[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
              THE ADMINISTRATION'S CLEAR SKIES INITIATIVE

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 2005

                               __________

                           Serial No. 109-39

                               __________

       Printed for the use of the Committee on Energy and Commerce


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


                               __________

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                    ------------------------------  
                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

        David Cavicke, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Energy and Air Quality

                     RALPH M. HALL, Texas, Chairman

MICHAEL BILIRAKIS, Florida           RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky                 (Ranking Member)
CHARLIE NORWOOD, Georgia             MIKE ROSS, Arkansas
JOHN SHIMKUS, Illinois               HENRY A. WAXMAN, California
HEATHER WILSON, New Mexico           EDWARD J. MARKEY, Massachusetts
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi                          GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
GEORGE RADANOVICH, California        LOIS CAPPS, California
MARY BONO, California                MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon                  TOM ALLEN, Maine
MIKE ROGERS, Michigan                JIM DAVIS, Florida
C.L. ``BUTCH'' OTTER, Idaho          HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma              CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania             JOHN D. DINGELL, Michigan,
MICHAEL C. BURGESS, Texas              (Ex Officio)
JOE BARTON, Texas,
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Connaughton, James L., Chairman, Council on Environmental 
      Quality, Executive Office of the President.................    16
    Holmstead, Hon. Jeffrey R., Assistant Administrator for Air 
      and Radiation, Environmental Protection Agency.............    22
Additional material submitted for the record:
    Connaughton, James L., Chairman, Council on Environmental 
      Quality, Executive Office of the President, response for 
      the record.................................................    61
    Holmstead, Hon. Jeffrey R., Assistant Administrator for Air 
      and Radiation, Environmental Protection Agency, response 
      for the record.............................................    63

                                 (iii)

  


              THE ADMINISTRATION'S CLEAR SKIES INITIATIVE

                              ----------                              


                         THURSDAY, MAY 26, 2005

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ralph Hall 
(chairman) presiding.
    Members present: Representatives Hall, Shimkus, Wilson, 
Walden, Otter, Murphy, Burgess, Barton (ex-officio), Boucher, 
Waxman, Engel, Allen, Solis, Gonzalez, and Dingell (ex-
officio).
    Staff present: Mark Menezes, chief counsel for energy and 
the environment; Margaret Caravelli, majority counsel; Peter 
Kielty, legislative clerk; Michael Goo, minority counsel; and 
Bruce Harris, minority professional staff.
    Mr. Hall. Okay. The subcommittee will come to order.
    And without objection, the subcommittee will proceed 
pursuant to Committee Rule 4E which allows members the 
opportunity to defer opening statements for, excuse me, extra 
questioning time and the Chair recognizes himself for an 
opening statement.
    The opening statement is that we have a vote on and they 
just don't give us any cooperation or any respect anymore to 
this committee. Do you want to get on the way and get started? 
All right. We will get our statements out of the way.
    Today, the subcommittee is holding a hearing on the 
administration's Clear Skies Initiative. And this initiative, 
modeled after the acid rain program in Title 4 of the Clean Air 
Act, seeks to repeat the success of innovative Cap and Trade 
Program that achieved substantial reductions in sulfur dioxide 
deposition at a cost lower than predicted by EPA and lower than 
predicted by industry.
    I would like to welcome and thank our esteemed witnesses 
for joining us today. The witnesses represent the 
administration's experts in the field of clean air and will 
walk us through the policy objectives and public health and 
environmental benefits to be realized by the Clear Skies 
Initiative. Chairman James Connaughton of the Council of 
Environmental Quality and the Honorable Jeffrey Holmstead of 
the Environmental Protection Agency join us as representatives 
of the administration. It is a pleasure to have both of you 
with us here today and we thank you for your time.
    The Clear Skies Initiative intends to bring clarity to 
complex patchwork I would say set of requirements established 
by the Clean Air Act. The Clean Air Act is separate 
requirements in varying dates for emission compliance for each 
pollutant. The hodgepodge of deadlines makes it extremely 
difficult for States and for industry to meet clean air 
objectives in a timely and cost effective manner.
    I think since the time and the passage of the 1990 Clean 
Air Act Amendments over 15 years ago, substantial gains have 
been made in the Nation's air quality. One program of the Clean 
Air Act that has proven to be highly effective is the acid rain 
cap and trade provisions. Continuing the goal of improved air 
quality, the administration's Clear Skies Initiative builds on 
the positive legacy of the Acid Rain Program. It does so by 
creating a series of Cap and Trade Programs for the reduction 
of three air pollutants, sulfur dioxide, nitrogen oxide, and 
for the first time, mercury. For the mercury cap, we hope this 
will drive technology in other countries as well as in our own.
    The cap and trade for sulfur dioxide is a tightening of the 
current Acid Rain Program lowering the cap from a current 8.95 
million tons per year today to 3.0 million tons per year by the 
year 2020. The nitrogen oxide cap and trade is divided into two 
trading zones, east and west, to account for regional 
differences and deal with the seasonal ozone issues. These 
market based programs set strict limitations on emissions while 
at the same time allowing industry the flexibility to choose 
the most cost effective course, the course of action that they 
think will achieve these limitations.
    The Clean Skies Initiative seeks to reduce from current 
emissions level sulfur dioxide emissions by 73 percent, 
nitrogen oxide emissions by 67 percent, and mercury emissions 
by 69 percent by the year 2020. These national caps recognize 
the transitory nature of air pollution and the emissions do not 
adhere to the lines on the map. Nationwide Cap and Trade 
Programs take into account the impact of upwind sources on 
downwind areas. The benefit of this is that States are insured 
that upwind neighbors are doing everything they can to address 
emissions and, therefore, eliminate the transport of pollution.
    So the Clean Skies Initiative also provides for the 
designation of transitional areas to help synchronize the 
benefits of all three Cap and Trade Programs with the 
achievement of reduced emission levels. This will be especially 
helpful to those areas recently designated as non-obtainable 
for the PM2.5 and 8-hour ozone national ambient air 
quality standards since these pollutants are formed from the 
three building blocks sulfur dioxide, nitrogen oxide, and 
mercury. This idea is a continuation of an EPA policy and I 
believe that good ideas should be pursued.
    When the Clear Skies Initiative is fully implemented, 
expect annual health benefits by 2020 to include 14,100 avoided 
premature deaths, 8,800 fewer cases of chronic bronchitis, 12.5 
million fewer days with respiratory illnesses and symptoms, 
30,000 fewer hospitalizations and emergency room visits. All of 
these add up to $110 billion in annual public health benefits 
by the year 2020.
    The Clear Skies Initiative also provides for timely 
environmental improvements and these include: visibility 
improvements in parks and forests, reductions in sulfur, 
nitrogen, and mercury deposition to improve the health of 
lakes, streams, and estuaries. The cost of the Clear Skies 
Initiative is projected to be a little over $6 billion per year 
by the 2020 full implementation date. When compared to all the 
health benefits I just mentioned, it is clear that this 
approach to improving air quality across the Nation is a win-
win situation for industry and individuals alike. I favor a 
practical policy of simplifying things so as to make the 
accomplishment of a goal more certain and I am looking forward 
to hearing from the administration's representatives about the 
practical policy and how it achieves the objectives of the 
Clean Air Act in a more straightforward and streamlined way. At 
this time, I recognize, Mr. Boucher, the ranking member.
    [The prepared statement of Hon. Ralph Hall follows:]

Prepared Statement of Hon. Ralph Hall, Chairman, Subcommittee on Energy 
                            and Air Quality

    The Subcommittee will come to order. Without objection, the 
Subcommittee will proceed pursuant to Committee Rule 4(e), which allows 
Members the opportunity to defer opening statements for extra 
questioning time.
    The Chair recognizes himself for an opening statement. Today, the 
Subcommittee holds a hearing on the Administration's Clear Skies 
Initiative. This initiative, modeled after the Acid Rain Program in 
Title IV of the Clean Air Act, seeks to repeat the success of the 
innovative cap and trade program which achieved substantial reductions 
in sulfur dioxide deposition at a cost lower than predicted by EPA and 
industry.
    I would like to welcome and thank our esteemed witnesses for 
joining us today. Our witnesses represent the Administration's experts 
in the field of Clean Air and will walk us through the policy 
objectives and public health and environmental benefits to be realized 
by the Clear Skies Initiative. Chairman James Connaughton of the 
Council on Environmental Quality and The Honorable Jeffrey Holmstead of 
the Environmental Protection Agency join us as representatives of the 
Administration. It is a pleasure to have you join us here today.
    The Clear Skies Initiative intends to bring clarity to a complex 
patchwork set of requirements established by the Clear Air Act. The 
Clean Air Act has separate requirements and varying dates for emission 
compliance for each pollutant. This hodgepodge of deadlines makes it 
extremely difficult for states and industry to meet clean air 
objectives in a timely and cost effective manner.
    Since the passage of the 1990 Clean Air Act Amendments, over 
fifteen years ago, substantial gains have been made in the nation's air 
quality. One program of the Clean Air Act that has proven to be highly 
effective is the Acid Rain cap and trade provisions. Continuing the 
goal of improved air quality, the Administration's Clear Skies 
Initiative builds on the positive legacy of the Acid Rain Program. It 
does so by creating a series of cap and trade programs for the 
reduction of three air pollutants: sulfur dioxide, nitrogen oxide, and 
for the first time, mercury. For the mercury cap we hope this will 
drive technology in other countries as well as in our own. The cap and 
trade for sulfur dioxide is a tightening of the current acid rain 
program, lowering the cap form a current 8.95 million tons per year 
today to 3.0 million tons per year by 2020. The nitrogen oxides cap and 
trade is divided into two trading zones, East and West, to account for 
regional differences and deal with seasonal ozone issues.
    These market based programs set strict limitations on emissions 
while at the same time allowing industry the flexibility to choose the 
most cost effective course of action to achieve these limitations. The 
Clear Skies Initiative seeks to reduce, from current emission levels, 
sulfur dioxide emissions by 73%, nitrogen oxide emissions by 67%, and 
mercury emissions by 69%, by 2020.
    These national caps recognize the transitory nature of air 
pollution and that emissions do not adhere to lines on a map. 
Nationwide cap and trade programs take into account the impact of 
upwind sources on downwind areas. The benefit of this is that states 
are ensured that upwind neighbors are doing everything they can to 
address emissions and therefore eliminate the transport of pollution.
    The Clear Skies Initiative also provides for the designation of 
transitional areas to help synchronize the benefits of all three cap 
and trade programs with the achievement of reduced emission levels. 
This will be especially helpful to those areas recently designated as 
nonattainment for the PM 2.5 and 8-hour ozone national ambient air 
quality standards since these pollutants are formed from the three 
building blocks: sulfur dioxide, nitrogen oxide, and mercury. This idea 
is a continuation of an EPA policy and I believe that good ideas should 
be pursued.
    When the Clear Skies Initiative is fully implemented expected 
annual health benefits by 2020 include:

 14,100 avoided premature deaths
 8,800 fewer cases of chronic bronchitis
 12.5 million fewer days with respiratory illnesses and symptoms
 30,000 fewer hospitalizations and emergency room visits
    All these add up to $110 billion in annual public health benefits 
by 2020.
    The Clear Skies Initiative also provides for timely environmental 
improvements. These include:

 Visibility improvements in parks and forests
 Reductions in sulfur, nitrogen, and mercury deposition to improve the 
        health of lakes, streams, and estuaries.
    The cost of the Clear Skies Initiative is projected to be a little 
over $6 billion per year by the 2020 full implementation date. When 
compared to all the health benefits I just mentioned, it is clear that 
this approach to improving air quality across the nation is a win-win 
situation for industry and individuals alike. I favor a practical 
policy of simplifying things so as to make the accomplishment of a goal 
more certain. I am looking forward to hearing from the Administration's 
representatives about this practical policy, and how it achieves the 
objectives of the Clean Air Act in a more straightforward and 
streamlined way.

    Mr. Boucher. Well thank you, Mr. Chairman.
    We have had the second bills for the floor vote. Do you 
intend to continue through the vote with this hearing or do you 
intend to recess?
    Mr. Hall. I don't know any way we can continue it through 
the votes. I don't think these men would want to testify to one 
another.
    Mr. Boucher. Well that being the case, Mr. Chairman, let me 
suggest a recess and we have a series of votes and you can----
    Mr. Hall. Do you want to recess before you give your 
opening statement?
    Mr. Boucher. Well I think it might be appropriate and then 
we can reconvene after that.
    Mr. Hall. What do we do? By that time they have forgotten 
everything I have said.
    Mr. Boucher. That is part of my point, Mr. Chairman.
    Mr. Hall. All right. We will recess for 20 minutes.
    Mr. Boucher. Well whatever time it takes, we have got a 
series of votes.
    Mr. Hall. For 20 minutes and 5 minutes are gone.
    Mr. Boucher. It is going to be longer than that, 45 
minutes. There are about five votes. It will probably be 3 
before we can come back.
    Mr. Hall. All right, belay that order, we will be back when 
we get back and probably we will be back here in about 30 
minutes. At ease, thank you.
    [Brief recess.]
    Mr. Hall The other guys are a lot slower than us younger 
people. Since the main ones are here, I recognize the gentleman 
from Virginia, Mr. Boucher, for an opening statement.
    Mr. Boucher. Well thank you very much, Mr. Chairman.
    I join with you in welcoming our witnesses this afternoon 
and thank them for taking time to inform this committee of 
their views with regard to clean air measures.
    Following a lengthy and thorough markup spanning several 
weeks and involving a number of postponements in the effort to 
achieve consensus, the Senate Environment Committee has voted 
not to approve the administration's Clear Skies Initiative. I 
am not aware of any changes that have taken place in the Senate 
or that are likely to take place there that would affect that 
outcome assuming that the matter would be considered 
potentially later this year or not next year.
    At the same time, the Environmental Protection Agency has 
moved forward with a series of rulemakings including a mercury 
control program and a regulation on the interstate transport of 
other emissions in the Clear Air Interstate Rule. The EPA has 
also addressed the new source review controversy by 
promulgating a rule that specifies the circumstances under 
which utilities that operate the older cold fired power plants, 
can undertake routine and maintenance on those facilities 
without triggering the new source performance standards.
    In view of the Senate action on Clear Skies and in view of 
the progress that the EPA is making in achieving many of the 
goals of the Clear Skies legislation through regulatory means, 
I will welcome the views of the witnesses on the practical 
utility of this committee attempting to legislate at this time. 
Perhaps in that respect a comment from Mr. Holmstead on the 
status of litigation regarding some of the EPA's rules would be 
appropriate and I will hope he will make some comment about 
those during his testimony.
    Frankly, Mr. Chairman, as far as I am concerned, this 
hearing should focus primarily on these practical questions 
rather than on a detailed analysis of the substance of the 
administration's bill. I think the key question for us is is 
there really any need for this committee to spend time and 
effort addressing a matter that from our perspective if it were 
to pass the House would simply go nowhere in the Senate.
    If after our discussions this afternoon it is apparent that 
the bill cannot be enacted during this session of Congress 
because of the Senate committee's decision, and if it appears 
that the EPA is making substantial progress in addressing many 
of the goals of the bill through regulations, then I think we 
should decide to focus our attention for this Congress on 
matters where we can make a genuine difference. Specifically on 
the urgent business of passing the Energy Bill, which I 
strongly support, as does the subcommittee chairman. And that 
is an area where our work can produce a major and much needed 
change.
    Mr. Chairman, I look forward to the witness' testimony 
today and I thank you for convening this opportunity for them 
to inform us of their views and I yield back.
    Mr. Hall. I thank you.
    At this time I recognize the chairman of Energy and 
Commerce Committee, the Honorable Joe Barton of Texas.
    Chairman Barton. Thank you, Mr. Chairman.
    I want to thank our two witnesses today. I know both of 
them well and they are both gentlemen and professionals and 
they have both done outstanding work in trying to protect the 
air quality of our Nation.
    Since the committee last focused on the Clear Skies 
Initiative, many clean air developments have occurred. In the 
past year, the Environmental Protection Agency has moved 
forward with the designation of non-attainment areas for the 
two new national ambient air quality standards: the 8-hour 
ozone and the PM2.5 standard.
    In recent weeks, two new rules have been finalized; the 
Clean Air Interstate Rule and the Clean Air Mercury Rule. The 
various rules and standards that the States were required to 
comply with highlights the necessity in my opinion for 
comprehensive national clean air policy that provides certainty 
and also ease of implementation. The Clean Air Act has gone far 
to improve the Nation's air quality and these rules would 
appear to be helpful but at some time it would seem to me that 
we need to also legislate.
    Progress can only be sustained through a cost effective 
process such as the Clear Skies Initiative the President has 
proposed. The success of the Acid Rain Program established 
under the 1990 Clean Air Act, demonstrates that a National Cap 
and Trade Program will clean the air efficiently while giving 
industry the flexibility it needs to deliver affordable 
electricity to our homes.
    The Clear Skies Initiative has stirred intense political 
debate over the best way to improve air quality. Of particular 
interest has been the appropriate mechanism to control 
emissions from the electric utility industry, a vital sector of 
our Nation's economy. Needless to say, people need both clean 
air and reliable power. Nobody should have to breathe polluted 
air, but people also don't want to be left in the dark, or not 
have a job.
    Throughout this discourse there has been a lack of 
understanding as to how the elements of the Clear Skies 
Initiative would amend the Clean Air Act. The new designations 
under the new 8-hour standard for non-attainment are of 
particular concern. My district, Ellis County, is a rural 
county with few major emitters. Yet, it has been designated as 
non-attainment for the 8-hour ozone standard even though, 
according to the EPA's own estimating procedure, it supplies 
less than .2 of a percent of the ozone in the affected region 
that is already in non-attainment.
    In time, as the new State implementation Plans are coming 
due, my constituents are going to come to me and point out the 
confusing time lines and misaligned deadlines. I hope I will be 
able to tell them that the Congress will be helpful. I want to 
be able to say that we had a chance to make the rules simpler 
and more straight forward and we did. I hope the experience and 
knowledge gained over 15 years with the successful Acid Rain 
Program shows us how to provide market mechanisms to being 
about cleaner air in a more cost effective way.
    Twenty-five of the 33 members of this subcommittee 
represent areas that have been designed non-attainment under 
the new PM2.5 or 8-hour ozone NAAQS standard. I 
expect soon that their constituents are going to begin coming 
to them complaining they are unable to attract new industry and 
new jobs, that they are prohibited from building roads to 
alleviate congestion, that the process is too complex, and that 
they have exhausted their local resources.
    We have an opportunity to be responsible, to simplify, and 
to allow market forces to determine the best course of action. 
We have a chance now to make even greater strides in approving 
America's air quality by preventing much of the postponements 
that have occurred in the past. It is time for us to put to 
good use the lessons we have learned in the last 15 years.
    We have much to learn from our two witnesses today. How do 
the Cap and Trade Programs make achieving the Nation's air 
quality goals easier? How do they assist newly designated non-
attainment areas achieve their clean air requirements? What can 
only be done by Congress? These are just some of the issues 
that the administration's experts have been asked to testify on 
today during the hearing. Some important reforms to the Clean 
Air Act can only be achieved through legislative action.
    I support the goals of the President's proposed Clear Skies 
Act. Myself and former Chairman Tauzin were sponsors of the 
President's proposal in the last Congress. I am willing to work 
toward a bipartisan solution on this legislation. Today's 
hearing should provide members of the committee on both sides 
of the aisle an opportunity to become educated on all parts of 
the Clear Skies proposals, rules, and necessary legislative 
action.
    One of the things that I hope to learn today is whether we 
can agree that jobs, growth, and opportunity are just as 
important as clean air. I am interested in learning if others 
in our committee are prepared to work on a bipartisan basis, 
roll up our sleeves, and work together in a good faith fashion 
to construct the legislative proposal that all members in the 
community, on the industrial side and the environmental side, 
can be supportive of.
    With that, Mr. Chairman, I yield back the balance of my 
time. I thank you for holding this hearing.
    [The prepared statement of Hon. Joe Barton follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    Thank you, Mr. Chairman. Since the Committee last focused on the 
Clear Skies Initiative, many clean air developments have occurred. In 
the past year, the Environmental Protection Agency has moved forward 
with the designation of nonattainment areas for the two new National 
Ambient Air Quality Standards (NAAQS): the 8-hour ozone and the PM 2.5 
standards. In recent weeks, two new rules have been finalized: The 
Clean Air Interstate Rule and the Clean Air Mercury Rule. The various 
rules and standards the states are required to comply with highlight 
the necessity for comprehensive national clean air policy that provides 
certainty and ease of implementation. The Clean Air Act has gone far to 
improve the nation's air quality, and these rules also appear to be 
helpful.
    However, progress can only be sustained through a cost-effective 
process like the Clear Skies Initiative. The success of the Acid Rain 
Program established under the 1990 Clean Air Act Amendments 
demonstrates that a national cap-and-trade program cleans the air 
efficiently while giving industry the flexibility it needs to deliver 
affordable electricity to our homes.
    The Clear Skies Initiative has stirred political debate over the 
best way to improve air quality. Of particular interest has been the 
appropriate mechanism to control emissions from the electric utility 
industry, a vital sector of our Nation's economy. Needless to say, 
people need both clean air and reliable power. Nobody should have to 
breath polluted air, but people cannot be left to sit in the dark while 
we figure it out. Throughout this discourse there has been a lack of 
understanding as to how the elements of the Clear Skies Initiative will 
amend the Clean Air Act.
    The new designations for nonattainment are of particular concern. 
In my district, Ellis County, a rural county with few major emitters, 
has been designated nonattainment for the 8-hour ozone standard. And in 
time, as the new state implementation plans are coming due, my 
constituents are going to come to me and point out the confusing 
timelines and the misaligned deadlines. I hope I will be able to tell 
them Congress was helpful. I want to be able to say that when we had a 
chance to make the rules simpler and more straightforward, we did. I 
hope the experience and knowledge gained over 15 years with the 
successful Acid Rain program will allow us to provide market mechanisms 
to bring about cleaner air in a cost-effective way. Continued 
oppressive regulation is not the best or only way to improve our 
environment.
    Twenty-five of the thirty-three Members of this subcommittee 
represent areas that have been designated nonattainment under the new 
PM 2.5 and 8-hour ozone NAAQS. I expect soon our constituents will come 
to us complaining they are unable to attract any new industry and new 
jobs; they are prohibited from building roads to alleviate congestion; 
and that the process is so complex that they have exhausted their 
resources. We have the opportunity to be responsible, to simplify, and 
to allow market forces determine the best course of action. And we have 
the chance now to make even greater strides in improving America's air 
quality by preventing much of the postponements that have occurred. 
It's time for us to put to good use all the lessons we have learned 
from the past 15 years.
    We have much to learn from these witnesses today. How do the cap-
and-trade programs make achieving the nation's air quality goals 
easier? How do they assist newly-designated nonattainment areas achieve 
their clean air requirements? What can only be done by Congress? These 
are issues the Administration's experts are invited to address during 
today's hearing.
    Some important reforms to the Clean Air Act can only be achieved 
through legislative action. I support the goals of the President's 
proposed Clear Skies Act. I am willing to start the hard work towards a 
bipartisan agreement and today should provide Members of the Committee 
to become educated on all parts of the Clear Skies Initiative--the 
rules and the legislation.
    One of the things I hope to learn today is whether we can agree 
that jobs, growth and opportunity for our people are important. I am 
interested in learning if others on our committee are prepared to work, 
really roll up our sleeves, and work together on a good faith, 
bipartisan, constructive basis to achieve clean air, reliable power, 
and economic growth for the people who depend on us for all three.
    I thank the Chairman for having this hearing and look forward to 
the testimony. I yield back the balance of my time.

    Mr. Hall. I thank the chairman for his time and his good 
remarks.
    I recognize at this time the former, long-time, very 
vererable chairman of this committee, John Dingell, 5 minutes.
    Mr. Dingell. Thank you, Mr. Chairman and I commend you for 
holding this important hearing on the administration's Clear 
Skies Initiative.
    In July 2003, we last met to discuss this same legislative 
program. Since that time, there have been a number of key 
developments that affect both the wisdom and the necessity of 
entertaining extensive amendments to the Clean Air Act at this 
time. I am hopeful that this hearing will provide us with an 
opportunity to explore these developments and to gain a better 
understanding of whether moving forward in this area continues 
to make sense. I am troubled about the lack of information on 
this matter and intend to explore those questions today. I must 
confess that I am not convinced at this particular time that 
moving forward with legislation is a good idea.
    As an initial matter, we suffer from a lack of reliable 
information regarding the options available to the committee. 
Before we begin to seriously consider substantial changes in 
the Clean Air Act, we need advised information from the 
Environmental Protection Agency, EPA that relates to the 
complete range of legislative possibilities including leaving 
the existing Clean Air Act in place.
    At our last Clean Skies hearing nearly 2 years ago, I 
quoted one of our witnesses today, Mr. Jeffrey Holmstead as 
saying, ``This sort of analysis that we are showing you today 
is result of months, and months, and months of staff work and 
we have no intention of doing that kind of work on other 
legislative proposals.'' As I mentioned at that time, such an 
approach to information sharing does not bode well for a 
thoughtful and thorough inquiry into what changes, if any, need 
to be made in the Clean Air Act.
    Last week in advance of the hearing, I sent a letter to the 
two witnesses appearing before us today and reiterated my 
position that before we begin to work, we should look seriously 
at the changes to the Clean Air Act--that we would need to 
analyze a range of multi pollutant programs and not just this 
one here.
    Since EPA has recently finalized important Clean Air Act 
rules using the authority of the existing Clean Air Act, I 
noted that EPA should include those rules in its analysis of 
what would happen without extensive amendments to the Clean Air 
Act. That way, a fair comparison could be made between the 
existing act and the changes sought by the administration and 
others.
    I noted that because the administration's bill relaxes key 
provisions of existing law, the effect of these changes should 
be projected as well. Anything less will result in an one-sided 
analysis and a situation where the committee does not have full 
information upon which it may predicate its judgments.
    Finally, given that EPA finalized its own proposal using 
state-of-the-art models, I asked that the same models be used 
to analyze other proposals so that direct comparisons are 
available to everyone and we are not compelled to compare 
apples and oranges to arrive at a curious decision that may 
perhaps only be described best as fruit salad. Only then can we 
fully and truly evaluate the relative merits of the 
administration proposal.
    As I noted in my letter, I remain highly skeptical about 
the need for extensive reworking of the Clean Air Act. The 
compromise we forged in 1980 has proven to be a sound one, one 
that balances environmental needs and economic viability. We 
worked hard on that legislation, as many will recall, for many, 
many months, and well into the night and sometimes into the 
next day in our attempts to develop something that all parties 
could agree upon. I will not support diverging from that 
compromise unless there is no question that the result will be 
better in all respects. Better for the environment, better for 
our energy uses, and better for our economic future. And a 
better and simpler policy that provides more certainty and 
rationality for everyone.
    At this time, I am afraid that we are a long way from that 
goal. I look forward to this hearing and learning more about 
this important topic at future hearings and I thank you for 
your recognition, Mr. Chairman.
    Mr. Hall. I thank the chairman.
    At this time, I recognize, Mr. Murphy, the gentleman from 
Pennsylvania.
    Mr. Murphy. Thank you, Mr. Chairman and thank you also for 
holding this important hearing on Clear Skies Initiative.
    Although we have not been able to get the consensus on 
moving these forward on the other side of the hill, I do 
believe we have a lot of work that we have to continue to take 
the lead on.
    Like many other districts, my district is one that has some 
problems with this, although sadly, some of the problems, many 
of the problems that have come with non-attainment designation 
don't even originate in the counties I represent and quite 
frankly, don't even originate in Pennsylvania. For this reason, 
it is a concern that even though our areas are in non-
attainment and it affects our ability to do manufacturing and 
industry work, it is something that comes from farther away and 
I believe it is something that we need to address in this Clear 
Skies Initiative to work on employment in this Nation.
    But ultimately, this is also a public health issue and that 
is where I am pleased that we are moving forward in this, Mr. 
Chairman, because it is vitally important. I recognize that 
moving forward more progressively on Clear Skies is a way of 
saving millions of dollars in healthcare costs, perhaps even 
more and for that reason, I am eager to hear some of the 
testimony and some of the actions that we can move forward on.
    Thank you, Mr. Chairman.
    Mr. Hall. I thank you and at this time recognize the 
gentleman from California, Mr. Waxman.
    Mr. Waxman. Thank you, Mr. Chairman.
    Today this committee is holding only its second hearing in 
3 years on the President's proposal to change the Clean Air 
Act. Congress has passed major amendments to the Clean Air Act 
of 1970 just twice, in 1977 and 1990. Representative Dingell 
and I are the only two members of the committee who were around 
for both the 1977 and 1990 amendments and we know how hard the 
committee worked and how many hundreds of hours of hearings and 
markups it took to pass those landmark laws. And certainly 
those who were there for the 1990 Clean Air Act revisions had 
firsthand experience of how much work we put into it.
    The legislation we are considering today is fundamentally 
different than the 1977 and 1990 amendments. Those laws 
strengthen the Clean Air Act and brought clean air to millions 
of Americans. The President's proposal I believe undermines the 
Clean Air Act and will increase pollution and delay clean up 
efforts.
    The President, its sponsors, and big power plants and 
chemical companies want Americans to believe that their 
proposal will clean up the air. In reality, this bill will 
dismantle one of the most effective environmental laws ever 
adopted. The result will be decades of dirtier air, tens of 
thousands of unnecessary illnesses and premature deaths, and 
ongoing damage to lakes, rivers, and forests. I support clean 
air; that is why I oppose the President's proposal.
    The Clean Air Act says that the air should be healthy for 
people to breathe. Areas that fail to meet the health based air 
quality standards must take steps to reduce pollution over a 
reasonable timeframe. The President's proposal amends the Clean 
Air Act to extend the existing timeframes for cleaning up the 
air in many areas, but it does not require them to do anything, 
so people will breathe unhealthy air for years longer if this 
bill passes.
    The Clean Air Act requires old power plants to adopt modern 
pollution controls when they upgrade. The President's proposal 
removes this requirement allowing plants with no pollution 
controls at all to keep on polluting. The Clean Air Act allows 
downwind States suffering from pollution from beyond their 
borders to petition EPA to require upwind reductions. The 
President's proposal dismantles this, making it almost 
impossible for downwind States to obtain any relief.
    The Clean Air Act has been successful in part because it 
provides multiple tools for tracking air pollution and for 
tackling the problem of how to reduce it. This bill would 
eliminate proven and effective tools such as enforceable 
deadlines, State authorities, and technology based standards. 
In fact, using its authorities under the existing law, EPA has 
already required through regulation almost all of the emissions 
reductions the President claims the bill will provide.
    This proposal is not about clean air, it is about letting 
polluters off the hook.
    Thank you, Mr. Chairman.
    Mr. Hall. I thank the gentleman.
    The Chair recognizes Mr. Shimkus of Illinois.
    Mr. Shimkus. Thank you, Mr. Chairman and thanks for holding 
this hearing.
    I have great respect for my friend from California and 
there has been great success in environmental standards.
    What this debate now is about is bringing some sense to the 
different components of having a good energy portfolio and 
monitored and being constricted by the old rules. One of the 
greatest things they did was the cap and trade system for 
sulfur. And it has been very, very successful. And why has it 
been successful? Because it incentifies new abilities for 
people to clean the sulfur out of emissions and then they got 
benefits from it. And all Clear Skies does is move that same 
provision into the other emmittants.
    And that is why I am very excited about this proposal. We 
have--because there has been a down side with the Clean Air Act 
and that has been thousands of coalminer jobs in Southern 
Illinois. It has also been a one fuel policy that this 
country's had that has caused natural gas prices to skyrocket. 
Now we have high skyrocketing natural gas prices. We cannot get 
liquefied national gas in on the coast because the 
environmentalists don't want the L&G facilities there. So if we 
want a balanced energy program and clean air, the Clear Skies 
is a great way to go. And so I am all encouraged and look 
forward to working very diligently for it.
    Two real world instances. We have two new coal generating 
plants on the board in Southern Illinois. Now I would ask my 
friends, what would you rather have, a 40-year-old coal 
generating facility that may have been grandfathered or would 
you rather have new technology and new plants with higher 
standards and new technology? And I think the answer is clear. 
You are going to get a better burn, you are going to get better 
generating capacity, and you are going to have cleaner air 
because they are going to reap financial benefits because of 
the cap and trade provisions.
    So the time for this legislation has come. I am glad it is 
now right after the Energy Bill. They are--they already go hand 
and hand and I look forward to moving the President's 
legislation forward.
    I yield back to balance my time.
    [The prepared statement of Hon. John Shimkus follows:]

 Prepared Statement of Hon. John Shimkus, a Representative in Congress 
                       from the State of Illinois

    Thank you Mr. Chairman.
    America's air has become markedly cleaner in the 35 years since the 
Clean Air Act was passed in 1970. Mercury emissions, which reached a 
peak in the 1960's, have continually decreased. We will continue to do 
more to improve air quality; however, we need to consider the most 
efficient and productive way to achieve the desired result.
    Existing law is now a hodge-podge of overlapping and conflicting 
regulations, often held up in legal battles, and fails to provide 
consistency, clarity or certainty. This process makes achieving cleaner 
air more complicated and costlier, while at the same time delaying 
improvements in air quality, and costing many people in my home state 
of Illinois, valuable jobs. The mining industry in Illinois was once a 
vibrant industry with over 14,000 jobs only 15 years ago. That was 
before the Clean Air Act amendments of 1990. Today, there are only a 
little over 3,000 mining jobs. The future of the Illinois coal industry 
can be bright again, if we provide them with the regulatory certainty 
provided under the Clear Skies plan.
    Clear Skies provides a balance between our environmental and our 
energy policies. Not finding a balance between these 2 issues is one of 
the biggest reasons while natural gas prices are so high. The 
government forced the use of natural gas for years, without thinking of 
the potential impact on prices.
    Clear Skies is significantly better for the environment than the 
existing Clean Air Act because it provides predictably that significant 
pollution reductions will occur and certainty as to when they will 
occur. The existing Act cannot guarantee either result.
    The cap and trade program in Clear Skies has shown it can work with 
the Acid Rain program, reducing SO2 emissions faster and at 
far lower costs than anticipated. The cap and trade program gives 
states the flexibility they need to meet our clean air goals.
    The way to achieve real emission reductions is through legislation, 
not agency regulations. Because with regulations, we get litigation. 
And with litigation, we get delays. Clear Skies will bring emission 
reductions sooner than current law, while at the same time keeping our 
economy moving forward.
    Thank you.

    Mr. Hall. Okay. Mr. Engel.
    Mr. Engel. I am sort of in the middle of two microphones, 
Mr. Chairman.
    Thank you very much for giving our subcommittee the 
opportunity to consider the President's proposal Clear Skies. I 
have been having a balancing act all day between this 
subcommittee and the telecom subcommittee of our committee in 
which I serve. They are holding simultaneous hearings so I 
apologize in coming in and coming out.
    I want to welcome EPA Assistant Administrator, Jeffrey 
Holmstead and James Connaughton, Chairman of the White House 
Council on Environmental Quality to our subcommittee today.
    The adoption of the Landmark Clean Air Act in 1970 and its 
updated provisions in 1990 were significant because for the 
first time, Congress set National environmental standards to 
protect our environment and citizens from the harmful effects 
of air pollution.
    Through key environmental attainment deadlines and census 
for smog reduction and empowerment of State and local 
Government to take control of their pollution problems, real 
progress was made. We obviously still have more work to do. It 
has been estimated that over 25,000 people die each year 
prematurely from power plant pollution. Additionally, power 
plant emissions are responsible for 38,000 heart attacks, over 
3 million lost work days, and more than half a million asthma 
attacks.
    The last health consequence is particularly troubling to 
me. Today over 7 million kids suffer from asthma, including two 
of my own, and the rates of asthma affliction keep going up so 
it is clear we have to continue the fight for environmental 
health and safety.
    I am willing to have an open mind on this bill. I 
appreciate Mr. Connaughton contacting me and coming to my 
office to discuss Clear Skies and to answer many of my 
questions. But what troubles me is I am told that this proposal 
only significantly extends communities deadlines to responsible 
reduce pollution, but also undermines State's abilities to 
confront pollution problems caused by industry emissions both 
near and far away. I would be willing to hear if that is not 
the case.
    My own State of New York has utilized both Sections 1 to 6 
and new source review statutes to effectively and significantly 
reduce our exposure to pollutant sources. It seems to me 
logically that eliminating those tools is not progress and 
certainly will not result in clear skies for New York.
    Furthermore, I worry about a one size fits all approach to 
pollution control. There is no reason to essentially apply the 
same cap and trade system to sulfur dioxides, nitrogen oxides, 
and mercury. In the first place, the Cap and Trade Program is 
not an adequate substitute, I believe, for all the Clear Air 
Act requirements.
    And second, it is not appropriate and unsafe to allow 
plants to buy emissions reductions credits rather than install 
mercury emissions controls as mercury deposits locally is toxic 
and could result in concentrations of mercury contamination 
known as hot spots. These concentrations of mercury are known 
to result in birth and developmental defects for children 
40,000 of whom are born each year in New York and 
cardiovascular and immune system problems in adults. This is 
simply not acceptable.
    In 2000, the EPA recognized that mercury was appropriate 
and necessary to be regulated and determined that plants should 
install the strictness emissions control technology possible to 
protect against excessive mercury emissions. In March, the 
agency took a giant step backwards with the issuance of their 
troubling mercury rule which both delisted mercury from a list 
of pollution sources subject to the strict pollution controls 
and established the Cap and Trade Program.
    New York, along with a number of other States, sued EPA 
over both issues. Notably both the Government Accountability 
Office and EPA Inspector General have also issued reports 
deeply critical of the way in which EPA developed the rule. I 
welcome the opportunity to open the debate on how to best 
improve our environment.
    The Senate Environment and Public Works Committee which 
have had over 24 extensive hearings on multi-emissions 
legislation since 1998 and at the end of which could not muster 
a majority to support the Clear Skies proposal has in many 
instances demonstrated a strong commitment toward crafting and 
proven environmental standards. We must craft legislation that 
strengthens and expands our current policies without 
undermining its most fundamental protection.
    Again, I am willing to listen. I know there are answers to 
some of my questions and perhaps I can be convinced but I 
thought it would be best for me to put my concerns on the 
record and I eagerly await to hear what the gentlemen have to 
say.
    Thank you, Mr. Chairman.
    Mr. Hall. I thank the gentleman and recognize the gentleman 
from Idaho, Mr. Otter.
    Mr. Otter. I will waive, Mr. Chairman.
    Mr. Hall. The Chair recognizes Mrs. Wilson, the young lady 
from New Mexico.
    Ms. Wilson. I will waive as well, Mr. Chairman.
    Mr. Hall. I accept all waivers.
    The Chair recognizes Mrs. Solis, the young lady from 
California.
    Ms. Solis. Thank you, Mr. Chairman and good afternoon.
    Thank you for holding this important hearing, and I welcome 
Mr. Holmstead and Chairman James Connaughton. I appreciate your 
being here this afternoon. I am very concerned about clean air 
as it relates to our public health.
    More than 159 million people live in areas that do not meet 
attainment for ozone standards and many of these individuals 
that are affected tend to be minority communities. In fact, 
more than 70 percent of Latinos and African Americans live in 
counties that have dirty air, high levels of air pollution; 5.5 
million Latinos live within 10 miles of coal fired power plant 
and 68 percent of all African Americans in the U.S. live within 
30 miles of a coal fired power plant, the distance within which 
the health impacts are more acute. Latino children have high 
rates of asthma, more than 2 to 3.5 times that of non-Latino 
white children. Death rates from asthma among African Americans 
at 2.5 times higher rates than white. Nationwide, African 
Americans are rushed to the emergency room with asthma attacks 
three times more than whites.
    If implemented and enforced, the existing Clean Air Act 
could help remedy these problems. But rather than fully 
implement and enforce existing law, the administration is 
pushing forward what I believe is one of the biggest gifts yet 
to corporate polluters, Clear Skies.
    In 1990, the Clean Air Act amendments risk based processes 
were implemented to regular air toxins. One such toxic emitter 
is industrial boilers like those used in refineries, chemical 
plants, and manufacturing facilities which emit hydrogen 
chloride, lead, arsenic, and mercury.
    Clear Skies, as proposed by President Bush, would exempt 
industrial boilers from existing standards on all of these 
toxic emissions if the facility chooses to accept weaker 
regulations on nitrogen oxide, sulfur oxides, and mercury. The 
Clear Skies proposal weakens regulations and ignores release of 
toxic emissions like lead and arsenic. As a result of President 
Bush's proposal, there are likely to be 14,000 more lost days 
of work, and 175 more cases of bronchitis in Los Angeles 
County, 574 more heart attacks in Cook County, Illinois, and 
160 more people suffering from asthma in Franklin County, Ohio.
    Clear Skies should really be called, in my opinion, ``Dirty 
Skies'' because it weakens existing law and worsens our air 
quality and harms the public heath, in particular, low income 
communities and communities of color. I urge my colleagues to 
take this issue very seriously, as I do. The potential damaging 
impacts of Clear Skies is one that will be felt for many 
generations. It is our responsibility to provide them with air 
that is clean and an environment that is healthy and thriving.
    I hope that the gentlemen that are sitting before us will 
be able to address some of the questions that I have regarding 
the implementation of this proposal.
    Thank you.
    Mr. Hall. I thank you.
    [Additional statement submitted for the record follows:]

  Prepared Statement of Hon. Michael C. Burgess, a Representative in 
                    Congress from the State of Texas

    Mr. Chairman, I would like to thank you for holding this important 
hearing.
    I can't think of a better time to hold a hearing on clean air. My 
Congressional District, like the Chairman's, is located in the Dallas-
Fort Worth Metroplex in North Texas. Each summer the Metroplex faces a 
serious public health problem in the form of ozone.
    The hot Texas air combines with Volatile Organic Compounds and 
nitrogen oxides to form ground level ozone, which causes health 
problems for our elderly and children, and especially those with 
asthma.
    I believe that clean air will be one of the North Texas region's 
most important and challenging issues over the next decade. I support 
efforts to clean up our air--clean air is one of the most important 
legacies that we can leave our children.
    In North Texas, there is a significant commitment to clean the air. 
The EPA, the State of Texas, the Cities of Fort Worth and Dallas, and 
the North Texas Clean Air Coalition, which is comprised of the North 
Texas Council of Governments and community leaders, are all working 
together to improve air quality in the North Texas region. They've done 
a good job so far--North Texas has grown rapidly over the last decade 
and the degree of air pollution has not increased, and has even 
improved.
    The Dallas-Fort Worth Metroplex has been designated as in 
``moderate'' non-attainment under the recently announced 8-Hour ozone 
designations, with an attainment date of 2010. This is an improvement 
over its 1-hour ozone designation, when Dallas-Fort Worth was 
classified as in ``serious'' non-attainment. I am pleased about the 
progress we have made over the last few decades on cleaning up our air, 
but there is a lot of work still to be done.
    The Clean Air Act has helped to improve our air quality since it 
was enacted, but I believe that the time is right for Congress to 
examine whether or not it makes sense for the future.
    The complexity alone makes it difficult for states and localities 
to comply. I do not believe that we should let states and cities ``off 
the hook'' for cleaning the air, as some have alleged.
    But I think that it makes common sense to allow states and cities 
to spend their resources on cleaning up the air rather than complying 
with unnecessarily complex federal laws and regulations.
    And, as a former member of the Transportation and Infrastructure 
Committee, I am also concerned about the transportation conformity 
provision in current law.
    In conclusion, Mr. Speaker, I'd like to welcome Chairman 
Connaughton and Administrator Holmstead and thank them for testifying 
before us today. I look forward to learning more about the President's 
Clear Skies Initiative.

    Mr. Hall. Now we get to the main feature. We have two 
gentlemen here that are going to testify for us and answer 
questions for us. We first have Jeffrey Holmstead who is in 
charge of all activities in the EPA's Office of Air and 
Radiation. He was Associate Council to the President in the 
White House, from 1989 to 1993 for George H. W. Bush. From 1993 
until his EPA appointment, he practiced law at the firm of 
Lathem and Watkins. He is a native of Colorado, which I 
understand is a State made up of people from Iowa that don't 
want any more Texans. Is that right? And he graduated, unlike 
the Chair, first in his class at Brigham Young University with 
degrees in Economics and English, and he is a graduate of Yale 
Law School. I recognize you hopefully for about 5 minutes.
    Mr. Holmstead. Mr. Chairman, if I could ask----
    Mr. Hall. You can. And we will go with Mr. Connaughton 
first. Is that what you want to do? They just told me. They 
said we are going to start with Mr. Connaughton first: I said, 
``no we are not.''
    Mr. Holmstead. Well we will defer to you but my testimony 
makes more sense after he gives his.
    Mr. Hall. We recognize Mr. Connaughton, who is a very 
intelligent advisor to the President, as well as Director of 
White House Office on Environmental Policy and he graduated 
high up in his class. He must have been in the same class with 
Mr. Holmstead because he graduated second in his class, magna 
cum laude at Yale University and also graduated from the 
Northwestern University School of Law. We all would recognize 
you for whatever time you take.

    STATEMENTS OF JAMES L. CONNAUGHTON, CHAIRMAN, COUNCIL ON 
 ENVIRONMENTAL QUALITY, EXECUTIVE OFFICE OF THE PRESIDENT; AND 
HON. JEFFREY R. HOLMSTEAD, ASSISTANT ADMINISTRATOR FOR AIR AND 
           RADIATION, ENVIRONMENTAL PROTECTION AGENCY

    Mr. Connaughton. Thank you so much, Mr. Chairman.
    And it is a pleasure to be here before members of the 
subcommittee. And for those of you with whom I was able to meet 
before this hearing, I appreciate that and I do look forward to 
meeting with those of you whom I have not yet had a chance to 
sit down privately.
    I very much appreciate the opportunity to talk about and to 
strongly urge the passage of the President's Clear Skies 
Initiative. President Bush is dedicated to providing our 
families and our children with a healthier, more economically 
vibrant and secure future. Important to achieving that future 
is bringing proven innovative tools to the task, and Clear 
Skies legislation is just such a proven innovative tool. It 
will mean healthier citizens, stronger communities, more 
affordable and reliable and secure energy, and more vibrant 
wildlife habitat across America.
    It will do this by significantly expanding the Clean Air 
Act's most innovative and successful program in order to cut 
power plant pollution of sulfur dioxide, nitrogen oxide, and 
for the first time mercury by an unprecedented 70 percent in 
two phases. These cuts in pollution will provide substantial 
health benefits, prolonging the lives of thousands of Americans 
annually and improving the conditions of life for hundreds of 
thousands of people with asthma, other respiratory illnesses, 
and heart disease. As the son of a pediatrician who is also a 
chronic asthmatic and someone who I had to take to the hospital 
usually about once a month or every 6 weeks, my passion for 
this policy is deeply personal.
    Clear Skies will produce the benefits, these health 
benefits with greater certainty by imposing a mandatory 
permanent multi-pollutant cap on emissions from more than 1,300 
power plants nationwide, reducing pollution by as much as 9 
million tons annually at full implementation. Now your 
utilities will achieve this by spending more than $52 billion 
to install, operate, and maintain new primarily coal pollution 
abatement technology on both old and new power plants. That is 
twice the expenditure that was undertaken to achieve the 
ambitious goals of the Acid Rain Trading Program in 1990.
    Clear Skies will require only a few dozen Government 
officials to operate it and will assure compliance through a 
system that is easy to monitor but more importantly is easy to 
enforce.
    Accordingly, the Clear Skies cap and trade approach will 
give our States the most powerful, efficient and proven tool 
available for meeting the new tough health based air quality 
standards for fine particles and for ozone. At the end of last 
year, EPA completed the process of informing over 500 counties 
that they either do not meet or that they contribute to another 
county not meeting new standards. That relatively 
straightforward act has now triggered a very complex process 
that will lead later this year to a frenzy of intrastate 
negotiation and conflict, interstate negotiation and conflict, 
Federal and State negotiation and conflict, State and citizen 
petitions, lawsuits, and heightened uncertainty and energy 
markets producing an avoidable but negative impact on local 
investment, jobs, and consumer energy bills. It is not a pretty 
picture. This is a chart that gives you an example of the 
numerous steps ahead of us, each of which is a field day for 
lawyers.
    Now as a former Governor, the President personally 
experienced and understands the complexities of developing and 
implementing State plans to meet air quality standards. That is 
why he places a premium on practical and common sense 
solutions. Clear Skies, in conjunction with the Bush 
Administration's new rules cutting diesel engine pollution by 
more than 90 percent, will provide that solution. Most counties 
will be able to meet the new tougher air quality standards 
without having to take local measures beyond the Clear Skies 
power plant reductions and the diesel ryles. For the relative 
few that remain, their burden will be substantially lighter and 
their likely challenge a local one. This simple approach could 
save governments and the private sector tens of millions of 
dollars in negotiations, litigation and otherwise inevitable 
delay in meeting the air quality standards.
    Now I would like to show you the attainment maps. These are 
the 350 counties monitored that have to meet these new ozone 
and fine particle standards. The next chart will show you what 
happens after the new diesel rules, current Clean Air Act 
programs and the Clear Skies legislation. Most of those 
counties will meet the standards. And by the way, most of them 
will meet them on time without having to take local measures.
    Now that is how the program will work so we will attain the 
standards, but let us talk about what it means to our 
communities. Clear Skies will help keep communities together. 
The up front assurance that legislation would provide of 
meeting air standards will give communities the certainty that 
they need to keep and attract manufacturing jobs in the places 
where generations of their families currently live, work, play, 
and pray. The absence of such certainty could exacerbate the 
break up of communities experiencing the exodus of industrial 
jobs to either ``greenfields'' locations in the United States 
or, even more consequentially and more often these days, 
overseas.
    If we could go back to the previous slide. If you look at 
the non-attainment areas, this is industrial America. These are 
the urban communities that we care about. Now by cleaning up 
these communities with certainty through legislation, it allows 
them to stay together and re-attract the new investment that 
they so desperately need. It allows us to take our 
``brownfields'' legislation that this committee and the 
Congress so strongly endorsed and provide for new reinvestment 
in those ``brownfields'' for new good paying jobs.
    Clear Skies is also going to make these communities 
stronger by helping to keep energy affordable, reliable, and 
domestically secure for their businesses and homes. Now that is 
particularly important to those least able to afford their 
energy needs. The market based trading approach will 
substantially cut the overall cost of compliance that is passed 
on to consumers and to fixed income shareholders. In addition, 
the specific cap levels in Clear Skies which have been endorsed 
by organizations such as the U.S. Conference of Mayors and the 
National Association of Counties are calibrated to encourage 
utilities to put controls on coal rather than switch to natural 
gas in order to comply. That minimizes the overall impact on 
energy prices. Forcing fuel switching from coal to natural gas 
is a tool of compliance by contrast maximizes the costs of 
compliance.
    This chart gives you a picture of coal, what happens to 
coal under Clear Skies. You see a steady increase in the rise 
of coal which is our most affordable, abundant, and 
domestically secure energy source. If we proceeded with other 
measures where there is less certainty about how they can 
comply, we will see switching out of coal into natural gas. And 
many of these--many members of the subcommittee have 
communities that are currently under a great burden in terms of 
their natural gas prices.
    Finally, Clear Skies will help our ecosystems and wildlife 
thrive. It will eliminate chronic acidity in the Adirondacks 
which was the purpose of the Acid Rain Trading Program and 
virtually eliminate it in other Northeastern lakes. It will 
improve long-term conditions in streams, rivers, lakes, and 
bays, and it will vastly improve visibility in many of our 
parks and other scenic locations.
    Now several members of the subcommittee have raised the 
questions about additional modeling and additional information 
and I would just like to indicate to the subcommittee that we 
will be providing that. Administrator Johnson has a letter 
going up to the Senate and we will share that if I could put 
that into the record, Mr. Chairman, we will be sharing that 
with the subcommittee as well.
    Mr. Hall. No objection.
    Mr. Connaughton. So Mr. Chairman, for all of these reasons, 
a broad array of State, regional, and local officials, as well 
as unions and non-Governmental organizations have endorsed the 
approach to meeting the air quality that Clear Skies delivers. 
We, therefore, look forward to the Congress delivering Clear 
Skies Legislation.
    Thank you, Mr. Chairman.
    [The prepared statement of James L. Connaughton follows:]

   Prepared Statement of James L. Connaughton, Chairman, Council on 
                         Environmental Quality

    Mr. Chairman and members of the subcommittee. I appreciate the 
opportunity to appear before you today to strongly urge passage of the 
President's Clear Skies Initiative. President Bush is dedicated to 
providing our families and children with a healthier, more economically 
vibrant and secure future. Important to achieving that future is 
bringing proven, innovative tools to the task. Clear Skies legislation 
is just such a tool, and means healthier citizens, stronger 
communities, more affordable, reliable and secure energy, and more 
vibrant wildlife habitat across America.
    Clear Skies will significantly expand the Clean Air Act's most 
innovative and successful program in order to cut power plant pollution 
of sulfur dioxide, nitrogen oxides and, for the first time, mercury by 
an unprecedented 70 percent in two phases. These cuts in pollution will 
provide substantial health benefits, prolonging the lives of thousands 
of Americans annually, and improving the conditions of life for 
hundreds of thousands of people with asthma, other respiratory 
illnesses, and heart disease.\1\ As the son of a pediatrician who is 
also a chronic asthmatic, my passion for this policy is deeply 
personal.
---------------------------------------------------------------------------
    \1\ Further detail about these benefits can be found in the 
materials accompanying this testimony and on the EPA and White House 
Web sites (www.epa.gov/clearskies and http://www.whitehouse.gov/ceq/
clear-skies.html).
---------------------------------------------------------------------------
    Clear Skies will produce these health benefits with greater 
certainty by imposing a mandatory, permanent, multi-pollutant cap on 
emissions from more than 1300 power plants nationwide, reducing 
pollution by as much as 9 million tons annually at full implementation. 
Utilities will achieve this by spending more than 52 billion dollars to 
install, operate and maintain new, primarily clean coal pollution 
abatement technology on both old and new power plants. Clear Skies will 
require only a few dozen government officials to operate and will 
assure compliance through a system that is easy to monitor and easy to 
enforce.
    Accordingly, the Clear Skies cap and trade approach will give our 
states the most powerful, efficient and proven tool available for 
meeting our new, tough, health-based air quality standards for fine 
particles and ozone. At the end of last year, EPA completed the process 
of informing over 500 counties that they either do not meet or that 
they contribute to another county not meeting the new standards. That 
relatively straightforward act has now triggered a very complex process 
that will lead later this year to a frenzy of intrastate negotiation 
and conflict, interstate negotiation and conflict, federal-state 
negotiation and conflict, state and citizen petitions, lawsuits, and 
heightened uncertainty in energy markets, producing an avoidable and 
negative impact on local investment, jobs and consumer energy bills. 
Not a pretty picture.
    As a former governor, the President personally experienced and 
understands the complexities of developing and implementing state plans 
to meet air quality standards. That is why he places a premium on 
practical, common sense solutions. Clear Skies, in conjunction with the 
Bush Administration's new rules cutting diesel engine pollution by more 
than 90 percent, provides that solution. Most counties will be able to 
meet the new standards without having to take any new local measures 
beyond the Clear Skies power plant reductions. For the relative few 
that remain, their burden will be substantially lighter and their 
likely challenges local ones. This simple approach could save 
governments and the private sector tens of millions of dollars in 
negotiations, litigating and otherwise inevitable delay in meeting air 
quality standards.
    Clear Skies will also help keep communities together. Up front 
assurance of meeting air standards will give communities the certainty 
they need to keep and attract manufacturing jobs in the places where 
generations of their families currently live, work, play, and pray. The 
absence of such certainty could exacerbate the breakup of communities 
experiencing the exodus of industrial jobs to either ``greenfields'' 
locations in the United States or, even more consequentially, overseas.
    Clear Skies will also make communities stronger economically by 
helping to keep energy affordable, reliable, and domestically secure 
for their businesses and homes--particularly important to those least 
able to afford their energy needs. The market-based trading approach 
will substantially cut the overall cost of compliance that is passed on 
to consumers and shareholders. In addition, the specific cap levels in 
Clear Skies--endorsed by organizations such as the U.S. Conference of 
Mayors and National Association of Counties--are calibrated to 
encourage utilities to put controls on coal rather than switch to 
natural gas in order to comply. That minimizes the overall impact on 
energy prices. Forcing fuel switching to natural gas, by contrast, 
maximizes it.
    Finally, Clear Skies will help our ecosystems and wildlife thrive. 
It will eliminate chronic acidity in the Adirondacks and virtually 
eliminate it in other Northeastern lakes. It will improve long-term 
conditions in streams, rivers, lakes and bays. It will vastly improve 
visibility in many of our parks and other scenic locations.
    Mr. Chairman, for these reasons, a broad array of state, regional 
and local officials, as well as unions and non-governmental 
organizations, have endorsed the approach to meeting air quality that 
Clear Skies delivers. We look forward to the Congress delivering Clear 
Skies.

[GRAPHIC] [TIFF OMITTED] T9909.001

[GRAPHIC] [TIFF OMITTED] T9909.002

    Mr. Hall. Thank you.
    Now I recognize Mr. Holmstead for 5 minutes with the same 
request that you stay within the 5 minutes and then we will ask 
you questions.

             STATEMENT OF HON. JEFFREY R. HOLMSTEAD

    Mr. Holmstead. I will do so, Mr. Chairman, thank you.
    It is a pleasure to be here and to have the opportunity to 
testify before this subcommittee.
    As I think many of you know, this is the very room where 
much of the hard work on the 1990 amendments took place and 
frankly, I would not mind if a little of that magic rubbed off 
on us today and we could really move forward on this important 
proposal.
    As Chairman Connaughton just testified, the President's 
Clear Skies Initiative would build on the Clean Air Act and 
ensure that we continue to clean up the Nation's air and 
protect the public health.
    In my oral statement, I would like to address just two 
major issues. One, why do we need the legislation, which I 
think is a question that Mr. Engel and Mr. Dingell and others 
asked. And second, why does our proposed approach for reducing 
mercury emissions make sense. As several of you have mentioned, 
the Agency has recently issued what we call the Clean Air 
Interstate Rule and the Clean Air Mercury Rule which if they 
are implemented as designed will achieve much of the pollution 
reduction that we would get under Clear Skies. But these 
regulations are limited in both scope and function. 
Importantly, the CAIR rule applies to only 28 States and the 
District of Columbia. That is because under the authority we 
have under the current Clean Air Act, those were the only 
States we could cover under the authority. So unlike CAIR, 
Clear Skies would be national in scope and would achieve 
additional emission reductions in the west principally but also 
in the east.
    CAIR and the Clean Air Mercury Rule are also inherently 
more uncertain over time. They are regulations, not law, and as 
final regulations, they are subject to legal challenge and 
litigation. I would say that we have done everything we can to 
make sure that they are legally defensible. But the only other 
time the agency tried to use this regulatory authority there 
were many lawsuits, the regulations that we tried to implement 
were delayed and, in fact, were paired down as a result of some 
of those lawsuits.
    Aside from the delays that could result from judicial 
action, CAIR and the Clean Air Mercury Rule will also provide 
less certainty for private investment and planning for 
compliance with regulations. Our experience with Acid Rain 
Program which was enacted in this room tells us that when 
incentives are built into the law and rules are clear for 
affected industries, sources will comply in advance of the 
actual deadlines.
    In summary, we think that by far the better thing to do 
from a public policy perspective is to provide certainty to the 
environment, to State and local agencies, to citizens who need 
the clean air, and to be fair to industry and provide them with 
the regulatory certainties so that they can go out and with 
certainty to invest the billions of dollars that will be 
necessary to achieve our clean air goals.
    If I could, Mr. Chairman, take a minute just to talk about 
one of the more controversial issues, which is mercury. And I 
hope that we have a chance to talk more about this because over 
the last 18 months or so, the United States Environmental 
Protection Agency has conducted the most comprehensive study 
ever of how Americans are exposed to mercury and in particular, 
the role that coal fired power plants play in that exposure. 
And I need to make just a couple of points if I can.
    First, Americans are exposed to mercury mainly through 
eating fish and shellfish that contain methyl mercury. Ninety 
percent of the fish and shellfish that we eat are from the 
ocean environments and nearly 80 percent of those are imported 
from waters far beyond our borders. Because the U.S. represents 
just a few percent of global manmade mercury emissions, we 
cannot expect a quick fix to the global mercury problem. But we 
recognize that although the vast majority of mercury exposure 
comes from ocean fish, there are at least some people who eat 
significant amounts of fresh water fish here that are caught 
locally and this is something we have looked at very carefully.
    [Slide.]
    If I could show you just a couple of slides. This shows of 
all the mercury that gets deposited in the United States, it is 
about 144 tons a year that gets deposited within our borders. 
Of that, you can see the little slivers at the bottom that 11 
tons and 12 tons represent the amount that emitted in the 
United States that gets deposited here. So 84 percent of what 
is deposited in the United States comes from outside of our 
borders. Only about 16 percent is emitted in the United States 
and gets deposited here and power plants represent about 11 of 
the 144 tons, or about 8 percent. Now if you look on the right 
hand side, we have blown up the power plant portion. And so 
right now power plants deposit 11.1 tons. And under the 
President's proposal, that would be reduced by about 70 percent 
down to 3 tons by 2010. So it represents a very small portion.
    But we also realize that it is not correct simply to look 
at it on an aggregate basis because there are certain areas 
that receive higher amounts of pollution of this deposition 
than others.
    [Slide.]
    If I can go to the next slide. So this tells you total 
deposition. The next slide actually shows mercury deposition 
from all sources in 2001 based on the most recent state of the 
science models from our office in research and development. It 
is hard to see the legend there but the darker colors represent 
where the greater deposition occurs.
    So look at this map and then go to the next map and keep 
this one in your mind. This is mercury deposition from all 
sources in the U.S. and Canada. So you can see this just gives 
you the distribution what I showed before that about--it is 
only about 16 percent comes from U.S. sources. Now I don't mean 
to suggest that we have control over Canadian sources but 
because of the way our models work, I wanted to show you this 
map.
    [Slide.]
    Now let me go to the next slide and that shows you mercury 
deposition today from coal fired power plants. So they are at 
subset and almost exclusively in the eastern part of the United 
States. That is today.
    [Slide.]
    Now let me go onto the next slide. This shows you what 
happens under the rules that we recently promulgated which are 
roughly equivalent to Clear Skies. So we go from having really 
very, very little impact--and I would be happy to provide you 
more information--to something we have been trying to explain 
all along that the President's proposal gets the greatest 
reduction in the places where you need it most. And so we only 
have about one microgram per meter here that comes from power 
plants.
    [Slide.]
    Now let me--if you look at this slide and then go to the 
next slide which again shows you that even with those dramatic 
reductions of over 70 percent from U.S. coal fired power 
plants, this is a rough estimation of what things--if we hold 
other emissions constant, this is what it will look like in the 
year 2020. So we believe the President's proposal really does 
essentially eliminate the problem of mercury deposition from 
U.S. power plants.
    And again, I would be happy to provide any of you with more 
detailed information. But I know for instance in the State of 
Maine, which Mr. Allen cares about very much, right now power 
plants represent about 3 percent of mercury deposition. We 
estimate it will be about 1 percent of mercury deposition after 
the President's proposal is put in place.
    Overall, the Clean Air Act has been and continues to be a 
vehicle for great progress but we know we can do better. We 
believe that Clear Skies would build on proven portions of the 
Clean Air Act and we look forward to working with this 
committee to see that it could be enacted into law.
    Thank you.
    [The prepared statement of Hon. Jeffrey R. Holmstead 
follows:]

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

                            I. INTRODUCTION

    Thank you, Mr. Chairman and Members of the Committee for the 
opportunity to testify today concerning the President's Clear Skies 
Act, which would reduce substantially emissions of sulfur dioxide 
(SO2), nitrogen oxides (NOX) and mercury from 
power plants. Although I am very proud that the Agency has just issued 
two regulations limiting power plant emissions (the Clean Air Intestate 
Rule and Clean Air Mercury Rule), legislation would be a more 
effective, efficient and long-term mechanism to achieve large-scale 
national reductions.
    This country should be very proud of the progress we have already 
made in cleaning up our air. Since the Clean Air Act was first enacted 
in 1970, total national emissions of the six most common air pollutants 
have been reduced 54 percent. Remarkably, this improvement in national 
air quality has occurred even while, during the same almost 35-year 
period, the U.S. Gross Domestic Product increased 187 percent, energy 
consumption increased 47 percent, and vehicle miles traveled increased 
171 percent.
    The President's Clear Skies Act is the most important next step we 
can take to continue our progress in providing healthy air and a clean 
environment for all Americans. Clear Skies would make great strides 
towards solving our remaining air quality problems in a way that also 
advances national energy security and promotes economic growth. It 
would reduce power plant emissions of SO2, NOX 
and mercury by approximately 70 percent from today's levels and do it 
with more certainty than would current law. Because of the innovative 
capandtrade approach used in Clear Skies and the legal certainty 
provided by caps and deadlines set by statute, power plants would have 
an incentive to start reducing emissions as soon as Clear Skies is 
passed, resulting in emissions reductions more quickly than required.
    When fully implemented, Clear Skies would deliver tens of billions 
of dollars in annual health benefits by prolonging thousands of lives 
and preventing millions of illnesses each year. It would also provide 
billions of dollars of economic benefits, including saving millions of 
dollars in health care costs.1 The added benefit of Clear 
Skies would virtually assure attainment of the new ozone and 
particulate matter standards for much of this country, yielding a level 
of air quality that meets the new, more protective health-based 
national air quality standards for millions of people. Clear Skies 
would also virtually eliminate chronic acidity in modeled northeastern 
lakes, reduce nitrogen loading in coastal waters, and help restore 
visibility in our national parks and wilderness areas.
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    \1\ Unless otherwise noted, all projections about the costs and 
benefits of the Clear Skies Act are based on EPA's 2003 analysis of the 
Clear Skies Act of 2003. The analysis can be found at http://
www.epa.gov/air/clearskies/technical.html. To calculate the costs and 
benefits of Clear Skies, EPA compared the Clear Skies Act of 2003 to a 
Base Case (Existing Control Programs), which is the typical approach 
EPA uses in calculating the costs and benefits of Agency rulemakings. 
The Existing Control Programs reflected implementation of only 
finalized control programs and the non-road diesel rule as it was 
proposed in April, 2003; it did not include yet-to-be developed 
regulations, such as the now final Clean Air Interstate Rule and Clean 
Air Mercury Rule, or other regulations that may be developed to 
implement the National Ambient Air Quality Standards.
---------------------------------------------------------------------------
    Although the Clean Air Interstate Rule (CAIR) and the Clean Air 
Mercury Rule (CAMR) are very important rules, with significant health 
and environmental benefits, the country would be even better off if 
Congress passed the President's Clear Skies Act. Clear Skies would 
provide more expansive and certain results. Clear Skies would enable us 
to achieve broader reductions of SO2 and NOX 
emissions because the legislation would apply nationally, while CAIR is 
limited in geographic scope to 28 states and the District of Columbia. 
Although CAIR addresses the bulk of power plant emissions of S02 and 
NOX, Clear Skies would also reduce SO2 and 
NOX emissions in the West and incorporate the SO2 
program developed by Western states. Based on our experiences with 
litigation on the NOX SIP Call versus that on the Acid Rain 
Trading Program, Clear Skies would provide more certainty for the 
utility industry, and for state and local air quality planners. 
Although the NOX SIP Call is now in place, litigation on 
this rule delayed compliance, making planning for pollution control 
installations difficult, raising costs to industry and consumers, and 
delaying health and environmental benefits. In contrast, the Acid Rain 
Trading Program, enacted by Congress as part of the 1990 Clean Air Act 
Amendments, has been almost free of litigation and started on schedule. 
Compliance has been nearly 100 percent, and the inherent flexibility of 
the allowance trading program has reduced costs by 75 percent from 
initial EPA estimates.
    As Chairman Connaughton said before me, we strongly urge passage of 
Clear Skies. Clear Skies gives our states a critical, proven tool for 
meeting our new air quality standards for fine particles and ozone. We 
urge you to act soon as the States are now developing their 
implementation plans.

             II. CLEAR SKIES PROVIDES SIGNIFICANT BENEFITS

    The heart of Clear Skies is a proven cap-and-trade approach to 
emissions reductions. Mandatory caps restrict total emissions and 
decline over time. When fully implemented, Clear Skies would result in 
a 70% reduction in power plant emissions of SO2, 
NOX and mercury from 2000 levels. Clear Skies would continue 
the existing national cap-and-trade program for SO2, but 
dramatically reduce the cap from 9 million to 3 million tons. Clear 
Skies would also use a national cap-and-trade program for mercury that 
would reduce emissions from the current level of about 48 tons to a cap 
of 15 tons. The legislation would also employ two regional cap-and-
trade programs for NOX to reduce emissions from 2000 levels 
of 5 million tons to 1.7 million tons.
    Although national in scope, Clear Skies recognizes and adjusts for 
important regional differences in both the nature of air pollution and 
the relative importance of emissions from power generation. The eastern 
half of the country needs reductions in NOX emissions to 
help meet the ozone and fine particle standards, which generally are 
not a regional issue in the western half of the county (with the 
exception of California, which does not have significant emissions from 
existing coal-fired power plants). The western half of the country 
needs NOX reductions primarily to reduce the regional haze 
that mars scenic vistas in our national parks and wilderness areas, and 
the nitrogen deposition that harms fragile forests. Recognizing these 
regional differences, Clear Skies would establish two trading zones for 
NOX emissions and prohibit trading between the zones to 
ensure that the critical health-driven goals in the East are achieved.
    Clear Skies also recognizes the special visibility protection 
measures that have been developed by states participating in the 
Western Regional Air Partnership (WRAP). Clear Skies would essentially 
codify the WRAP's separate SO2 backstop cap-and-trade 
program, which would come into effect only if the WRAP states did not 
meet their 2018 SO2 emissions targets.
    Finally, Clear Skies requires tough, technologybased new source 
standards on all new power generation projects and maintains special 
protections for national parks and wilderness areas when sources locate 
within 50 km of ``Class I'' national parks and wilderness areas.
Significant Public Health and Environmental Benefits
    The public health and environmental benefits of Clear Skies present 
compelling reasons for its immediate passage. EPA's 2003 analysis of 
the President's Clear Skies Act (which did not account for CAIR and 
CAMR) projected that Americans would experience significant health 
benefits each year by 2020, including approximately:

 14,100 fewer premature deaths;
 8,800 fewer cases of chronic bronchitis;
 23,000 fewer non-fatal heart attacks;
 30,000 fewer visits to hospitals and emergency rooms for 
        cardiovascular and respiratory symptoms, including asthma 
        attacks; and
 12.5 million fewer days with respiratory illnesses and symptoms.
    Many of these benefits, as well as the benefits described below, 
would be achieved by CAIR and CAMR if they are not delayed or blocked 
by litigation.2 Clear Skies would lock in the benefits of 
CAIR and CAMR and provide additional benefits, particularly in the 
West.
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    \2\ See explanation in footnote 1 for more detail regarding EPA's 
2003 analysis of costs and benefits.
---------------------------------------------------------------------------
    Clear Skies' benefits would far exceed its costs. EPA estimated in 
2003 that the monetized value of the health benefits we can quantify 
under Clear Skies would be $110 billion annually by 2020--substantially 
greater than the projected annual costs of approximately $6.3 billion. 
The Agency estimated an additional $3 billion in benefits from 
improving visibility at select national parks and wilderness areas. 
These estimates did not include the many additional benefits that were 
not monetized, such as human health benefits from reduced risk of 
mercury emissions, and ecological benefits from improvements in the 
health of our forests, lakes, and coastal waters.
    Clear Skies would achieve most of these benefits by dramatically 
reducing fine particle pollution caused by SO2 and 
NOX emissions, which is a year-round problem. Of the many 
air pollutants regulated by EPA, fine particle pollution is perhaps the 
greatest threat to public health. Hundreds of studies in the peer-
reviewed literature have found that these microscopic particles can 
reach the deepest regions of the lungs. Exposure to fine particles is 
associated with premature death, as well as asthma attacks, chronic 
bronchitis, decreased lung function, and respiratory disease. Exposure 
is also associated with aggravation of heart and lung disease, leading 
to increased hospitalizations, emergency room and doctor visits, and 
use of medication.
    By reducing NOX emissions, Clear Skies also would reduce 
ozone pollution in the eastern part of the country and help keep ozone 
levels low in the western portion of the country. Ozone (smog) is a 
significant health concern, particularly for children and people with 
asthma and other respiratory diseases who are active outdoors in the 
summertime. Ozone can exacerbate respiratory symptoms, such as coughing 
and pain when breathing deeply, as well as transient reductions in lung 
function and inflammation of the lung. Ozone has also been associated 
with increased hospitalizations and emergency room visits for 
respiratory causes. Repeated exposure over time may permanently damage 
lung tissue.
    Analyzing the Clear Skies reductions, coupled with the decreases 
associated with the nonroad diesel engine rule and other existing state 
and federal programs, EPA's 2003 analysis projected that 86% of 
counties monitoring nonattainment for the PM2.5 standard 
(based on 1999-2001 data) would monitor attainment by 2020, and 91% of 
counties monitoring nonattainment for the 8-hour ozone standard (based 
on 1999-2001 data) would monitor attainment by 2020.
    Even in the few areas that would not attain the standards, EPA's 
modeling projected that Clear Skies would significantly improve air 
quality. Throughout the West, Clear Skies would hold emissions from 
power plants in check, preserving clean air in high-growth areas and 
preventing degradation of the environment, even as population, the 
economy and electricity demand increase. (See Attached Figures 1 and 
2.)
    Clear Skies would also address mercury emissions from power plants. 
People are exposed to mercury mainly through eating fish and shellfish 
that contain methylmercury. While mercury in fish is not an issue for 
most people, mercury can put a developing fetus or young child's 
developing nervous system at risk when ingested in sufficiently high 
quantities. Some recent studies raise a possibility that exposure to 
methylmercury may attenuate the cardioprotective effects of fish 
consumption in some populations of men, although other studies have not 
observed an association. This is a new area of research and these 
potential effects need to be further evaluated in the context of the 
known heart-health and developmental benefits of a well-balanced diet 
that includes a variety of fish and shellfish.
    Mercury is released into the environment from many sources. Mercury 
emissions are a complex atmospheric pollutant transported over local, 
regional, national, and global geographic scales. As previously 
indicated, Americans are exposed to mercury through eating fish that 
contain methylmercury. Of the mercury that falls directly onto the U.S. 
we estimate that approximately 16% comes from U.S. sources, about half 
of which is from power plants. This fraction varies significantly 
across the U.S. (See Figures 3 and 4.) Ninety percent of the fish and 
shellfish we eat are from the ocean environment; and nearly 80 percent 
of those are imported. Because the U.S. represents just a few percent 
of global man-made mercury emissions, we cannot expect a quick fix to 
the global mercury problem. For the foreseeable future, EPA advises 
that women who may become pregnant, pregnant women, nursing mothers, 
and young children carefully observe the joint EPA-FDA Fish Advisory 
issued last year. We are also committed to working collaboratively with 
those countries that are the largest sources of airborne mercury to 
help them reduce those emissions to the global pool. Our actions reduce 
our contribution to the global pool and promote the technologies so 
other countries can follow our lead.
    Clear Skies will require a 69% reduction of mercury emissions from 
power plants from 1999 levels. Under Clear Skies, units are projected 
to install selective catalytic reduction (SCR) and scrubbers to meet 
their SO2 and NOX requirements and take 
additional steps to meet the mercury reduction requirements, including 
adding mercury-specific control technologies (such as Activated Carbon 
Injection). The specific controls we anticipate will be adopted by 
utilities under the Clear Skies are particularly good at reducing the 
forms of mercury that are of concern with respect to U.S. deposition. 
Therefore, we expect U.S. deposition to be reduced faster than 
emissions.
    Not only do the controls tend to reduce the forms of mercury that 
matter most for reducing U.S. deposition from power plants but many of 
the mercury emission reductions are projected to result from large 
units installing these controls. Under the cap-and-trade approach we 
are projecting that mercury reductions result from units that are most 
cost effective to control, which enables those units that cannot 
install controls cost-effectively to use other approaches for 
compliance. The largest emitting plants are generally more cost-
effective to control than small plants and under our cap-and-trade 
approach, the large plants produce the greatest reductions in the form 
of mercury that matters most for reducing U.S. deposition. For all of 
these reasons, Clear Skies is projected to lead to the greatest 
reduction in power plant deposition where it is the greatest. (See 
Figures 5 and 6.)
    In addition to substantial human health benefits, Clear Skies would 
also deliver numerous environmental benefits. Nitrogen loads to the 
Chesapeake Bay and other nitrogen sensitive estuaries would be reduced, 
reducing potential for water quality problems such as algae blooms and 
fish kills. Clear Skies would also accelerate the recovery process of 
acidic lakes, virtually eliminating chronic acidity in all but 1% of 
modeled Northeastern lakes by 2030, according to our 2003 analysis. The 
Acid Rain Program has allowed some of these lakes and the surrounding 
forests to begin to recover. Clear Skies would also help other 
ecosystems suffering from the effects of acid deposition by preventing 
further deterioration of Southeastern streams. Finally, Clear Skies 
would improve visibility across the country, particularly in our 
treasured national parks and wilderness areas, resulting in projected 
improvements of approximately two to seven miles in visual range in 
many areas (based on our 2003 analysis).

Reasonable Costs and Energy Security for Consumers and Industry
    The President directed us to design Clear Skies to meet both our 
environmental and our energy goals. While delivering substantial 
emission reductions, Clear Skies is not projected to impact electricity 
prices significantly. Our extensive economic modeling of the power 
industry looked at a broad array of factors to gauge the effects of 
Clear Skies on the energy industry--and they all show that cleaner air 
and energy security can go hand-in-hand.
    Clear Skies would maintain energy diversity. With Clear Skies, our 
analysis indicated that coal production for power generation would be 
able to grow by 10 percent from 2000 to 2020 while air emissions are 
significantly reduced. Our analysis showed that the legislation would 
also have little effect on natural gas prices. EPA's economic modeling 
for Clear Skies demonstrated that the proposal's emission reductions 
would be achieved primarily through retrofitting controls on existing 
plants, where those controls would likely be most cost-effective. Clear 
Skies' timeframe and certainty enable the power sector to meet 
aggressive emission reduction targets without fuel switching. This is 
important not only to power generators and their consumers who want to 
continue to rely on our most abundant, reliable, affordable and 
domestically secure source of energy, but also to other consumers and 
industries whose livelihoods could be hurt by a rise in natural gas 
prices.
    One of the key reasons Clear Skies would be cost-effective is its 
reliance on cap-and-trade programs. Like the Acid Rain Trading Program 
upon which it is based, Clear Skies would give industry flexibility in 
how to achieve the required emission reductions, which allows industry 
to make the most cost-effective reductions and pass those savings on to 
consumers. Power plants would be allowed to choose the pollution 
reduction strategy that best meets their needs (e.g., installing 
pollution control equipment, switching to lower sulfur coals, buying 
excess allowances from plants that have reduced their emissions beyond 
required levels). Like the Acid Rain Trading Program, Clear Skies 
includes banking provisions, enabling companies to save unused 
allowances for future use. Banking creates a tangible, quantifiable, 
economic incentive to decrease emissions beyond allowable levels, which 
EPA projects will result in significant early benefits due to over-
compliance in the initial years, particularly for SO2. It 
also leads to gradual emissions reductions over time, and therefore a 
less disruptive transition to tighter emission controls needed to 
address lingering problems. Based on past experience under the Acid 
Rain Trading Program, by placing a monetary value on avoided emissions, 
Clear Skies would stimulate technological innovation, including 
efficiency improvements in control technology, and encourage early 
reductions.

Assistance to State and Local Governments
    Under the current Clean Air Act, state and local governments face 
the daunting task of meeting the new fine particle and ozone standards. 
Clear Skies would substantially reduce that burden. By making enormous 
strides towards attainment of the fine particle and ozone standards, 
Clear Skies would assist state and local governments in meeting their 
obligation under the Clean Air Act to bring areas into attainment with 
these health-based standards, and provide Americans with cleaner air.
    As noted previously, the combination of Clear Skies, EPA's rule to 
decrease emissions from nonroad diesel engines, and other existing 
state and federal control programs--such as pollution control 
requirements for cars and trucks--would bring a substantial number of 
counties that currently monitor nonattainment into attainment with the 
fine particle and ozone standards. Even in the few areas that would not 
attain the standards without adoption of local control measures, Clear 
Skies would significantly improve air quality. This would make it 
easier for state and local areas to reach the ozone and fine particle 
standards.
    Clear Skies' assistance to states goes beyond ensuring that power 
plants will reduce their emissions. Clear Skies relies on a common-
sense principle--if a local air quality problem will be solved cost-
effectively in a reasonable time frame by the required regional 
reductions in power plant emissions, we should not require local areas 
to adopt local measures. Under Clear Skies, areas that are projected to 
meet the ozone and fine particle standards by 2015 would be able take 
advantage of the broad emission reductions occurring at the regional 
level as a result of Clear Skies.3 If certain conditions are 
met, these areas could be designated ``transitional'' areas, instead of 
``nonattainment'', and they would not have to adopt local measures 
(except as necessary to qualify for transitional status). They would 
have reduced air quality planning obligations and would not have to 
administer more complex programs, such as transportation conformity, 
nonattainment New Source Review, or locally-based progress or 
technology requirements in most circumstances.
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    \3\ Clear Skies legislation introduced in the House of 
Representatives (H.R. 999, February 27, 2003) was introduced before EPA 
designated nonattainment areas for the 8-hour ozone or PM2.5 
standards. Such areas have since been designated.
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           III. IMPROVING THE CLEAN AIR ACT WITH CLEAR SKIES

    Clear Skies would improve the Clean Air Act in a number of ways. It 
would build on the proven portions of the Clean Air Act--like the 
national ambient air quality standards and the Acid Rain Trading 
Program--and reduce reliance on complex, less efficient requirements 
like New Source Review for existing sources. The mandatory emission 
caps at the heart of Clear Skies guarantee that reductions will be 
achieved and maintained over time. In contrast, litigation 
uncertainties make it difficult to estimate how quickly and effectively 
current regulations would be implemented under the current Clean Air 
Act.

Legislation Now Is Better than Regulation Followed by Years of 
        Litigation
    Clear Skies has several benefits over the regulatory scheme that 
will otherwise confront power generators. Clear Skies provides 
regulatory certainty and lays out the timeframes necessary for plant 
managers to design a cost effective strategy tailored to both their 
current budgets and future plans. Clear Skies is designed to go into 
effect immediately upon enactment. Power plants would immediately 
understand their obligations to reduce pollution and would be rewarded 
for early action. As a result, public health and environmental benefits 
would begin immediately and result in emissions reductions more quickly 
than required. Given Clear Skies' design, it is unlikely that 
litigation could delay the program (particularly since Congress would 
decide the two most controversial issues--the magnitude and timing of 
reductions).
    Past experience suggests that litigation delays on the regulatory 
path are likely. Our experience with two cap-and-trade programs--the 
legislatively-created Acid Rain Trading Program and the 
administratively-created NOX SIP Call--illustrates the 
benefits of achieving our public health and environmental goals with 
well-designed legislation rather than relying solely on existing 
regulatory authority. Even when regulations are ultimately upheld in 
the courts, emission reductions can be delayed and costs can increase 
simply because of uncertainty.
    Reductions from the Acid Rain Trading Program were experienced 
early, well before compliance deadlines. There were few legal 
challenges to the small number of rules EPA had to issue--and none of 
the challenges delayed implementation of the program. The results of 
the program have been dramatic--and unprecedented. Reductions in power 
plant SO2 emissions were larger and earlier than required, 
providing earlier human health and environmental benefits. Now, in the 
tenth year of the program, we know that the greatest SO2 
emissions reductions were achieved in the highest SO2-
emitting states; acid deposition dramatically decreased over large 
areas of the eastern United States in the areas where it was most 
critically needed; trading did not cause geographic shifting of 
emissions or increases in localized pollution; and the human health and 
environmental benefits were delivered broadly beyond what EPA had 
projected.
    It is clear from this example that existing regulatory tools often 
take considerable time to achieve significant results, and can be 
subject to additional years of litigation before significant emissions 
reductions are achieved. Even when the regulation is ultimately upheld 
by the courts, litigation creates uncertainty that can delay emission 
reductions or increase costs.

Conclusion
    The President's Clear Skies Act provides a balanced approach that 
our nation needs for meeting clean air goals, while safeguarding 
economic growth and promoting energy security. Congressional action on 
Clear Skies legislation is the preferable route toward ensuring that 
health and environmental goals can be met. We stand ready to work with 
this Committee and the Congress to get a bill on the President's desk 
as soon as possible.

    Mr. Hall. Thank you and it is good to have you.
    I would like to now yield my time as chairman to Chairman 
Barton, the chairman of the full committee.
    Chairman Barton. Well, thank you. And thanks again to both 
of you gentlemen.
    When does the enforcement mechanism kick in for all these 
counties that were in attainment for the 1 hour standard, but 
will be non-attainment for the new 8-hour standard?
    Mr. Holmstead. Some of the requirements kicked in already 
late last year. Automatically, upon designation, there are 
certain requirements that apply such as increased difficulty in 
permitting, increased planning when it comes to transportation 
conformity. The real burden on the counties and the local 
Government comes as part of the State planning process. So they 
now have 3 years to submit State implementation plans. 
Typically, that process is not a smooth one. There is often 
litigation involved. I can tell you that we have been sued by 
any--quite a number of State and local organizations, as well 
as, industry groups over those designations so we are in a 
period right now that will eventually lead to cleaner air but 
is often a pretty difficult and cumbersome process.
    Chairman Barton. Mr. Connaughton, do you want to comment on 
that?
    Mr. Connaughton. Yes, we have this period that we went 
through in the 1990's which was extremely conflict ridden 
because the burden was primarily on local communities. That is 
the design of the Clean Air Act. This burden, and really it 
starts about this summer and this fall for the new standards, 
each county is going to start figuring out its portfolio of 
where it can go after this high hanging fruit now because we 
have gotten the low hanging fruit, we have gotten the middle 
fruit, we are now going after the high hanging fruit, the tough 
stuff, especially on ozone but also the fine particles is new. 
And so this is going to be a new challenge for our States and 
their local communities.
    Because it is new and because it is tough, it makes the 
deal making within the State a lot harder and then every State 
has an incentive to blame the other guy, the State across the 
border. And so--and that is understandable because also the 
costs are quite high. And so that is a recipe for litigation. 
It is a recipe for what we saw in the 1990's with States and 
localities asking EPA or asking the Congress to give them 
extensions of time on meeting attainment deadlines. 
Understandably.
    Many did not meet the air quality standards on time and 
that resulted in this mechanism under the Clean Air Act that 
imposes an additional burden. It raises them to a new level of 
concern at the agency and requires them to do even more so 
there is a penalty for not being able to make it on time.
    What we are trying to do with this policy which I think is 
the opposite of your question, Mr. Chairman. What we are trying 
to do with this policy is turn that dynamic around. Let us give 
a reasonable, opportunity to meet the standards through this 
combined set of programs so that the few that remain and there 
will be fewer that remain, will be able to concentrate on truly 
local issues.
    And I think you gave the example of Ellis County where your 
main burden is coming from other counties. And I think to the 
extent there is a little bit of extra work to do in Ellis 
County. I would assume the county is a little bit better off 
and feels a little better about it when they know that 
pollution coming across from other locations has been addressed 
first. And that is what this legislation is intended to do.
    Chairman Barton. It is my understanding that the Clear 
Skies Initiative will achieve through incentive and market 
certainty the installation of the pollution control equipment 
that is sought by the ongoing New Source Review litigation.
    Mr. Holmstead, has the EPA or the Department of Justice 
estimated the cost associated with the Government's expenses so 
far and their expected continuing expenses in the existing 
prosecution of new source cases? If not, could the EPA and/or 
the Department of Justice supply the committee with that 
information?
    Mr. Holmstead. What I can say is I know it represents a 
very significant portion of the enforcement office budget and 
the Department of Justice Environment Division Budget. I don't 
know the exact numbers but we could provide those to you, I am 
sure.
    Chairman Barton. We would like that. And if we were to pass 
this legislation and it would become law, how would that 
improve this? What would be different if we were to do Clear 
Skies?
    Mr. Connaughton. Mr. Chairman, the litigation currently is 
against several dozen power plants. The U.S. Government is 
bringing it as are a number of States. It is not against all 
1,300 that would be covered by Clear Skies so you have a 
difference there. The litigation is only against firms against 
which there is an argument they made an upgrade.
    Most power plants avoided doing investments in efficiency 
and other things because of the fear of New Source Review 
litigation so we only have a hook with respect to a few dozen 
right now. And as it turns out, we have had a few successful 
settlements, several billion dollars in settlements and so far 
though we have only won about half the cases. We are 8 years 
into the litigation and we have probably eight to 12 more years 
to go with respect to the current filed cases.
    Now take Clear Skies by contrast instead of a few dozen 
power plants it is over 1,300 power plants. Instead of lots of 
lawsuits in different locations all around the country, you 
have no lawsuits. You get the retrofits that we are looking for 
through the New Source Review litigation. You get the retrofits 
not just at the, you know, several dozen plants where we have 
litigation but you get it at a whole lot more, nearly all the 
big ones and all the medium size ones and many of the small 
ones. So you also then save all those enforcement costs.
    The Acid Rain Program has proved to be the most enforceable 
program of the Clean Air Act. We have nearly 100 percent 
compliance and have not had to see the inside of a court room 
because you have 24-hour monitoring, you know exactly how much 
someone is polluting and they have to have an allowance to meet 
that commitment. In order to be able to pollute, you have to 
have an allowance so it is 100 percent enforceable. It also 
only takes a few dozen EPA employees to actually run the whole 
program rather than the thousands of government officials and 
private sector people and lawyers involved in trying to pursue 
the New Source Review process. So that is why the benefits are 
enormous and the certainty is nearly complete.
    Chairman Barton. My final question is if this subcommittee 
and perhaps the full committee were to pass this legislation, 
would that in any way enhance the possibility the Senate might 
take this up again? In other words, is it worth our time to try 
to legislate here responsibly given what has happened in the 
Senate, where the proposal has already died because of a 
deadlocked committee?
    Mr. Connaughton. Action by the House always is an 
inspiration to the Senate.
    Chairman Barton. Good answer for this group.
    Mr. Connaughton. I also noted a number of the opening 
statements by members. I have not seen that level of deference 
to the Senate from this body in a long time. The Senate process 
is not dead, Mr. Chairman. I participated very actively in it. 
We hit a roadblock over the modeling issues. Senator Carper in 
particular wanted to see more information. You will have in the 
record today a commitment from Administrator Johnson to provide 
that additional information. We are going to do the next round 
of modeling because we can now. The rulemaking process is over. 
And the folks who are working on a bipartisan basis toward a 
constructive solution by the way included Senator Carper who 
has indicated that he still wants to see legislation this 
summer.
    Now whether that can happen or not will really turn on 
reengagement in the Senate but the President and his team, Jeff 
Holmstead and I are firmly committed to keeping up the effort 
in the Senate. The House inspired Healthy Forests legislation 
in the Senate, it inspired ``brownfields'' legislation in the 
Senate, the House has inspired energy, action again in the 
energy bill in the Senate. I think leadership in the House is a 
wonderful thing and we look forward to further leadership from 
the House.
    Chairman Barton. Well we are interested if the Senate is 
also interested. We are, as I have told you privately, I am not 
interested in engaging in the process here that is sterile from 
the beginning because lack of apparent ability to act in the 
Senate. But, if it will help our friends in the Senate to do 
something, we are certainly willing to that.
    Thank you.
    Mr. Connaughton. Thank you, Mr. Chairman. I will be back.
    [Brief recess.]
    Mr. Hall. We will wait right here. I have just cast the 
last vote of the day and others are going over to cast the last 
vote and probably the next vote they cast will be what airplane 
they are going to get on. So you are going to have it get a 
little bit easier.
    But I have a question, sir, I want to ask you. And one I 
will throw out here that you can knock clear out of the park, 
but we would like to have it for the record. You have partially 
answered it, Mr. Holmstead. You have heard critics, and one of 
the panel mentioned that the Clear Skies is a rollback of the 
Clean Air Act, arguing that the current act is properly 
interpreted and faithfully executed it could potentially 
achieve more emission reductions in this bill. And for the 
record, why don't you give us your answer to this assertion.
    Mr. Holmstead. Mr. Chairman, this is designed to 
substantially improve upon the Clean Air Act. And we will get 
more certain reductions. We will get greater reductions and we 
keep in place all of the important parts of the Clean Air Act 
that actually get real reductions in pollution. So if I can 
just say in a more positive way, this bill is designed to and 
will improve upon the pollution reductions that we would 
otherwise get under the current Clean Air Act.
    Mr. Connaughton. Mr. Chairman, if I might, let me add----
    Mr. Hall. Yes, sir, please do.
    Mr. Connaughton. [continuing] just an essential specific 
reason why. The Clean Air, ambient air quality standards for 
ozone and fine particles were set in 1997, were litigated all 
the way through to the Supreme Court. President Bush and his 
team completed the litigation process and we have now done all 
the designations required for setting the air quality standard 
so we already have in place in America today the performance 
standard that we are trying to meet and that does not change.
    So the air quality standard is the performance standard. 
What we are talking about today is merely the tool by which we 
can enable our States to meet these tough new standards. And so 
for those who suggest that we are rolling back Clean Air Act 
protections, the facts are the complete opposite of that 
assertion because nobody is suggesting changing the new health 
based ambient air quality standards. This is how we get there. 
And Clear Skies will help most counties do it without having to 
do any additional work as we indicated in our earlier testimony 
and it will actually provide a simple and effective tool as a 
replacement for a whole series of tools that again they can 
work too but they are not nearly effective and they are much 
more costly and they tend to produce delay. And so this is the 
most effective way to getting to our shared goals.
    Mr. Hall. Well I thank you for that.
    Let me ask you this, Mr. Holmstead. What happens to those 
facilities that have already installed emission control 
technology on their plants? What will be the impact of Clear 
Skies on those companies and will they be penalized or 
disadvantaged in any way under the new program?
    Mr. Holmstead. Absolutely not. The design of the Clear 
Skies Program essentially gives people allowances based on 
something we called heat input. But the design of that system 
is specifically designed to reward people who have already put 
on good control. So for example, a facility that is very well 
controlled may receive more allowances than it needs so it 
actually would have something of value that it could sell to 
someone else. But it is specifically designed not to penalize, 
in fact, it is designed to reward facilities who have already 
installed good pollution controls.
    Mr. Hall. Mr. Connaughton?
    Mr. Connaughton. The only thing I would add, those who have 
done it already are lucky in one sense because they don't bear 
the additional burden that will be required of the facilities 
that have not. But as Mr. Holmstead said we are not going to 
penalize them but we are also looking to facilities that can 
reduce earlier and there is a whole class of big power plants 
that with the Clear Skies legislation that currently don't have 
controls that will now have an incentive to put on controls 
fast, do it early rather than wait to some compliance date in 
the future. So the old ones will be in good position, the ones 
who have already done the investment. But it is this group that 
have the potential to reduce early and fast are the ones we 
want to incentivize and that is what this legislation will do.
    Mr. Hall. But they won't have the ability to improve as 
they have already improved and what affect will that have on 
their credits and the cost of it?
    Mr. Holmstead. One of the concerns about the Clean Air Act 
before 1990 was that there was something called the percent 
reduction approach where, often times, wherever you were, you 
had to get an additional reduction. And for the very reason you 
outlined, the Agency has avoided that approach altogether 
because we really do want to make sure that we are fair to 
people who have already taken actions to reduce their 
emissions. So the way that it works, just mechanically, is that 
all of those facilities get allowances under the current Acid 
Rain Program. They will continue to get those allowances. Many 
of those companies will have allowances to sell and will 
continue to have allowances to sell under the President's 
proposal.
    Mr. Hall. I thank you and I yield to the gentleman from 
Virginia for 5 minutes, Mr. Boucher.
    Mr. Boucher. Well thank you very much, Mr. Chairman, and I 
want to thank both of our witnesses for their illuminating 
testimony today.
    Mr. Holmstead, I was glad to hear you talk about mercury 
and your mercury rule and I have a couple of questions about 
that.
    I am looking at the phase one mercury allocations in your 
rule and its application to particular coal types. And I am 
concerned that it has a disproportionate affect among the 
various types. Here are the numbers I have, correct me if I am 
wrong. With regard to allocations between now and 2010, the 
bituminous coal allowance is about 87 percent. So there could 
be emissions equal to 87 percent of current emissions by 2010.
    With regard to sub-bituminous, the allocation is 
considerably more generous. For sub-bituminous, the emissions 
by 2010 could be 104 percent of the current levels so there is 
an increase of 4 percent for bituminous and decrease of 13 
percent. And then you get the lignite and you have the largest 
disparity of all. By 2010, the permitted emissions for lignite 
would be 175 percent of current. And so you would have a 75 
percent increase.
    And I just don't see how that kind of desperate treatment 
can be sound public policy. The ultimate effect would be that 
the users of bituminous coal are going to have to go to the 
users of lignite and buy emission allowances. And that strikes 
me as being unjust. So would you like to have a word about your 
methodology and first of all if these numbers are wrong tell me 
but assuming they are right, why are we doing it this way?
    Mr. Holmstead. Let me see if I can correct that a little 
bit.
    Mr. Boucher. Fine.
    Mr. Holmstead. And I can tell you that this has been 
something that we have worked very hard and looked very hard at 
because there is I think a real sensitivity to making sure that 
we have a level playing field among all the coal types, among 
all the regions of the country. And we did extensive analytical 
work in an effort to make sure that we were not in any way 
artificially advantaging one type over another, one region of 
the country over another.
    What we tried to recognize--and again, the way the rule 
works is there is an adjustment factor that is specifically 
designed to reflect the additional cost of reducing mercury 
from some coal types. We know based on a lot of data that the 
cost of reducing an ounce of mercury from bituminous is less 
than the cost of reducing an ounce of mercury from sub-
bituminous or lignite. And that is where we have the adjustment 
factor. And I assume that is how you derive those numbers. But 
the adjustment factor is one for bituminous, 1.25 for sub-
bituminous, and three for lignite.
    What our analysis shows is that when you apply those 
factors, you do not get any switching of coal use from one 
region of the--to another. And, in fact, I don't think we see--
no one is buying or selling mercury allowances until after 
2010----
    Mr. Boucher. Yes.
    Mr. Holmstead [continuing]. Because there is no cap today 
and so there is no reason for bituminous to buy from lignite or 
sub-bituminous because----
    Mr. Boucher. I understand all that, Mr. Holmstead, but the 
reason that you might not get switching is because it is 
impractical to utilize lignite in an application that uses 
bituminous for example. There are a lot of investments in clean 
coal technologies and other things that would not be compatible 
with that other coal type perhaps and there are probably a lot 
of other reasons too. And I fully understand that you don't 
have the capping effect until a later date. But at some point, 
you are going to get this kind of disparity. If you disagree 
that this disparity exists, I would like for you to send a 
letter out that explains why it does not because this is the 
information presented to us and if it is wrong, I hope it is 
wrong. If it is, I would like for you to correct it.
    Mr. Holmstead. I would be happy to provide that technical 
information. One thing I would like to say, if I can, just to 
make sure that everybody hears this today, all of our analyses 
suggests that there will be an increase not only in total coal 
usage but in each type of coal over time so that we do project 
the use of bituminous will continue to grow, the use of sub-
bituminous, and use of lignite will all continue to grow and--
--
    Mr. Boucher. Well, I agree with you that there is going to 
be an increase in coal use, but I think that is occasioned by a 
lot of factors, the confluence of a range of factors and not a 
market force----
    Mr. Holmstead. No, that is absolutely right.
    Mr. Boucher. The high cost of natural gas which is not 
projected to come down and a lot of other reasons will 
contribute to that. This particular analysis, if it is correct 
and there is this disparate effect against bituminous, will 
have a degrading effect on the willingness of people to use 
that particular fuel type because they will have the cost of 
going out and buying allowances from the users of lignite 
presumably. So if this is wrong, let me know and if it is not, 
we will have a continual discussion about it.
    Let me just say one other thing. I understand that your 
mercury rule approximates what you would get should Clear Skies 
pass. I think you said that in your testimony.
    Mr. Holmstead. Yes, sir.
    Mr. Boucher. I also believe your CAIR rule approximates the 
kind of result you would have on SO2 and 
NOX were Clear Skies to pass.
    Mr. Holmstead. That is not correct.
    Mr. Boucher. That is not correct.
    Mr. Holmstead. With respect to mercury, the results are 
very similar. With respect to NOX and 
SO2, under Clear Skies, you would get additional 
reductions because it is a nationwide program and so you get 
pretty significant additional reductions of SO2 and 
also NOX partly because of working within the 
existing regulatory structure, we could not have a cap as far 
out into the future that continues to drive things down. So I 
don't want to overstate the differences because the mercury is 
very similar, but you do get additional benefit in 
NOX and SO2, both in terms of the amount 
and getting the nationwide coverage there.
    Mr. Boucher. So the eastern region it would be more or less 
the same under your rule and under Clear Skies?
    Mr. Holmstead. No, even under Clear Skies you would get----
    Mr. Boucher. You would still get more.
    Mr. Holmstead. Even in the east you would get more, yes.
    Mr. Boucher. Okay. Gentlemen, thank you very much.
    Mr. Chairman, I yield back.
    Mr. Hall. The Chair recognizes Mr. Waxman, the gentleman 
from California for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Connaughton, the administration is portraying the 
proposal as benefiting the public health but if you compare it 
to the implementation of the Clean Air Act, your bill would 
allow more pollution as I understand it for years longer. Areas 
where the administration bill weakens existing law, it guts the 
State authority to address upwind pollution, drops protection 
for national parks, exempts utilities from installing controls 
when they upgrade and increases the emissions. And then what 
you do is extend the deadlines and you hope that you are 
going--the areas will achieve emissions.
    Under existing law and regulations, most areas have to 
attain the health based standards for air quality by 2007 or 
2010. But the bill called Clear Skies would allow re-
designation of up to 198 counties including areas like New York 
City and Chicago as transitional areas. They will have a level 
of air pollution that violates the health base standards. They 
could all be given a deadline extension until 2015. Then if 
they do not meet the standards by 2015, they will automatically 
get another 5 year extension to 2020. Now that is a long time 
difference.
    How many people that live in these areas will be affected 
by these delays in terms of their health?
    Mr. Connaughton. Let me take your question in order. First, 
Congressman, there is no change in the health based air quality 
standards. The new stricter standards for ozone and for fine 
particles go into effect and they were enacted in--they were 
put in place in 1997, litigated to the Supreme Court----
    Mr. Waxman. Do you disagree with the idea that whatever the 
standards are under your bill they are given a lot longer time 
to achieve them?
    Mr. Connaughton. Yes, I do disagree with your 
characterization of it. The EPA modeling shows----
    Mr. Waxman. Then why not leave the existing deadlines in 
place rather than change them?
    Mr. Connaughton. The only place that the legislation--well 
first of all, the modeling shows that most counties will come 
into attainment on time with the scheduled attainment dates, so 
we need to start there. So then we are talking about a smaller 
range, a smaller number of counties. I don't--I have not heard 
the 198 counties so I would be interested to see your analysis 
on that. But a smaller number of counties may require a little 
more time and there then becomes--there then comes the choice--
and this is the logic behind the transition area provision. If 
it is shown that within a very short period of time the power 
plant reductions will bring an area into compliance with the 
new standard, then that county could then seek to obtain the 
benefit of the transition county designation. And the logic is 
pretty straightforward. If they are very close, they have a 
choice then of having to go through a whole State planning 
process to get a whole bunch of locally obtained reductions 
when in a very short period of time they are going to be 
getting those reductions anyway.
    Mr. Waxman. Well under----
    Mr. Connaughton. That has been a great challenge and it 
is----
    Mr. Waxman. Under our analysis based on your data there are 
76 million people living in areas of the Eastern United States 
that are projected to have unsafe air in 2010. The attainment 
dates are being pushed back for those areas by 5 to 10 years. 
That means your proposal allows an additional 380 million to 
760 million person years of exposure to dangerous levels of air 
pollution.
    The philosophy of the Clean Air Act of 1990 was if an area 
was close to attainment of the standards, you did not give them 
a long period of time, you gave them a short period of time and 
they did not have a lot to do because they were getting close. 
But if they were further away from meeting the standards, you 
gave them more time but you required them to do more.
    I was interested in the comments, I think maybe by Mr. 
Barton, but I am not sure, who talked about how terrible it 
would be if an area is bumped up. Well, a reason an area would 
be bumped up is they did not do what was necessary to get to 
the standards in time so if they continued to have even 
increased pollution, they would be bumped up to an area where 
they would have to do more but they are given more time to do 
that.
    The problem we had prior to 1990 was that this--there would 
be these State implementation plans based on modeling that were 
all fictitious. It looked--it did not have anything real in it. 
So we had very clear amounts of time requirements for those 
areas that were the most polluted to do the most, those that 
were least polluted to do the least, and make sure that they 
did the things that would get them into compliance.
    It seems to me, your bill has a lot of assumptions that I 
guess what the off road diesel rule and a few others, there was 
something else in there the--I think you have the--your cap and 
trade, but that has already been put in place with the 
interstate rule, that you think the air is just going to sit 
and wait and most of the areas will be clean. But if they are 
not, they are just given more time without having to do 
anything. That is a real concern because that seems to me that 
this--if you don't--if these assumptions don't work out, we are 
going to have a lot of dirty areas.
    Mr. Connaughton. Very briefly, then I think Mr. Holmstead 
could get to some of the more technical points.
    The goal here is actually for counties to meet the 
standards on time. So I think we have got a shared view there. 
And the fact of the matter is these two massive national 
programs, the diesel rules and the Clear Skies legislation will 
enable most areas to do that. And then the only ones that could 
be looking for more time--by the way they tend to be the ones 
that more classically have either failed to meet their 
deadlines or never: I mean, some have never met their deadlines 
but some might be failed to meet the deadlines but even in that 
instance, the only ones that could apply for a transition 
status is if they could demonstrate that the reductions will 
actually occur otherwise by addressing these transported air 
pollution reductions. The ones who could not make that showing 
are still going to have to develop very stringent local air 
quality plans and, in fact, as it turns out there will fewer of 
them. They will have less work to do because at least they will 
make substantial strides as a result of these transported air 
pollution reductions.
    So hopefully we will have minimized the local challenge 
rather than maximize the local challenge and we will have a 
higher level assurance that even those counties have a hope of 
finally making it on time. So we are talking about a very small 
universe.
    But I think it would be helpful then for Mr. Holmstead to 
just give you a few more of the very specific points.
    Mr. Waxman. If it would be--if he addresses them, I know it 
is a little difficult to keep the 5 minutes and I have already 
gone beyond. But an area can still get a transitional status if 
the power plant emissions or reductions alone will not get them 
there to meet the standards and then the area can just simply 
promise to adopt measures. Mr. Holmstead?
    Mr. Holmstead. That is not the way we read the President's 
bill. And I know there has been some confusion about which bill 
people are looking at but the way we structured the President's 
bill was to make sure that the right mix of power plant 
reductions and local reductions are--that we strike the right 
balance to bring everybody into attainment as expeditiously as 
practical.
    Mr. Waxman. But that was not in the Senate though.
    Mr. Holmstead. Well in the President's bill that we are 
supporting, it does require that State and local Governments 
also take the actions that they need to take to show that they 
are going to come into attainment on time.
    Mr. Waxman. Let me just tell you we disagree about that. I 
think even the President's bill allows----
    Mr. Holmstead. Well we would be happy to clarify that.
    Mr. Waxman. Yes.
    Mr. Holmstead. The other point that I think is really 
important is what improved air quality is not necessarily 
deadlines. As you well know, a number of areas, your own 
district has failed to meet many deadlines and what we have 
tried to do is focus on those things to get real emission 
reductions and that is why we are so focused not on, you know, 
an artificial deadline but actually putting in place the things 
that get pollution reductions and by in large it has not been 
the planning process, it has been specific requirements, things 
like the non-road rule, the 2007 highway diesel rule, the CAIR2 
program and all of those things coupled with the additional 
local reductions that will need to be achieved. And we could--I 
would be happy to talk with your staff or to explain but the 
idea here is to get most areas into attainment by their 
deadlines. Because one of the things that people have 
complained about as being unfair is even if they do everything 
they can locally, they may not be able to come into 
attainment----
    Mr. Waxman. But the deadlines are extended.
    Mr. Holmstead. Just like they were for California in 1990 
when people realized----
    Mr. Waxman. My time is up. I appreciate your answer. I beg 
to disagree with you and perhaps we can discuss it further to 
get clarifications.
    Mr. Hall. I am trying to go as long as we can with anybody 
that has questions or answers but some of us have a 10 flight 
tonight. The Chair recognizes if the gentleman from Maine will 
allow me to recognize the Dean again, Mr. Dingell. I recognize 
Mr. Dingell for five minutes.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy and 
I thank the gentleman from Maine.
    Gentlemen, I have sent a letter on May 19 to Mr. Stephen 
Johnson, Administrator of EPA and the Honorable James L. 
Connaughton regarding the questions that might be asked 
factually about this legislation. When, gentlemen, will that 
letter be responded to?
    Mr. Holmstead. If we could have 30 days from the date that 
we received it. It does ask a number of complicated questions 
but we will definitely get it to you within 30 days, Mr.----
    Mr. Dingell. Now gentlemen, EPA last testified on this 
subject and admitted it had done months and months of modeling 
on its own proposal but it had not analyzed anyone else's 
proposal.
    In that letter I sent you last week, I asked you to analyze 
all other major multi-pollutant proposals to analyze reductions 
we would get under existing Clean Air Act, to analyze all the 
provisions of the administration bill including those which 
relax portions of the Clean Air Act and that you use the same 
models for everyone. I understand that you today sent a letter 
to Senator Inhofe suggesting that you will do some initial 
modeling. As I requested earlier, will you commit to doing the 
modeling that I have requested in my letter?
    Mr. Connaughton. The letter from Administrator Johnson will 
lay out in detail the elements that we are able to model and to 
head toward that straight comparison between several of the 
most prominent proposals and will enable all of us to get a 
very clear sense of the relative differences between the two--
--
    Mr. Dingell. It is different modeling though, on different 
questions, and you come up with different answers, don't you?
    Mr. Connaughton. Well, in this----
    Mr. Dingell. And the answers may or may not be compatible. 
Is that not right?
    Mr. Connaughton. Well, in this particular case, you will 
see in the letter, Congressman, Administrator Johnson lays out 
in detail the modeling that he will undertake and will be 
undertaken equivalently as to the different packages.
    Mr. Dingell. Equivalently is not the same is it?
    Mr. Holmstead. If----
    Mr. Dingell. It is quite different, isn't it?
    Mr. Holmstead. No, we will----
    Mr. Connaughton. Well, we will clarify that for you right 
now.
    Mr. Holmstead. Yes, if I could just clarify.
    Mr. Dingell. Just tell me, equivalent and the same are not 
necessarily identical are they?
    Mr. Holmstead. We are going to be using the same models to 
analyze sort of the range of bills.
    Mr. Dingell. So you will use the same models then?
    Mr. Holmstead. I want to just clarify one exception to 
that. That is the majority of the modeling will be done on all 
of the bills. The air quality--and this is something we have 
tried very hard to explain to Mr. Carper and others. The actual 
air quality modeling analysis does take many, many weeks and a 
lot of----
    Mr. Dingell. But it will also get you the facts----
    Mr. Holmstead. No, no, and we are going to provide you with 
the facts, Mr. Dingell.
    Mr. Dingell. Okay. I will----
    Mr. Holmstead. We are going to do that for one bill sort of 
that is the most stringent and one that is the least 
stringent----
    Mr. Dingell. So----
    Mr. Holmstead. And that will allow us to interpolate 
including the President's bill.
    Mr. Dingell. So we need to have the same modeling for each 
and every one of these bills so that we have the same answers. 
Is that right?
    Mr. Holmstead. We will give you much more modeling than 
anybody ever dreamed possible in 1990.
    Mr. Dingell. Will you give us the same modeling in each 
instance?
    Mr. Holmstead. Yes, we will.
    Mr. Dingell. You will. All right.
    Mr. Holmstead. Exactly as spelled out in Mr. Johnson's 
letter.
    Mr. Dingell. That is fine, the same modeling. Now is the 
modeling--now let us see. Will the modeling only analyze the 
impact of provisions that relax existing law or will they 
analyze the provisions that tighten and change existing law?
    Mr. Connaughton. Actually, you got that reversed so----
    Mr. Holmstead. No, I think I understood the question.
    Mr. Dingell. All right.
    Mr. Holmstead. Mr. Dingell, we just disagree with the 
assumption that there are things that relax existing law.
    Mr. Dingell. Okay.
    Mr. Holmstead. The caps are so stringent that they overtake 
anything that you could possibly----
    Mr. Dingell. So you will analyze all provisions, that is 
fine.
    Now I guess that is all the questions I have, gentlemen, 
thank you. Thank you Mr. Chairman.
    Mr. Hall. Thank you, gentleman. The Chair recognizes Mr. 
Shimkus for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And if I have time, Mr. Holmstead, we will go back to this 
modeling question because I don't know if--we got all confused 
because I think you want--why don't you--is there anything else 
you want to say about this modeling provision to clarify this 
assertion that there is not similar and I think that was kind 
of the intent of the question.
    Mr. Holmstead. Yes, thank you for giving me the chance to 
do that. In order to model these proposals, we use a number of 
different of models sequentially. And I will not go into all 
the acronyms, but the bottom line is we will allow an apples to 
apples comparison of all the proposals and so we have worked 
with our technical people and that is what is contained in Mr. 
Johnson's letter, something that we can give to this body, that 
we can give to the Senate, and so people with a great deal of 
confidence can look at the full range of proposals on an apples 
to apples basis.
    Mr. Shimkus. Thank you.
    Mr. Connaughton. Congressman, I would just add we have 
already done a massive amount of modeling on the major 
proposals and have already enabled very significant apples to 
apples comparison so this will be an addition and supplement to 
that effort with the most updated information.
    Mr. Shimkus. And again, I appreciate that. Unfortunately, 
we don't always deal in facts and apples to apples comparisons 
will not be portrayed as apples to apples comparisons so I 
think we want to encourage to do the best job we can and we 
will try to fight it out and let the fourth estate have a crack 
at them but we really would--the more precise they can be, the 
better it is for us to make the case. And so I think in apples 
to apples comparison will help our argument.
    Three quick things that if we have time, you kind of talked 
about the--this is really tied also with the--our National 
energy planner, our Energy Bill and you cannot really divorce 
the two because as you constrain, as you don't bring in new 
science, as you don't incentivize new generation, cleaner 
generation, then you are stuck with the old plan. And what is 
the old plan if we don't move this, what will it effect--how 
will that affect energy prices? Do you have any idea and 
probably not for you, Mr. Holmstead but----
    Mr. Connaughton. As a general proposition this--it is fair 
to say that this will be the most cost effective way for the 
energy sector to meet their inevitable compliance obligations 
and so that is why we say we have an obligation to meet our air 
quality standards. It is clear the power plants are going to be 
a bigger part of the equation than they have been in the past 
and so the issue is how can we get more of them to install more 
controls at the lowest cost for energy consumers, especially 
our manufacturers who are energy intensive and it is very 
important for our household consumers, many of whom are 
suffering under very high bills. Now you and I can afford it 
but there are many in our society for whom it is a struggle to 
meet their energy bills. So that is a very important component 
of this.
    And it is also important to recognize, we spent the last 3 
years talking about the concern about the leveling off of 
natural gas prices at very high levels. In order to deal with 
that situation, we also have to find an increased place for 
coal.
    Mr. Shimkus. Right.
    Mr. Connaughton. And it is an energy security issue for us, 
too, because coal is here. This will enable us to keep our base 
load energy generation in coal and that will free up natural 
gas for its better use which is in people's homes to provide--
you know, to heat and cook food and in manufacturing 
enterprises where they use it directly. That is the best place 
for natural gas.
    Mr. Shimkus. The--and following up on the train wreck that 
we are going to experience nationally if we don't get some 
certainty on this clean air debate and the State implementation 
plans, I always use the example I fly into St. Louis to get 
home and then I--if I drive 90 miles to another part of my 
district in Illinois, I go through three air quality plans. 
When there is a disruption in the fuel, you cannot ship one 
fuel to the other area because it does not comply. So it 
escalates the price. It is the craziest thing I have ever seen 
in my life. But that is current law. And that is going to be 
even worse if we don't move because States are going to try to 
comply and as you said earlier we have got the low hanging 
fruit. So it is just going to be more stringent.
    I have--in the Energy Bill, we talked--we addressed some 
downwind provisions. Jersey County, Illinois is north of 
Madison County rural, it is non-attainment, no manufacturing. 
How do they meet it? I mean, what is Jersey County, Illinois 
going to do to meet the standards? The answer is nothing. 
Other--maybe their own--if I may, Chairman, I will finish with 
this--Mr. Chairman?
    Mr. Hall. Go on. Give him a chance to answer and your time 
will be up. Go ahead.
    Mr. Shimkus. Just to finish up. Will Jersey County have to 
themselves have a county implementation plan and a county fuel 
of choice to meet their attainment?
    Mr. Connaughton. Jersey County like Ellis County will have 
the strong incentive to try to go through a petition process 
and a litigation process to make their neighbors do the work 
they need to do to help them come into attainment. Now you can 
either do it through the litigation driving process or you can 
do it with legislation that will guarantee they will get the 
reductions they need. I think legislation that eliminates 
lawyers from the process is a good outcome.
    Mr. Shimkus. And less expensive.
    Thank you, Mr. Chairman, I yield back.
    Mr. Hall. All right.
    The Chair recognizes a very patient Mr. Allen from the 
State of Maine.
    Mr. Allen. Thank you, Mr. Chairman.
    Just a point of clarification. I was here at the beginning 
of the hearing. Do I get 5 minutes or 8 minutes? I did not give 
my opening? I was here at the beginning.
    Mr. Hall. We are not going to be very restricting on you. 
Ask your questions and get your answers.
    Mr. Allen. Okay. I have so much to say, I was just 
concerned. I want to thank Mr. Connaughton for coming by my 
office the other day. We had two brief conversations but then I 
think we could go at this for some period of time.
    Let me just react to some of the things you have said and 
then turn to some questions. Despite all--well, despite 
everything you have said so far, I think several things are 
true. One is that we are really not debating certainty. That, I 
mean, you have said over and over again we want to have 
certainty, we want industry to be able to invest to achieve its 
clear air goals.
    I don't think that is what is going on here. We could 
create certainty by requiring every power plant to install 
scrubbers tomorrow but the administration would not agree to 
it. We could create certainty be repealing the Clean Air Act 
but the public will not accept that. And it seems to me that 
what we are really trying to do here or ought to be trying to 
do is improve the public health in a way that allows industry a 
time to adapt and does not sort of, you know, make it 
impossible for them to go ahead.
    And the way I read the Clean Air Act as it exists today and 
the President's proposal whether it is what he said or what is 
in Senator and House bill is the Clean Air Act, the Clear Skies 
weakens the Clean Air Act as it exists today. The President's 
proposal allows non-attainment areas to be reclassified as 
transitional areas to avoid local pollution reductions and to 
miss their 2007 and 2010 deadlines by more than a decade.
    And people were saying, I think Mr. Connaughton, you were 
saying well, you know, it is not a smooth process when these 
local areas are trying to figure out how to comply with these 
regulations. Right, that is the point. What it does as it is 
done in Maine and across the, you know, all up and down the 
East Coast, it has forced cities, it has forced counties which 
are in non-attainment to try to do everything they can to 
regulate air pollution that they can. We regulate gas 
containers in Maine. And what Clear Skies does, what Senate and 
House bill does, what your legislative proposal will do is to 
say well it is getting complicated, it is not very smooth so we 
want to postpone everything, we will set everything back by a 
decade.
    What you do in your proposal as I read it is you eliminate 
the incentive for the dirtiest areas in this country to work 
day after day to figure out how to clean up their own area as 
long as they can show that there is a significant contribution 
of the air coming into their county from somewhere outside. And 
my view is that whole non-attainment approach is really 
something that is just going to give all of these areas a 
chance to push off any serious effort on controlling their own 
homegrown pollution.
    The President's proposal eliminates protection for national 
park visibility. It eliminates requirements that new sources 
install the latest control technology. And it strips Governors 
of Section 126 and other tools to reduce pollution that is 
literally killing their constituents.
    Now my--when you look at Section 126, 126 is the tool that 
Governors use in order to force the EPA, you can take a 
different view and that would be fine. But in our view to force 
the EPA to go after these other States and polluters in other 
States--and frankly once you take that away in hopes that, you 
know, there will be more voluntary compliance or that your 
proposals will lead to lower reductions, I don't think it works 
because it takes away the initiative and the power of the 
States to really act responsibly.
    I am told that EPA's models show that in 2020 under the 
administration's bill, 46 percent of the Nation's coal fired 
power plants still will not have modern controls. Because 
what--your cap and trade system frankly is one that allows a 
lot of plants not to clean up their act. And my understanding 
again, you can correct me if I am wrong is that EPA's 
projections show that by 2020 only 14 units or about 1 percent 
will have installed controls.
    Let me go back, Mr. Holmstead, on mercury. You know, it is 
true that, you know, numbers can be read a lot of different 
ways. It is true that most mercury deposition is not local in 
the United States but it is also true that 40 percent of all 
the manmade emissions of mercury in this country come from coal 
fired power plants. That is the low hanging fruit when it comes 
to mercury. That is the low hanging fruit. And the mercury rule 
doesn't do what it should.
    Now you made a case, Mr. Holmstead, and I understand the 
case. You are saying well, so much of this comes from other 
places in the world that we can't control that; we can only 
deal with a tiny percentage. And my response to that is fine, 
but when has this administration ever taken leadership on an 
international basis to get together with other countries to 
control carbon dioxide, sulfur dioxide, nitrogen oxides, or 
mercury? When has it done that? It has walked away from all of 
the major opportunities to deal with international 
environmental pollution.
    And so, you know, again when it comes to mercury, it seems 
to me you are ignoring the hot spots. You had them up there on 
the map. You have got hot spots particularly in the Ohio River 
Valley. They are all on the east. You know, most of them are 
east of the Mississippi and, you know, I just think that when 
you compare the Clean Air Act to the Mercury Rule and the way 
the Mercury Rule was put together, it seems to me that we 
really are making a mistake not to deal with mercury as a 
hazardous air pollutant under the Section 112 of the Clean Air 
Act. And it does seem to me to be what we ought to be doing.
    And just a couple of other comments. That is the core--let 
me just see if there is something else here, a couple of other 
points. On litigation delays for CAIR, if we pass a law there 
will be litigation. If you do a new regulation, there will be 
litigation, it is inevitable. Somebody is going to sue over it. 
It has happened in the past, it will happen again. But CAIR as 
it stands today without modifying the Clean Air Act, CAIR as it 
stands today, I think will probably do pretty well because as 
you said, you hope it--you think it is defensible but it was--
it is based on the same legal authority upon which the 
NOX, SIP Call was already established and litigated 
and I don't think though the NOX, SIP Call was 
stayed, you would not think that would happen now that the 
Supreme Court has made a decision in that litigation.
    So I just--I really believe here--and you can obviously you 
can react to this, that our job here as legislators is to do no 
harm. And, you know, Mr. Connaughton, talking about utility 
bills. Most people's healthcare bills are a lot higher than 
their utility bills and that is what we are ultimately 
concerned about. We are concerned about the public health and 
making sure we don't undermine one of the great achievements of 
this Congress in the last 30 or 40 years, which is the Clean 
Air Act.
    So that is my speech. I would not have done that except I 
have been listening so long, it gets all pent up. I am happy if 
the Chairman will give you a little extra time to react. I 
suspect I have not persuaded you.
    Mr. Connaughton. Well, I have enjoyed our conversation 
today and I look forward to future conversations, Congressman.
    Let me take it in reverse order. First of all, thank you 
for your ringing endorsement of President Bush's Clean Air 
Interstate Rule and if you like the Clean Air Interstate Rule, 
then you should love Clear Skies because it does it better and 
it does it more effectively and it would be immediate. We don't 
have to wait for the States to go through their processes of 
adopting it and we don't have to wait for the States to design 
State implementation plans around which they can incorporate 
it.
    And when it comes to litigation, we know two things. Nearly 
every provision of the Clean Air Act and its implementing 
regulations has been litigated except for two. One of them was 
the Acid Rain Trading Program upon which the Clean Air, Clear 
Skies legislation is modeled. That is the one that did not get 
litigated. That is the one that was implemented with nearly 100 
percent effectiveness. So that is a great signal. The other one 
by the way was the Diesel Rule, the Non-Road Diesel Rule which 
we negotiated in a very constructive negotiation between the 
effected industries and the environmental community.
    So President Bush has a very strong track record of making 
enormous progress when we put our shoulders to it like we did 
on ``brownfields'' with the Congress. And this is an 
opportunity. You said Congress' position is to do no harm. We 
believe the President's position and Congress' position should 
be to lead.
    And it has been 15 years since we have taken a look at the 
Clean Air Act and we are looking at one element in trying to 
expand the best tool available to us. That is all we are trying 
to do here. We are not looking at the entire Clean Air Act. We 
are not looking--we are looking at taking the best tool and 
making the most of it rather than a lot of the muddling through 
to, you know, to--and having thousands of lawyers and 
consultants and Government officials slogging through to an 
outcome that we all share and yet we know we could get much 
easier, you know, by going on a level field around the mountain 
rather than trying to go up over the top and to the other side.
    Mr. Allen. Just one quick question. Then why eliminate 126?
    Mr. Connaughton. Well actually, it is not being eliminated.
    Mr. Allen. Or weakened.
    Mr. Connaughton. Section 126 is just like the New Source 
Review provision. We are granting through Clear Skies 
Legislation, we are granting the 126 petitions up front. Rather 
than wait for the 4 year process of an EPA petition and then 
its subsequent implementation, Congress, through an act of 
legislation, effectively is telling the States we grant your 
transition--your transport petitions. We are going to grant it 
right now and you don't have to wait for EPA to act.
    The same is true of New Source Review and you and I 
discussed this. Right now we have lawsuits against a few dozen 
facilities, a few dozen power plants. If I could tell anybody 
here that tomorrow I could guarantee that we have settled all 
the lawsuits and EPA wins, I think everybody would be for that. 
Well, not only do we settle all the lawsuits and EPA wins as to 
those several dozen power plants, but we settle the future 
lawsuits and EPA wins with respect to 1,300 power plants. So 
this is the actual, the judicial relief that the Federal 
Government has been seeking and the States have been seeking. 
This legislation would provide it without having to then 
further bother the courts and that is why it is perfectly 
appropriate to replace the NSR litigation with an NSR solution 
which is what Clear Skies is about.
    Mr. Hall. We are way over our time. I ask unanimous consent 
for these two gentlemen to have dinner together sometime. All 
right. The Chair recognizes--thank you, Mr. Allen.
    Mr. Allen. Thank you.
    Mr. Hall. The Chair recognizes Dr. Burgess from the State 
of Texas for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    And I appreciate you giving the panel an opportunity to 
answer that last series of questions. I will try not to take 5 
minutes to ask my question but Administrator Holmstead, 
speaking of lawsuits, earlier this month the Environmental 
Protection Agency and the Texas Council on Environmental 
Quality, several of our local Governments and environmental 
groups in the Dallas, Fort Worth area reached an agreement on a 
lawsuit filed by the environmental groups over the 1-hour ozone 
standard that expires in June.
    And in fact, Mr. Chairman, if I could, I would like to ask 
unanimous consent that the EPA's press release about the 
consent decree, as well as, a copy of the consent decree be 
entered into the record.
    Mr. Hall. Without objection, they are admitted.
    [The information referred to follows:]

                      [News Release--May 5, 2005]

   Parties Reach Agreements on Dallas/Fort Worth Air Quality Planning

    Government agencies, local officials and citizen groups have 
reached a series of agreements regarding plans to achieve health-based 
air quality standards in the Dallas/Fort Worth area. The U.S. 
Environmental Protection Agency (EPA) has agreed to take steps to 
settle a lawsuit over the expiring 1-hour ozone standard. EPA, the 
Texas Commission on Environmental Quality (TCEQ), and local governments 
have voluntarily committed to additional steps for ensuring progress in 
meeting the new 8-hour ozone standard.
    ``I am pleased that we and the local citizens groups were able to 
reach an agreement that moves us toward our goal of cleaner, healthier 
air for residents of the Dallas/Fort Worth area,'' EPA Regional 
Administrator Richard E. Greene said. ``The commitments made in a 
series of agreements by many members of the Dallas/Fort Worth community 
will help us take faster steps toward achieving healthier air quality 
under the new standard.''
    Four citizen groups (Blue Skies Alliance, Downwinders at Risk, 
Public Citizen's Texas Office and the Sierra Club) sued the EPA, 
alleging that insufficient action had taken place to approve and 
implement the State Implementation Plan for meeting the old 1-hour 
standard for ozone, due to expire next month. A number of organizations 
intervened in the litigation supporting EPA, including the TCEQ, Collin 
County, Tarrant County and some industry representatives.
    ``This settlement marks a new era of action to improve Dallas/Fort 
Worth's air quality as quickly as possible. For the first time since 
the Clean Air Act was passed, we think we have an outline of a plan 
that can finally deliver clean air for Dallas/Fort Worth residents to 
breathe,'' said Wendi Hammond, Director of Blue Skies Alliance. ``And 
we believe that if all the parties continue to cooperate as they have 
during these negotiations, we'll arrive at that goal sooner than we 
would have without this agreement.''
    In a consent decree, EPA agreed to a schedule to complete action on 
a number of 1-hour ozone standard planning requirements including a 
program for cleaner engines and traffic congestion prevention measures. 
Significantly, parties went beyond the lawsuit and made voluntary 
commitments focused on making progress to achieve the new 8-hour 
standard. EPA also agreed to evaluate the most significant toxic air 
pollutants for additional monitoring.
    TCEQ agreed to a cement industry study to evaluate the potential 
availability of new air pollution control technologies for cement kilns 
in the Dallas/Fort Worth 8-hour ozone nonattainment area.
    ``We are pleased that all of the parties involved agreed to move 
forward to take positive steps towards improving air quality in the 
Dallas/Fort Worth area immediately,'' TCEQ Commissioner R.B. ``Ralph'' 
Marquez said. ``We remain committed to evaluating all reasonable 
pollution control measures to move us closer to our goal of cleaner 
air.''
    Local officials agreed to implement local pollution control 
measures earlier than required by state and federal regulations.
    ``Clean air has been my goal for some time,'' Collin County Judge 
Ron Harris said. ``These measures will help us bring relief faster to 
children and families suffering from the effects of poor air quality.''
    Tarrant County Judge Tom Vandergriff said, ``Besides making us 
healthier, clean air will make our area more attractive to businesses 
and spur economic development. It's a problem we created together and 
one we must solve together.''

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    Mr. Burgess. Administrator Holmstead, to quote the EPA's 
press release, the EPA ``The EPA agreed to a schedule to 
complete action on a number of 1-hour ozone standard planning 
requirements including a program for cleaner engines and 
traffic congestion prevention measures.'' Additionally, the 
release states that ``Parties went beyond the lawsuit and made 
voluntary commitments focused on making progress to achieve the 
new 8-hour standard. The Environmental Protection Agency also 
agreed to evaluate the most significant toxic air pollutants 
for additional monitoring.'' According to the press release, 
local officials also agreed to implement local pollution 
control measures earlier than required by State and Federal 
regulations. And the Texas Commission on Environmental Quality 
agreed to a cement industry study to evaluate the potential 
availability of new air pollution control technologies for 
cement kilns in the 8-hour ozone non-attainment area.
    I know I am beginning to sound like Mr. Allen, but my 
question is this. Is the legal agreement legally binding, and 
if so, how would it change in air quality law like the changes 
that would be made under the President's proposed Clear Skies 
Initiative impact this agreement?
    My personal opinion is that this is such a watershed 
agreement back home that we cannot allow it to move backward, 
so I would be interested in your answer.
    Mr. Holmstead. We are equally enthusiastic about that 
agreement. It really is a great achievement by a lot of people 
working together in the local area. And as you have asked it, 
it is a legally binding agreement. I am quite sure there is 
nothing in the President's bill that would have any impact on 
that. But let me do this if I can. Let me see if we can get you 
a letter to that effect. And the other thing I think I can say 
on behalf of the administration is if anybody thinks there is 
something in there, I mean, that is one of the great things 
about legislation, we just make that is not the case because we 
would not want to do anything to undercut all the good work 
that has been done in that area.
    Mr. Burgess. So, Mr. Chairman, can we accept his expounded 
answer in writing for the record?
    Mr. Hall. I see no objection. If there are no objections to 
it. Who is here to object?
    Mr. Burgess. I guess just you and I.
    Mr. Hall. No, we would want to be fair with them even in 
their absence. Let me ask Counsel is there any objection? There 
being no objection, it will be allowed.
    Mr. Burgess. Very good, thank you, Mr. Chairman.
    Let me then just ask a general question to either one of 
you. What is the current status--we spent a long time hearing 
about mercury. I would like to hear you talk about it. What is 
the current status of mercury controlled technology? What is it 
about the status of this technology that you think would make a 
Cap and Trade Program for reducing mercury emissions more 
effective than a more traditional command and control model?
    Mr. Holmstead. One of the great things we have learned 
about the Cap and Trade Program is--and this is just one 
example. Years ago when all the arguments were about what 
technology you put on a certain plant, there would be endless 
debate about whether this scrubber can get 70 percent reduction 
or 72 percent reduction or 78 percent reduction. All of a 
sudden when you have a Cap and Trade Program that creates an 
economic incentive, we have scrubbers that are getting 95 
percent reduction because there is an economic incentive for 
the plants and the engineers to find the most cost effective 
way to maximize things.
    Today there is no commercially available mercury specific 
control technology. There are other pollution controls that are 
designed to reduce sulfur dioxide or nitrogen oxides that 
accidentally reduce mercury emissions. But what we would like 
to do with the cap and trade is to create an incentive for 
people to optimize those controls to develop other controls.
    And one of the things, one of the great features of the Cap 
and Trade Program is that with so much mercury coming from 
overseas, if we can be the leaders in creating incentives for 
the development with the cost effective control technology, 
then maybe other countries will adopt it. Right now we are the 
only country in the world to require mercury controls. But 
through this Cap and Trade Program, we are confident that over 
time you will see the development of much better, much more 
cost effective controls that we hope can then be exported to 
reduce this global background that comes in from all over the 
world.
    Mr. Burgess. Thank you. Mr. Chairman, I must just point out 
that the Peterbilt plant in my area in Denton, Texas produces a 
truck with a diesel engine that has practically zero emissions 
of the year 2007.
    I will yield back.
    Mr. Hall. We thank you, Doctor, for yielding back and if 
there are no more questions, I want to thank this panel. You 
have been----
    Mr. Shimkus. Mr. Chairman?
    Mr. Hall. I am sorry, Mr. Shimkus. I recognize you for 1 
minute and 30 seconds is gone.
    Mr. Shimkus. Thank you, Mr. Chairman.
    I just want to follow up on the mercury.
    Mr. Hall. I recognize the gentleman from Illinois.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Say that again. Right, is there current specific mercury 
reduction technology on the shelf today for--just solely for 
reducing mercury emissions?
    Mr. Holmstead. The short answer is no.
    Mr. Shimkus. Thank you.
    The--and so it is an offset of other technology that is 
doing other things.
    Mr. Holmstead. No, but there is mercury specific control 
technology that people are trying to adapt for power plants.
    Mr. Shimkus. Correct.
    Mr. Holmstead. And they have done some short-term tests and 
they have done--and we are confident that that technology will 
work but right now there is not a power plant in the country 
that actually has that installed on a regular basis.
    Mr. Shimkus. The reason I bring this--we have talked about 
the mercury, the old mercury MACT and now the new mercury rule, 
can you assure those of us who have eastern coal that there 
will be a single standard for the challenge when we move to 
mercury of the reduction of mercury instead of a two tiered 
system for the different type of coals used?
    Mr. Holmstead. You probably heard my earlier answer. The 
whole goal of the way we have done it in the regulation and the 
way it is in the President's bill is to create a level playing 
field so that no one is artificially advantaged. And we have 
spent an enormous amount of time working with industry folks 
and the coal industry, and the technical people at DOE and 
within our office and we believe that we have struck that 
balance. And I know that there still continues to be some 
disagreement but the whole goal and we think the result is to 
create a level playing field across all coal types.
    Mr. Shimkus. Thanks.
    And I will end on this. You know, I have a lot of fun with 
my good friend from Maine and we debate this all the time, this 
whole issue. But it did strike a nerve when he said coal is a 
low hanging fruit. Coal is not the low hanging fruit. In the 
last Clean Air Act, 10,000 miners in Southern Illinois lost 
their jobs. Costs are escalated. So for people to say coal is 
the low hanging fruit, I would challenge them to come to 
Southern Illinois, come to West Virginia, go all parts around 
the--on this country in which coal was the primary low cost 
power producer.
    Mr. Connaughton. Congressman, it is hard to understand how 
a $52 billion cost which is twice as expensive as the next most 
expensive program is low hanging fruit. I mean, this is--what 
we are imposing through this legislation is enormously costly 
but it is the most cost effective. And by doing it, we can 
actually increase our use of coal and put those coal miners in 
Illinois back to work.
    Mr. Shimkus. I am with you. Keep up the great work and I 
yield back, chairman.
    Mr. Hall. I want to thank you for your time today, for the 
time it took to prepare, for all the good work you have put 
into this, and the assistance you give a good President. We are 
going to probably talk about getting this bill sent back over 
for the Senate to reconsider. I thank you again and really 
appreciate everything. With that, we are adjourned.
    [Whereupon, at 4:48 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

 Response for the Record by James L. Connaughton, Chairman, Council on 
                         Environmental Quality

           ANSWER TO SUBMITTED QUESTION OF HON. RALPH M. HALL

    Question 1. Recently the 1998-1999 global warming studies producing 
what is nicknamed the ``hockey stick'' temperature history, which 
formed the basis for international finding that late 20th century 
temperatures were the warmest of the 1,000 years, have been 
discredited. What impact, if any, does this have on the 
Administration's position that CO2 is not a pollutant and 
should not be part of the Clear Skies Initiative?
    Response: The ongoing debate on reconstructing climate over the 
past 1000-2000 years underscores the need to invest in new knowledge on 
natural climate variability, including developing and deploying 
comprehensive and sustained global observations of the climate system 
through programs such as the U.S.-led Global Earth Observation System 
of Systems (GEOSS) international partnership. The President's 2006 
Budget includes nearly $2 billion for climate change science and 
another $3 billion for technology research, development, and deployment 
activities. The Administration's portfolio of climate change programs 
and cross-cutting initiatives focus on reducing the fundamental 
scientific uncertainties associated with climate change; advancing the 
development and introduction of energy-efficient, renewable, and other 
low- or non-emitting technologies; and improving standards for 
measuring and registering emissions reductions.
    The intent of Clear Skies is to reduce the emissions of 
conventional air pollutants from the power sector which have harmful 
health effects when present in the ambient air at certain levels. 
CO2 does not fall in that category nor is it regulated by 
the Clean Air Act.
    The President's National Energy Plan envisions an integrated 
strategy for advancing economic growth and addressing energy security, 
air quality, climate change, and economic growth. Through a combination 
of research and development and market incentives these policies 
provide investment opportunities to advance cleaner, more efficient 
technologies such as a new generation of low polluting and lower carbon 
emission coal power plants. Combined with Administration policies to 
transform the way we use energy by improving efficiencies in 
transportation, buildings and appliances; to promote the use of nuclear 
power, clean diesel, methane, renewable energy, bio-energy, and more 
efficient power grids and development of hydrogen-powered vehicles we 
will dramatically improve our air quality and reduce greenhouse gas 
emissions without compromising our economic growth.
                                 ______
                                 
The Honorable Michael Burgess
United States House of Representatives
Washington, DC 20515
    Dear Congressman Burgess: This letter follows up on your question 
raised during the House Energy and Commerce hearing on May 26, 2005. At 
the hearing, you asked whether the recent Dallas/Fort Worth settlement 
to address ozone problems in the area was legally binding, and whether 
Clear Skies legislation would affect this agreement. At the hearing, 
then acting Administrator Jeffrey R. Holmstead stated that we at the 
Environmental Protection Agency (EPA) strongly supported the settlement 
of the litigation over the 1-hour ozone State Implementation Plan (SIP) 
for the Dallas/Fort Worth area and did not think that anything in Clear 
Skies would affect this settlement. This letter memorializes his 
statement.
    We are of the opinion that the Clear Skies legislation would not 
affect what EPA has agreed to in the settlement, which was entered on 
August 8, 2005. In the consent agreement, EPA committed to taking final 
action on three elements of the Texas SIP for Dallas/Fort Worth. These 
elements of the SIP are: 1) the Texas Emission Reduction Plan SIP 
revision; 2) the Voluntary Mobile Source Emission Reduction Program SIP 
revision; and 3) the Transportation Control Measures SIP revision. None 
of these actions committed to in the consent agreement are affected by 
Clear Skies legislation and EPA has now completed final rulemaking on 
all three actions. In an action not part of the consent agreement, 
EPA's Regional Office in Dallas further agreed, in a letter dated 
February 18, 2005, to some activities in the Dallas/Fort Worth area 
that will serve the interest of clean air for the area. These agreed-
upon activities are also independent of the outcome of expected Clear 
Skies legislation.
    Separately, the Texas Commission on Environmental Quality has 
committed to the Plaintiffs that it will make a good faith effort to 
submit an 8-hour attainment demonstration SIP for the Dallas/Fort Worth 
nonattainment area in advance of the existing deadline of June 15, 
2007, and to attain the 8-hour ozone standard in the Dallas/Fort Worth 
area as expeditiously as practicable.
    I hope this response adequately addresses your question. I 
appreciate your interest in air quality issues, especially those for 
the Dallas/Fort Worth area. If I may be of further assistance, please 
do not hesitate to contact me.
            Sincerely,
                                         William Wehrum    
                                 Acting Assistant Administrator    
                                        Office of Air and Radiation
cc: Richard Green, Regional Administrator
                                 ______
                                 
The Honorable Ralph M. Hall
U.S. House of Representatives
Washington, DC 20510-6115
    Dear Congressman Hall: Thank you for your July 1, 2005, letter in 
which you request additional information regarding Clean Air Act (CAA) 
related issues. I hope you find our responses helpful to you and the 
Committee. If you have further questions, please contact me or your 
staff may contact Lora Strine in EPA's Office of Congressional and 
Intergovernmental Relations, at (202) 564-3689.
            Sincerely,
                                            John Reeder    
                                Acting Associate Administrator,    
            Office of Congressional and Intergovernmental Relations
   Questions from the Honorable Ralph M. Hall for Jeffrey Holmstead, 
   Assistant Administrator for Air and Radiation, U.S. Environmental 
                           Protection Agency

    Question 1. There was concern when the Acid Rain Program was 
initiated that fuel switching was used as a method to comply with 
sulfur dioxide emissions reductions. Does EPA predict fuel-switching 
happening under the Clear Skies Initiative cap and trade programs? 
Please include in your response the supporting analysis for any 
conclusions reached.
    Answer: Under the Acid Rain Program, significant SO2 reductions 
were achieved from coal-fired electric generating facilities by 
switching the type of coal that is burned from higher sulfur content to 
lower sulfur content varieties, but not necessarily by switching fuels 
(from coal to natural gas). EPA analysis of the Clear Skies Act of 2003 
projected that significant fuel switching would not occur as a result 
of the Act, and instead, projected that significant amounts of 
pollution controls would be installed to meet the emission reduction 
requirements of Clear Skies. Coal was projected to remain an important 
fuel in providing affordable and reliable electricity to consumers, and 
Clear Skies was designed in part to avoid any major disruptions to the 
supply of fuel for producing electricity. The conclusions are based 
upon power sector modeling done in 2003 in support of Clear Skies, 
which can be found on EPA's Clear Skies website and is detailed in the 
Clear Skies Technical Support Package (http://www.epa.gov/air/
clearskies/econ.html ). Additional comprehensive analysis of Clear 
Skies and other proposed multipollutant legislation, as well as recent 
regulation, (available at http://www.epa.gov/airmarkets/mp) supports 
these findings.
    Question 2. Please tell the Committee, how the mercury allowances 
will work under the Clear Skies Initiative? How did EPA take into 
account the various coal types utilitized? Please include in your 
response the supporting analysis for any conclusions reached.
    Answer: Under the Clear Skies Act of 2003, allowances would be 
allocated to affected units based on the proportionate share of their 
baseline heat input to total heat input of the units. For mercury, only 
coal units would be affected, and the baseline heat input for each unit 
is adjusted for coal type. Different types of pollution controls are 
able to achieve a range of mercury reductions based upon the type of 
coal that is being burned at a particular facility and other facility 
characteristics. If allowances were allocated proportional to the 
overall reduction required under Clear Skies, then the coal types that 
are less able to get reductions would have to purchase more allowances. 
Under the allocations methodology of Clear Skies, bituminous units 
would be allocated a share of the mercury allowances 1.0 times their 
share of the overall heat input, subbituminous units would be allocated 
at 1.25 times their share, and lignite units would be allocated at 3.0 
times their share. This allocation formula would partially compensate 
for the different mercury removal capabilities from the various coal 
types. Under Clear Skies, allocations are based on historical coal rank 
and heat input data, so the allocation approach does not create 
incentives to switch fuels, and fuel switching would not result in a 
unit being allocated any additional allowances.
    Question 3. Outlined in comments submitted on the EPA's Clean Air 
Mercury Rule (CAMR), was a concern that test data EPA relied on for 
Gulf Coast lignite coal may have underestimated the mercury content of 
Gulf Coast lignite coal by a factor of two. Please tell the Committee 
if EPA believes that the mercury content of Gulf Coast lignite coal was 
underreported by the ICR data? Furthermore, what does the Agency 
believe is the mercury content of Gulf Coast lignite coal? In your 
response please provide the supporting analysis for any conclusions 
reached and how those conclusions impact plants using Gulf Coast 
lignite coal in meeting CAMR's requirements. Lastly, if the ICR data 
underreported the mercury content, please provide an estimate of the 
amount of increased emissions that must be reduced by plants using Gulf 
Coast lignite coal in order to meet the requirements of CAMR.
    Answer: We have no reason to doubt the accuracy of the data 
submitted during the public comment period for CAMR indicating that the 
mercury content of Gulf Coast lignites may have been underreported in 
the 1999 ICR effort. Further, we have no reason to doubt the revised 
mercury content values reported by the commenters for Gulf Coast 
lignites. However, we do not believe that units combusting Gulf Coast 
lignites will be adversely impacted by the ``error'' in the ICR data 
related to the mercury content of the lignite itself, because the 
mercury content of the coal was not a direct factor in the analysis. In 
developing the CAMR new source limits, where we did factor in the 
mercury-in-coal values, we accounted for the new mercury values for 
Gulf Coast lignites, such that new units burning Gulf Coast lignite 
should not be disproportionately burdened by the new source standards. 
In developing the allowance allocation adjustment factors for 
determining State budgets, EPA balanced three factors: (1) data on 
mercury capture by control configuration and coal type, (2) data on 
coal characteristics impacting mercury capture, and (3) mercury 
emissions by capacity. Although EPA utilized ICR data in determining 
these factors, EPA believes that these adjustment factors reasonably 
reflect that subbituminous and lignite coals have the lowest mercury 
capture with existing technologies, represent more emissions per 
capacity, and, in the case of lignite, also have a higher coal mercury 
content. EPA believes that the values we have assigned to these factors 
will succeed in equitably distributing allowances to the States and 
Tribes on the basis of the affected industry within their borders. 
Additionally, under CAMR, States have the discretion to allocate 
mercury allowances to sources in any manner that they choose. The final 
allocation adjustment factors are discussed in greater detail in a 
technical support document entitled ``State and Indian Country 
Emissions Budgets'' available at http://www.epa.gov/ttn/atw/utility/
state_
indiancountry_emissionbudgets_oar_2002_0056_6154.pdf.
    Question 4. Please tell the Committee, if the mercury content of 
Gulf Coast lignite coal was underreported by the ICR data, what impact 
this might have on the overall mercury reduction requirement for the 
utility industry? Please provide the Committee with information on what 
the chlorine levels are in Gulf Coast lignite coals, including the 
impact those levels may have on the ability of plants utilizing Gulf 
Coast lignite coal to reduce mercury emissions.
    Answer: As noted in the response to Question 4, the mercury content 
of the various coals, including Gulf Coast lignites, was not used in 
the analyses to develop the Phase I and II CAMR mercury caps. 
Therefore, the underreporting of the mercury content of Gulf Coast 
lignites in the ICR will have no impact on the overall mercury 
reduction requirement of the utility industry. It is widely known that 
mercury emissions from units utilizing Gulf Coast lignites are 
relatively more difficult to control than are those from other coals, 
partially as a result of generally low chlorine levels. However, the 
U.S. DOE is including such facilities in its mercury control technology 
demonstration program; early results indicate that these units will 
have options for reducing their mercury emissions but they may not be 
able to reduce them as much as other units may.
  Questions from the Honorable Hilda L. Solis for Jeffrey Holmstead, 
   Assistant Administrator for Air and Radiation, U.S. Environmental 
                           Protection Agency

    Question 1. EPA's 2004 guidance on rulemaking allows discussion of 
environmental justice only ``as necessary and appropriate,'' while 
other executive orders must always be addressed. Why did EPA decide 
that the executive order on environmental justice only has to be 
discussed ``as necessary and appropriate''? When would it not be 
appropriate to discuss environmental justice? If environmental issues 
are not considered during a rulemaking because it is not deemed 
necessary and appropriate, how does EPA determine there are no 
environmental justice impacts?
    Answer: EPA has consistently worked to consider and address 
environmental justice issues in its rulemaking process. Since 1994, EPA 
has considered and analyzed the environmental justice implications of 
rules under development, but EPA does not require each rule's preamble 
to discuss Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations (EO 12898). EPA believes there is a distinction between the 
consideration of environmental justice issues during rule development 
and including in each rule preamble a section addressing EO 12898. EPA 
believes that through its Action Development Process, rulewriters and 
managers are provided sufficient guidance to ensure environmental 
justice issues are appropriately identified, analyzed and addressed in 
the rulemaking process. The absence of a specific discussion of EO 
12898 in every regulatory preamble, therefore, should not be viewed as 
an absence of care and consideration of environmental justice 
implications.
    Question 2. How many new clean air rules over the last five years 
included consideration of the executive order on environmental justice 
and how many did not? Please identify each rulemaking specifically. For 
each, please identify the reason why consideration of environmental 
justice was or was not included.
    Answer: As noted above, EPA believes it appropriately addresses 
environmental justice issues in its rulemakings and that a specific 
preamble discussion of EO 12898 is not always necessary.
    Question 3. Please detail the specific role the Office of 
Environmental Justice's (OEJ) had in developing the CAIR Rule, the 
Mercury Rule and both the October 27, 2003 ``Equipment Replacement 
Rule'' and December 31, 2002 Final NSR ``Improvement'' Rule for NSR. If 
OEJ did not have a role please explain why and provide information 
explaining how the decision to not involve OEJ was made.
    Answer: The Office of Air and Radiation manages environmental 
justice issues in its rulemakings. OEJ develops broad policy, which the 
program offices implement in their specific activities, generally 
without further OEJ involvement,
    Question 4. In the 420 page document for CAIR, there are only two 
paragraphs which address environmental justice. These state ``The 
agency expects this rule to lead to reductions in air pollution and 
exposures generally. For this reason, negative impacts to these 
subpopulations (minority or low-income) that appreciably exceed similar 
impacts to the general population are not expected.'' The final rule 
does not say that ``negative impacts'' are not expected at all. Can you 
please detail the negative impacts that are expected for any and all 
populations and locations which will experience negative impacts under 
the CAIR rule?
    Answer: The Clean Air Interstate Rule is expected to lead to 
reductions in air pollution and exposures throughout the CAIR region of 
the Eastern U.S. The vast majority of the population living in this 
region, including the inhabitants of major cities such as New York, 
Philadelphia, Atlanta, and Chicago will experience dramatic 
improvements in air quality. All populations are expected to benefit 
from the rule, including low-income and minority populations. For 
particulate matter, in fact, ambient concentrations are predicted to 
decline for every location: we do not anticipate any negative impacts 
to any populations anywhere in the CAIR region. Modeling for 2015 
predicts that a small region in western Michigan may experience small 
increases, of less than 2 ppb, in the 2015 time period. In this 
instance of small, temporary increases in ozone concentrations, no 
disproportionate impacts will be experienced by localized low-income or 
minority populations. Other areas in the CAIR region will experience 
reductions in ozone pollution between now and 2015.
    Question 5. Both the final CAIR rule and the Regulatory Impact 
Analysis state that a rule like CAIR may lead to reductions in air 
pollution and exposures generally. Please provide detailed information 
on where these reductions are expected generally and those locations 
where reductions are not expected to occur.
    Answer: See answer to #4.
    Question 6. Has the Office of Environmental Justice sought advice 
from the OAR about the future of NEJAC? If yes, what advice was given 
to them? If no, what is OAR's role in the dismantling of NEJAC?
    Answer: All EPA advisory committees are required to be evaluated 
annually. As one of 23 advisory committees of the Agency, the NEJAC 
charter was evaluated earlier this year and extended until September 
25, 2006. The Agency has committed over the next year to seek 
independent advice and recommendations from the NEJAC's Executive 
Committee regarding options for meaningful public involvement, 
training, collaborative problem-solving and partnership building. The 
decision to renew the charter of an advisory committee authorized under 
the Federal Advisory Committee Act lies within the Office of the 
Administrator. Such a decision is made with the advice of the offices 
that manage the Committee, and other relevant program offices, which in 
this case includes OAR.
    Question 7. Please identify what tools does EPA will have to obtain 
information from low-income and minority communities on how they are 
being impacted by environmental and public health issues if NEJAC is 
dismantled. What evidence does EPA have that these tools are sufficient 
enough to dismantle NEJAC? Please refer this question to the 
appropriate office, including the Office of the Administrator or Office 
of Environmental Justice if OAR is unable to respond.
    Answer: The Agency is not dismantling the NEJAC, as noted above.
    Question 8. Please identify, in consultation with OEJ, any OAR 
rulemakings for which OEJ requested, either formally or informally, an 
opportunity to participate. Please identify any such rulemakings in 
which OEJ did not participate in the rulemaking process, and/or was not 
provided with an opportunity to participate in the rulemaking process.
    Answer: In 2000, OEJ requested an opportunity to participate in the 
NSR and Title V rulemakings. This request was made at a staff-to-staff 
level. Given time constraints and the adequacy of OAR's consideration 
of environmental justice issues, OEJ's involvement was not required. 
OEJ has not asked to participate in any other rulemakings. OAR 
informally solicited OEJ's recommendations with respect to the Tier II 
rulemaking after comments on the proposed rule were received. 

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