
partnerships on a watershed basis. It capitalizes on economies of scale 
and cost differences among sources. Trading allows one source to meet 
its regulatory obligations by using pollutant reductions gained by 
another source and provides incentives for voluntary reductions at a 
reduced cost to all. It provides an opportunity for innovative 
solutions to complex water quality problems. To encourage the 
implementation of water quality trading programs, the budget includes 
$4 million in the Targeted Watersheds Grants program.
    The President's Budget continues its commitment to help provide 
affordable financing for States' water infrastructure needs. The Budget 
provides $850 million for the Clean Water State Revolving Fund, which 
will ultimately result in a $3.4 billion long term revolving level, 
helping communities across the country clean up their wastewater. It 
also provides $850 million for the Drinking Water State Revolving Fund, 
resulting in a long term revolving level of $1.2 billion and protecting 
public health. However, growing populations are increasing demands on 
water resources, and addressing these demands, along with the Nation's 
multi-billion dollar water infrastructure gap, will require creative 
solutions at the local, State and Federal level. As part of a long-term 
strategy to develop sustainable infrastructure EPA will work in 
partnership with States, the utility industry and others to enhance 
operating efficiencies and mitigate infrastructure needs by encouraging 
efforts to reduce water demand and wastewater flows, potentially 
downsizing capital needs. High priority activities in support of this 
effort include a new water efficiency labeling program and a 
sustainable infrastructure initiative that will promote best practices 
such as full cost pricing.

                   LAND PRESERVATION AND RESTORATION

    This budget continues EPA's commitment to clean up toxic waste 
sites with $1.4 billion for Superfund. This reflects a $124 million 
increase over the fiscal year 2004 appropriated level for Superfund's 
remedial program, which will allow for 8-12 additional construction 
starts in 2005 and a similar number of additional completions by 2006. 
As of January 2004, cleanup construction projects were underway or 
complete for over 93 percent of National Priority List (NPL) sites.
    The President's Budget also includes an additional $26 million to 
strengthen EPA's partnership with States to monitor underground storage 
tanks. Recognizing that States have primary responsibility for 
monitoring tanks, issuing permits, and enforcing regulations, the 
additional grant money will provide funds for States to inspect a 
larger universe of federally regulated underground storage tanks on a 
more frequent basis.

            PROTECTING AMERICA'S COMMUNITIES AND ECOSYSTEMS

    EPA is committed to building and enhancing effective partnerships 
that allow us to safeguard human populations and ecosystems across 
America. To help protect and restore land-based ecosystems, this budget 
provides $210.7 million, over $40 million more than the level provided 
in the fiscal year 2004 Consolidated Appropriations bill, for the 
Brownfields program, one of the administration's top environmental 
priorities. The Brownfields program will draw on these additional 
resources to provide grants to State and Tribal partners to fund 
cleanup of lightly 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.
    EPA's budget requests resources to protect individual ecosystems 
across the country, including a total of $30 million for the Chesapeake 
Bay. Ten million dollars of this total will be provided through the 
Targeted Watersheds Program for a pilot program to help municipalities 
reduce nutrient discharges to the Bay through collaboration with 
nonpoint sources. EPA's collaborative partnership in Chesapeake Bay 
protection, which serves as a model for similar endeavors, includes 
Maryland, Virginia, Pennsylvania, the District of Columbia, the 
Chesapeake Bay Commission, and participating citizen advisory groups.
    The Great Lakes are the largest system of fresh surface water on 
Earth, containing roughly 18 percent of the world's supply. The Great 
Lakes basin also is home to more than one-tenth of the population of 
the United States, one-quarter of the population of Canada, and heavy 
concentrations of industry. Over the years, industrial development has 
contaminated sediments throughout large areas of the lakes with toxics 
such as polychlorinated biphenyls (PCB's) and heavy metals, putting 
large populations and the tremendous water resource at risk. EPA's 
Great Lakes Legacy program provides funding to remediate contaminated 
sediments, keeping them from entering the food chain where they may 
cause adverse effects to human health and the environment. In 2005, 
this administration will demonstrate its commitment to the health and 
well-being of the region and its citizens by proposing to fund the 
Great Lakes Legacy program at $45 million, nearly five times greater 
than previous levels.
    To ensure that the American public will continue to enjoy one of 
the safest and most affordable food supplies in the world, the 
President's budget continues to meet implementation challenges of the 
Food Quality Protection Act (FQPA). The Agency's implementation of FQPA 
focuses on science-driven policies for pesticides review, seeks to 
encourage the development of reduced risk pesticides to provide an 
alternative to the older versions on the market, and works to develop 
and deliver information on alternative pesticides/techniques and best 
pest control practices to pesticide users. The Agency is also working 
to help farmers' transition to safer substitutes and alternative 
farming practices while minimizing production disruptions. Reassessing 
existing tolerances ensures food safety, especially for infants and 
children, and ensures that all pesticides registered for use meet 
current health standards.

                COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP

    This budget also requests $751 million to promote and insure 
compliance with environmental laws, and to foster and support the 
development of pollution prevention strategies and innovative 
approaches to environmental protection. Since EPA's inception over 30 
years ago, many environmental improvements in our country can be 
attributed to a strong set of environmental laws, and to our efforts to 
ensure enforcement of those laws. The Agency uses a ``smart'' 
enforcement approach, employing a mix of compliance assistance, 
incentives and monitoring strategies, supported by strong, effective 
civil and criminal enforcement and litigation teams. This ``smart'' 
approach maximizes the use of the Agency's resources and personnel, and 
allows us to quickly and effectively adapt both to emerging 
environmental threats and to changes in law and policy.
    The President's fiscal year 2005 request also continues to support 
results-based, innovative, and multimedia approaches to pollution 
prevention and natural resource conservation by government, industry, 
and the public. Increasingly, Americans are recognizing the value of 
their own pollution prevention efforts, and the contributions made 
through sustainable business practices, to the preservation and 
restoration of community and national environmental resources. In 
addition, EPA will continue to support initiatives targeted toward 
improving compliance at public and private facilities, empowering State 
and Tribal environmental programs, encouraging corporate stewardship, 
and better informing the public.

                             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. In fiscal year 2005 EPA will strengthen the role 
of science in decision-making by using sound scientific information and 
analysis to help direct policy and establish priorities. This budget 
request includes $572 million for the Office of Research and 
Development to develop and apply strong science to address both current 
and future environmental challenges. These resources support a balanced 
research and development program designed to address administration and 
Agency priorities, and meet the challenges of the Clean Air Act (CAA), 
the Safe Drinking Water Act (SDWA), the Federal Insecticide, Fungicide, 
and Rodenticide Act (FIFRA), the Food Quality Protection Act (FQPA), 
and other environmental statutes. The budget request includes important 
new or increased research efforts in the following areas: computational 
toxicology, data quality, and EPA's Integrated Risk Information System 
(IRIS)--an EPA database of Agency consensus human health information on 
environmental contaminants.

                 ACCELERATING ENVIRONMENTAL PERFORMANCE

    To further promote environmental stewardship with localized 
solutions, the Agency requests $1.25 billion, the highest level ever, 
for categorical grants to support core State and Tribal environmental 
programs. A new State and Tribal Performance Fund provides $23 million 
in competitive grants to develop projects with tangible, performance-
based environmental and public health outcomes that can be models for 
implementation across the Nation. The administration believes that the 
best way to ensure strong, effective programs is to promote 
accountability, competition, and performance, and these funds will 
allow States and tribes that can link their proposed activities to 
health and environmental outcomes to receive additional assistance. EPA 
will also continue its emphasis on working with Tribal governments to 
build the capacity of their environmental programs.

             REWARDING RESULTS AND INCREASING PRODUCTIVITY

    The President's proposed EPA budget for fiscal year 2005 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 facilitating collaboration, harnessing 
leading-edge technology, creating market-based incentives, and 
ultimately finding a better way for environmental protection. 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.

                       STATE REVOLVING LOAN FUNDS

    Senator Bond. Thank you very much, Mr. Administrator, and 
let me begin with some questions. We have discussed water 
infrastructure funding. I think that funding our Nation's water 
infrastructure is one of the really pressing issues facing EPA. 
I have seen communities that don't have clean water. They 
aren't able to clean up their waste water, and I know what an 
impact that has on the health of their citizens, not just the 
environment.
    I was very disappointed in the OMB recommendation on the 
EPW panel. I have heard people complain that this 
administration has cut the SRF's. I pointed out to them that 
OMB has done this traditionally.
    We have people in OMB who apparently have never seen 
problems with waste water that is not cleaned up. I would be 
interested in any suggestions that the administration has on 
how States and localities can find resources to meet this 
country's water infrastructure needs. Are there other things 
that are in addition to SRF's? How are these SRF's being used? 
How can we deal with the arsenic problem that Senator Craig has 
raised?
    Administrator Leavitt. Senator, I feel some confidence that 
your sensitivity on this matter most likely has its root when 
you were governor. It is certainly when I learned the value of 
the State Revolving Loan funds to small communities like those 
that have been mentioned already today.
    In our States, most States, small communities, and even 
moderate to large size communities, have depended on State 
Revolving Funds. Now that I've become Administrator of the 
Environmental Protection Agency, and see the demand, 
particularly in some of our large cities for the retooling of 
their entire systems, the need has become quite evident to me.
    It is also clear that there is a gap in our approach thus 
far as a Nation in dealing with this. I've had a chance to 
study the history of this problem going back to the passage of 
the major underpinning legislation when the country at the 
Federal level made huge investments, in the neighborhood of 
$65, $70 billion to create the systems, and they've had a good 
impact. But we're now at the point where just like our 
highways, many of them are beginning to need repair.
    The question that is raised by this discussion, is what is 
the partnership? It will clearly be a partnership between the 
Federal Government, the State governments and local 
governments, and the rate payers and we are anxious to have 
that conversation. It will be a function of Federal funding. It 
will be a function of local funding and State funding, but 
there are other things we can do.
    I think the point you make about using the funds 
differently, I am very anxious to have a conversation about 
using greater leverage in the funds that we've put forward.
    How can we stretch the availability of Federal funds? How 
can we work with local water districts to employ rate systems 
that provide incentives for conservation?
    Those are all part of this bigger conversation. We do think 
that it is an important area, and look forward to having a 
discussion with you and the committee.

                              MERCURY RULE

    Senator Bond. Governor, I may have another several 
questions pertaining to SRF's that I'll ask on the second 
round, but I thought it is important to ask this question. I 
want to hear your responses, because I know this is going to be 
a controversial area.
    This administration is the first administration to propose 
to control mercury from power plants; and that seems to be 
ignored by the critics, but there are lots of questions raised 
about the way that the regulation was adopted. I would welcome 
your comments on the Agency's commitment to reduce mercury 
exposure.
    Administrator Leavitt. Senator, I am anxious to reply, and 
am looking forward to the conversation further as we proceed. 
It is important to look at the history of this. The requirement 
for the Environmental Protection Agency to look at mercury came 
as a part of the Clean Air Amendments passed in the early 
1990's. The Agency was to study mercury from power plants and 
decide whether it was a toxin that needed to be regulated in 
the early--in the mid-1990's, I think 1994 was the deadline. 
The Agency did not meet that deadline. They were sued by an 
environmental organization.
    A consent decree was entered into in I believe, in 1996 or 
1997. That deadline was missed, and they extended it. The next 
deadline was missed, and they extended it, and then 10 days 
prior to the time this administration took office a declaration 
was made that mercury from power plants needed to be regulated. 
It was left to this administration, whoever it was that would 
be in my chair, to set the standard.
    That standard was to be proposed on December 15, 2003. That 
is an obligation that I took very seriously. Among the first 
decisions that I made as Administrator was that we would meet 
that deadline, we would establish the standard. On December 15, 
we filed a proposed rule that would outline that standard. That 
was the beginning of a conversation.
    We are in the midst now of a national comment period to 
hear from tens of thousands of people on their feelings 
regarding mercury.
    I would point out that recently, the Agency did join with 
the Food and Drug Administration to highlight the relationship 
of mercury in fish. Basically, the message was fish is good, 
mercury is bad, and we've got to do all we can to reduce it.
    The process we are in right now is to set that standard. We 
intend to set the standard as prescribed in the law, using the 
best available technology. We intend to do it in a way that is 
most efficient. We intend to do it to the furthest degree that 
we can. I feel some optimism that for the first time in this 
Nation's history, we will regulate mercury from power plants, 
and it will occur this year.
    Senator Bond. Thank you very much, Governor. We have been 
joined by my Ranking Member, Senator Mikulski. Are you ready to 
offer us your comments and first round of questions?

                STATEMENT OF SENATOR BARBARA A. MIKULSKI

    Senator Mikulski. Thank you very much, Mr. Chairman. And I 
apologize both to you and to Administrator Leavitt. I was 
testifying at a flood insurance hearing discussing the need to 
both reauthorize and reform it. My State suffered terrible 
damage during Hurricane Isabel. We were doubly hit, one by the 
hurricane, and again by some of the flawed practices of flood 
insurance.

                           PREPARED STATEMENT

    Mr. Chairman, in the interest of time, I am going to ask 
for unanimous consent that my full statement go into the 
record.
    Senator Bond. Without objection, we would love to hear it, 
but we will accept it for the record.
    [The statement follows:]
           Prepared Statement of Senator Barbara A. Mikulski
    I would like to welcome Administrator Mike Leavitt to his first 
hearing before the subcommittee. The EPA serves the very important 
mission of protecting human health and the environment. So I am 
troubled that the 2005 budget request for the EPA is just $7.76 
billion--a $610 million cut from the 2004 level. This is a cut of 7 
percent.
    A robust EPA budget is an opportunity to make America safer, 
stronger and smarter. It makes America safer by cleaning up our air, 
water and land. It makes us stronger by creating jobs and economic 
development. And it makes us smarter by helping to develop new 
environmental technologies.
    A strong EPA budget gives us triple value for the taxpayer dollar. 
I'm concerned that this EPA budget doesn't get us there.

                              BROWNFIELDS

    I'm pleased that Brownfields is one area in which the budget is 
strong. The budget request is $210 million--a $40 million increase over 
last year. Brownfields make our communities safer by cleaning up 
contaminated properties, stronger by creating jobs and economic 
development and smarter by using newer, better, and faster technologies 
for cleanup.
    I am pleased that the budget makes a solid downpayment toward the 
fully authorized level of $250 million for Brownfields. But I am also 
puzzled about many areas of this budget proposal.

                          WATER INFRASTRUCTURE

    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 
water and sewer project funding. The budget cuts $500 million from the 
Clean Water State Revolving Loan Fund and $327 million for targeted 
water projects.
    The administration says it cut earmarks. But Congress funds these 
projects because the needs are so great. There is no national framework 
that even comes close to addressing the national needs.
    Water and sewer funding makes our communities safer by cleaning up 
the environment, fixing sewer overflows and leaks, preventing pollution 
from getting into lakes, streams, rivers, and bays and by making sure 
our communities have safe drinking water by removing arsenic, lead and 
other contaminants. Water and sewer funding makes our communities 
stronger by creating jobs, businesses and economic development. And 
water and sewer funding makes America smarter by developing new 
technologies to clean our water.

                             NATIONAL NEEDS

    The administration's cut to water and sewer funding is puzzling.
    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 (EPA) 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 and 
valid.

                            MARYLAND'S NEEDS

    Our Nation's Governors are struggling with tight budgets. In 
Maryland, we have $4 billion in immediate needs, but this budget would 
cut Maryland's share by over $10 million.
    Governor Ehrlich is putting a ``flush tax'' on residents to try to 
make up the gap. So when the EPA doesn't help our communities the 
entire burden falls on local rate payers. But in many urban and rural 
low-income areas, rate increases are just not affordable.

                                  JOBS

    The budget cuts to water infrastructure are also puzzling because 
water and sewer funding creates jobs. For every $1 billion we spend on 
water infrastructure up to 40,000 jobs are created.
    I thank Administrator Leavitt for responding to my request for an 
updated, comprehensive jobs study and I look forward to working with 
him on it. But I am really puzzled why the budget skimps on this 
priority.
    I know this was probably a funding decision by the 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.
    Last year, the 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 about how the EPA followed up and what the next steps will 
be. I want to know what the EPA is doing to develop new ideas to help 
communities meet these challenges. I am deeply concerned that this 
budget does not adequately address these challenges.
    What is EPA, as an advocate for the environment, doing to make this 
a national priority and develop solutions to make America's communities 
safer, stronger and smarter?

                             CHESAPEAKE BAY

    The Chesapeake Bay is a national treasure. Each year, the VA-HUD 
Subcommittee provides $20 million for the EPA's Chesapeake Bay Program. 
The EPA is the lead among 23 Federal agencies working together with 
State and local governments to restore the Bay.
    The subcommittee also provides funding for small watershed grants: 
$2 million last year for grassroots projects to clean up the Bay. But 
the budget zeroes out these grants. The subcommittee also funds 
projects for nutrient removal from sewage treatment plants along the 
Bay. But the budget zeroes out funding for these projects. Instead, the 
EPA's budget includes $10 million for a new ``Targeted Watershed 
Initiative for the Chesapeake Bay.''

                               BAY NEEDS

    The Chesapeake Bay Commission, made up of representatives from Bay 
States, tells us that we will need $18.7 billion by the year 2010 to 
clean up the Bay. So while we appreciate that this budget includes new 
funding, the Bay needs a more robust commitment.
    I want to hear from Administrator Leavitt today on how the EPA 
plans to make highest and best use of funding for the Bay.

                                RESEARCH

    Another area of the EPA's budget that makes America safer, stronger 
and smarter, is research and development. For example, the EPA's 
Science to Achieve Results (STAR) program develops partnerships between 
the EPA and scientists to come up with new ideas and technology to 
prevent pollution, protect public health, reduce environmental risks, 
and get new technologies to market.
    Robust research funding makes our environment safer, helps fight 
threats against natural and man-made environmental disasters and it 
makes our communities stronger by developing new technologies for our 
communities to use. All of this makes us smarter in the way that we 
protect public health and the environment. But STAR research is cut by 
$34 million in this budget.
    Overall, the EPA science and technology budget is cut by $93 
million. Our country faces many environmental challenges and we need 
robust support for research to develop new technologies that will help 
our communities meet these challenges and protect public health. The 
budget also cuts $8 million for building decontamination research.
    The EPA has been a leader in building cleanup of anthrax and 
ricin--in our Senate buildings. The EPA's work is a model for private 
buildings. So I am troubled that this research is cut.

                   ENFORCEMENT OF ENVIRONMENTAL LAWS

    I also want to follow up on the EPA's budget to enforce 
environmental laws. Over the past few years, the subcommittee has 
rejected the EPA's proposals to reduce Federal enforcement staff. 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. I would like to hear 
from Administrator Leavitt about how priorities are being set for 
enforcement.
    The VA-HUD Subcommittee will continue to stand sentry against cuts 
to Federal enforcement.

                  COMMUNITY ENVIRONMENTAL STEWARDSHIP

    I also am concerned about cuts in this budget to programs that 
don't cost much but that are very important to communities. For 
example, this budget cuts environmental justice and zeroes out 
environmental education. The subcommittee provided $10 million last 
year for these programs. These are small investments that make a big 
difference, so I am puzzled why they are cut.

                               CONCLUSION

    Finally, I hope that we can have a VA-HUD bill this year that is 
not a vehicle for environmental riders.
    I thank Administrator Leavitt for his testimony today and I look 
forward to hearing from him about how the EPA's budget will make 
America safer, stronger and smarter.

            CLEAN WATER STATE REVOLVING LOAN FUND--REDUCTION

    Senator Mikulski. Because I know that we are under a tight 
time schedule.
    Mr. Leavitt, I know that you've just answered the questions 
on mercury, which were of very keen interest to me, but I want 
to go to another topic--water quality. The fact is that 
communities are facing very serious challenges in water, sewer, 
and treatment plants.
    Here is my question: I understand that the budget proposes 
to cut $500 million from the Clean Water State Revolving Loan 
Fund. Could you tell me what would be the consequences of this 
cut, how many projects won't be funded, and how this will 
impact public health and the environment?
    Administrator Leavitt. Senator Mikulski, we at EPA have 
done a study to determine what the gap in water infrastructure 
is now, and what we are investing as a country. The Federal 
Government clearly has a role in this partnership. It is a 
Federal, State, and local role. It is a ratepayer role. It is 
one that we all have to deal with, and we are anxious to not 
just look at what our role should be as a Federal Government, 
we are also looking to be able to add additional benefit. For 
example, to help in promotion of being able to----
    Senator Mikulski. What will be the consequences of the cut? 
How many projects won't be funded, and how it is going to 
impact the environment?
    Administrator Leavitt. Senator, I'll need to submit that 
information to the record. I don't know precisely how many 
won't be----
    Senator Mikulski. Can you tell me, though, what you 
estimate are the consequences of the cut?
    Administrator Leavitt. Well, the consequences that we find 
ourselves as a country, with far greater demands, not just for 
Federal money, but for local money, for State money, our 
Revolving Loan Funds, are not going to be sufficient to meet 
that entire need.
    Senator Mikulski. That is exactly right, what is the 
backlog of requests on the claim for a Clean Water State 
Revolving Loan Fund?
    Administrator Leavitt. I'll have to give you the specifics.
    [The information follows:]

                       Clean Water SRF: Reduction

    EPA believes that few if any projects will be impacted in fiscal 
year 2005. Federal capitalization grants are a smaller percentage of 
available Clean Water State Revolving Fund (CWSRF) as more funds are 
being derived from loan repayments, interest earnings, and issuance of 
bonds. As of June 30, 2003, the States had about $3.5 billion of CWSRF 
funds available that had not yet been committed to loans. In addition, 
annual inflows to the CWSRF from new loan repayments, bond proceeds, 
and interest earnings continue to increase.
    In 1997, the Federal Government promised to help States establish a 
$2 billion projected long-term target annual revolving level for 
funding 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. A 
total funding level of $4.4 billion 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 will significantly 
increase the CWSRF program's ability to fund projects in both the near 
term and in the long-run.

    Senator Mikulski. Mr. Leavitt, I welcome you to your first 
VA-HUD hearing, but this is a pretty big deal question. If you 
can't tell me you've cut a half a billion dollars from the 
State Revolving Loan Fund, and you can't tell me what the 
backlog is, so how can we estimate what it is going to take to 
do this?
    Administrator Leavitt. Senator, I'm going to introduce you 
to Mr.----
    Senator Mikulski. Can you do that?
    Administrator Leavitt. I'll introduce you to ``Mr. Water'' 
at the EPA, Ben Grumbles.

                  STATE REVOLVING LOAN FUND--REDUCTION

    Senator Mikulski. Let me tell you, while he is getting 
himself together, and we look for the answers, the subcommittee 
feels that this is one of the most important areas that we can 
pursue. No. 1 it improves the environment, and it improves 
public health.
    No. 2 it also creates jobs, and it creates jobs in the 
United States of America. So if you are building a water system 
here, or you are taking pollutants out of sewerage that goes 
into the Chesapeake Bay, you are creating jobs, from the civil 
engineers who design it, to the heavy equipment. It is a win/
win thing, and I just cannot, for the life of me, see why we 
would cut clean water funding. You want to tell us?

                     BACKLOG OF WASTEWATER PROJECTS

    Mr. Grumbles. Senator, I am Ben Grumbles, I am the Acting 
Assistant Administrator for the Office of Water. The backlog is 
a question. What you have to do is look at the backlog in each 
of the States.
    Senator Mikulski. What does it add up to?
    Mr. Grumbles. Well, what it adds up to is, is that each 
State has an intended use plan, and I can't say what project 
each and every State has. What I can tell you is that given our 
proposed requests for the SRF, we know that the gap will 
continue. But we also know----
    Senator Mikulski. Can you tell me what the backlog is in 
American dollars? I can tell you what the backlog is in 
Maryland. We have got a $4 billion backlog. We are under a $900 
million consent decree in Baltimore City because our water 
system was built over a hundred years ago. Baltimore City 
doesn't have $900 million, neither do the ratepayers.
    Let's start there. So you have got a backlog of $4 billion 
in one State and you've got 50 States. I am very frustrated by 
the inability to tell me what is the dollar backlog. Your 
predecessor could do that.
    Mr. Grumbles. We could tell you from a national 
perspective.
    Senator Mikulski. What is it?
    Mr. Grumbles. There is a $21 billion gap in the amount of 
funding that is needed over the next 20 years, and that States 
and localities, if they relied on their current revenue 
sources, will have. We factored into this debate the reality 
that the way to close that gap is to have a long-term funding 
plan. And the 850----
    Senator Mikulski. What is it? You are starting with a $500 
million cut.
    Mr. Grumbles. Right. The problem is the $850 million a year 
from Federal funding through 2011 adds essentially $4.4 billion 
in moneys at the Federal level. But the most important aspect 
is to focus not just on the supply side, but the demand side. 
So what we are doing is accelerating the whole emphasis on 
sustainable infrastructure through different mechanisms, 
pricing mechanisms, asset management.
    There is also targeted funding, targeted watershed grants 
for the Chesapeake Bay for a new initiative to provide $10 
million to help advance innovative trading between water point 
source----
    Senator Mikulski. That is a trading thing like a commodity. 
What we need in Maryland is actual dollars to do water and 
sewer, and waste water treatment programs.
    We don't need cuts in these areas. And we could go over the 
estimates, you estimated $21 billion gap, others have different 
estimates. Well, we know we have very serious shortfalls. So do 
you think that a $500 million cut is a wise and prudent thing 
to be doing here?
    Mr. Grumbles. I can respond that the $850 million in 
funding, needs to be viewed in the context of, ``What are the 
various programs under the Clean Water Act?'' We are actually 
increasing the funding to the States, Maryland, and other 
States, for management of the Clean Water Act in general 
through the Section 106 program. We are also emphasizing 
additional funding through the Targeted Watershed Grants 
Program, and through a new $23 million results-oriented 
performance grants program.
    The point is, is that while we recognize there is a 
tremendous gap, that we can't just focus on one program, and 
one agency at the Federal level. We need to look at the other 
programs, the innovations, the grants to the State in exploring 
non-point source, as well as----
    Senator Mikulski. Weren't they cut as well? Aren't they cut 
as well?
    Mr. Grumbles. We are proud of the increases in funding for 
some of those programs, but there is----
    Senator Mikulski. I think we've covered the ground, and I 
appreciate your comments.
    But, Mr. Chairman, you and I have discussed this. I think 
this is an area of bipartisan agreement where we need more 
water and sewer dollars.
    I can't see the clock. Is my time up?
    Senator Bond. Well, Senator, you have had time as the 
ranking member, and we have a couple other members here, but if 
you want to follow up on that, I have no problem. I have made 
my views clear, and I spoke on this issue, and I thought I 
spoke for you, apparently I did, when I said that the cuts in 
the Clean Water SRF was not acceptable.
    Senator Mikulski. Well, I'll yield my time to other 
members, and then I'll come for a second round.
    Senator Bond. Thank you very much, Senator Mikulski. We 
have been joined by Senator Domenici. I'll give him an 
opportunity to make comments and questions for his time slot, 
and turn it back to Senator Leahy.
    Senator Domenici. Are we--excuse me, Mr. Chairman. Are we 
at questions? Have they spoken already?
    Senator Bond. Yes, we are well into it, so we'll give you 5 
minutes for comments and questions.
    Senator Domenici. I'm very sorry that I'm late.
    Senator Bond. We all have too much to be doing.
    Senator Domenici. To tell you the truth, I wasn't doing 
anything.
    Senator Leahy. You may not want that in the record.
    Senator Domenici. It could be on the record. I'm trying to 
get my health back, so there is no rush. Got to take it easy, 
you know.
    I thought I had some questions here, that were more 
specific, but I'm going to give this back to him and see if he 
can find them.

                 STATEMENT OF SENATOR PETE V. DOMENICI

    I first want to congratulate you and hope you like your 
job----
    Administrator Leavitt. Yes, I do.
    Senator Domenici. And compliment you on your science 
advisor, Dr. Paul Gilman. I hope he doesn't leave you, because 
he is a very good man. Lots of people want him.

                           ARSENIC STANDARDS

    Senator Domenici. One of the things we have out in our part 
of the country, and it might flow over into some other parts 
that are not just in the West, is the issue of the arsenic 
standards.
    Mr. Leavitt, I don't know if you remember when you were out 
in your State that a situation has arisen regarding arsenic. Do 
you remember?
    Administrator Leavitt. Very clearly, Senator.
    Senator Domenici. Well, we are in a jam, because we got a 
standard for arsenic that is crazy, and you have to implement 
it, I guess, in due course. But somebody got themselves in a 
position where they couldn't get out of it with further 
administrative activity on the part of your department, and 
we're stuck with a standard that is going to cost an enormous 
amount of money to small communities, and they don't have it.
    For some of us, for some of our communities, it is an 
enormous amount of money. The thing that is so peculiar is that 
in States like mine, we have lived with arsenic in the 
groundwater, and flowing in our dry rivers, which we call 
arroyos for a long, long time. We have traced back the history 
of the Spanish conquistadores who lived in this area, and the 
Indians who preceded them, and we don't have any evidence at 
all that the arsenic that was there harmed them.
    So I want to know if you are looking at some way to help 
us. There is a bill with many of us cosponsoring it, and we are 
going to pursue it, but it doesn't do any good unless we have 
you on our side.
    I know you are stuck with a budget this year. That isn't 
going to last forever. We have to have a way to either defer 
this, or find you recommending that we have to take care of 
some communities that don't have sufficient money.
    Now, there are some that have sufficient money, but it is 
just too much. Albuquerque has money. They could go out and do 
something. But it is in the few hundreds--hundreds of millions 
of dollars, which is just too much if it is not necessary.
    Would you first address it?--and then I have another 
question.

                     TECHNOLOGIES TO REDUCE ARSENIC

    Administrator Leavitt. I will invite Paul Gilman to come to 
the table and tell you specifically about some of the things 
we're doing in the technology area. While he is coming, may I 
just address this whole area generally? You've raised it, 
others have as well.
    We established a series of high standards in this country 
on water, and they are serving us in the context of clean air 
and water, and improving our public health. We do face at each 
end of the spectrum on our large systems and our small systems 
dramatic problems, systems that will require billions of 
dollars of improvement.
    We, as a Nation, have not fully wrestled with how we are 
going to pay for those. The Federal Government's role is only 
one portion of it.
    On the other end of the spectrum, we are dealing with small 
systems, like the ones that you've referred to, and that were 
referred to earlier. We are working to help communities not 
just finance those changes, but also to find technologies that 
can make it affordable, and I'd like to ask Paul Gilman to 
detail a couple of those.
    Dr. Gilman. Thank you, Senator. We have a demonstration 
program that we are actually implementing as we speak. In fact, 
one of the sites in New Mexico opened just a few weeks ago. 
That program is aimed at marrying up different technology 
companies who have technologies that they believe can be more 
cost-effectively implemented for small communities, with small 
communities who have arsenic issues with their water systems.
    Our initial phase of that is to have 12 sites up and 
running. With the funding this committee has provided, we think 
we can provide an additional 18 to 22 sites that would be doing 
it in phase two. There we've identified 148 technology vendor 
proposals, and 32 different sites. Our effort is to try and go 
to all of the different types of geological media with the 
appropriate kinds of technology so we can in fact look to the 
range of issues that different States find, so there are 
several sites in your State, there are sites in Maryland, 
Vermont, and Idaho.
    So we are trying to hit all the different geologic media, 
as well as the different community situations, and marry up 
technology to bring those costs down.
    Senator Domenici. Thank you very much.
    Administrator Leavitt. Senator, I'll also mention the fact 
that the Agency is also phasing the arsenic rule over a longer 
period of time, encouraging the States to use the exemption 
authority that has been provided them by the Safe Drinking 
Water Act. The exemption authority will allow States sufficient 
time to allot portions of their drinking water revolving funds 
obviously, which we need to build larger, to handle problems 
like this.
    Senator Domenici. Thank you very much. Thank you, Mr. 
Chairman.
    Senator Bond. Thank you, Senator Domenici. I passed over 
Senator Leahy for the first round of questions. If you want, I 
will be happy to defer from my end the second round of 
questions to you after Senator Leahy. I want to give Senator 
Leahy time. He has been here for awhile. I apologize.

                              MERCURY RULE

    Senator Leahy. That is all right, Mr. Chairman. I 
appreciate that, and I don't have to leave. I know after some 
of the comments I made at the beginning, it is only fair that 
Governor Leavitt be given a chance to respond.
    I would point out that I keep hearing the statement the 
Bush Administration was the first ever to propose a mercury 
regulation. First, they had to under a settlement agreement. 
They had to do it by December 15 of last year. To say you've 
done something you were required to do is commendable, but you 
were required to do it.
    And of course the proposal is a 70 percent cut, not a 90 
percent cut, as the previous administration was working toward.
    This chart shows just a few examples of where you have 
language taken from industry memos. It is almost a case of you 
don't really need all the people to write things. Just take 
what you get from the industry, take the letterhead off, put 
yours on.
    In some places it is verbatim. In some cases, it has a word 
or two changed. In fact, you go down through the EPA proposal 
language and I could find about 20 places where this occurs.
    I know that Senator Jeffords called on you to seek an 
inspection by the Inspector General, and have her find out why 
it is that an independent agency like yours is having their 
regulatory work being done by the same people that are supposed 
to be regulated by it. I understand you have not made that 
request.
    Doesn't this industry influence raise some questions about 
your agency's independence, if the same people you are 
regulating are writing your independent regulations? Is this 
the fox guarding the chicken house?

                         PROPOSED MERCURY RULE

    Administrator Leavitt. Senator, let me make clear that we 
brought that allegation to the attention of the Inspector 
General. I took the mercury MACT rule home over the 
Thanksgiving holiday and spent a good chunk of that weekend 
reading about 275 pages of a regulation.
    Senator Leahy. And you stayed awake?
    Administrator Leavitt. Well, I must say they are mind-
numbing. But what I was evaluating was a series of ideas. The 
source of the language wasn't clear to me, and as a matter of 
course, I would say I would like to know where it came from, 
but this is a proposed rule. Ideas came from lots of different 
places.
    As a matter of general course and practice, we need to know 
that, and I am not here to explain it. There is an explanation. 
That is not productive. The important thing for me is to make 
certain that--that I tell you directly that we intend to 
regulate mercury from power plants, and for the first time.
    We intend to do it as aggressively as we can to optimize 
it, given the nature of the available technology. I spent a lot 
of time in the last 3 months learning the science of mercury 
and learning the technologies that are available. There is a 
new technology called activated carbon injection that we have 
lots of optimism for. The actual amount that we can reduce 
mercury revolves in large measure around when that technology 
can be deployable. We think it is deployable.
    We think that in fact it is the way in which we'll get to a 
70 percent reduction. I can find no evidence anywhere in the 
EPA where we have proposed a 90 percent reduction. I know that 
people have talked about it, but I can find no evidence where 
the EPA has ever proposed that formally until December the 
15th, when we suggested that the proposed rule, that is now 
part of----

               MERCURY REDUCTION--COAL-FIRED POWER PLANTS

    Senator Leahy. The technology says we could do 90 percent, 
doesn't it? I'm looking at a report from the ``American Coal 
Council'' magazine, where they talk about these things. Tests 
have shown you can go down 90 percent.
    In the industry-wide application, these technologies within 
5 years, couldn't we go 90 percent?
    Administrator Leavitt. It is our opinion that the ACI 
technology is not yet deployable to scale. Let me tell you a 
little bit of background that I have, what I learned. There are 
two ways to reduce mercury at coal-fired power plants. The 
first is by reducing NOX and SOX. That is 
what is known at that point as co-benefit, by reducing 
NOX and SOX, we get benefit of mercury 
being reduced as well.
    The second means is by controls designed to include 
mercury. This includes an activated carbon injection system. 
This essentially is to put a large charcoal filter, if you 
will, at the top of a smoke stack. The carbon molecules catch 
the mercury as it goes, and they are able to be essentially 
harvested, and cleaned, and disposed of in a different way. It 
is a technology that has been used successfully. They are using 
it to reduce mercury emissions from municipal wastes, and 
achieves over 90 percent.
    We have also begun to deploy on an experimental basis, on a 
limited number of power plants, the ACI technology, but it has 
never been put on a full scale power plant anywhere in the 
country, and run full-time for any considerable period of time. 
I have had a chance to speak with the owners of the power 
plants, and the engineers and the environmental specialists who 
are testing it.
    They have tested it, and in certain conditions, but not in 
others. This is a big investment, and one that I believe will 
be made, and that it will ultimately result in a substantial 
reduction in mercury emissions from coal-fired power plants. 
The technology needs to be deployed. It needs to be deployed as 
soon as it is reasonably possible, and we'll do it 
aggressively, and that is what ultimately will be in the final 
rule.
    Senator Leahy. Governor, I hope so, because I don't know 
what you tell mothers, fathers, and grandparents. If you have 
young children, what do you do? I'm not sure what to tell my 
pregnant daughter on these things. I look at my grandchildren, 
and I worry about them.
    I do commend you for speaking out and expressing concern 
when this came to light. But you can understand these kind of 
things taint just about any statement that comes out, because 
the people feel that the same polluting industries that are 
supposed to be regulated by this, are writing the regulations.
    The EPA's credibility is gone. Ultimately, in many ways, 
your credibility is the most important thing you have here. 
People will cooperate and work with you to clean up these 
plants, if the credibility is there.
    The credibility gets lost, even if you came out with a 
proposal that you and I would agree on. You are going to have a 
problem then getting everybody to get onto the bandwagon, spend 
the money necessary to do it, if the credibility is not there.
    I will submit other questions for the record. Maybe you and 
I will have a chance to talk more about this.

                              MERCURY RULE

    Administrator Leavitt. Senator, I would be delighted to do 
that, as we do today on the public record. I want you to know, 
and other Members of this committee, that we intend to finalize 
the first ever rule regulating mercury from power plants this 
year, and we will do so in a way that will reduce to the 
maximum level possible under available technology. And that 
we'll be deploying technology in the future to reduce it.
    We believe it can be reduced by 70 percent. We believe that 
there are alternative ways to do it. The final rule, which will 
be final this year, will be the best of the ideas that we can 
receive from literally tens of thousands of people in written 
comments from public hearings across the country, because we 
acknowledge and recognize that this is a toxin, that it puts 
pregnant women and fetuses potentially at risk.
    We are anxious to cooperate with other governmental 
agencies, and have as recently as this week with the FDA to 
make clear to people what guidelines of their own behavior 
should be that would protect them. I look forward to more 
conversations on this matter.
    Senator Leahy. Well, as you know, that when your 
confirmation came up, there was some, some controversy, I voted 
to confirm you.
    Administrator Leavitt. Thank you.
    Senator Leahy. Many in my State were unhappy with that 
vote. I hope that you will do this the right way, and let us 
work together.
    Mr. Chairman, thank you very much.

                 MERCURY--WESTERN COAL VS. EASTERN COAL

    Senator Bond. Thank you very much, Senator Leahy. We 
appreciate it. There will be questions submitted for the 
record. Senator Domenici has questions, Senator Craig, and of 
course Senator Leahy's questions. I would just say that the 
coal that we burn in Missouri is Western coal, and there are 
real questions whether the ACI works on Western coal.
    We understand it may be more effective on Eastern coal, 
but, as I said earlier, we have got to explore the technologies 
aggressively to get these pollutants out, because you know, we 
are trapped. If we can't get the technology that allows us to 
burn the source of fuel that is abundant, that is coal, we are 
going to impact families heavily. It's not family values when 
an elderly couple can't afford to pay their heating bill and 
buy the food they need, when a young couple can't keep the 
house warm enough for their children, and still get them the 
care they need. This directly impacts us in several ways, so 
this is all connected together.
    Let me ask you a difficult question. On April 15, EPA will 
be designating additional areas as nonattainment for the ozone 
standard. How will the agency's designation protect public 
health, as well as ensuring and protecting a healthy economy?

                      INTERSTATE AIR QUALITY RULE

    Administrator Leavitt. Senator, the Agency does have an 
obligation to designate those areas in this country that are in 
attainment with our new 8-hour standard on ozone. We'll meet 
that requirement, and we'll do so in a way that will be both 
consistent and defendable, and in a way that will allow us to 
work then with communities over the course of the next several 
years to bring them into attainment.
    The most important thing we are doing to bring them into 
attainment is the Interstate Air Quality Rule, which will bring 
nearly all of the roughly 500 counties that will not be in 
attainment into attainment. The Interstate Air Quality Rule 
itself will reduce NOX and SOX by 70 
percent and will bring nearly--will bring all but 17 of those 
counties--17 to 20 of those counties into compliance.
    So we are not only putting designations on the table, but 
we are also providing a means by which they will be able to 
reach attainment within a relatively short period.

                       OZONE NON-ATTAINMENT AREAS

    Senator Bond. This might be a good opportunity to explain 
how you envision a partnership between the EPA and the States 
to assure compliance with the environmental laws.
    Administrator Leavitt. We are actually working in direct 
partnership with the States to determine the areas of 
attainment and nonattainment. The States made recommendations 
to the EPA on which areas they believed should be found in 
nonattainment. The EPA has been working to express our opinion, 
and to find ways in which to work with the States to reach 
agreement on which areas would be in nonattainment.
    Once an area has been designated nonattainment, we will 
then work with them to develop a plan. They'll have a 3-year 
period to develop a plan, and we will have 1 year in which to 
comment and accept it, and then we'll move forward to what 
would be new standards, cleaning up what is essentially smoot, 
or soot and smog, and has a substantial impact on the health of 
people in this country.
    This is a good thing, and we can do it in a way that will 
keep us competitive as a nation.

                          EN LIBRA PRINCIPLES

    Senator Bond. As governor of the State of Utah, you 
promoted the principles of en libra. What is it and does it 
apply to your work in EPA?
    Administrator Leavitt. En libra is a Latin word that means 
to move towards balance. Today we've dealt with a number of 
problems that have thorny edges. We are dealing with the need 
for cleaner power plants, and the need to keep us economically 
competitive, and en libra recognizes if we utilize markets, 
people will do things faster, and do more of it than if we 
simply use command and control.
    It acknowledges that we need strong national standards, 
that there are neighborhood solutions that we can find to solve 
those problems. It acknowledges that collaboration is always a 
better way than polarizing and litigating.
    It acknowledges that as we focus on results, we will have 
more success than if we simply focus on programs. It is finding 
the productive center. Today we talked about many problems 
where it can well be applied.

                          SUPERFUND--CLEANUPS

    Senator Bond. Final question for this round. Superfund. I 
mentioned some of the concerns I have about Superfund, and the 
small amount going to actual clean-ups. You've asked for a $124 
million increase. Right now it is very difficult to find that. 
How are you going to allocate the resources within the program? 
How is your internal review coming on the allocation of 
resources within Superfund to assure the maximum utility for 
what we appropriate for Superfund.
    Administrator Leavitt. Your request has been taken 
seriously, Senator. I'm going to ask Marianne Horinko to come 
forward to comment. While she comes forward, I would say that 
we have made requests for additional Superfund dollars, and we 
are committed to see they are used effectively, and are making 
progress on many of the sites, and want to make more. Marianne.
    Ms. Horinko. Senator, thank you. I would like to thank the 
staff for support. As we are winding up the 120-day study, we 
feel it is incumbent upon us as we ask you for the kindness of 
more funding to make sure we have taken the existing funding 
you've given and maximize the dollars towards cleanup, so we 
are about near completing that funding.
    As you can imagine, there aren't huge pockets of cash we 
discovered out there. But there are program efficiencies that 
we can undertake, and we will look forward to coming up with a 
review with your staff on some of those proposed measures to 
maximize dollars towards cleanup over the next several weeks.
    Senator Bond. Thank you very much. Senator Mikulski.

                    WATER INFRASTRUCTURE--JOBS STUDY

    Senator Mikulski. Thank you, Mr. Chairman. Let me go to one 
other question to follow up on the water issue.
    I contacted you, Mr. Administrator, about the need to have 
an updated study about what is the job impact on water 
infrastructure, which you responded to, and I appreciate that. 
In a letter to me I think just a few days ago, you said that 
you've set aside the money. It is a more complicated project 
than just giving you a 60-day report. You were now going out to 
get the right people to give us that assessment.
    I appreciate that this is complicated, but I think it would 
give us a good benchmark about where a public investment 
improves the environment, public health, and creates jobs, 
which I know would be hopefully a bipartisan agenda.
    First of all, thank you for your response. When do you 
think we could get an estimate of that, as we work for, in your 
own words, that productive center?
    Administrator Leavitt. I'll give you a direct report.
    Mr. Grumbles. Ben Grumbles again, Senator.
    Senator Mikulski. Yes.
    Mr. Grumbles. I wanted to tell you that we very much 
welcome this directive to do the study. We are in the process 
of making sure that we've got the right people to do it, to 
ensure the independence and integrity of it.
    I am not sure if it is a matter of weeks or months, but we 
are working very much to try to get this put together and 
recognize the importance of the ability to update the number of 
jobs estimated that are created by investment in 
infrastructure.
    Senator Mikulski. Do you have any idea if we'll have this 
before we conclude our appropriations process?
    Mr. Grumbles. I'm not sure when the conclusion of the 
process is, but we could some time towards the end of this 
month, or I would say into the next month is when we could----
    Senator Mikulski. When could you initiate the study? Could 
you then stay in touch with our staffs about when you think the 
study is done, I, of course want a quick case study, Mr. 
Administrator. I don't want to study it to death, but we do 
want exactly what you called for, accuracy and independence, so 
we want to press on, but also press for accuracy and 
independence. So could you let us know when you are going to 
get that?
    Mr. Grumbles. Most certainly.

                  CHESAPEAKE BAY WATERSHED INITIATIVE

    Senator Mikulski. While we're here, we talked about the 
watershed issue, the $10 million in terms of the targeted 
watershed initiative for the Chesapeake Bay, again we 
appreciate it being targeted. The Executive Director of the 
Chesapeake Bay Commission raises some flashing yellow lights 
about the language.
    She is concerned, as are the members of the Commission, 
that the current language proposed by the administration would 
tie non-point source programs to limiting the grantees to 
nutrient trading activities, yet still involving a huge and 
costly reduction in nutrients that must take place before any 
trades take place. So we still have to spend these great 
buckets of bucks on the nutrient removal before we get to the 
trade.
    We are concerned that this is a good intention that might 
not have the result. I would like to share with you Miss 
Swanson's recommendations, and to see if we could work with you 
so that we really do get the bang for the buck, and have not 
just limited it to trading activities. She has some 
constructive recommendations that we'd like to share with you, 
and see if again we can't then make maximum use of taxpayers' 
dollars, in terms of the protection of the Bay, which has been 
a longstanding bipartisan initiative supported by every 
President, and was initiated by Senator Mathias, my Republican 
predecessor. We want to stay in touch with you on that.
    I'd like to go then to enforcement. We have been concerned 
on the committee for some time about vigorous enforcement--not 
concerned about the enforcement, but is it really happening?
    Could you share with us where you are on the aspects of 
criminal enforcement? Do you have enough resources? What is the 
backlog that there might be now on criminal cases, and so on? 
Could you give us your views on that?
    Administrator Leavitt. Yes. Our Office of Enforcement is 
implementing currently recommendations of a management review 
that was issued in December of 2003. Key steps that were 
recommended included refocusing EPA's criminal investigations 
on environmental crimes, and in fact evaluating organizational 
structure, including field operations to ensure that optimal 
deployment of investigative resources were used.
    And that we were securing a separate source of funding for 
the various aspects of that, that needed to be. Despite that, 
the fact that we have limited enforcement, we have been able 
to, I think, move forward. Clearly enforcement, criminal 
enforcement and civil enforcement are clearly a very important 
part of an environmental regulatory agency.
    Our first obligation, our first desire, is to help people 
comply. But if people evade, or if they avoid, they'll feel the 
full weight of the Federal Government until they do.

              CRIMINAL ENVIRONMENTAL ENFORCEMENT--BACKLOG

    Senator Mikulski. Well, I appreciate you drawing the 
distinction. I want to draw the distinction between civil and 
criminal activity. Civil often is not clear for a variety of 
reasons that you've just hinted at. But criminal is. When I 
talk about criminal, I'm talking about premeditated, deliberate 
desire to usurp, evade the environmental laws.
    Do you know what your backlog is on the prosecution of 
criminal cases?
    Administrator Leavitt. I'll ask the Office of Enforcement 
to give you those.

                          CRIMINAL ENFORCEMENT

    Senator Mikulski. Because one is really, as you know from 
your own background, that is different than just not knowing 
the regs, or getting bad legal advice.
    Administrator Leavitt. Indeed I do.
    Ms. Harris. Good morning. My name is Phyllis Harris, I'm 
the Acting Assistant Administrator for the Office of 
Enforcement and Compliance Assurance. I can assure you that we 
are taking very aggressive steps to deal with the entire case 
log of the criminal enforcement program, and indeed as 
Administrator Leavitt mentioned, we just undertook a study of 
the overall resource allocation of the program. Right now we 
are in the process of making adjustments to assure that we have 
adequate resources in terms of where the cases are.
    As a natural progression, I would say in the criminal 
program, we have cases in various stages of investigations, and 
we believe we are aggressively pursuing those through the 
actual partnerships that we have with our State agencies, as 
well as the U.S. Attorney's Offices. And through that 
progression, we are making very good steps, ensuring that we 
are effectively prosecuting----
    Senator Mikulski. Can you tell me what the backlogs are, 
though, and are there patterns within States or regions?
    Ms. Harris. I can follow up with you specifically on the 
backlog as to whether or not there are patterns in regions and 
States.
    Senator Mikulski. I would encourage you to look at--in 
other words, this also goes to the deployment of your 
resources. If some have a greater level of criminal activity, 
you'll of course want to deploy. I know I share this concern 
with some of my colleagues, who are also very keen on, very 
strong on enforcement of the environmental laws.
    We really do want this information from you, and we would 
like to know how many cases EPA has decided not to pursue 
because of either funding shortfalls or staff shortages, 
because you just don't have the people to do the cases.
    Ms. Harris. We'd be happy to provide that you to.
    [The information follows:]

                      Criminal Enforcement Backlog

    This table shows that a total of 1,067 criminal enforcement cases 
remain ``open'' dating from fiscal year 1991 through April 26, 2004, 
most of which have been opened since fiscal year 2001. Eight hundred 
and ninety two of these cases are at the ``pre-indictment stage'' 
(i.e., they are still within EPA's investigative control). The 
remainder are either at the Department of Justice or the Federal Courts 
(i.e., at various stages of review, litigation or appeal). These cases 
represent only traditional environmental crime cases and do not include 
homeland security cases or the Administrator's Protection Service 
Detail cases.
    EPA has maintained a relatively stable number of open, active cases 
as an ongoing workload. These are cases that are receiving active 
attention by criminal investigators and/or Department of Justice staff. 
Normally, if a case remains open, exhibiting little activity, it 
usually is because of continuing legal proceedings (i.e., plea 
bargaining, litigation, appeals, etc.).

----------------------------------------------------------------------------------------------------------------
                                                                                  Number of Open     Number of
                           Fiscal Year                            Number of Open    Cases Pre-       Cases on
                                                                       Cases        Indictment        Appeal
----------------------------------------------------------------------------------------------------------------
1991............................................................               1               0               1
1992............................................................               4               0               2
1993............................................................               2               0               1
1994............................................................               3               0               1
1995............................................................               8               1               1
1996............................................................               9               0               5
1997............................................................              11               3               2
1998............................................................              23               9               3
1999............................................................              51              22               0
2000............................................................              83              50               4
2001............................................................             150             121               2
2002............................................................             221             223               1
2003............................................................             308             282               0
2004............................................................             193             181               0
                                                                 -----------------------------------------------
      Total Cases...............................................           1,067             892              23
----------------------------------------------------------------------------------------------------------------


    Administrator Leavitt. Senator, I can shed this much light. 
We opened 470 traditional environmental crime enforcement cases 
in fiscal year 2003. That will give you a sense of the 
proportion. The recent study by the Inspector General reported 
that the environmental crime investigations during the last 6 
years have been relatively stable, and that as of September of 
2003 they concluded that the Criminal Investigation Division 
was carrying out its mission to investigate environmental 
violations in the environmental statutes.
    I don't think that is a prescription for perfection, but I 
do think it is a demonstration that we are carrying that part 
of our mission out. And additional information, we will supply 
to you.
    [The information follows:]

                       Criminal Cases Not Pursued

    The Criminal Investigation Division (CID) opens criminal cases 
based on criteria in a 1994 policy memorandum on investigative 
discretion. The criteria are significant environmental harm and 
culpable conduct. Some of the CID Special Agents in Charge of the Area 
offices will not open a new case if they believe they do not have 
adequate resources to handle it. Instead, they will refer the original 
investigative leads to EPA's civil enforcement program or to State 
authorities. The disposition of leads in fiscal 2002 is summarized in 
the table below. (To reemphasize, this table refers to leads, not 
formally opened criminal enforcement cases; formally opened cases are 
almost always pursued.). CID does not have an automated tracking system 
for leads; these figures are compiled manually, and the fiscal year 
2003 figures are have not yet been compiled.

              DISPOSITION OF LEADS RECEIVED IN FISCAL 2002
------------------------------------------------------------------------
                                               Leads          Percent
------------------------------------------------------------------------
Under CID Review........................             270              14
Closed Prior to Referral................             415              21
Referred to State/Local.................             702              35
Referred to EPA Civil Program...........             188               9
Referred to Other Federal...............              91               5
Opened as a Criminal Case...............             310              16
------------------------------------------------------------------------

                    EPA'S ROLE IN HOMELAND SECURITY

    Senator Mikulski. I'll go to one other criminal act, which 
is the ultimate, most despicable, and heinous, which is an act 
of terrorism. As the administrator of the EPA, could you share 
with us where you are in terms of your role in Homeland 
Security, and your role in making recommendations, and having 
adequate resources for the protection of America's 
infrastructure? Could you tell us what you are doing with the 
Department of Homeland Security, and what we need to do to help 
you carry out your responsibility in that? Because to me, that 
is the ultimate crime.
    Administrator Leavitt. Homeland Security is everyone's job. 
EPA does have some specific responsibilities particularly for--
in the area of water. It has also been quite--you've seen us in 
a prominent role with respect to clean-ups, with respect to 
anthrax, also the World Trade Center, also regarding the 
Columbia Space Shuttle and others.
    I'll ask Marianne Horinko to give you a direct report on 
many of the activities that we are undertaking on a going 
forward basis.
    Ms. Horinko. Senator, first of all, I'd like to thank you 
for your support to us over the years, and particularly in the 
anthrax and more recently the ricin. This is an unexpected role 
for all of us. We appreciate your support during these very 
challenging times. We also thank you for the resources you 
provided us in the past.
    In my own program, we've hired additional on-scene 
coordinators, opened a new emergency response team in Las Vegas 
to complement our teams in Cincinnati and New Jersey, meaning 
increased capacity for West Coast responses.
    We've worked closely with the Department of Homeland 
Security in the Biowatch Program to detect incidences of 
biological contamination, also working closely with them for 
developing protocols for responding to radiological responses, 
and have done a number of large-scale cross-agency exercises 
and training and deployments to test out how to respond to 
different types of attack.
    As we move forward, we are looking at enhancing our ability 
to work with different parts of the infrastructure, such as the 
water safety issue in the chemical industry and others to 
ensure that we have appropriate threat protection that is a 
cooperative effort with Homeland Security relief. And we are 
also working on the issue of laboratory capacity nationwide, 
making sure we add laboratory capacity in the States and 
Federal installations, and private sector to respond to an 
incident of weapons of mass destruction on a large scale.
    So as the Administrator indicated, it is an enormous job. 
Our job is a daunting task. We are working hard at it, and 
working collaboratively with the new department.
    Senator Mikulski. Do you need more help?
    Ms. Horinko. We could always use more help. We would be 
happy to sit down with you and----

                         ANTHRAX IN THE SENATE

    Senator Mikulski. Why don't we do that. Mr. Chairman, I 
know the clock is ticking. First of all, EPA did a really 
yeoman's job after we were hit by anthrax here, and also along 
with the post office at Brentwood, and some private sector 
facilities. Is your office in the Hart Building, Senator?
    Senator Bond. No.
    Senator Mikulski. I was one of the Daschle 13, meaning I 
was in the Daschle air vent system. We were out of our office 
for 6 months, but thanks to all of us working together, and I 
might say the leadership of Dr. Frist, we were able to keep the 
Senate going, but thanks to the Marine Corps Decon Unit from 
Indian Head, the very good work of your predecessor, and this 
incredible team that you've put together, we now not only could 
go back, but we could go back with confidence.
    We have pregnant women who work here, people who served 
overseas, and in some ways have compromised immune systems, we 
have people who have asthma, we have a lot of issues of our own 
staff who work for us, so we want to thank you.
    I am troubled, however, that there is a cut in building 
decontamination in the science and research account that I want 
to talk about, because I think you did a great job. I think you 
learned a lot, and I think this is another area to research. I 
am very concerned about laboratory capacity, the research 
buildings, because there might not be a big bomb, but it could 
be a bioattack within our building, it could be a dirty bomb, 
et cetera, for which we want you to have the right research.
    Mr. Chairman, I'd also like to thank EPA for the way they 
responded to the very melancholy Columbia incident. It really 
was a multi-State, multi-agency effort, and EPA's role in this 
helped. The job that you all did helped weigh in the 
professionalism, helped give consolation to the families, but 
at the same time laid the groundwork so Admiral Gehman could do 
his work, and so we could come up with lessons learned that 
would never happen again.
    So I would like to thank you, and all of the people who 
worked in very difficult circumstances.
    Administrator Leavitt. Senator, on behalf of the Agency, I 
accept your kindness. I also would reflect Marianne Horinko and 
her leadership, as she has demonstrated not just great 
leadership, but inspiring courage at some very difficult times.
    Senator Bond. Thank you very much for your questions, 
Senator Mikulski. And I, too, share your great concern about 
Homeland Security. The Senator from Maryland and I serve on the 
Intel Committee, and we are most interested in dealing with 
many of these issues.
    I think some of these discussions are probably better 
carried out not in the public eye, but do you have any ballpark 
figure of the needs you may have to do of the many tasks that 
you are assigned under Homeland Security? I have a feeling that 
we are looking at a tidal wave coming up of additional needs. 
Have you all done an assessment of those, of what you think the 
needs may be in the areas we've discussed?
    Administrator Leavitt. Senator, without giving you a 
specific number, may I reflect on my experience now as 
Administrator of the EPA and also in my previous 
responsibilities as governor.
    Homeland Security is everyone's second job. It has to be 
inculcated into our fundamental missions. And we are 
approaching it in that way at the Environmental Protection 
Agency. We recognize there will be additional resources that 
will be necessary, and we will be forthcoming in providing you 
with the specifics in appropriate venues.
    But I can also tell you that we view Homeland Security to 
be part of every office in this agency, and part of our mission 
is to contribute to the Homeland Security network of this 
country.

                       TOTAL MAXIMUM DAILY LOADS

    Senator Bond. Thank you. Total maximum daily loads, that is 
the limited pollutants in waterways. If the State fails to meet 
the requirements, EPA has been charged with carrying out the 
responsibility. Right now, despite some progress, some 39 
percent of the river and stream miles assessed by the States 
and 45 percent of the lake acres, do not meet the water quality 
standards.
    When you talk about TMDL, you strike fear in the hearts of 
agriculture, small communities. This is a huge issue, a huge 
concern. To what extent does non-point source pollution impact 
TMDL's? What steps are being taken by EPA with the States in 
things such as run-off from animal feeding operations, and are 
you looking at ways to keep the costs within reason?
    Administrator Leavitt. Again, Senator, something I have 
some direct personal experience with in my previous role.
    The whole area of non-point source pollution is the next 
opportunity for substantial progress in this country, but it 
also is one that requires a new skill, with its collaboration 
on a watershed by watershed basis. There are numerous examples 
where local communities have come together to clean up their 
watersheds, and it begins to happen when the local government, 
the local water system, the local agriculture community work 
together to do it.
    Our role at EPA is not just to create an atmosphere where 
that can happen well, but in many cases to provide best 
practices, to provide resources, provide a continued urgency 
for it to occur. We are providing all of those, but it falls 
back into the pattern I spoke of earlier, where we desire to 
have the improvement you spoke of, and to do it in a way that 
maintains our economic competitiveness as a Nation. We can have 
both. That is our objective, to clean up the streams and non-
point sources. To do it in collaboration is the key.

                              BROWNFIELDS

    Senator Bond. Speaking of collaboration, I would refer you 
to a bill I have been shopping around for a number of years, 
called The Fishable Waters Act, which involves collaboration on 
watershed bases, and brings together many of the cooperating 
parties. And I would tell you there is a great desire for 
cooperation, and I would say that EPA Region 7, working with 
the University of Missouri, and some work that we funded here, 
has, I think, has developed some very, very cost effective, 
desirable means of controlling non-point source pollution.
    And I think that this could be both productive for the 
landowner in planting valuable crops and using those crops to 
curb TMDL's to bring down the total daily maximum load numbers.
    Brownfields, we have a problem. One of the Cass/Bates 
Regional Planning Commission in West Central Missouri is really 
built around a very great fishable lake, great tourist site, 
but has some Brownfields in the seven-county region, and they 
haven't been successful in making it onto the EPA's scoring 
process.
    I'm concerned that rural areas are disadvantaged, but is 
there anything that needs to be done? How can we deal with 
Brownfields if they happen not to be in a metropolitan area?
    Administrator Leavitt. I'm going to ask Marianne Horinko to 
give you comments on that point.
    Ms. Horinko. Senator, we share your concern. A number of 
other Senators and Representatives from primarily Midwestern 
and Western rural areas have expressed the same concern. About 
54 percent of our grants from fiscal year 2003 have gone to 
sites in rural areas. More tend to be located in urban areas, 
as you can imagine, but we're still very concerned these 
communities have equal fair access to funding.
    What I would suggest in your specific case is that we 
follow up with your staff, and have our Region 7 Brownfield 
specialists sit down and walk them through the process, and do 
some outreach and training so they can compete in the next 
round.
    [The information follows:]

                Brownfields Grants to Rural Communities

    The Agency did a review and determined that about half of last 
year's grants went to sites in small or rural areas. One hundred 
sixteen of the 214 grants (54 percent) announced for fiscal year 2003 
went to non-urban areas with populations of 100,000 or less. The Agency 
is concerned that these communities have equal fair access to funding, 
so we made changes to the fiscal year 2004 application guidelines and 
are funding outreach forums for small rural communities, including 
workshops in Kansas City on April 30, Idaho on June 17, and Montana on 
July 14.

                           NEW SOURCE REVIEW

    Senator Bond. We would appreciate that.
    I hate to draw this to a close, we are having so much fun, 
but I am going to ask you one final question on New Source 
Review, something of course that is not very controversial. I 
know there are lawsuits. Because of all the changes, there is a 
lot of uncertainty over how EPA treats ongoing litigation, 
which was instituted prior to EPA's issuance of the final rule 
on August 27, 2003 regarding the routine maintenance.
    How is EPA addressing this particular litigation issue, and 
the general issue?
    Administrator Leavitt. Senator, we are committed to making 
New Source Review work. We believe the rules that we have put 
forward will ultimately be put in place, despite the fact that 
there is a current stay. We are enforcing the law and moving 
forward with the cases that were filed prior. We're filing new 
cases. We are selecting new cases based on a myriad of 
different factors, among them being available resources and the 
desired environmental outcomes.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Bond. Well, thank you very much, Governor. We are 
delighted to have you before the committee. Obviously, we have 
lots of questions and follow-up. We will have additional 
questions for the record, and we appreciate you and your 
staff's prompt attention to them.
    [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 AIR ISSUES

    Question. The most prominent air quality issue of the last few 
months has been what to do about emissions from coal-fired electric 
power plants. I applaud the administration for attacking this issue 
head on by proposing regulations on New Source Review and Mercury 
emissions. President Bush has also asked Congress to pass ``Clear 
Skies'' or multi-pollutant legislation that would reduce power plant 
emissions and encourage investment in new plants by providing certainty 
regarding future regulatory requirements.
    Governor, would you please comment on the status of both the New 
Source Review and Mercury emissions proposals?
    Answer. On October 27, 2003, EPA made final rule changes to the New 
Source Review (NSR) program. These changes focused on determining what 
activities at an industrial facility constitute Routine Maintenance, 
Repair and Replacement and are therefore exempt. The final rule is 
called the Equipment Replacement Provision. These amendments to the NSR 
rules would apply only prospectively.
    Previously EPA completed final rule changes in December 2002 that 
removed NSR's barriers to environmentally beneficial projects, created 
incentives, such as Plantwide Applicability Limits (PALs), for 
additional beneficial projects, and streamlined the NSR rules.
    Some State agencies and environmental groups have filed suit in the 
DC Circuit Court of Appeals, seeking to overturn the December 2002 and 
October 2003 rules. Other States and industry groups have intervened in 
this suit on EPA's behalf. These are complex cases and will likely not 
be resolved until 2005 or later.
    In the meantime, in response to a motion by some State agencies and 
Environmental Groups, the DC Circuit Court of Appeals stayed the 
Equipment Replacement Provision on December 24, 2003. However, the DC 
Circuit denied the petitioners' renewed motion to stay the NSR rules 
that were promulgated on December 31, 2002, and so EPA continues to 
implement these rules.
    EPA is disappointed in the ruling staying the Equipment Replacement 
Rule, but we believe that once the court has a chance to review the new 
rule on its merits, it will lift its stay and eventually uphold the 
rule.
    We are committed to following the court's direction. We believe 
that both these rules will significantly improve the effectiveness of 
the NSR program, while preserving its environmental benefits.
    In the next several months, EPA will be proposing additional 
changes to the NSR program. These include additional improvements to 
simplify the program for complex facilities and to create additional 
incentives for beneficial projects. (This upcoming package is referred 
to as the ``Debottlenecking, Aggregation, and Allowables PAL 
package'').
    EPA is offering aggressive alternatives for controlling mercury 
from power plants by proposing new environmental regulations. This 
marks the first time in United States history that power plants would 
be required to reduce mercury pollution.
    Controlling mercury from coal-fired power plants raises many 
difficult issues with respect to the availability of technology and the 
impact on our energy markets. We have tried to address those issues in 
our proposal. We extended the official comment period by 30 days, and 
the signed documents were available on our website within 48 hours of 
signature, December 15, 2003. We are now in the process of carefully 
considering all the comments, and abiding by our commitment in the 
settlement agreement with NRDC, we expect to issue a final rule by 
March 15, 2005.
    Question. Further, how would the passage of ``Clear Skies'' or 
multi-pollutant legislation contribute to EPA's ability to reduce power 
plant emissions in the next 20 years?
    Answer. Clear Skies would provide dramatic environmental benefits 
by reducing emissions from the power sector more than any legislation 
that any other administration has ever proposed. It does so while 
allowing the downward trend in energy prices to continue and while 
promoting energy independence.
    One of the most important benefits of Clear Skies is that it would 
provide both regulatory and environmental certainty. Clear Skies builds 
on the successes of the Clean Air Act and would significantly improve 
air quality across the nation by requiring power plants to reduce their 
emissions of SO2, NOX and mercury by 70 percent. 
The mandatory emissions caps at the heart of Clear Skies are a sure 
thing and guarantee that reductions will be maintained over time. 
Because cap-and-trade programs include economic incentives for early 
action, Clear Skies would begin improving public health immediately.
    Clear Skies also allows firms to make the reductions in the most 
cost-effective means possible. The statutory caps in Clear Skies would 
provide certainty of reductions that could not be delayed by 
litigation. Without Clear Skies, we also know that, under the current 
Act, EPA and States will need to develop and issue regulations to 
reduce power plant emissions, but the levels and timing of these 
regulations are unknown. Over the next 20 years, uncertainties 
regarding regulatory development, litigation, implementation time, etc. 
under the current Act compare unfavorably with the certainty provided 
by Clear Skies.

                      OZONE AIR QUALITY STANDARDS

    Question. The EPA is required by the Clean Air Act (CAA) to set 
National Ambient Air Quality Standards (NAAQS) for wide-spread 
pollutants from numerous and diverse sources considered harmful to 
public health and the environment. The EPA has set NAAQS for six 
principal pollutants--ozone is one of these six pollutants.
    On April 15th, EPA will designate areas that are in attainment and 
nonattainment of the 8-hour ozone air quality standard. There is a 
small rural county in Missouri, Sainte Genevieve, which is in danger of 
being included with St. Louis in a nonattainment area. This small rural 
county is not contributing to the region's nonattainment.
    Governor, will you please walk us through the process of 
designating an area in nonattainment of the 8-hour ozone standard? In 
the case of counties like Sainte Genevieve, how and who is making the 
final decision on which communities are really contributing to a 
region's nonattainment status?
    Answer. Area designations are required after promulgation of a new 
or revised NAAQS. The EPA works together with appropriate State and 
local authorities to establish designations. On July 18, 1997, we 
promulgated a revised ozone standard of 0.08 parts per million (ppm), 
measured over an 8-hour period, i.e., the 8-hour standard. In March 
2000 and July 2000, we issued designation guidance on how to determine 
the boundaries for nonattainment areas. In that guidance, we rely on 
the CAA definition of nonattainment as an area that is violating an 
ambient standard or is contributing to a nearby area that is violating 
the standard. If an area meets the definition, EPA is obligated to 
designate the area as nonattainment. In making designations, we use the 
most recent 3 years of monitoring data. Once we determine a monitor is 
recording a violation, the next step is to determine if there are any 
nearby areas that are contributing to the violation and include them in 
the designated nonattainment area. In making this determination, we 
review all available technical data such as air quality, source 
locations and emissions, photochemical modeling, meteorology, terrain, 
population, commuting, and growth in the area.
    On April 15, we finalized designations for all areas of the United 
States. Ozone air quality monitors in the St. Louis area are in 
violation of the ozone standard. The St. Louis nonattainment area 
consists of Franklin, Jefferson, St. Charles, St. Louis Counties and 
St. Louis City, Missouri, and Jersey, Madison, Monroe, and St. Clair 
Counties, Illinois.
    An ozone monitor is located in Ste. Genevieve County. The design 
value for this monitor was calculated to be below the standard for the 
2001-2003 ozone season. Our initial concern for this county was based 
on anticipated growth in nitrogen oxide emissions (a precursor of 
ground-level ozone) and that these emissions may be carried by the 
prevailing wind into the St. Louis area, contribute to the 
nonattainment problem, and make it difficult to attain the standard. 
The State of Missouri provided information to us on the amount of 
current emissions and the stringency of controls on newly permitted 
sources in the county. Based on this information, we concluded that the 
county is not a contributor to nonattainment in the St. Louis area and 
designated the county as attainment.

                       LEAD CONTAMINATION CRISIS

    Question. I would be remiss if I did not ask you, Governor, to 
brief us this morning on the lead contamination crisis occurring in the 
District at this moment.
    Sir, will you update the subcommittee on the agency's actions in 
the wake of discovering elevated levels of lead in the District of 
Columbia's drinking water?
    Answer. EPA is very concerned about the current situation related 
to elevated levels of lead in drinking water in many homes served by 
the District of Columbia's water system. Exposure to elevated levels of 
lead can have serious health effects, particularly for children. 
Therefore, EPA places a high priority on reducing exposure to lead from 
all sources.
    The Agency's main priority at this time is ensuring that all 
citizens in the District have access to safe drinking water and that 
citizens nationwide can be confident in the safety of their drinking 
water.
    EPA's Regional office in Philadelphia, which has oversight 
responsibility for District drinking water, has a number of actions 
underway to see that the problem is corrected at the local level. The 
Region has worked with the City to ensure that all potentially affected 
residents with lead service lines receive filters and is also ensuring 
that additional monitoring is carried out, public outreach is improved, 
and replacement of lead service lines is accelerated. The Region has 
developed a website at www.epa.gov/dclead to keep the public informed 
of the activities that are being carried out.
    Staff from EPA Regional, national and research offices are 
participating in a multi-agency technical expert working group to 
identify a technical solution to the problem. The national office has 
also facilitated an independent peer review of that group's efforts. 
Pursuant to the working group's recommendations, a partial system test 
to assess a new corrosion control treatment method will take place in 
June. Full implementation of revised corrosion control will take place 
later in the summer about July 15 if the partial test does not 
encounter problems.
    While the Agency does not anticipate that there is a serious 
problem nationally, we are collecting data to better understand the 
occurrence of elevated levels of lead in drinking water. We are also 
committed to initiating a national review of implementation of, and 
compliance with, the Federal regulations for lead in drinking water 
during 2004.
    Question. Further, how did dangerously high levels of lead in water 
being delivered to the District's residents remain overlooked for the 
past year and a half?
    Answer. The sampling results that the District of Columbia Water 
and Sewer Authority (WASA) submitted to EPA for the 2000-2001 
monitoring period indicated that neither the lead nor copper action 
level had been exceeded at the 90th percentile. The 90th percentile 
value reported for lead was 8 parts per billion (ppb).
    The optimal corrosion control treatment implemented by the 
Washington Aqueduct appeared to be effective in minimizing lead levels 
until the sampling period between July 2001 and June 30, 2002. EPA 
received a final report from WASA on August 27, 2002 indicating that 
the 90th percentile value had increased to 75 ppb during that period. 
The high level required that WASA conduct more frequent monitoring and 
carry out public education. The lead action level was also exceeded for 
subsequent monitoring periods in 2003, with 90th percentile values at 
40 ppb (January 1 to June 30, 2003) and 63 ppb (July 1 to December 31, 
2003).
    The action level exceedance for the period ending in June 2002 
triggered provisions in the Lead and Copper Rule (LCR) that required 
WASA to complete the following actions:
  --Resume full monitoring for lead and copper at the customers' taps 
        by sampling a minimum of 100 customers taps during subsequent 
        6-month monitoring periods.
  --Prepare and implement a public education program to advise 
        consumers on how to protect themselves from exposure to lead in 
        drinking water and inform them of steps that will be taken to 
        reduce the lead level.
  --Develop and undertake a lead service line replacement (LSLR) 
        program. The LCR requires that a system replace 7 percent of 
        the lead service lines which the system owns each year until 
        all of the lines have been replaced, or until tap water 
        monitoring indicates that its 90th percentile lead level is 
        equal to or less than 15 ppb.
    WASA began to carry out a public education program in October 2002. 
However, it is clear now that messages were not heard. Notifications to 
individual residents were often not timely and did not achieve the goal 
of getting information to those who needed to know. Mass media tools 
were not used as effectively as they could have been. There should have 
been more widespread and urgent communication of the problem District-
wide.
    In March 2003, WASA began an expanded sampling program to evaluate 
the lead concentrations leached into water from lead service lines, 
using a protocol that differed from that used for required tap 
monitoring. The Region did not receive the sampling results from the 
lead service line testing program until October 27, 2003. EPA's review 
of this information by technical staff was focused on determining 
whether WASA had replaced or tested the required number of lines under 
their Lead Service Line Replacement Plan, and on how to address the 
underlying cause of the corrosion problem. The results of this expanded 
sampling program indicated that the lead problem was more significant 
and widespread than had been previously understood. Although WASA 
provided letters with results and instructions to customers whose lines 
were tested, those communications were not promptly delivered nor were 
they effective in informing the public of the magnitude of the problem 
or in conveying the steps families and individuals should take to 
protect themselves.
    EPA, WASA and the Washington Aqueduct continued their research plan 
to address the cause of the problem. However, WASA should have taken 
additional measures to ensure that customers were quickly informed, and 
that public education and outreach materials reflected an appropriate 
level of concern. Once it became evident that WASA's public education 
program failed to reach consumers in a way that ensured they would take 
action to reduce their risks, EPA began working with WASA to improve 
its communication to the public, and we took direct actions to 
supplement those efforts. Region III has since undertaken a more 
thorough review of WASA's public education efforts to identify specific 
recommendations for improvement, and have modified their own compliance 
review procedures to assure that the utilities' public education 
materials convey both the appropriate sense of urgency and proper, 
timely information.
    Question. What exactly is EPA's role in lead's public health 
crisis?
    Answer. EPA's Regional office has primary enforcement authority for 
the District's drinking water. The Region ensures that the District of 
Columbia's water suppliers know and understand Federal regulations, 
provides advice and technical assistance on how to comply with the 
Federal regulations, requires monitoring of the water and treatment 
processes according to the Federal regulations, and ensures that 
required monitoring results are reported. The region can also take an 
appropriate administrative or judicial enforcement action, including 
issuing notices of violation or administrative orders and seeking 
administrative and/or civil penalties.
    The Region therefore carries out the role that a State would 
otherwise carry out in implementing the Federal Lead and Copper Rule. 
The District's water utilities, the Water and Sewer Authority (WASA) 
and U.S. Army Corps of Engineer's Washington Aqueduct (Aqueduct) must 
report the results of monitoring and other activities carried out 
pursuant to the rule to the Regional office. The Regional office must 
likewise report certain information required under the rule to the 
national Safe Drinking Water Information System (SDWIS).
    The Region is responsible for evaluating the compliance of WASA and 
the Aqueduct with the Federal regulation. The Region was responsible 
for evaluating the corrosion control study presented by the Aqueduct. 
The Region approved the final treatment selection, after requiring 
several additional studies, and also approved the required water 
quality parameters that must be monitored by the Aqueduct and WASA to 
ensure that corrosion control is effective.
    The Region receives the results of required tap monitoring by WASA, 
determines if the utility is exceeding the action level, and instructs 
the utility as to the actions required to be carried out under the 
rule. The Region is currently conducting a thorough review of WASA's 
compliance with the public education, sampling and lead service line 
replacement requirements.
    With the District government, EPA has directed WASA to provide 
filters to households with lead service lines, to further expand 
sampling to assess the extent of the problem of elevated lead levels, 
to accelerate the physical replacement of lead service lines, and to 
develop a plan to significantly enhance its public education and 
outreach activities.
    Question. What was EPA's normal responsibility for water issues in 
the District?
    Answer. Nationally, EPA's role is to establish health-based 
standards that are protective of public health, develop guidance to 
assist States and public water systems, and provide oversight of State 
drinking water programs that have primary enforcement responsibility 
for public water systems in their State. Federal regulations designate 
the Regional Administrator as the entity responsible for implementing 
the Public Water System Supervision Program when a State has not been 
granted primary enforcement authority, or primacy, by EPA. The District 
of Columbia does not have primacy; therefore, the Agency's Regional 
office in Philadelphia directly implements the drinking water program 
for the District.
    EPA's role includes ensuring that the D.C. water suppliers (D.C. 
Water and Sewer Authority [WASA] and U.S. Army Corps of Engineer's 
Washington Aqueduct [Aqueduct]) know and understand Federal 
regulations; providing advice and technical assistance on how to comply 
with the Federal regulations; requiring monitoring of the water and 
treatment processes according to the Federal regulations; and taking 
appropriate enforcement actions if violations occur.
    WASA and the Aqueduct are responsible for carrying out required 
monitoring of lead. WASA is responsible for overseeing the collection 
of monitoring samples from customer taps. The Aqueduct and WASA are 
required to conduct monitoring for water quality parameters at the 
water treatment plant and in the distribution system, respectively. 
Both WASA and the Washington Aqueduct are required to report monitoring 
data and information regarding compliance with maximum contaminant 
levels, public notification and required treatment techniques to EPA 
Region III.

               CONFINED ANIMAL FEEDING OPERATIONS (CAFOS)

    Question. What is the current policy of EPA as to discharge 
permitting for confined animal feeding operations? Are the permitting 
requirements different depending on the size of the operation?
    Answer. The majority of animal feeding operations (AFOs) are not 
concentrated animal feeding operations (CAFOs) and are thus not 
required to obtain permits. Three categories of CAFOs are recognized in 
EPA's regulations: large, medium, and small. Large CAFOs are AFOs that 
exceed certain production thresholds (e.g., 1,000 beef cattle, 700 
mature dairy cows, 2,500 swine over 55 lbs, etc.). All large CAFOs are 
required to obtain permits except in rare cases where they can 
demonstrate ``no potential to discharge.'' In some cases, medium or 
small AFOs below the production thresholds for large CAFOs may be 
either defined or designated by the permitting authority as CAFOs and 
thus be required to obtain permits, but only if they discharge directly 
to surface waters and are significant contributors of pollutants (see 
CFR 122.23 for exact definitions of medium and small CAFOs).
    EPA requires all operations that are defined or designated as 
Concentrated Animal Feeding Operations (CAFOs) to apply for NPDES 
permits. The NPDES permit requirements for all CAFOs include: 
implementation of a nutrient management plan; submission of annual 
reports to the permitting authority; maintaining current permits until 
the operation is completely closed and all manure is removed; and 
keeping records of nutrient management practices for at least 5 years.
    The permit requirements may be different depending on the size of 
the operation. Large CAFOs are subject to both the effluent limitation 
guidelines found at 40 CFR 412 and the NPDES regulations found at 40 
CFR 122. The medium and small CAFOs must meet the requirements of 40 
CFR 122 and effluent limitations based on best professional judgment 
(BPJ).

                        COMBINED SEWER OVERFLOWS

    Question. A number of communities have problems with combined sewer 
overflow where the capacity of the sewer collection and treatment 
system is exceeded due to high volumes of rainwater or snowmelt. How 
many urban areas have CSO problems and what is the extent of the 
problem? What is the Federal role versus the local or State role? What 
are the potential costs associated with addressing CSO problems?
    Answer. As of October 2003, 32 States have communities with 
Combined Sewer Systems (CSS). The approximately 750 communities with 
CSSs are concentrated in the Northeast and Great Lakes regions. Within 
these communities there are approximately 9,500 Combined Sewer Overflow 
(CSO) discharge points that are regulated by 836 NPDES permits.
    EPA's 2001 Report to Congress estimated that CSOs discharge 
approximately 1.2 trillion gallons per year. The report also estimates 
that CSO controls have resulted in an approximate 12 percent reduction 
in untreated CSO volume since 1994 (170 million gallons per year), and 
biochemical oxygen demand (BOD) loadings were reduced by 125 million 
pounds per year since 1994.
    EPA and the States implement the CSO Control Policy through the 
National Pollutant Discharge Elimination System (NPDES) permits 
program. Forty-five States have been authorized to implement the NPDES 
program. In a limited number of States, EPA is the NPDES authority. 
When the State is the permitting authority, EPA provides appropriate 
oversight in accordance with NPDES program requirements. Through NPDES 
permits or other enforceable mechanisms issued by NPDES authorities, 
communities with CSOs are required to implement the nine minimum 
controls identified in the CSO policy and to develop and implement 
long-term CSO control plans (LTCPs) to meet Clean Water Act 
requirements and to achieve compliance with applicable State water 
quality standards.
    Based on data from the 2000 Clean Watershed Needs Survey, the 
estimated total capital cost for CSO control is $50.6 billion, an 
increase of $1.0 billion from the estimated cost in the 1996 Clean 
Water Needs Survey. This estimate is based on the level of control 
presented under the ``presumption approach'' delineated in the 1994 CSO 
Control Policy (capture for treatment of 85 percent of wet weather 
flows entering the combined sewer system). Improved costs estimates 
will be available as more communities develop LTCPs.

                                  MTBE

    Question. MTBE and ethanol are used to meet Clean Air Act 
requirements that reformulated gas, sold in the Nation's worst ozone 
attainment areas, contain at least 2 percent oxygen to improve 
combustion. Recently, MTBE leaks have been implicated in many instances 
of ground water contamination. As a result, some 17 States have taken 
steps to ban or regulate its use and a number of bills have been 
introduced to address these concerns. What is EPA's current position on 
the phase-out of MTBE?
    Answer. EPA supports the energy bill that is currently pending in 
Congress and which would call for a phase out of MTBE in gasoline. 
Because actions taken by individual States to control or ban the use of 
MTBE as a fuel additive are not uniform or coordinated, they can create 
concerns about fuel distribution. The provisions in the energy bill, 
however, would help to address this situation in several ways. The bill 
would: (1) maintain the air quality benefits of the clean fuel 
programs, such as RFG; (2) remove the 2 percent oxygenate requirement 
under the RFG program; (3) phase out the future use of MTBE across the 
Nation while allowing sufficient lead time for refiners and MTBE 
producers to switch production to other gasoline blend stocks; and, (4) 
implement a Renewable Fuels Standard that encourages positive life 
cycle renewability through the use of domestically produced renewable 
fuels through a national credit averaging and trading program.

           ENVIRONMENTAL ENFORCEMENT AND SECURITY ACT OF 2004

    Question. I plan to introduce the Environmental Enforcement and 
Security Act of 2004. This legislation is intended to address concerns 
raised by a recent EPA IG report, internal EPA reviews and numerous 
press reports that the EPA is straining to meet its environmental 
enforcement duties and its new post-9/11 homeland security 
responsibilities. In particular, the bill will authorize additional 
funds to add 50 new criminal enforcement special agents and 80 new 
homeland security special agents. The EPA also would be authorized to 
fund $100 million in grants for physical security measures to protect 
our Nation's water systems. Does EPA have other needs for legislative 
authority to help the agency meet its homeland security mission?
    Answer. The Office of Enforcement and Compliance Assurance's 
(OECA's) criminal enforcement program continues to be a high priority 
for the Agency. The Agency recognizes the increased demands relating to 
Homeland Security, and has provided the program with an additional 30 
FTE. The increased resources ensure that homeland security activities 
are not being conducted at the expense of traditional criminal 
enforcement. This commitment is carried forward into the Fiscal Year 
2005 President's Budget request.
    We believe we have the tools and resources needed to continue our 
important work in enforcing environmental laws. Further, the Agency is 
currently reviewing its responsibilities under HSPD-7 and HSPD-9, and 
investigating the need for additional legislative authority.

                               SUPERFUND

    Question. What steps is EPA taking to ensure that more funds are 
going to clean-up as opposed to administrative functions?
    Answer. This past November, the Acting Deputy Administrator 
commissioned a short-term internal study of the Superfund program to 
identify opportunities to more efficiently deploy Superfund resources 
within EPA. To that end, EPA is reviewing how Superfund resources are 
currently being used and what is being accomplished with those 
resources. An important goal is to identify how more Superfund 
resources can be dedicated to remedial action constructions by 
improving the efficiency of the program. The report on the study's 
findings was made available in late April.
    In addition to this study, the EPA Office of the Inspector General 
(OIG) has initiated its evaluation of Superfund expenditures, as 
specified in the conference report which accompanies H.R. 2673 
(Consolidated Appropriations Act of 2004). Per the conference report, 
the OIG plans to make recommendations for options to increase resources 
directed to extramural cleanup while minimizing Superfund 
administrative costs. The OIG expects to complete its evaluation and 
respond to the House and Senate Appropriations Committees in December 
2004. The OIG's recommendations will be carefully considered and 
adopted as appropriate.

                 DRINKING WATER SRF AND CLEAN WATER SRF

    Question. Provide a State-by-State assessment of the use of the 
Drinking Water and Clean Water SRFs. Are all the funds in use and are 
the funds targeted to areas with the greatest need? Are there ways to 
improve utilization of these programs?
    Answer. The attached charts provide a state-by-state assessment of 
the use of the Drinking Water State Revolving Fund (DWSRF) and the 
Clean Water State Revolving Fund (CWSRF). Through June 2003, States 
have been awarded a total of $5.5 billion in capitalization grants for 
the Drinking Water SRF. Twenty-four States are utilizing their Drinking 
Water SRF funds at or above the national average of 79 percent. As of 
June 30, 2003, 93 percent of all funds available in the CWSRF are being 
used to finance needed projects.
    States must fund DWSRF projects in accordance with a ranking system 
that gives priority to projects needed for public health protection and 
compliance with the Safe Drinking Water Act (SDWA). Forty-two percent 
of the assistance provided has been specifically for projects to bring 
water systems into compliance with drinking water standards. Many of 
the other DWSRF loans are to assure that systems currently operating in 
compliance can maintain their operations in compliance with health 
based standards. EPA, the States, and its partners provide technical 
and financial assistance to small systems where there is a great need 
for infrastructure funding. For additional information and specifics, 
refer to http://www.epa.gov/safewater/smallsys/pdfs/tfa_sdws.pdf.
    Although the CWSRF places no statutory oversight requirement for 
allotment of funds within the States based on need, it requires that 
each State have a priority list that includes environmental and public 
health criteria. All publicly owned treatment works projects proposed 
for CWSRF financing must be on a State's priority list and Intended Use 
Plan, which are reviewed annually by our regional offices. EPA is 
committed to helping the States identify and fund their highest 
priority projects. In our oversight of the CWSRF program, EPA has had 
no indication that higher priority projects are being delayed in favor 
of lower priority projects. States do have the authority to fund 
projects anywhere on their priority lists and may bypass a project if 
it is not ready to proceed.
    States are the primary managers of the SRF programs. EPA works 
directly with the State programs to continue making incremental 
improvements in the implementation of the Drinking Water SRF program. 
EPA conducts regular trainings and conferences on DWSRF program 
management and facilitates State-to-State idea exchange through 
participation in the States/EPA SRF workgroup. EPA conducts annual 
reviews of every State program including management and staff level 
discussions on best practices for DWSRF program implementation. EPA 
works with the State programs to address long-term financial 
performance planning and assists the States with continuing refinement 
of program management to yield the greatest output of program results.
    To improve utilization of the CWSRF, EPA has encouraged States to 
voluntarily develop integrated planning and priority setting systems 
which are based on the States' water quality information. So far, 25 
States have adopted integrated planning priority setting systems that 
include nonpoint source and estuary projects. This integrated planning 
helps to ensure that funding goes to each State's highest environmental 
projects.

                                ARSENIC

    Question. What is the extent of the cost and need for communities 
to reinvest in their water infrastructure in order to comply with EPA's 
revised arsenic standards?
    Answer. EPA estimates that of the 74,000 systems subject to the new 
arsenic maximum contaminant level, only 3,000 community water systems 
and 1,100 non-transient, non-community water systems will need to 
install treatment for compliance. The total national capital costs for 
treatment technology and infrastructure to meet the arsenic standard 
are estimated to be almost $900 million. Small systems make up the 
majority of the systems affected by the rule, but the majority of the 
capital costs will be incurred by larger systems that serve more than 
10,000 people.
    While the compliance date for the revised rule is January 2006, 
States can give eligible small systems (those serving fewer than 3,300 
people) up to the year 2015 (14 years after the rule was promulgated) 
to come into compliance. This authority will allow States sufficient 
time to allot portions of their Drinking Water Revolving Fund (DWSRF) 
over the next several years to systems adding arsenic removal 
treatment. A fact sheet on the EPA website describes how the DWSRF 
program can be used to fund capital projects needed to comply with the 
revised standard. The fact sheet can be found at website http://
www.epa.gov/safewater/dwsrf/fund-arsenic.pdf.
    In October 2001, EPA committed $20 million to research more cost-
effective solutions for removing arsenic from drinking water. One of 
the key components of this research program is demonstration testing 
that will be conducted at very small water systems. Under the first 
round of the demonstration testing, treatment technologies are being 
installed at 12 water systems throughout the country. For most of these 
sites, the selected technology was not available at the time the rule 
was promulgated, so these technologies may be more cost-effective than 
the technologies that were considered in the rule. The results of this 
research may reduce some of the infrastructure burden, especially for 
small systems.

                               CARRYOVER

    Question. Please provide a list of all funds by program that EPA 
expects to carry over into fiscal year 2005.
    Answer. The chart below estimates the fiscal year 2005 carryover 
levels for EPA. The estimates are based on the most recent history of 
funds carried forward by the Agency.

                  FISCAL YEAR 2005 CARRYOVER ESTIMATES
                        [In thousands of dollars]
------------------------------------------------------------------------
                                                             Estimated
                      Appropriation                          Carryover
------------------------------------------------------------------------
Environmental Programs and Management...................         180,000
Science and Technology..................................         250,000
Inspector General.......................................          14,000
Buildings and Facilities................................           6,000
Leaking Underground Storage Tanks.......................           5,000
Superfund...............................................          50,000
Oil.....................................................               4
Federal Insecticide, Fungicide and Rodenticide Act......             500
State and Tribal Assistance Grants......................       1,400,000
------------------------------------------------------------------------

                    TOTAL MAXIMUM DAILY LOAD (TMDL)

    Question. What is the current status of the Total Maximum Daily 
Load requirements?
    Answer. States and EPA are accelerating implementation of the 
regulations, promulgated in 1985, as amended in 1992. States and EPA 
have now approved or established more than 10,000 TMDLs, approximately 
6,000 of them in the last 2 years in contrast to the less than 1,000 
TMDLs established prior to 1999. EPA continues to meet consent decree 
deadlines established in court orders covering 22 States. States and 
EPA also continue to work to improve the scientific rigor of the list 
of waters needing TMDLs, the quality of TMDLs, and to ensure that TMDLs 
are used to achieve water quality goals by incorporating them in 
watershed planning processes.
    To accomplish these goals EPA has issued guidance to improve the 
listing process. The guidance recommends that two separate statutory 
requirements (sections 303(d) and 305(b)) be addressed together to 
provide an integrated and comprehensive picture of the status of a 
State's water quality; the integrated report. The guidance also asks 
States to develop and make public their water quality assessment 
methodologies. The guidance clarifies that waters do not have to be 
listed as needing a TMDL if other programs designed to achieve water 
quality standards are in place and being implemented. EPA has also 
issued guidance for use of CWA Section 319 funding to ensure that funds 
are used to develop and implement watershed plans that incorporate 
completed TMDLs.

                     NONPOINT SOURCES OF POLLUTION

    Question. What is the current status of plans to control nonpoint 
source pollution? At what point do we expect States to have plans in 
place? What are the anticipated costs to implement these plans? What 
are anticipated costs to the various industries, such as mining, 
farming, agriculture and forestry, to implement adequate plans?
    Answer. Since 1990, all States have had approved nonpoint source 
management programs in place and have received annual appropriations of 
Section 319 funds to enable them to implement their programs. Of the 
$238 million appropriated by Congress in fiscal year 2004, States are 
using $100 million of these funds to develop and implement watershed-
based plans to restore waters that have been impaired by nonpoint 
source pollution. EPA anticipates that each year States will develop 
several watershed-based plans. States will implement the plans by using 
Section 319 funds, USDA aid, other available Federal funds State funds, 
and other resources and authorities as needed to successfully address 
the water quality problems that exist in the watershed. It is 
anticipated that it will require a number of decades to develop and 
comprehensively implement plans for all watersheds.
    Each plan will be uniquely tailored to the nonpoint source problems 
that exist in the watershed for which the plan is being developed and 
implemented. Each watershed is different, often vastly different, from 
one another, and thus the water quality problems, solutions, and the 
costs of implementing those solutions will vary widely. In the ``Clean 
Watersheds Needs Survey 2000'' published by EPA in August 2003, EPA 
used two different estimating techniques to estimate total nonpoint 
source needs. These two estimates provided cumulative national nonpoint 
source needs of $13.8 billion and $21.5 billion. For a variety of 
reasons explained in that report, both of these figures are regarded as 
under-estimates due to the unavailability of adequate data to estimate 
the costs of controlling certain nonpoint source pollution categories.

                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby

                      ANNISTON, ALABAMA: CLEAN UP

    Question. Administrator Leavitt, on January 10, 2002 I sent a 
letter to your predecessor, Administrator Whitman expressing my concern 
about the PCB pollution in and around Anniston, Alabama and in April of 
2002 the VA-HUD Subcommittee held a hearing to address the issues that 
the citizens of Anniston, Alabama were facing with respect to the 
continued pollution and clean-up efforts.
    Since that time I have worked with the community, EPA and ATSDR to 
ensure that the residents of Anniston were cared for, that the clean-up 
of their community was a priority and that the Federal Government did 
not obviate big business from its obligations to the current citizens 
of Anniston and to the future generations who will want to call 
Anniston home.
    Today, I am still concerned about the citizens of Anniston and the 
pollution that we continue to discover. Widespread PCB contamination 
remains a constant concern and since we began testing, we now 
understand that lead contamination is a significant problem in the 
greater Anniston area as well. It seems as if Anniston was a virtual 
dumping ground for all sorts of industrial pollution.
    I believe that this situation is unacceptable and today my question 
is the same that it was in April of 2002 when I first asked it--what is 
the Federal Government doing to clean up this mess and who is being 
held accountable?
    Answer. EPA continues to be actively involved in cleanup activities 
in Anniston for both polychlorinated biphenyl (PCB) and lead 
contamination.
    In March of 2002, EPA filed a complaint against Solutia, Inc. and 
Pharmacia Corporation in Federal District Court and lodged a Consent 
Decree partially settling that complaint. The Consent Decree was 
entered as an Order of the Court on August 4, 2003. The Consent Decree 
requires the Potentially Responsible Parties (PRPs), under EPA 
oversight, to conduct cleanups of residential properties and perform a 
study to determine the full nature and extent of contamination and to 
evaluate remediation alternatives at the entire Anniston PCB Site.
    Residential properties with greater than one part per million of 
PCBs are required to be cleaned up pursuant to the Consent Decree. To 
date, the PRPs, with EPA oversight, have cleaned up 27 properties in 
this condition. The work at 130 properties known to be in need of 
cleanup is progressing steadily. Additional properties will be 
identified as sampling progresses.
    Although residential cleanups will address a major source of 
exposure to the citizens, more comprehensive studies of contamination 
in the Anniston area are needed. The study to determine the nature and 
extent of contamination and to evaluate alternatives for cleanup is the 
Remedial Investigation/Feasibility Study (RI/FS). This study is 
underway. In planning the study, EPA is seeking input from all Federal 
and State stakeholders, including environmental agencies, public health 
agencies, and natural resource trustees.
    EPA has also discovered a significant number of residential 
properties contaminated with lead above acceptable levels for 
residential use. EPA has been cleaning up these properties on a time 
critical basis as they are identified through ongoing sampling and as 
resources and time permit. To date, EPA has cleaned up 86 residential 
properties contaminated with lead. An additional 206 properties 
contaminated with lead have already been identified and are awaiting 
cleanup. Enforcement efforts to identify PRPs for the lead 
contamination are underway. In the past, Anniston was a major center of 
operations for soil pipe foundries, as well as a number of other 
industries which may have contributed to widespread lead contamination 
in the area.
    Question. Administrator Leavitt, I am most interested in the 
progress that has been made to mitigate the pollution to date?
    Answer. To date, the Potentially Responsible Parties (PRPs), with 
EPA oversight, have cleaned up 27 properties contaminated with PCBs. 
The cleanup of 130 properties known to be in need of cleanup is 
progressing steadily. Additional properties will be identified as 
sampling progresses. In addition, a Remedial Investigation/Feasibility 
Study is underway to determine the full nature and extent of 
contamination and to develop cleanup alternatives for consideration. 
Experts at EPA are working with other Federal agencies (Department of 
Interior, ATSDR) and our counterparts in the State of Alabama (Alabama 
Department of Environmental Management, the Department of Conservation 
and Natural Resources, Geological Survey of Alabama), as well as 
interested member of the community, to ensure that the study satisfies 
the needs of all stakeholders.
    In addition, EPA has cleaned up 86 residential properties 
contaminated with lead. An additional 206 properties contaminated with 
lead have already been identified and are awaiting cleanup. Enforcement 
efforts to identify PRPs for the lead contamination are underway. In 
the past, Anniston was a major center of operations for soil pipe 
foundries, as well as a number of other industries which may have 
contributed to widespread lead contamination in the area.
    Question. One of the concerns originally expressed by the citizens 
of Anniston was the involvement of Monsanto in the testing and clean-up 
efforts. If I recall correctly, EPA was to handle, or shall I say 
oversee, the testing being conducted. I am interested to know 
specifically what EPA's involvement has been to date, what the current 
cost estimate of clean-up is, and how long EPA anticipates the cleanup 
will take.
    Answer. Under the Consent Decree, the Potentially Responsible 
Parties (PRPs) provide cleanup related documents, such as sampling 
plans, to EPA for review, comment, and approval. Additionally, EPA and/
or its contractors accompany and oversee the PRPs during sampling and 
cleanup work.
    To date, the PRPs, with EPA oversight, have cleaned up 27 
residential properties contaminated with PCBs. The cleanup of an 
additional 130 residential properties known to be in need of cleanup is 
progressing steadily. Additional properties will be identified as 
sampling progresses. It is EPA's understanding that it costs 
approximately $30,000 to clean up each contaminated residence. Until 
all residences needing cleanup are identified, total costs and time 
required to complete the cleanup cannot be accurately estimated.
    To date, EPA has cleaned up 86 residential properties contaminated 
with lead. An additional 206 properties contaminated with lead have 
already been identified and are awaiting cleanup. Presently, it costs 
approximately $30,000 to clean up each residence. This is similar to 
the PCB cleanups primarily because the cleanup consists of the same 
solution; removal of contaminated soil and replacement with clean fill. 
Until all residences needing cleanup are identified, total costs and 
time required to complete the cleanup cannot be accurately estimated.
    EPA is still in the process of determining the extent of 
contamination and the time required to address the contamination. The 
study to determine the nature and extent of contamination is called a 
Remedial Investigation/Feasibility Study (RI/FS). Based upon the 
complexity and scope of the RI/FS which includes approximately 40 miles 
of creeks and waterways, the complete RI/FS may take 2 to 4 years to 
complete. It is presently envisioned that the RI/FS will be broken into 
sub-units called operable units. The RI/FS for some operable units will 
be completed within 2 years, while others will take longer to complete.
    When the RI/FS for each operable unit is complete, a remedy will be 
proposed for public comment. EPA will compile and respond to all public 
comments. After consideration of public comments, EPA will finalize the 
remedy in a Record of Decision. It will then be necessary to negotiate 
a cleanup agreement with the PRPs. Once the cleanup agreement is 
approved in Federal District Court, the remedy can be implemented. The 
total time required to complete cleanup activities in Anniston will 
depend on the remedies selected.

                  ANNISTON, ALABAMA: PCB CONTAMINATION

    Question. Following the acknowledgment that PCB contamination in 
Anniston, Alabama was a serious problem that must be addressed, 
Congress included funding for the Agency for Toxic Substances and 
Disease Registry (ATSDR) to conduct a study to determine the extent of 
the problem. Last year, ATSDR found that exposure to PCBs in Anniston 
posed a serious public health hazard. They recommended that sampling of 
properties for PCB contamination continue and that rapid clean-up 
efforts be continued.
    Administrator Leavitt, has the EPA taken action on these 
recommendations? If so, what actions have been taken and what is EPA's 
anticipated timeline for further activity? If not, why not?
    Answer. EPA is taking action on ATSDR's recommendations. Pursuant 
to the Consent Decree, the Potentially Responsible Parties (PRPs) are 
cleaning up properties known to be in need of cleanup on an expedited 
basis and are continuing to sample in an effort to identify additional 
properties for cleanup. EPA consults with ATSDR throughout the Remedial 
Investigation/Feasibility Study (RI/FS) process. EPA will provide ATSDR 
copies of all data collected in every media (air, soil, groundwater, 
sediment, surface water, and biota). EPA will work closely with ATSDR 
to get input on the most appropriate remedies to protect public health.

                        ANNISTON, ALABAMA: LEAD

    Question. As I mentioned earlier, lead is another pollutant that 
has been discovered since testing began in Anniston and surrounding 
communities. What, if anything, is EPA doing to address the lead 
problem in Anniston and how does it fit into the larger clean-up 
efforts currently underway?
    Finally, I want to acknowledge that the ATSDR is in the process of 
conducting a multi-faceted health study spanning nearly 3 years. I hope 
that the EPA will work with ATSDR to ensure that conclusions and 
recommendations from this or any other studies are quickly and 
effectively put into action.
    Answer. EPA has also discovered a significant number of residential 
properties contaminated with lead above acceptable levels for 
residential use. EPA has been cleaning these properties up on a time 
critical basis as they are identified through ongoing sampling and as 
resources and time permit. To date, EPA has cleaned up 86 residential 
properties contaminated with lead. An additional 206 properties 
contaminated with lead have already been identified and are awaiting 
cleanup. There has been some overlap between the Anniston PCB Site and 
the Anniston Lead Site. Presently, there are a significant number of 
properties which have both PCB and lead contamination.
    Enforcement efforts to identify potentially responsible parties for 
the lead contamination are underway. In the past, Anniston was a major 
center of operations for soil pipe foundries, as well as a number of 
other industries which may have contributed to widespread lead 
contamination in the area.
    As in the past, EPA will continue to work with ATSDR to ensure that 
required steps are implemented as quickly and effectively as possible. 
EPA is aware that ATSDR is working through Jacksonville State 
University (JSU) in Alabama to develop an area wide exposure registry. 
EPA is also sharing sampling data directly with the JSU.

                                 ______
                                 
               Questions Submitted by Senator Larry Craig

                            ARSENIC STANDARD

    Question. Administrator Leavitt, given that compliance with the new 
arsenic drinking water standard will financially cripple many towns and 
small communities in the Intermountain West, what is EPA doing in the 
following three areas:
  --Research into technologies to reduce the cost of compliance?
  --Financial assistance to come into compliance? and
  --Approval of requests to delay the date of compliance or provide 
        other regulatory relief?
    Answer. EPA has undertaken a number of activities to reduce the 
burden of the arsenic rule on small systems. EPA is helping States, 
Tribes, and systems prepare for implementation of the arsenic rule by 
providing training and technical assistance on State and Tribal 
requirements, treatment technologies, waste disposal, and EPA's small 
system compliance strategy.
    The State can use authority provided by the Safe Drinking Water Act 
to phase in the arsenic rule over time. This authority will allow 
States sufficient time to allot portions of their Drinking Water 
Revolving Fund (DWSRF) over the next several years to systems adding 
arsenic removal treatment. States can give eligible small systems 
(those serving fewer than 3,300 people) up to the year 2015 to come 
into compliance (14 years after the rule was promulgated). States are 
currently working with EPA on addressing several arsenic compliance 
exemption requests. For example, Idaho's fiscal year 2004 Intended Use 
Plan for the DWSRF showed that the State has $23 million available to 
provide in drinking water assistance and will receive an additional 
$8.3 from the fiscal year 2004 allotment.
    Pursuant to a Memorandum of Agreement signed in 2002, EPA is also 
working with the Rural Utilities Service (RUS) of the Department of 
Agriculture to target grants and loans for small communities for 
projects that address arsenic-related treatment upgrades. In fiscal 
year 2003, 759 water projects were funded by the RUS, which used $769 
million of the Water and Environment Program funds.
    The Agency has made a significant investment in small system 
treatment technologies by allocating $20 million to fund: (1) the 
development of small system treatment technologies, (2) small business 
grants for arsenic treatment research, and (3) the development of 
specific guidance to help systems choose, operate, and maintain 
appropriate technologies. Treatment Technology Demonstration projects 
are taking place in 8 States (Listed below). One project is in the 
state of Idaho. Additional demonstrations will be selected this year.
    The Agency has established a comprehensive research effort to 
identify new low cost arsenic treatment technologies, document their 
cost when compared to more traditional technologies and test and 
document their effectiveness. This research program consists of five 
elements:
  --Small Business Innovation Research (SBIR) and Science to Achieve 
        Results (STAR).--Through this effort, the Agency has supported 
        small business development of innovative arsenic removal 
        technologies that could significantly reduce costs for small 
        communities and grants to academic and non-profit institutions 
        to perform exploratory research on arsenic treatment 
        technologies.
  --Treatment Technology Demonstrations.--The Agency has initiated the 
        full-scale demonstration of commercially ready arsenic 
        treatment technologies at selected small water systems across 
        the Nation. Twelve sites were selected for round one of the 
        demonstration program and 32 additional demonstration sites are 
        currently being considered under round two of the program. The 
        Agency has assured that the demonstration sites are distributed 
        in areas facing high arsenic levels across the Nation including 
        the Intermountain West.
  --Environmental Technology Verification (ETV).--Under the Agency's 
        Environmental Technology Verification Program, four 
        commercially ready arsenic treatment technologies have been 
        verified: (1) Hydranautics-Reverse Osmosis Membrane Element 
        Module, (2) Kinetico, Inc.--Macrolite Coagulation and 
        Filtration System, (3) Koch Membrane Systems--Reverse Osmosis 
        Membrance Module, (4) Watermark Technologies, Coagulation and 
        Filtration System. Two other adsorptive treatment technologies 
        are currently being tested under this short-term testing 
        program.
  --Enhanced Internal Research.--Through its in-house research program, 
        the Agency is exploring new methods to identify and predict the 
        occurrence of areas with high arsenic levels in ground water. 
        Research studies are being conducted in Maine and Oklahoma. The 
        goal of this research is to provide tools and information to 
        assist communities in sighting new ground water sources in 
        areas with low arsenic and to possibly re-engineer existing 
        wells, thereby reducing compliance costs by avoiding the need 
        for new add-on treatment.
  --Training and Technical Assistance.--As research program results are 
        available, Agency scientists and engineers provide information 
        to technical groups, water operators, water systems and others.
    Detailed information on the research program is available at 
www.epa.gov/ORD/NRMRL/arsenic. In addition, as directed by the 
Congressional Appropriations Committee the Agency is completing a 
report on the status of the Arsenic research program. Also, under the 
Government Performance and Results Act, the Agency will be completing 
two key reports on cost and performance of full-scale arsenic treatment 
technology demonstrations this fiscal year.

                         DEMONSTRATION PROJECTS
------------------------------------------------------------------------
                                                  Technology To Be
                   Site                             Demonstrated
------------------------------------------------------------------------
Rimrock, AZ...............................  AdEdge Iron Media
Valley Vista, AZ..........................  Kinetico Activated Alumina
City of Fruitland, Fruitland, ID..........  Kinetico Ion Exchange
Queen Anne's County, Stevensville, MD.....  Severn Trent Iron Media
Brown City, Brown City, MI................  Severn Trent Iron Media
Town of Climax, Climax, MN................  Kinetico Oxidation/Co-
                                             Precipitation/Filtration
City of Lidgerwood, Lidgerwood, ND........  Kinetico Modified Treatment
Holiday Acres Water & Wastewater Service,   ADI Iron Adsorption/
 Allenstown, NH.                             Regeneration
Rollinsford Water & Sewer District,         AdEdge Iron Media
 Rollinsford, NH.
Desert Sands Mutual Domestic Water          Severn Trent Iron Media
 Consumers Association, Inc., Anthony,  NM.
Nambe Pueblo, NM..........................  AdEdge Iron Media
South Truckee Meadows GID, Washoe County    US Filter Iron Media
 Water Resources, Reno, NV.
------------------------------------------------------------------------

                    OMBUDSMAN REVIEW OF BUNKER HILL

    Question. Today, the EPA Ombudsman released its review of EPA's 
activities at the Bunker Hill Site in Idaho.
    Do you have a reaction to the Ombudsman's findings and could you 
provide a schedule for providing your response to the recommendations, 
and when any corrective actions will be implemented?
    Answer. EPA is in general agreement with the Ombudsman's findings. 
The report contained recommendations for EPA regarding dissemination of 
information on the site, the Basin Commission, and the Lake Coeur 
d'Alene Management Plan. EPA has 90 days from the report date (March 
24, 2004) to provide a written response to the report recommendations. 
We will provide a response to the specific recommendations before June 
23, 2004. We have already started to implement the report 
recommendations and expect to act on all of the recommendations by June 
2004.

                                 ______
                                 
            Questions Submitted by Senator Pete V. Domenici

                           ARSENIC STANDARDS

    Question. Mr. Leavitt, as you are aware, new EPA arsenic Federal 
drinking water regulations will take effect in 2006. The EPA estimates 
that roughly 97 percent of the systems expected to exceed the standard 
are small systems, those serving 10,000 people or less.
    The new standard is estimated to cost small communities $600 
million annually and require $5 billion in capital outlays. For some 
households, necessary infrastructure upgrades will raise water prices 
to over $100 per month.
    These small communities lack the economies of scale present in 
larger communities and are less able to spread out costs. Furthermore, 
small and rural communities have lower than median incomes. These two 
factors result in a greater per capita cost of compliance coupled with 
a decreased ability to pay for the improvements. Mr. Leavitt, 
implementing the impending EPA arsenic regulation will cause great 
financial hardship to our small and rural communities.
    Mr. Leavitt, many citizens of my home State of New Mexico live in 
rural areas and have lower than average incomes. As such, the burden 
complying with these standards is great. Implementing the new standards 
will cost rural New Mexicans between $370 and $440 million in capital 
outlays plus $18 million per year in operating costs.
    What plans does the EPA have to help small and rural communities 
pay for the billion of dollars in upgrades necessary to comply with the 
arsenic standards?
    Answer. EPA understands that many communities will face a challenge 
in carrying out the new arsenic standard. The Agency has a number of 
activities underway to provide financial, technical and compliance 
assistance and to identify new technologies that may serve to be more 
affordable for small systems.
    EPA estimates that of the 74,000 systems subject to the new arsenic 
maximum contaminant level, only 3,000 community water systems and 1,100 
non-transient, non-community water systems will need to install 
treatment for compliance. The total national capital costs for 
treatment technology and infrastructure to meet the arsenic standard 
are estimated to be almost $900 million. Small systems make up the 
majority of the systems impacted by the rule, but the majority of the 
capital costs will be incurred by larger systems that serve more than 
10,000 people.
    EPA's Drinking Water State Revolving Fund (DWSRF) program will play 
an important role in helping many systems install treatment needed to 
protect the health of their customers. State DWSRF programs are 
currently providing more than $1.2 billion per year using annual 
appropriations of $850 million, bond proceeds, repayments and 
additional funds. More than 40 percent of the funding and 75 percent of 
the loan agreements are going to small systems that serve fewer than 
10,000. The low-interest loans and disadvantaged assistance provided 
through the program will prove critical in helping States address needy 
communities. Some States, like Arizona, are already beginning to fund 
projects for arsenic. Close to one-half of the top 30 projects on the 
State's priority funding list for 2004 address arsenic treatment. 
Pursuant to a Memorandum of Agreement signed in 2002, EPA is also 
working with the Rural Utilities Service (RUS) of the Department of 
Agriculture to target grants and loans for small communities for 
projects that address arsenic-related treatment upgrades.
    States can use authority provided by the Safe Drinking Water Act to 
phase in the arsenic rule over time. This authority will allow States 
sufficient time to provide DWSRF assistance over the next several years 
to systems adding arsenic removal treatment. States can give eligible 
small systems (those serving fewer than 3,300 people) up to the year 
2015 (14 years after the rule was promulgated) to come into compliance.
    The Agency has made a significant investment in small system 
treatment technologies by allocating $20 million to fund: (1) the 
development of small system treatment technologies, (2) small business 
grants for arsenic treatment research, and (3) the development of 
specific guidance to help systems choose, operate, and maintain 
appropriate technologies. Treatment Technology demonstration projects 
are taking place in 9 States (listed below). Two sites in New Mexico 
were chosen: Desert Sands MDWCA in Anthony, New Mexico and the Tribal 
system at Pueblo of Nambe. Additional demonstrations will be selected 
this year. The table on the following page highlights some of the 
technologies being tested and their locations.
    Finally, EPA Region 6 is working through the University of New 
Mexico Environmental Finance Center to conduct pilot studies for 
arsenic removal at three small tribal New Mexico water systems. The 
technologies being tested, adsorbent media operated without pH 
adjustment or regeneration, require minimal operator training.

               ARSENIC TREATMENT TECHNOLOGY DEMONSTRATIONS
------------------------------------------------------------------------
                                                  Technology To Be
                   Site                             Demonstrated
------------------------------------------------------------------------
Rimrock, AZ...............................  AdEdge Iron Media
Valley Vista, AZ..........................  Kinetico Activated Alumina
City of Fruitland, Fruitland, ID..........  Kinetico Ion Exchange
Queen Anne's County, Stevensville, MD.....  Severn Trent Iron Media
Brown City, Brown City, MI................  Severn Trent Iron Media
Town of Climax, Climax, MN................  Kinetico Oxidation/Co-
                                             Precipitation/Filtration
City of Lidgerwood, Lidgerwood, ND........  Kinetico Modified Treatment
Holiday Acres Water & Wastewater Service,   ADI Iron Adsorption/
 Allenstown, NH.                             Regeneration
Rollinsford Water & Sewer District,         AdEdge Iron Media
 Rollinsford, NH.
Desert Sands Mutual Domestic Water          Severn Trent Iron Media
 Consumers Association, Inc., Anthony,  NM.
Nambe Pueblo, NM..........................  AdEdge Iron Media
South Truckee Meadows GID Washoe County     US Filter Iron Media
 Water Resources, Reno, NV.
------------------------------------------------------------------------

    Question. Last year, the Federal Government appropriated over $2.6 
billion for water infrastructure funding. Do you believe that the 
Federal Government should also provide funding to States and 
municipalities so that they can comply with EPA mandated arsenic 
standards?
    Answer. EPA has promoted use of the DWSRF program that, along with 
Federal funding, leverages much more investment to help States and 
communities comply with the arsenic standard and other recent rules. In 
fact, many States are beginning to fund arsenic-related projects in 
anticipation of the 2006 compliance deadline. The program has a fact 
sheet that highlights how it can be used to help systems comply with 
the revised standard (http://www.epa.gov/safewater/dwsrf/fund-
arsenic.pdf).
    The Agency has also made a significant investment in small system 
treatment technologies by allocating $20 million to fund: (1) the 
development of small system treatment technologies, (2) small business 
grants for arsenic treatment research, and (3) the development of 
specific guidance to help systems choose, operate, and maintain 
appropriate technologies. Treatment Technology demonstration projects 
are taking place in 9 States (listed below). Two of the projects are in 
the State of New Mexico. Additional demonstrations will be selected 
this year.

                         DEMONSTRATION PROJECTS
------------------------------------------------------------------------

------------------------------------------------------------------------
Rimrock, AZ...............................  AdEdge Iron Media
Valley Vista, AZ..........................  Kinetico Activated Alumina
City of Fruitland, Fruitland, ID..........  Kinetico Ion Exchange
Queen Anne's County, Stevensville, MD.....  Severn Trent Iron Media
Brown City, Brown City, MI................  Severn Trent Iron Media
Town of Climax, Climax, MN................  Kinetico Oxidation/Co-
                                             Precipitation/Filtration
City of Lidgerwood, Lidgerwood, ND........  Kinetico Modified Treatment
Holiday Acres Water & Wastewater Service,   ADI Iron Adsorption/
 Allenstown, NH.                             Regeneration
Rollinsford Water & Sewer District,         AdEdge Iron Media
 Rollinsford, NH.
Desert Sands Mutual Domestic Water          Severn Trent Iron Media
 Consumers Association, Inc., Anthony,  NM.
Nambe Pueblo, NM..........................  AdEdge Iron Media
South Truckee Meadows GID Washoe County     US Filter Iron Media
 Water Resources, Reno, NV.
------------------------------------------------------------------------

                        safe drinking water act
    Question. As with arsenic, small and rural communities will soon be 
required to meet Safe Drinking Water Act minimum standards for other 
contaminants. EPA promulgated minimum parts per billion (ppb) standards 
for other contaminants such as uranium, perchlorate, radon, and MTBE 
which will also be very costly to small and rural communities are just 
down the pike.
    The financial hardship borne by small communities in implementing 
the arsenic and other EPA standards will be significant. Operators of 
many rural water systems with whom I have spoken said they will not be 
able to afford these costly upgrades.
    Do you anticipate having a widely accepted and scientifically sound 
review which will justify the expenditure of billions of dollars by 
small communities before promulgating new minimum standards?
    Answer. EPA understands the challenges that small and rural 
communities face in implementing new drinking water regulations needed 
to protect public health. The 1996 Amendments to the Safe Drinking 
Water Act (SDWA) anticipated the challenge water systems would face to 
implement revised public health standards, and created a suite of 
tools, including the Drinking Water State Revolving Fund (DWSRF), to 
help systems successfully meet these challenges. Other available tools 
include varying compliance time frames through technical assistance, 
and funding through the Rural Utilities Service (RUS) of the U.S. 
Department of Agriculture. Together, the State DWSRF programs and RUS 
provide more than $2 billion to public water systems for capital 
improvements and infrastructure needs. We will use these and other 
tools to help mitigate and minimize impacts that new standards may have 
on small communities.
    With respect to the specific regulations referenced in your 
question, EPA promulgated National Primary Drinking Water Regulations 
for uranium in 2000, and arsenic in 2001. EPA has not promulgated final 
standards for radon, nor has the Agency made the determination that a 
regulation is appropriate for perchlorate or MTBE.
    Before the Agency develops a standard to limit the amount of a 
substance in public drinking water systems, EPA is required by the SDWA 
to make specific determinations about the contaminant in drinking 
water. First, EPA must determine that it occurs at both a frequency and 
level which represents a public health concern, and second, that 
regulating the contaminant represents a ``meaningful opportunity for 
health risk reduction'' for persons served by public water systems. 
Once a determination is made to regulate a contaminant, EPA develops a 
regulation using the best available, peer reviewed science in 
accordance with sound and objective scientific practices. Both the 
scientific and economic analyses underlying the rule undergo a thorough 
review.
    Stakeholder involvement and understanding is a key component of the 
regulatory development process. In addition to providing the 
opportunity for public comment in the Federal Register, the Agency 
holds stakeholder meetings to discuss EPA's plans and progress and 
makes draft documents available for comment. This includes obtaining 
stakeholder input on costs and benefits for any rule being developed. 
EPA often consults with the experts through formal and informal expert 
review processes and considers comments from these groups in the 
preparation of the final documents. In addition, major scientific work 
products supporting EPA's rules receive formal peer review to ensure 
that they are scientifically sound.
    Question. Do you believe that the Federal Government should also 
provide funding to States and municipalities so that they can comply 
with any additional drinking water standards promulgated by the EPA?
    Answer. Congress appropriated $845 million (incorporates the 
Omnibus Appropriation's 0.59 percent rescission across all budget line 
items) for the DWSRF program in the fiscal year 2004 budget. The DWSRF 
is the primary vehicle by which EPA helps States address water system 
infrastructure upgrades that are needed to protect public health and 
ensure compliance with the Safe Drinking Water Act (SDWA). Through the 
auspices of the States, the program is focused on providing low-
interest assistance and, where appropriate, additional subsidies to 
disadvantaged communities for high priority projects. Through fiscal 
year 2003, EPA has awarded over $5.5 billion to States for needed 
drinking water system projects and, as previously mentioned, in fiscal 
year 2004, Congress appropriated $845 million for the DWSRF. The 
administration recognizes the critical role that the DWSRF plays in 
water infrastructure investment and has committed to fund the program 
at a level of $850 million annually through 2018. States are also 
coordinating funding with the Rural Utilities Service of the U.S. 
Department of Agriculture to address the special needs of smaller 
communities.
    EPA has promoted use of the DWSRF program to address new and 
existing drinking water standards. The program's website includes fact 
sheets that explain how the DWSRF can be used to address projects 
needed to comply with recent rules including the Stage 1 Disinfectants 
and Disinfection Byproducts, Long Term 1 Enhanced Surface Water 
Treatment, Arsenic and Radionuclides Rules (see http://www.epa.gov/
safewater/dwsrf.html).

                       WATER INFRASTRUCTURE NEEDS

    Question. In many communities along the U.S.-Mexico border, the 
water infrastructure needs have reached critical levels. Rapid and 
dense population growth along the border without the installation of 
adequate water and sewage systems has resulted in contamination of 
drinking water and sewage spewing down city streets. The people 
populating these border communities are truly living in squalor.
    In order to address the chronic environmental infrastructure 
deficit that exists along the border region, Congress established the 
Border Environment Infrastructure Fund. This fund ensures that border 
communities have access to a safe and reliable water supply and do not 
face the health dangers associated with human waste.
    In recent years, funding for this program has decreased 
significantly. This has resulted in an inability of border communities 
to meet their water infrastructure needs.
    Do you believe that the Federal Government should provide our 
border communities with funding for critical water infrastructure 
through the continued funding of the U.S.-Mexico Border Infrastructure 
Program?
    Answer. The Agency's fiscal year 2005 budget request of $50 million 
reflects our continued commitment to providing funding for critical 
water and wastewater infrastructure projects along the U.S.-Mexico 
Border. This request will allow continuation of EPA participation in 
border infrastructure funding through fiscal year 2005 at roughly the 
current pace. As of fiscal year 2004, Congress has appropriated over 
$700 million to the U.S.-Mexico Border program. Projects that are 
currently under construction or are operational have a total value of 
over $1.4 billion.

                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy

                       MERCURY RULE REQUIREMENTS

    Question. The administration has repeatedly asserted that the 
reason they have retreated from a more aggressive mercury regulation 
that is inline with the Clean Air Act MACT requirements is that the 
technology is not available to reduce mercury emissions further. This 
contradicts recent industry reports and statements where they say the 
opposite is true. Last year, the American Coal Council's magazine 
included an article talking about the effectiveness of existing 
technology in reducing mercury emissions. An industry representative 
testified before the House Energy and Commerce Committee last year that 
these technologies show ``promising results.'' The fact is that tests 
already have shown we can reach a 90 percent reduction. We can also do 
it much more quickly than the administration's proposal requires. A 
recent report in the Washington Post quotes industry experts as saying 
that there could be industry-wide application of new technologies by 
2009. Please explain why the administration chose a longer timeline.
    Answer. The Clean Air Act requires emissions limitations based on 
the average achieved by the best performing 12 percent of existing 
sources. Further, the U.S. Environmental Protection Agency (EPA) does 
not believe that electric utility, coal, and pollution control industry 
statements contradict its view that advanced mercury control 
technologies are not yet ready for commercialization. The EPA agrees 
with industry that these new technologies show great promise, but are 
not, and will not be, available within a 3- to 4-year time-frame. Our 
belief is based on the following points:
  --To date, there have been four full-scale field tests on activated 
        carbon injection (ACI), the most promising mercury-specific 
        control technology on the near-term horizon. These tests have 
        been conducted on three bituminous-fired units and one 
        subbituminous-fired unit. The longest period of continuous ACI 
        operation was conducted for a 9-day period at one unit and for 
        4- to 5-day periods at the other three units. The short 
        duration of continuous ACI operation at this limited number of 
        units is insufficient to conclude that ACI technology can be 
        used to comply with a national standard that requires 
        continuous compliance for the remainder of the life of the 
        unit.
  --The initial four tests provided information that ACI could be 
        effective on both Eastern bituminous coals and Western sub-
        bituminous coals for short periods of time, with removal 
        ranging from 70 percent for Western coals to 90 percent for 
        Eastern bituminous coals. To provide additional, longer-term 
        information on ACI performance, the DOE has contracted with 
        ALSTOM and ADA-ES (the ACI technology firm with the most 
        current experience in the field) to conduct ACI tests on four 
        additional coal-fired power plants over a 3-year period for 
        longer duration tests. The testing will provide a better 
        understanding of the performance capabilities of power plants 
        that could be impacted by the pending regulations by addressing 
        questions remaining following the four initial tests, such as 
        the effectiveness of the technology on other coal/boiler/
        activated powdered carbon combinations, the capture of 
        activated carbon in small and moderate size electrostatic 
        precipitators (ESP), integrated performance with flue gas 
        desulfurization (FGD), mercury removal on sub-bituminous coals 
        with dry scrubbers, process and equipment costs for various 
        levels of mercury removal, plant impacts such as by-product 
        contamination, and the relationship between chlorine content 
        and mercury removal levels.
  --One long-term ACI test was initiated in April 2003 on a bituminous-
        fired unit. This test was to evaluate the mercury removal 
        efficiency of ACI over a period of several months to 1 year, 
        further assess the impact of ACI on balance-of-plan operations 
        (i.e., how will ACI impact maintenance frequency and costs, ash 
        disposal and utilization, internal plant energy use, etc.), and 
        provide additional information on design characteristics and 
        costs of ACI technology for other installations. Because of 
        problems encountered, this test has not been completed and thus 
        the final results are not known. However, it is our 
        understanding that this test has shown the ability of ACI, when 
        used at a bituminous-fired unit, to average 86 percent mercury 
        removal over an extended period of time but has highlighted 
        design problems that must be corrected prior to full scale 
        installation on other units.
  --Additional ACI testing has been conducted on less than full-scale 
        operations at a limited number of other sites. However, these 
        tests were also of short duration and provide little additional 
        information on how ACI will perform on a long-term continuous 
        basis.
  --To date, no ACI testing has been conducted on a coal-fired unit 
        equipped with a wet FGD system for sulfur dioxide removal. Wet 
        FGD systems are currently installed on approximately 13 percent 
        of the coal-fired units in the United States; this percentage 
        will increase as units are brought into compliance with the 
        proposed Clean Air Interstate Rule (previously called the 
        Interstate Air Quality Rule). As it is impractical to install 
        ACI downstream of the wet FGD (because of the saturated flue 
        gas stream), such installations would have to be installed 
        upstream, where existing ESP units are now placed. It is not 
        known what impact ACI will have on the operation of the wet 
        FGD. (For example, no particulate control device is 100 percent 
        efficient; therefore, it is likely that some activated carbon 
        will enter the wet FGD system.) Tests are currently on-going on 
        ACI on a wet-FGD equipped unit firing medium-sulfur bituminous 
        coal with another test planned for spring 2005 on a unit firing 
        high-sulfur bituminous coal.
  --On April 21, 2004, the U.S. Department of Energy (DOE) made a joint 
        announcement with WE Energies about the initiation of a joint 
        venture aimed at demonstrating technology that will achieve a 
        90 percent reduction in mercury emissions from coal-based power 
        plants. This 5-year project will involve the design, 
        installation, operation, and evaluation of an integrated system 
        on one coal-fired power plant to control emissions of mercury, 
        particulate matter, sulfur dioxide, and nitrogen oxides.
  --The electric utility industry reportedly has had trouble obtaining 
        solid, guaranteed quotes for ACI installation on coal-fired 
        units. We have heard from a number of utility companies 
        indicating that they have tried without success to get bids on, 
        and guarantees for, ACI installations. To date, we are aware of 
        only one permit, other than a federally co-funded program (on a 
        unit to commence operation in 2007 and burn low-sulfur Western 
        coal), that has been issued that included ACI technology 
        (MidAmerican Energy Station permit issued by the Iowa 
        Department of Natural Resources). The lack of additional 
        examples is indicative of the lack of industry confidence in 
        guaranteeing permit levels at this time.
    Thus, we conclude that 90 percent emissions reduction is not yet 
achievable on a long-term basis for all coal types, and ACI is not 
ready for wide-spread commercial installation on coal-fired electric 
utility units in a shorter time-frame than the EPA has outlined in its 
proposed regulations. We anticipate that our regulations will serve as 
a driver to ensure that ACI (and/or other hybrid sorbent technologies) 
is developed in a more timely manner than would otherwise be the case.
    Question. Also, please provide the EPA analysis that was conducted 
to determine reduction targets over the timeframe in the proposed rule 
and detail what additional analysis the Agency will do before 
finalizing the rule this year.
    Answer. As part of the analysis for the proposed rule EPA carefully 
studied the availability of various mercury-control technologies and 
the timeframe for achieving reduction targets. This analysis is 
documented in the proposed rule and can also be found at http://
www.epa.gov/air/mercuryrule/. A detailed discussion of the Phase 1 and 
Phase 2 caps is given in proposed rule (See page 4698 and 4699 of 
Volume 69 of the Federal Register). The proposed rule reads:

    ``Our proposed 15 ton cap in 2018 is grounded largely in the 
modeling completed in support of the President's Clear Skies 
initiative. This modeling suggests that, assuming technologies such as 
ACI become available; such a cap will create an incentive for certain 
plants to install these newer technologies. It also suggests that such 
market-based controls should not have any significant impact on power 
availability, reliability, or pricing. Nor should a 15-ton cap cause 
any significant shift in the fuels currently utilized by power plants 
or in the source of these fuels. Sensitivity analyses indicate that a 
more stringent cap could have potentially significant impacts on fuels 
and/or power availability, reliability, or pricing. Less stringent caps 
do not appear warranted based on our expectations about technology 
development and our modeling analysis of the potential impacts of the 
15-ton cap.''

    This is an ongoing process and we will use the most current 
information available when working to finalize the Clean Air Mercury 
Rule, including a careful study of the information that we receive 
during the comment period for the proposed rule. Since we are still in 
the comment period, it would be premature to speculate on how new 
information received will affect our analysis prior to finalizing the 
rule in March 2005.
    Question. Recent reports from the Department of Energy estimate 
that the power industry proposes to build, and put into service by 
2010, at least 94 new coal-fired power plants across the United States. 
These power plants will generate enough energy to power 62 million 
homes, and add an additional 120 million cubic feet of emission gases. 
Based on the geographic distribution of these plants, there about 28 
plants situated in the midwest and northeast, the area from which most 
of Vermont's mercury air pollution blows in from. What requirements 
these plants will have to control mercury under the Clean Air Act and 
if any of the latest technologies--like activated carbon injection--
will be used to control mercury emissions from these plants?
    Answer. In March 2005 EPA will issue a final regulation that will 
require reductions of mercury emissions from power plants either under 
Section 111 or Section 112 of the Clean Air Act. Depending on the part 
of the Clean Air Act chosen, the regulations will either take the form 
of a cap-and-trade program or a Maximum Achievable Control Technology 
(MACT) standard. EPA's preferred alternative is a cap-and-trade program 
under Section 111.
    One of the key advantages of a cap-and-trade program is that 
pollution is reduced even as the economy expands and new power plants 
are built. Traditional standards such as MACT standards require 
reductions in emissions at each power plant but not necessarily overall 
for a growing industry because the emissions from additional power 
plants exceed the reductions required at existing power plants. This is 
one reason why EPA prefers the cap-and-trade approach outlined in the 
proposed Clean Air Mercury Rule of 2004.
    Under either the MACT or the cap-and-trade approach EPA will not 
mandate particular technologies. The choice of technologies is best 
left to the regulated industry, provided they lead to the ultimate 
emissions reductions required by EPA. There are a number of promising 
technologies, such as activated carbon injection (ACI), which are being 
developed and tested. Based on current information it is projected that 
ACI technology will be adequately demonstrated and widely deployable 
sometime after 2010 and that removal levels in the 70 percent to 90 
percent range could be achievable. The regulated sector, not EPA, will 
make the final decision about what technologies are actually employed 
to achieve the emissions reductions that will be required.
    Question. Is the Agency preparing any new guidance for States that 
would limit their ability to require or even consider that new coal-
fired power plants use the best available control technology, including 
advanced systems like Integrated Gasification Combined Cycle and 
fluidized-bed combustion?
    Answer. No, the Agency is not planning to prepare any additional 
guidance which would limit a State's ability to require or consider new 
coal-fired power plants use of the best available control technology.

                          SUBCOMMITTEE RECESS

    Senator Bond. We look forward to working with you on an 
ongoing basis, and we appreciate the cooperation that your 
staff has shown us in the past, and look forward to continuing 
to work with you in the future. The hearing is recessed.
    [Whereupon, at 11:44 a.m., Thursday, March 25, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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