[Senate Hearing 109-876]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-876

                THE NEED FOR MULTI-EMISSIONS LEGISLATION

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

                                HEARING

                               before the

     SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY

                                 of the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 26, 2005

                               __________

  Printed for the use of the Committee on Environment and Public Works


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                               __________





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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island         BARBARA BOXER, California
LISA MURKOWSKI, Alaska               THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota             HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia              BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director
                              ----------                              

     Subcommittee on Clean Air, Climate Change, and Nuclear Safety

                  GEORGE V. VOINOVICH, Ohio, Chairman
CHRISTOPHER S. BOND, Missouri        THOMAS R. CARPER, Delaware
JIM DeMINT, South Carolina           JOSEPH I. LIEBERMAN, Connecticut
JOHNNY ISAKSON, Georgia              FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              BARACK OBAMA, Illinois




















                            C O N T E N T S

                              ----------                              
                                                                   Page

                            JANUARY 26, 2005
                           OPENING STATEMENTS

Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri.......................................................    18
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..    10
DeMint, Hon. Jim, U.S. Senator from the State of South Carolina..    22
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    13
Isakson, Hon. Johnny, U.S. Senator from the State of Georgia.....    24
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..    15
Lautenberg, Hon. Frank, U.S. Senator from the State of New Jersey    20
Obama, Hon. Barack, U.S. Senator from the State of Illinois......    23
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     1

                               WITNESSES

Gard, Hon. Beverly, Senator, Indiana State Senate, and chair, 
  Energy and Environment Affairs Committee.......................    30
    Prepared statement...........................................   109
    Responses to additional questions from:
        Senator Jeffords.........................................   125
        Senator Lautenberg.......................................   130
Harper, Ronald, chief executive officer and general manager, 
  Basin Electric Power Cooperative...............................    46
    Prepared statement...........................................   131
    Responses to additional questions from:
        Senator Jeffords.........................................   133
        Senator Lautenberg.......................................   134
        Senator Voinovich........................................   133
Parady, Fred, manager, Environmental Services, OCI Wyoming, L.P., 
  on behalf of the National Association of Manufacturers.........    50
    Prepared statement...........................................   235
    Responses to additional questions from Senator Jeffords......   239
Paul, John A., supervisor, Regional Air Pollution Control Agency, 
  on behalf of STAPPA/ALAPCO.....................................    28
    Prepared statement...........................................    68
    Responses to additional questions from:
        Senator Inhofe...........................................   104
        Senator Jeffords.........................................   106
        Senator Lautenberg.......................................   108
        Senator Voinovich........................................   104
Schneider, Conrad G., advocacy director, Clean Air Task Force....    47
    Prepared statement..........................................134-164
    Responses to additional questions from:
        Senator Jeffords.........................................   226
        Senator Lautenberg.......................................   229
        Senator Voinovich........................................   224
Young, Hon. Bob, Mayor, City of Augusta, GA, on behalf of the 
  U.S. Conference of Mayors......................................    26
    Prepared statement...........................................    64
    Responses to additional questions from:
        Senator Jeffords.........................................    66
        Senator Lautenberg.......................................    68
        Senator Voinovich........................................    66

                          ADDITIONAL MATERIAL

Analysis, State and Territorial Air Pollution Program 
  Administrators/Association of Local Air Pollution Control 
  Officials (STAPPA/ALAPCO)......................................73-103
Charts:
    Comparison of Growth Areas and Emissions.....................     6
    Comparison of United States Energy Reserves (Quadrillion BTU)     8
    Coal Use Correlates with Low Electricity Prices..............     9
    Industrial Price of Natural Gas ($/Mcf), 1997-2003...........    10
    Supporting Documents, Senator Gard..........................112-124
    The Clear Skies Act..........................................     7
Letters from:
    Hubbard, James W., The Maryland House of Delegates to Senator 
      Voinovich..................................................    56
    Paul, John A., on behalf of STAPPA/ALAPCO, dated February 16, 
      2005 to Senator Voinovich..................................    43
Report, Natural Gas Update, prepared by Energy and Environmental 
  Analysis, Inc.................................................165-198
Statements:
    American Farm Bureau Federation..............................   243
    American Public Power Association............................   244
    Bluestein, Joel, May 8, 2003................................199-223
    National Conference of State Legislatures, July 2006.........    59


























 
                THE NEED FOR MULTI-EMISSIONS LEGISLATION

                              ----------                              


                      WEDNESDAY, JANUARY 26, 2005

                               U.S. Senate,
         Committee on Environment and Public Works,
                Subcommittee on Clean Air, Climate Change, 
                                        and Nuclear Safety,
                                                    Washington, DC.
    The subcommittee met pursuant to notice, at 10 o'clock a.m. 
in room 406, Senate Dirksen Building, Hon. George Voinovich 
(chairman of the subcommittee) presiding.
    Present: Senators Inhofe, Voinovich, Bond, DeMint, Isakson, 
Jeffords, Carper, Lautenberg, and Obama.

         OPENING STATEMENT OF HON. GEORGE V. VOINOVICH,
              U.S. SENATOR FROM THE STATE OF OHIO

    Senator Voinovich. The committee will come to order.
    Good morning and thank all of you for coming. We are here 
today to discuss an issue on which I think there is broad 
consensus. Our Nation needs multi-emission legislation.
    This is not a new topic for this committee. It is our 23rd 
hearing on multi-emission issues since 1998. Our consideration 
of this important matter has spanned four different chairmen 
and covered many issues ranging from mercury and greenhouse 
gases to new source review to the National Ambient Air Quality 
Standards referred to as NAAQS. I believe we have spent enough 
time talking about this issue and that we must act now to 
improve the environment and protect public health.
    I hope we can renew the bipartisan spirit of this committee 
which has come together to enact major environmental laws on 
brownfields and safe drinking water, and that we can now pass a 
multi-emissions piece of legislation specifically the Clear 
Skies Act. First and foremost, legislation is needed for our 
environment. The Clear Skies Act would be the most aggressive 
clean air proposal ever enacted. On April 1, 2004, 
Administrator Leavitt testified before the subcommittee that 
sulfur dioxide and nitrogen oxide reductions ``will result in 
some $50 billion being spent putting new equipment on old 
plants that will provide for the highest amount of pollution 
being reduced in the least amount of time in our Nation's 
history.'' Although Clear Skies is costly and ambitious, I want 
to make it clear that it is going to be expensive to implement 
Clear Skies.
    We should pass it because of the certainty it provides. It 
gives our Nation environmental certainty that sulfur dioxide, 
nitrogen oxide and mercury will be reduced by 70 percent by 
2018. It ends the cycle of litigation and confrontation 
obstructing further progress in reducing pollution. It also 
provides regulatory certainty so that companies can invest in 
needed pollution control.
    Second, legislation is needed to help State and local 
governments attain the new NAAQS standards. EPA recently 
designated 474 counties as being in nonattainment for the new 
NAAQS for ozone and 225 counties for particulate matter. The 
designations are based on stricter standards. I want to make 
that clear, not dirtier air. Chart 1 shows that in fact since 
1970, while there have been increases of gross domestic product 
by 176 percent, vehicle miles traveled by 155 percent, energy 
consumption by 45 percent, and population by 39 percent, 
emissions of the six main pollutants have decreased by 51 
percent, a fact I shared with Tony Blair back in November. We 
met with him when I was in London and he wasn't aware of what 
we had done here in this country in terms of reducing 
pollution. [The referenced chart follows on page 6.]
    The nonattainment designations are a threat to many State 
and local government economies. This point can be best 
summarized by Cincinnati Chamber of Commerce President Michael 
Fisher's testimony last year. He said, ``Job growth and capital 
investment for existing operations in our region have been 
hindered by the nonattainment designation. We have been told by 
national site location consultants that nonattainment areas are 
frequently not even included as potential locations for major 
new manufacturing projects.''
    The Clear Skies Act would help meet the Nation's new more 
stringent air quality standards. Although it needs to be 
updated, Chart 2 still shows that 90 percent of those counties 
come into attainment under the reductions in Clear Skies and 
EPA's new fuel and engine regulations to reduce sulfur. The 
NAAQS are actually an unfunded mandate on our States and 
localities, something I understand well as a former county 
commissioner, mayor and Governor who brought almost all of 
Ohio's counties but one into attainment. That was the first 
thing that I did when I became Governor of Ohio was work to 
bring my counties into attainment because I knew that 
businesses that were there because we weren't in attainment 
would not expand and I also knew that businesses we were trying 
to attract to the State would fly over it because they didn't 
want to get involved in nonattainment areas. [The referenced 
chart follow on page 7.]
    Clear Skies provides that assistance more quickly and 
cheaply than current law. It expands the Nation's most 
successful clean air initiative, the Acid Rain Program. Unlike 
most of our Nation's environmental laws and regulations, this 
program has had virtually no litigation, 100 percent compliance 
and has achieved its reductions at less than the projected 
cost. Clearly, this is what we should strive for in any multi-
emissions legislation and Clear Skies does exactly that.
    Third, legislation is needed to harmonize our environmental 
policies with our energy needs. As this chart shows, coal is 
our most abundant energy source. We have more coal than natural 
gas or oil reserves. You can see our natural gas reserves and 
U.S. oil reserves. The fourth chart shows that the more coal 
you use, the lower your electricity prices. Businesses and 
manufacturers in my State and across the country depend on coal 
and these low prices to stay competitive in the global 
marketplace. [The referenced charts follow on pages 8 and 9.]
    We are just going to keep sending jobs overseas if we don't 
start addressing some major issues, litigation, health care 
costs and higher energy and environment costs are a major part 
of the puzzle if we are going to compete in that global 
marketplace. Clear Skies will keep our energy prices stable and 
jobs in America. It allows our Nation to continue to burn coal 
meaning that we will not continue to rely on natural gas for 
power generation.
    Listen to this. Since 1992 nearly 88 percent of the new 
power plants built have been for natural gas. The substantial 
increase in the use of gas is one of the main reasons that we 
have a natural gas crisis right now. Chart 5 shows natural gas 
prices have nearly doubled their historic price for industrial 
users who depend on it for manufacturing. Look at that chart. 
Look at 1999 and see how natural gas costs have gone up and 
where we are today. Definitely this country has lost jobs 
because of high natural gas costs. I would say in my State the 
recession began when we saw a tremendous spike in natural gas 
costs. Businesses that had been profitable overnight became 
unprofitable because they saw their natural gas costs 
skyrocket. [The referenced chart follows on page 10.]
    As Tom Mullen from Cleveland Catholic Charities testified 
before this committee in 2002, we must also pay attention to 
the impact on the poor and elderly of multi-emission bills that 
increase electricity and home heating costs. In fact, higher 
natural gas prices have forced us to increase funding for a 
heat program to help low income families with their home 
heating bills by $800 million since 1999. With this tough 
winter, we are going to be asked to put more money in that 
program and basically it is because those energy costs have 
escalated to the extent that we have to do something to respond 
to the needs of our older people and to the poor.
    We need multi-emissions legislation to continue at a higher 
rate than this country's commitment to cleaning up the 
environment and protecting public health. As my first chart 
showed, we have substantially cleaned up while the Nation has 
grown. Clear Skies would continue this progress by being the 
most aggressive clean air proposal ever enacted. Let us not 
delay any further. We need to come together and in a bipartisan 
fashion and pass this legislation. A broad coalition supports 
Clear Skies and is working for its passage which I would like 
to insert for the record. I am not going into it because I have 
already exceeded my time by 53 seconds.
    I look forward to hearing from our witnesses today on how 
important it is that this committee and Congress come together 
and pass this important multi-emissions legislation. I would 
just show the chart of the various organizations that have 
publicly endorsed this legislation. Thank you.
    I would now like to call on Senator Carper. I am glad to be 
working with you. Senator Carper and I have worked with each 
other for a long time. We are both very active in the National 
Governors Association.
    There has been a lot of regionalism in this environmental 
area. It is the Midwest and the Northeast. I ran into it when I 
was chairman of the National Governors Association. I figure if 
Carper and Voinovich can't get it together, then this country 
is in big trouble. I look forward to working with my friend, 
Tom Carper.
    [The prepared statement of Senator Voinovich follows:]
      Statement of Hon. George V. Voinovich, U.S. Senator from the
                             State of Ohio
    The hearing will come to order. Good morning and thank you all for 
coming. We are here today to discuss an issue on which I think there is 
broad consensus: our nation needs multi-emissions legislation.
    This is not a new topic for this Committee; it is our 23rd hearing 
on multi-emissions issues since 1998. Our consideration of this 
important matter has spanned four different chairmen and covered many 
issues ranging from mercury and greenhouse gases to new source review 
to the National Ambient Air Quality Standards--referred to as NAAQS.
    I believe we have spent enough time talking about this issue and 
that we must act now to improve the environment and protect public 
health. I hope we can renew the bipartisan spirit of this Committee--
which has come together to enact major environmental laws on 
brownfields and safe drinking water and that we can now pass multi-
emissions legislation, specifically the Clear Skies Act.
    First and foremost, legislation is needed for our environment. The 
Clear Skies Act would be the most aggressive clean air proposal ever 
enacted. On April 1, 2004, EPA Administrator Leavitt testified before 
this Subcommittee that sulfur dioxide and nitrogen oxide reductions:

        ``. . . will result in some $50 billion being spent putting new 
        equipment on old power plants that will provide for the highest 
        amount of pollution being reduced in the least amount of time 
        in our history.''

    Although Clear Skies is costly and ambitious, we should pass it 
because of the certainty it provides. It gives our nation environmental 
certainty that sulfur dioxide, nitrogen oxide, and mercury will be 
reduced by 70 percent by 2018--period. It ends the cycle of litigation 
and confrontation obstructing further progress in reducing pollution. 
It also provides regulatory certainty so that companies can invest in 
needed pollution controls.
    Second, legislation is needed to help state and local governments 
attain the new NAAQS. EPA recently designated 474 counties across the 
country as being in nonattainment for the new NAAQS for ozone and 225 
counties for particulate matter.
    The designations are based on stricter standards, not dirtier air. 
[CHART 1] In fact, since 1970, while there have been increases of Gross 
Domestic Product by 176 percent, vehicle miles traveled by 155 percent, 
energy consumption by 45 percent, and population by 39 percent--
emissions of the six main pollutants have decreased by 51 percent.
    The nonattainment designations are a threat to our state and local 
economies. This point can best be summarized by Cincinnati Chamber of 
Commerce President Michael Fisher's testimony also on April 1, 2004:

        ``. . . job growth and capital investment for existing 
        operations in our region have been hindered by the 
        nonattainment designation. . .(and we have) been told by 
        national site location consultants that nonattainment areas are 
        frequently not even included as potential locations for major 
        new manufacturing projects . . .''

    The Clear Skies Act would help meet the nation's new, more 
stringent air quality standards. [CHART 2] Although it needs to be 
updated, this chart still shows how 90 percent of these counties come 
into attainment under the reductions in Clear Skies and EPA's new fuel 
and engine regulations to reduce sulfur. The NAAQS are actually an 
unfunded mandate on our states and localities, something I understand 
well as a former county commissioner and mayor--and as a governor who 
brought almost all of Ohio's counties into attainment. Our local 
communities need our help and need it now.
    Clear Skies provides that assistance more quickly and cheaply than 
current law. It expands the nation's most successful clean air 
initiative--the Acid Rain Program. Unlike most of our nation's 
environmental laws and regulations, this program has had virtually no 
litigation, 100 percent compliance, and has achieved its reductions at 
less than the projected cost. Clearly, this is what we should strive 
for in any multi-emissions legislation--and Clear Skies does exactly 
that.
    Third, legislation is needed to harmonize our environmental 
policies with our energy needs. [CHART 3] As this chart shows, coal is 
our most abundant energy source--we have more coal than natural gas or 
oil reserves. It is also our cheapest energy source. [CHART 4] This 
second chart basically shows that the more coal you use the lower your 
electricity prices. Businesses and manufacturers in my state and across 
the country depend on coal and on these low prices to stay competitive 
in the global marketplace. We are just going to keep sending jobs 
overseas if we don't start addressing many of these issues--litigation, 
health care, and higher energy and environment costs are a major piece 
of the puzzle.
    Clear Skies will keep energy prices stable and jobs in America. It 
allows our nation to continue to burn coal--meaning that we will not 
rely more on natural gas for power generation. Since 1992, nearly 88 
percent of the new power plants built have been natural gas fired. This 
substantial increase in the use of gas is one of the main reasons that 
we have a crisis right now. [CHART 5] As this chart shows, natural gas 
prices have nearly doubled their historical price for industrial users, 
who depend on it most for manufacturing.
    As Tom Mullen from Cleveland Catholic Charities testified before 
this Committee in 2002, we must pay special attention to the impact on 
the poor and elderly of multi-emissions bills that increase electricity 
and home heating costs. In fact, higher natural gas prices have forced 
us to increase funding for the LIHEAP program to help low income 
families with their home heating bills by $800 million since 1999.
    We need multi-emissions legislation to continue at a higher rate 
this country's commitment to cleaning up the environment and protecting 
public health. As my first chart showed, we have substantially cleaned 
up our air while the nation has grown. Clear Skies would continue this 
progress by being the most aggressive clean air proposal ever enacted.
    Let's not delay any further. We need to come together in a 
bipartisan fashion and pass this legislation. A broad coalition 
supports Clear Skies and is working for its passage--including (among 
others) farmers, chemistry, public power, and many legislators.
    I look forward to hearing from our witnesses today on how important 
it is that this Committee and Congress come together and pass this 
important multi-emissions legislation.
    Thank you.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
          OPENING STATEMENT OF HON. THOMAS R. CARPER,
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Carper. Thank you. We sat next to each other for a 
great many years. Senator Voinovich has heard me say as 
Governor and as a U.S. Senator, I think a major role of 
government is to provide a nurturing environment for job 
creation and job preservation. We know from our time as 
Governors, if you have companies that are profitable, if they 
are making money, if they are paying taxes, hiring people to 
work out of colleges, high schools, off welfare rolls, off 
unemployment rolls, if you have all that going for you, the 
rest is pretty easy.
    Having said that, I would also add it is important that 
government not be the lapdog of business or industry. It is 
important for companies to play by the rules, it is important 
for them to pay their taxes and be good citizens, good stewards 
of the environment among those responsibilities.
    Recently I spoke at a student assembly back in Delaware. I 
know we have opportunities to visit schools in our own States 
but I spoke for a bit and then we opened it to the students for 
questions. The first question this one student asked was what 
was the hardest thing about your job? I said, ``I think the 
hardest thing about my job is finding the right sense of 
balance in my life, what I do here in Washington, my 
responsibilities here as a legislator, my responsibilities to 
help build my part of the Democratic Party in the State and in 
this country and try to find good people to run and support 
their candidacy, my responsibilities as someone who is trying 
to be a good husband, a good father, a good son to a mom who 
has Alzheimer's Disease and to somehow try to balance all those 
things and get it into a 24-hour day.'' We all face similar 
kinds of problems.
    I didn't say it at the time but just as difficult a 
challenge for me with respect to balance is finding the right 
balance among competing interests that come before us on issues 
that are important to us as individuals and important to our 
Nation. We have been able to find that right balance in recent 
months on a couple difficult issues, trying to take the 
recommendations of the 9/11 Commission and put them into 
legislation to restructure our intelligence operations in this 
country; we are now coming together and I think with a good 
consensus on significant changes to class action legislation; I 
think we are close to an issue that Senator Voinovich and I and 
others care about a lot, finding a good sense of balance on 
asbestos litigation reform. I think we are coming close to that 
as well.
    Among the reasons why we have made progress on those fronts 
are strong Presidential leadership and Presidential flexibility 
and in addition to that, congressional leadership, bipartisan 
congressional leadership and flexibility. I would add to that 
unrelenting efforts in many cases of private citizens. The 
families who were victims of 9/11 certainly come to mind and as 
we work with asbestos litigation to try to balance the 
competing interests of victims, labor unions, trial bar, 
insurers, businesses, those folks have been at the table trying 
to help us shape our legislation.
    Last, I would say among the key reasons we have made 
progress in those areas is the ability to work across the 
aisle. I have found the working relationship between Senator 
Collins and Senator Lieberman as something we should hold out 
as the gold standard as they work to bring us together on 9/11. 
Maybe that will be a role model for us as we tackle this issue 
here this year.
    Clean air legislation calls out for the latter. I am 
encouraged given the long working relationship and frankly the 
long friendship that Senator Voinovich and I have enjoyed that 
perhaps this year we can make that progress.
    I would say to my colleagues, especially my friends on the 
Republican side, if we take the approach here that it has to be 
my way or the highway, we are in for gridlock that is going to 
make this morning's traffic jams coming into Washington, DC 
look like a day at the beach. It just can't be my way or the 
highway. There is room for finding and building consensus and 
we have to work until we find it.
    The stakes are high. There are hundreds of thousands of 
kids across this country, probably millions of kids who have 
asthma, who use these inhalers, who have asthma attacks who end 
up in the hospital and people who die from this stuff because 
our air is not clean enough. There are millions of women of 
child bearing age who have higher levels of mercury that are 
unsafe not just for them but for the children they are going to 
bring into this world.
    I am reminded every time my wife and our boys drive down to 
North Carolina where my wife is from and we drive through the 
Blue Ridge Mountains and I think I am in the Smokey Mountains 
because the haze is so thick you can almost cut through it. I 
know not everyone is convinced global warming is a problem or 
an issue. For a number of years, frankly I was not either and I 
have become convinced and believe it. We need to address that 
as well.
    The last thing I would say in my first race for Governor, a 
question was asked at a debate with my opponent. The question 
was this, if you are elected Governor, what will it be? What 
will be the priority, the economy or the environment? I 
responded at the time both. I think the right answer today is 
still both. We can address the economic issues that Senator 
Voinovich and I share and the environmental issues, the health 
issues that a lot of us share as well.
    I will close with this. Most tough issues around here, and 
we went through this in orientation with our new members, you 
need a lot more than 50 votes. On a lot of the tough issues, 
you need 60. The way to get to those is to work across the 
aisle. I am willing to do that and I look forward to doing 
that. It is hard for me to imagine how we get to that number of 
votes without doing something on global warming, that aspect of 
clean air.
    Senator Jeffords has an admirable proposal and a clear 
skies proposal from the Administration that has value and the 
last thing I would say is this, I never liked it when I had 
just two alternatives, polar alternatives. I always like to be 
able to vote for something rather than against something. 
Senators Alexander, Gregg and Senator Chafee and myself have 
worked to try to find some middle ground. We will be talking 
about that during the course of this hearing and in the weeks 
ahead. I don't know that is the middle ground around which we 
can begin to rally but I hope it might provide some assistance 
as we move in that direction.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Carper follows:]
       Statement of Hon. Thomas R. Carper, U.S. Senator from the
                           State of Delaware
    I would like to thank Senators Voinovich and Inhofe for scheduling 
this hearing. The fact that the committee has placed multi-pollutant 
legislation so high on the agenda for the 109th Congress shows a 
commitment to the issue that will be necessary to pass a bill. However, 
to pass multi-pollutant legislation, it will require agreement and 
cooperation from both sides of the aisle.
    Clean air does not have to be a partisan issue. It shouldn't be a 
partisan issue. This committee has always acted in a bipartisan way, 
and if you look back in history, the most significant environmental 
laws all passed with overwhelming support of both Democrats and 
Republicans. I hope that will be the case on the issue of clean air.
    I have concerns about the President's Clear Skies plan because it 
does not go far enough, fast enough, and it does nothing to address the 
role electricity generation plays in global warming. The government has 
a responsibility to provide clean air for people to breathe. If we 
establish the right targets and timelines, American ingenuity will meet 
the challenge, clean technologies will come to market and create new 
jobs, and emissions will be reduced. But if we do nothing or set the 
wrong targets then we will have failed in one of our basic 
responsibilities. Clear Skies sets the wrong targets and timetables for 
the emissions it does address, and it completely misses the mark on 
CO2 and global warming. We can do better.
    Power plants, particularly those burning coal, are a leading source 
of air pollution in a state like Delaware and across the nation. Since 
1970, the Clean Air Act has helped clean up our nation's air, but we 
still have work to do. An example of what we need to do comes from the 
EPA itself, which reported that, in 2000, there were nearly 2 million 
emergency room visits and nearly half a million hospitalizations due to 
asthma. Moreover, the rate of asthma among school children has more 
than doubled in the past 20 years!
    From the perspective of industry, businesses do not like 
unpredictability. Currently, we have several regulations on various 
pollutants and pollution sources with different implementation 
schedules and often overlapping goals. New ozone and fine particulate 
standards are currently being implemented, while new standards for 
mercury are pending before the EPA right now. Meanwhile, states are 
considering regulating CO2. A more-coordinated approach is 
needed, not just to provide cleaner air but to provide regulatory 
certainty to utilities.
    Last Congress, I introduced a four pollutant bill called the Clean 
Air Planning Act with Sens. Chafee, Gregg and Alexander. The Clean Air 
Planning Act takes a market-based approach that, compared to Clear 
Skies, would achieve the following for only an additional 2 percent in 
total system costs: an additional 33 million tons of nitrogen oxides 
reductions; an additional 25 million tons of sulfur dioxide reductions; 
an additional 150 tons of mercury reductions; and an additional 6 
billion tons of CO2 reductions, plus business and investment 
certainty.
    Dollar for dollar, our 4-pollutant proposal achieves significantly 
greater benefits than the president's 3-pollutant proposal. Including 
the cost of regulating CO2, which is minimal, the total cost 
difference between Clear Skies and the Clean Air Planning Act over a 
20-year period (2005 to 2025) is about 2 percent. The EPA has estimated 
that retail electricity prices would increase by only $1.20 per month 
for the average residence under the Clean Air Planning Act versus under 
Clear Skies.
    You can't measure a clean air bill by cost alone, however. You also 
have to take into consideration public health benefits. When our bill 
is fully implemented, it will result in $60 billion in public health 
benefits and prevent 5,900 fewer premature deaths.
    The key question is what will happen now. To a large degree, that 
is up to the President and up to the leadership in the House and 
Senate. I am concerned about reports saying that the White House and 
Senate Republicans want to move Clear Skies quickly and without fully 
engaging Democrats about what is best for the country. If the approach 
to moving this bill is going to be ``my way or the highway'' then we're 
going to end up in a traffic jam. I hope we can work through our 
differences and produce legislation that will improve our air quality 
in a cost-effective way.

    Senator Voinovich. Thank you, Senator Carper.
    I will now call on the chairman of our committee, Senator 
Inhofe.

           OPENING STATEMENT OF HON. JAMES M. INHOFE,
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Mr. Chairman.
    I had an opening statement that would have consumed my 5 
minutes but as I crossed out things as you said them, I am down 
to about 30 seconds now.
    I think that chart particularly shows the success story 
that we have in this country in terms of the Clean Air Act and 
the amendments in the last 30 years.
    I am glad we are holding this hearing this early. When I 
was chairman of this subcommittee we actually had eight 
hearings on this. We have covered this in every possible way. 
The debate has been very thorough and I think we are in 
position now to do something, particularly with the leadership 
that we have on this subcommittee. Bringing together two people 
who have been working together, as far as Senator Voinovich is 
concerned, I had him come in and testify before this 
subcommittee when I chaired this subcommittee and he was 
Governor of Ohio. He did an excellent job at that time. In 
fact, we heard from a couple other Governors. Senator Jeffords 
and I received a letter from both George Pataki and Arnold 
Schwarzeneggar from California and New York expressing their 
concern that States maintain the ability to have stronger 
pollution controls than those set for the Nation as a whole. I 
think that is one thing this bill does. I would like to enter 
this into the record immediately following my opening remarks.
    Senator Voinovich. Without objection.
    Senator Inhofe. I think probably the most telling chart 
that was held up during the chairman's opening remarks was the 
one that showed the success story, that our air is far cleaner 
than it was a few decades ago. In the last 30 years, while our 
GDP has almost tripled, our energy consumption has increased by 
45 percent, emissions from the six major pollutants have been 
cut by more than half.
    We recognize that a lot more needs to be done. On Monday, I 
introduced with Senator Voinovich the Clear Skies bill. This is 
the most aggressive mandated reduction in pollutants in the 
history of this country, of any President, of any time. I think 
it is very important we understand that.
    They were trying to do this earlier by rule and I think we 
all understand that rules do nothing but invite uncertainty and 
lawsuits and we have had enough of that in addressing this 
subject. What we need is legislation and our legislation will 
clean the air further, faster and cheaper than existing laws.
    While some might criticize the legislation because it 
doesn't address the divisive issue of imposing carbon caps, 
carbon dioxide is not a pollutant, I think we understand that 
and while some would sacrifice these massive reductions that 
would be mandated for a political agenda, I think it is wrong. 
Let us have a debate on carbon dioxide, on carbon caps, on 
taxes, all these things dealing with global warming. We will 
have that debate. We don't want to kill the opportunity to have 
the most aggressive reduction any President has ever proposed 
by keeping this from being passed.
    I look forward to this hearing. I think we will have a 
hearing next week some time on this subject and I thank you for 
giving this the priority you have early in this session.
    Thank you.
    [The prepared statement of Senator Inhofe follows:]
        Statement of Hon. James M. Inhofe, U.S. Senator from the
                           State of Oklahoma
    Thank you for holding this hearing today, Chairman Voinovich. It is 
another important step in our long-standing consideration of multi-
emission legislation. We are now the fourth Congress to address this 
issue and this is the 23rd hearing of this Committee to address issues 
related to multi-emissions legislation. I held several hearings when I 
was Chairman of this Subcommittee, and I am now the fourth Chairman to 
examine the matter.
    This Committee has vetted the issue thoroughly and debated every 
aspect. Our examination of this issue over the next month represents 
the culmination of an exhaustive, deliberate, and time-consuming 
process to update and modernize our nation's clean air laws.
    The Clean Air Act is a vital law to enable Americans to breathe 
healthy air. And it has had many successes. America's air is far 
cleaner than a few decades ago. In the last 30 years, while our Gross 
Domestic Product almost tripled and our energy consumption has 
increased by 45 percent, emissions of the six major pollutants have 
been cut by more than half. And lead has been virtually eliminated.
    Despite this, more work needs to be done. New more stringent 
particulate and ozone standards were implemented and hundreds of 
counties across the nation are not in attainment with these much lower 
pollution levels. To assist these counties with coming into attainment 
and continue our clean air progress, further emission reduction will be 
needed. The most effective, most flexible, and least burdensome way to 
achieve these reductions is to build on the most successful part of the 
Clean Air Act--the Acid Rain program.
    On Monday, I introduced with Senator Voinovich the Clear Skies 
bill, proposed by President Bush. This bill--which cuts sulfur dioxide, 
nitrogen oxides, and mercury by 70 percent--is the most aggressive 
emissions reduction initiative ever proposed by an American President.
    Multi-emissions legislation is necessary to help states come into 
compliance with the law and to keep jobs here in America. Coal is our 
nation's most abundant resource. It provides not only jobs, but keeps 
energy prices affordable for the elderly and poor. As important, 
keeping coal as the backbone of our electric grid allows natural gas to 
be used for more valuable purposes, such as home heating and the 
manufacturing sector. Natural gas is in a state of crisis due to limits 
on production. Our bill will not put further stresses on natural gas 
demand, as competing proposals do.
    Rules to address sulfur dioxide, nitrogen oxides, and mercury are 
due out later this year. But these rules suffer from what all rules 
suffer from lack of certainty. Litigation of clean air rules in recent 
years has become an epidemic. The result is that rules provide neither 
the certainty that we will achieve needed emission reductions nor the 
certainty industry needs to invest the tens of billions of dollars that 
will be needed to achieve these reductions. What is needed is 
legislation. And our legislation will clean the air further, faster, 
and cheaper than the existing law.
    While some have criticized our legislation because it does not 
address the divisive issue of imposing carbon caps, carbon dioxide is 
not a pollutant. While some would sacrifice public health on the alter 
of a political agenda to regulate carbon dioxide, I believe that the 
time to move forward with making our skies cleaner is upon us.
    I look forward to today's hearing. We will have a full committee 
hearing 1 week from today and it is my intention to hold a full 
committee markup before the President's Day recess.

    Senator Voinovich. I would like to call on our Ranking 
Democrat member, Senator Jeffords. I want to say publicly how 
much I admire your conscientious effort in this area. I know 
you have spent hours and hours on a piece of legislation that 
you promoted and I am anxious to hear what you have to say this 
morning.

          OPENING STATEMENT OF HON. JAMES M. JEFFORDS,
             U.S. SENATOR FROM THE STATE OF VERMONT

    Senator Jeffords. Thank you.
    I am glad we are here today to discuss the need for multi-
pollution legislation. I have been a strong proponent of such 
bipartisan legislation for years. We need to lock in emissions 
and reductions as soon as we can to meet our public health and 
environmental responsibilities on schedule.
    Yesterday, I reintroduced the Clean Power Act with 18 
bipartisan co-sponsors. Despite great progress in reducing 
pollution over the last 30 years, science tells us that we 
still have an enormous challenge now and ahead. We have only 
barely touched upon many of these challenges. We still must 
achieve safe air quality for all Americans to breathe and to 
live longer lives and finally and fully address acid rain and 
mercury contamination, clear the Vistas National Park and 
really begin to deal with the human induced climate change.

    Before I go on, I want to provide some historical context 
on the committee's actions on this important matter. In early 
2001, there was a bipartisan dialog to establish principles for 
the committee to use in developing multi-pollution legislation. 
That dialog was disrupted by the President's decision to 
reverse his pledge to control carbon dioxide from the power 
plants.
    In October 2001, we had a widely attended stakeholder 
meeting on multi-pollutant legislation to restore some type of 
dialog but without much luck. In early 2002, I started a brief 
but unsuccessful attempt to resume negotiations on a four 
pollutant bill but the Administration refused to negotiate or 
even to provide the full committee with timely assistance. So 
with no one on the other side to negotiate with or to 
compromise with, the committee under my chairmanship approved 
the Clean Power Act in June 2002. If that legislation had been 
signed into law, we would have been well over our way to 
reducing the number of people, 25,000 or so, who died 
prematurely each year from power plant pollution. There were 
Republican objections to taking up the bill, so it went no 
where. Gradually, it has become clear that the Administration 
and most of the utility industry did not and does not want 
Congress to successfully legislate on this matter.
    Legislation would require compromise and a strengthening of 
the Clean Air Act, not a weakening to get public support. 
Instead, the Administration has tried to unravel many important 
clean air programs with special focus on gutting the new source 
review or NSR Program. Last year, the Administration proposed a 
Clean Air Act interstate rule using authority already in the 
law. Unfortunately, the approach is inadequate to help 
nonattainment areas meet the deadlines in the law on time. Non-
attainment areas need reductions in clean air monitoring data 
by 2009 for ozone and by 2010 for fine particulate matter, not 
in 2018.
    The Clean Air Act has ample authority now and requires the 
EPA to make sure that all States have adequate implementation 
plans in place to prevent interstate pollution and to meet the 
health-based standards on time. Any delay in the schedule is 
unwise and causes more health and environmental damage. Our 
legislation avoids such delays. EPA's analysis shows that our 
bill would prevent 13,000 more premature deaths in 2010 and 
18,000 more in 2015 than will Clear Skies. The Administration 
has proposed several options for controlling the mercury due to 
the deadline in March. Unfortunately, these options don't 
appear to be legal and to really ever reduce mercury by any 
serious amount.
    As I have said many times in public and in private, I am 
prepared to compromise to achieve faster and better public 
health and environmental benefits than is current law. That 
even includes some kind of reasonable compromise on controlling 
carbon dioxide but we cannot legislate responsibly and ignore 
manmade global warming completely. The U.S. power sector emits 
one-tenth of the world's total carbon dioxide emission. To 
ignore this fact defies reason, logic and the peer review work 
of the National Academy of Sciences, the American Geophysical 
Union and the International Panel on Climate Change.
    It has surprised me to learn without any consultation 
beforehand that we will mark up a three pollutant bill in 3 
weeks, a bill that is not a product of bipartisan compromise or 
consensus. We are here to discuss the need for multi-pollution 
legislation. There is a compelling need for such legislation. 
This is especially true given the Administration's efforts to 
delay the implementing and enforcing current law. 
Unfortunately, there is no process in place to produce or pass 
bipartisan legislation that could achieve stronger, better and 
faster benefits than the Clean Air Act already guarantees.
    Whether these benefits are attained by the genuine 
enforcement and compliance, State actions or through 
litigation, still I am an optimist and I remain hopeful that we 
can do better and meet the challenges that I have outlined. 
There is a negotiated compromise to be found, then Senators 
Carper and Voinovich working together can almost certainly find 
it.
    I look forward to working with you and look forward to the 
testimony of the witnesses to follow.
    [The prepared statement of Senator Jeffords follows:]
       Statement of Hon. James M. Jeffords, U.S. Senator from the
                            State of Vermont
    I'm glad we're here today to discuss the need for multi-pollutant 
legislation. I've been a strong proponent of such bipartisan 
legislation for years. We need to lock in emissions reductions soon so 
we can meet our public health and environmental responsibilities on 
schedule.
    Yesterday, I re-introduced the Clean Power Act with 18 bipartisan 
cosponsors and just that kind of guarantee. Despite great progress in 
reducing pollution over the last 30 years, science tells us that we 
still have enormous challenges now and ahead.
    We have only barely touched upon many of these challenges. We still 
must:

     achieve safe air quality for all Americans to breathe and to live 
longer lives;
     finally and fully address acid rain and mercury contamination;
     clear the vistas in our national parks; and,
     really begin to deal with human-induced climate change.

    But, before I go on, I want to provide some historical context on 
the Committee's actions on this important matter.
    In early 2001, there was a bipartisan dialogue to establish 
principles for the Committee to use in developing multi-pollutant 
legislation. That dialogue was disrupted by the President's decision to 
reverse his pledge to control carbon dioxide from power plants. In 
October 2001, we had a widely attended stakeholder meeting on multi-
pollutant legislation to restore some type of dialogue, but without 
much luck. And in early 2002, I started a brief but unsuccessful 
attempt to resume negotiations on a four-pollutant bill. But the 
Administration refused to negotiate or even to provide the full 
Committee with timely technical assistance.
    So, with no one on the other side to negotiate with or to 
compromise with, the Committee, under my chairmanship, approved the 
Clean Power Act in June 2002. If that legislation had been signed into 
law, we would have been well on our way to reducing the number of 
people, 25,000 or so, who die prematurely each year from power plant 
pollution. But there were Republican objections to taking up that bill, 
so it went nowhere.
    Gradually, it has become crystal clear that the Administration and 
most of the utility industry did not and does not want Congress to 
successfully legislate on this matter.
    Legislating would require compromise and a strengthening of the 
Clean Air Act, not a weakening, to get the public's support. Instead, 
the Administration has tried to unravel many important Clean Air 
programs with a special focus on gutting the New Source Review, or NSR, 
program.
    Last year, the Administration proposed the Clean Air Interstate 
Rule, using authority already in the law. Unfortunately, this approach 
is inadequate to help non-attainment areas meet the deadlines in the 
law on time. Non-attainment areas need reductions and clean air 
monitoring data by 2009 for ozone and by 2010 for fine particulate 
matter, not in 2018.
    The Clean Air Act has ample authority now and requires the EPA to 
make sure that all states have adequate implementation plans in place 
to prevent interstate pollution and to meet the health-based standards 
on time. Any delay in this schedule is unwise and causes more health 
and environmental damage.
    Our legislation avoids such delays. EPA's analysis shows that our 
bill would prevent 13,000 more premature deaths in 2010 and 18,000 more 
in 2015 than will Clear Skies. The Administration has proposed several 
options for controlling mercury due to a deadline in March. 
Unfortunately, these options don't appear to be legal or to really ever 
reduce mercury by any serious amount.
    As I have said many times, in public and in private, I am prepared 
to compromise to achieve faster and better public health and 
environmental benefits than in current law.
    That even includes some kind of reasonable compromise on 
controlling carbon dioxide. But we cannot legislate responsibly and 
ignore manmade global warming completely. The U.S. power sector emit's 
one-tenth of the world's total carbon dioxide emissions. To ignore this 
fact defies reason, logic and the peer-reviewed work of the National 
Academy of Sciences, the American Geophysical Union and the 
International Panel on Climate Change.
    So, it has surprised me to learn, without any consultation 
beforehand, that we will mark up a 3-pollutant bill in 3 weeks, a bill 
that is not a product of bipartisan compromise or consensus. We are 
here to discuss the need for multi-pollutant legislation. There is a 
compelling need for such legislation. This is especially true given the 
Administration's efforts to delay implementing and enforcing current 
law.
    But, unfortunately, there is no process in place to produce or pass 
bipartisan legislation that could achieve stronger, better and faster 
benefits than the Clean Air Act already guarantees--whether those 
benefits are obtained by genuine enforcement and compliance, state 
actions or through litigation.
    Still, I am an optimist and I remain hopeful that we can do better 
and meet the challenges that I have outlined. If there is a negotiated 
compromise to be found, then Senators Carper and Voinovich working 
together can almost certainly find it. I look forward to working with 
them and the testimony of the witnesses.

    Senator Voinovich. Thank you.
    I would like to reiterate that the procedure we are going 
to follow in this committee is the chairman will speak, the 
Ranking Member of the subcommittee, we will then recognize the 
chairman of the committee as a whole and the Ranking Member and 
that is why we followed that procedure here this morning. Then 
we are going to follow a rule for the new members, the early 
bird rule. That basically says that those that show up early 
get a chance to make their opening statements before those that 
come later.
    Following that rule, Senator Bond, I would call upon you 
for your statement.

         OPENING STATEMENT OF HON. CHRISTOPHER S. BOND,
            U.S. SENATOR FROM THE STATE OF MISSOURI

    Senator Bond. Thank you.
    I appreciate your comments about the emissions trading 
provisions in the Clean Air Act amendments of 1990, sometimes 
known as the Byrd-Bond Rule. In Missouri, we know it as the 
Bond-Byrd Rule. I was the most junior member who showed up at 
the organizing meeting for it and nobody else wanted to do it, 
so the paper slid all the way down to me but having the strong 
support of Senator Byrd assured us that the 18 votes we had in 
that coalition was a majority. I am glad to hear that it is 
working.
    I appreciate your strong comments about the Clear Skies 
Act, the fact that it is going to use this as well. I think 
with the Clear Skies Act, it is obvious we have the opportunity 
to cut the largest amount of pollution in history from electric 
utilities. We have the opportunity to cut by 70 percent acid 
rain producing sulfur dioxide, 70 percent of ozone producing 
nitrogen oxides, 70 percent of poisonous mercury pollution and 
we have the opportunity to help families and hundreds of 
cities, we have the opportunity to help children and pregnant 
mothers. I think we must take that opportunity.
    Unfortunately, there apparently is going to be an effort to 
change this bill, to add a provision that is absolutely 
unworkable for those of us in the Midwest and many in the West 
that would prevent this bill from passing with the 70 percent 
cuts in SOx, NOx and Mercury. People who want us to expand this 
bill to include carbon mandates mean well. I understand the 
arguments they make. I know they believe that carbon controls 
are the future and we should start now. Tragically, we do not 
know how to make that work and it would be a poison pill that 
would kill this bill and leave us with nothing.
    Carbon mandates would have a crushing burden on families in 
my State. Where I come from we get 80 percent of our 
electricity produced from western coal; 100 percent of that is 
Powder River Basin coal. I understand the opposite is true in 
the Northeast. Many Northeastern States get their electricity 
from natural gas and for them it is not a problem, but for our 
Nation, for our energy it is a problem to be using natural gas 
and boilers to generate electricity.
    Twenty-five years ago I heard a lecture by Nobel laureate 
Professor Glen Seabert and he said to use natural gas in 
combustion boilers to generate electricity was like throwing 
your best antique furniture in the fireplace to keep the house 
warm. It is a highly uneconomical and unwise use of it. The use 
by utilities of natural gas has driven the price of natural gas 
as we saw on the chart to more than double. To force even 
greater use of natural gas would put much higher gas and power 
bills on communities, low income families would be faced with a 
choice between heating and eating, fixed income seniors would 
face tough decisions between turning off lights and freezing 
and Missouri families would also be hurt by job losses. Many 
employers in my State and across the Nation depend upon natural 
gas as a feedstock. Fertilizer makers, chemical makers, the car 
industry, all provide good wages that allow our families to 
remain strong economically and strong in their health as well.
    We are seeing already manufacturers closing down their 
American plants and moving overseas. You talk about 
outsourcing, driving the price of natural gas even higher is 
going to be one of the biggest outsourcing effects we could 
see. A carbon mandate increasing demand and driving up prices 
would send jobs overseas.
    Let us not kid ourselves, we would be sending pollution 
overseas. Manufacturers in China and India will not follow U.S. 
pollution control laws, they will pollute more and much of that 
pollution will come right back to us in the air, water and 
through our food supply.
    Maybe some day there will be some way we can do it 
affordably, to extract and sequester carbon without severe 
economic hardship. Right now we know we can do that by planting 
more trees. I have planted 10,000 and I challenge all my 
friends to plant several thousand themselves but there is no 
feasible way of sequestering it right now. We will when we 
adopt this Clear Skies bill give a mandate and give a clear 
demand for the creation of coal gasification plants to 
substitute coal gas for natural gas and that will allow the 
carbon to be segregated and when we find the means of 
sequestering it, we can do that.
    A bill to cut pollution from electric utilities right now 
that includes a mandated carbon cut will not pass the Senate, 
it will not pass the House, the President will not sign it. The 
carbon mandates will kill the bill. I don't think there is a 
purposeful effort to kill the bill but a carbon mandate would.
    We have a choice, we take three-quarters of a loaf, SOx, 
NOx and mercury or take no loaf. I think it is time that we 
take the three-quarters of the loaf. We have an opportunity in 
the Clear Skies Act to do great things for the environment and 
the health of our families and I hope a majority of my 
colleagues here and on the floor will support this bill.
    Thank you.
    Senator Voinovich. Senator Lautenberg.
    Senator Lautenberg. Thank you. This is kind of a nostalgic 
return home for me. I think I am probably the most senior 
member here by virtue of the time that I spent on the 
Environment Committee. I missed being here and I am pleased to 
be able to serve on the committee. As I said to Senator Inhofe 
when I came in, I came to make his day. That is my primary 
mission.
    Senator Inhofe. I would respond by saying we missed you 
during your absence.

          OPENING STATEMENT OF HON. FRANK LAUTENBERG,
           U.S. SENATOR FROM THE STATE OF NEW JERSEY

    Senator Lautenberg. Senator Inhofe and I have always had an 
interesting exchange. I am pleased to be here and to welcome 
our newer members. It gives me some encouragement because with 
20 years of service in the U.S. Senate, I had to have some 
junior members to kind of look down on if you don't mind.
    I am anxious to get to work on the problems we are looking 
at. I commend you, Mr. Chairman, for holding this hearing, 
getting us focused on the task and I know how much you care 
about it. The question for me is how much are we doing and how 
much can we do? It has been said around here many times, and I 
repeat it, that perfection is the enemy of the good and we will 
never get a perfect piece of legislation. In my eyes, I know 
that we have a tough fight.
    I listened very carefully to Senator Carper and Senator 
Voinovich's introduction to the hearing and those are very good 
words and I know they are sincerely meant, to try to work 
together and get something done that we can all agree upon, but 
when I listened further, and I know that the job situation is 
one we really have to pay attention to. I come from a working 
class family. My father punched a time clock. When the mills 
closed down in Patterson, New Jersey, the textile miles, silk 
mills in particular, it hurt like the devil. Whatever we could 
do to keep him working, we wanted to do.
    Then I came out of the corporate world and I know that for 
the corporate world the best thing is to be able to earn, to be 
able to keep people working and keep America's economy 
flourishing.
    When we talk about things like heating with natural gas and 
the implications, what is the alternative, I ask you, to have 
to absorb all kinds of toxic emissions coming generously to New 
Jersey from our western neighbors as opposed to using what we 
can do to fuel our industries, where is American ingenuity. 
When we talk about job loss and sending jobs overseas, where 
are we in terms of saying to the automobile industry, hey, your 
CAFE standards have to be improved. We know it is possible to 
do it. So instead we blithely go along, more SUVs, bigger cars, 
you burn it up, shoot it out there. I don't see why the choices 
have to be made in the manner that they are being discussed 
now.
    My sister died from an asthma attack at a school board 
meeting one night, she was a member of the school board and she 
couldn't help herself at the moment of attack. She tried to get 
to her car to plug in a little respirator that she carried and 
she didn't make it. I have an 11-year-old grandson who 
occasionally has to be rushed to the hospital emergency ward 
because he has an asthma attack. He has had steroids and his 
face is all blown up and it is a bloody unpleasant sight and a 
painful thing to witness.
    At what point do we say the most important thing are the 
lives that we can save, or the health that we can protect? Why 
is the focus exclusively on one side of the equation, the 
economic side of the equation? I frankly don't get that. My 
suggestion is we start with what we can do to improve life for 
our citizens and then work to an end. I don't want to give up 
any jobs, believe me. It is painful in New Jersey. We have seen 
so many of the jobs we used to have being accomplished in other 
places.
    When I look at what is happening with asthma, in the last 
15 years asthma rates have risen 250 percent. Today, over 7 
million kids struggle with asthma and our hospitalized, miss 
days from school, miss days of fun, miss days of normal living. 
So I ask unanimous consent that a statement from our 
Commissioner of Environmental Protection of New Jersey, Mr. 
Brad Campbell be included in the record as if read.
    Senator Voinovich. Without objection.
    Senator Lautenberg. I also ask that my full statement which 
I have deviated from be included in the record as if read.
    [The prepared statement of Senator Lautenberg follows:]
      Statement of Hon. Frank R. Lautenberg, U.S. Senator from the
                          State of New Jersey
    Mr. Chairman:
    I'm very happy to be back on the Environment & Public Works 
Committee. Of course, if I hadn't left four years ago, I would be 
sitting much closer to you than to this end of the dais, but such is 
life!
    Thank you for holding this hearing on the need for ``multi-
pollutant'' legislation. It's this sort of topic that made me want to 
get back on the Committee.
    Improving air quality is vital for my home State of New Jersey and 
for the entire country. We have made great progress in the last few 
decades, but today, over 150 million Americans continue to live in 
areas that still have hazardous levels of air pollution.
    I saw what asthma did to my sister, and I see what it does to one 
of my 10 grandchildren. I want my children and grandchildren to live in 
a country where they can breathe clean air.
    I helped write the 1990 amendments to the Clean Air Act. Those 
amendments established innovative ways to improve air quality and 
protect public health. For instance, we created the ``cap and trade'' 
program for cutting sulfur dioxide emissions, which cause acid rain.
    The ``cap and trade'' program has been a big success and serves as 
a model for cutting the emissions of other air pollutants, such as 
nitrogen oxides.
    We've made progress when it comes to sulfur dioxide and nitrogen 
oxides, but there's more we need to do, and we have to start getting 
rid of mercury, too. It's well known that these three pollutants hurt 
millions of Americans each year, causing thousands of hospitalizations, 
emergency room visits, and more and more asthma.
    As I see it, two of the fundamental questions the Committee needs 
to address are as follows:

    The first question is whether the Clean Air Act needs to be 
replaced. I think the answer to that question is ``no.'' The Clean Air 
Act provides the authority and flexibility we need; it just needs to be 
enforced better.
    The second question is whether we need to start cutting the 
emissions of a fourth pollutant, carbon dioxide. I believe the answer 
to that question is ``yes.''

    Carbon dioxide is the primary greenhouse-gas pollutant that is 
causing our atmosphere to trap heat. Scientists from around the world 
have warned us that greenhouse gas emissions are causing our atmosphere 
to heat up.
    The longer we delay, the harder it's going to be to fix the 
problems that are beginning to show up now.
    Polar ice caps are melting. The oceans are getting warmer, which 
may be causing harsher weather--like the hurricanes this past fall. 
Rising sea levels could destroy coastal areas--such as those in New 
Jersey. This isn't the kind of world I want to leave to my 
grandchildren!
    So, this is a profoundly important hearing today and I look forward 
to the testimony of our witnesses, and to participating in this ongoing 
discussion.
    Thank you, Mr. Chairman.

    Senator Voinovich. Thank you.
    Senator DeMint.

  OPENING STATEMENT OF HON. JIM DeMINT, U.S. SENATOR FROM THE 
                    STATE OF SOUTH CAROLINA

    Senator DeMint. Thank you. I appreciate the panelists being 
here to testify.
    It is my opinion at this point, still being a new member, 
that the Clear Skies Act would be the most effective, clean air 
proposal that we have ever enacted. I know we all want to 
improve the quality of the air. I don't think anyone is 
questioning anyone else's motivation. The question is how. I 
certainly agree with the Ranking Member that we should not be 
the lap dog of business and industry and I agree with my 
colleague that our focus has to be on improving the quality of 
life of our children and all our citizens. I agree that 
business and industry should play by the rules.
    I think it is important for us to recognize that the 
current set of rules that we have is a quagmire of antiquated 
regulations that are open to subjective and arbitrary 
interpretation, that has clearly done more to promote lawsuits 
than they have to clean up the air. Judges and lawyers are not 
going to clean up our air.
    In South Carolina, we have seen firsthand the uncertainty 
of our regulatory system. In several of our counties I used to 
represent in Congress where BMW is headquartered and Michelin, 
an area of the State that is known for its clean water and 
clean air, we have some counties now in nonattainment for 
ozone. With this bill, our counties in developing a plan to 
clean up the air could obtain a transitional designation that 
would bring us into compliance by the year 2015. We could 
accomplish the goal of cleaner air without hurting the economy. 
I think this is just what my colleague was talking about.
    I want to just encourage us again as just said not to make 
the perfect the enemy of the good. This bill clearly is an 
aggressive move toward cleaner air, toward setting standards, 
but it is not just business and industry that are asking for 
this. DEHEC in our State wants a clear set of regulations they 
can interpret in a very scientific, standard way so the 
industry, the power plants will know how to move ahead to clean 
up our air in a responsible way. We must translate our good 
intentions into a good regulatory system and we need clear 
rules if we are going to have clear air.
    Thank you.
    Senator Voinovich. Senator Obama.

            OPENING STATEMENT OF HON. BARACK OBAMA,
            U.S. SENATOR FROM THE STATE OF ILLINOIS

    Senator Obama. Thank you and other members of the 
committee.
    Like Senator DeMint, I am new to this committee and so 
first of all, I appreciate all the hard work that has been done 
by members on both sides of the aisle on this difficult issue. 
I could hear from your introductory remarks, Mr. Chairman, that 
there have been some frustrations in terms of all the work that 
has been put in. So I would like to be part of some 
constructive process to move legislation along that strikes the 
right balance.
    I should note that in my State, the two sides of the coin 
that have been discussed are very visible. On the one hand, 
Chicago--I think--ranks second in the country in terms of the 
impact of power plant emissions and pollution. The metro east 
and East St. Louis areas that I share with Senator Bond and 
others, there are almost equally severe problems. I don't need 
to repeat what Senator Lautenberg expressed so well and that is 
the human cost of this pollution. My daughter who is 6 years 
old has asthma as well. We have had those frightening moments 
where she comes up to my wife and I and says, Daddy, I can't 
breathe. Until you have rushed a daughter to the hospital in 
the middle of the night and had them in the emergency room for 
hours, I think it is hard to recognize the degree to which 
there is a human cost to this stuff.
    Having said that, we also have the Illinois coal industry 
in southern Illinois that has been extremely hard hit, partly 
because western coal is easier to extract because we have had 
problems in terms of some of the existing regulatory regime and 
how it impacts jobs and economic growth in the area of southern 
Illinois. When you travel to these areas, these are some of the 
poorest areas of the State, you are very sympathetic to the 
fact that these communities need to get back on their feet.
    My understanding is there are elements of this bill that 
might make Illinois coal more competitive. That is something 
that is of interest to me. Those economic issues don't just 
relate to the coal industry directly. We have a large chemical 
industry in Illinois and they use a lot of natural gas, those 
issues that were raised about the rising cost of natural gas 
impacts those industries as well. So these are complex issues. 
There are people on this committee who have studied this much 
more than I and am looking forward to learning.
    I will make one last statement and that is that although 
regulation has fallen into ill repute in recent years, part of 
the reason the chart that was presented earlier shows enormous 
improvement with respect to our air and our water has to do 
with the fact that industry was regulated. Those gains were not 
achieved voluntarily because there is always a cost to society 
and those costs can be localized with particular industries and 
particular communities and yet I think most of us feel pretty 
proud even those people who may have resisted those initial 
regulations feel good about the fact that our water is cleaner 
and our air is easier to breathe.
    So my hope is we approach these issues and there is a bill 
here that reflects long and hard work on the part of others and 
I want to keep an open mind, but I do think it is important 
that this process not be driven by ideology but by science and 
common sense and a recognition that we only have one 
environment and sometimes it is hard to reverse some of the 
mistakes that we make. So we need to be mindful, cautious and 
humble about what we do.
    Senator Voinovich. Thank you, Senator.
    Senator Isakson.

           OPENING STATEMENT OF HON. JOHNNY ISAKSON,
             U.S. SENATOR FROM THE STATE OF GEORGIA

    Senator Isakson. Thank you.
    I noted in preparing for the hearing that I think this is 
the 23rd hearing the committee has had since 1998 on multi-
emission standards. After listening to the opening statement, I 
would like to have been at all of them. I am sure they were 
entertaining. I know the operative word of the day certainly is 
carbon. I have a lot to learn on those issues, but there are a 
couple of issues I want to address briefly in the interest of 
my State with regard to Clear Skies.
    First of all, the positive impact that Clear Skies will 
have on the State of Georgia, Georgia's sources would reduce 
emissions of SO2 by 89 percent, NOx by 77 percent, 
and mercury by 76 percent. The annual savings in positive 
impact in terms of health would be $5.3 billion and there would 
be 1,500 less hospital visits a year. That is meaningful.
    Second, I want to associate myself with the remarks of 
Senator DeMint with regard to the transition areas designation. 
That is a tremendously positive step for my State and many 
others, to reach attainment but to not be unnecessarily 
prohibited from reaching that through the overly oppressive 
regulation that can sometimes take place.
    I look forward to working with the committee and the 
members here on the transition areas proposal because it is a 
meaningful, positive step for many of us in the South to 
address what has clearly been a problem.
    Later I will get the chance to introduce a distinguished 
mayor from my State. I appreciate the time that you have given 
me. I would only ask unanimous consent that you allow the 
remainder of my prepared statement to be submitted to the 
record.
    Senator Voinovich. Without objection.
    [The prepared statement of Senator Isakson follows:]
   Statement of Hon. Johnny Isakson, U.S. Senator from the State of 
                                Georgia
    Thank you Chairman Voinovich and Chairman Inhofe for holding this 
hearing. While I and some of my colleagues on the Subcommittee may be 
new to this Committee, the issue before us certainly isn't new to the 
Committee. In fact, by my count, this is the 23rd hearing this 
Committee has held on multi-emissions issues since 1998. I know that I 
appreciate another opportunity to hear first hand how Clear Skies will 
substantially reduce emissions of the three most harmful pollutants 
from power generation, and will do so in a way that is much faster and 
more efficient than under current law.
    I think that when any of us look at a piece of legislation, the 
first thing we ask is ``what is the impact on those whom I represent?'' 
The positive impact that Clear Skies will have on the State of Georgia 
is very real. Georgia sources would reduce emissions of SO2 
by 89 percent. NOx would be reduced by 77 percent, and Mercury by 76 
percent by the year 2020. Georgians would realize health benefits 
totaling $5.3 billion annually, and visit the hospital or emergency 
rooms 1,500 less times. These are very tangible results.
    I am especially interested in the benefits for Georgia in the 
section regarding ``Transitional Areas''. Under Clear Skies, areas that 
are projected to meet the ozone and fine particles standards by 2015 as 
a result of Clear Skies would have legal deadline of 2015 for meeting 
these standards (i.e., will have an attainment date of 2015). These 
areas would be designated ``transitional'' areas, instead of ``non-
attainment'' or ``attainment,'' and would not have to adopt local 
measures except as necessary to qualify for transitional status). They 
would have reduced air quality planning obligations and would not have 
to administer more complex programs. Clear Skies will allow many of 
Georgia's counties to be designated ``transitional'', and ultimately in 
attainment.
    America has made much progress since 1970 and the passage of the 
Clean Air Act, however we still face major air quality challenges in 
many parts of the country. Clear Skies is the most important step we 
can take to address these challenges. Clear Skies would make great 
strides towards solving our remaining air quality problems in a way 
that advances national energy security and promotes economic growth. 
When fully implemented nationally, Clear Skies would prolong thousands 
of lives each year, providing billions of dollars in economic benefits, 
save millions of dollars in health care costs, and increase by millions 
the number of people living in areas that meet our new, more stringent 
health-based national air quality standards.
    There is no better time for us to be considering multipollutant 
legislation. Today we begin the process of bringing Clear Skies to the 
floor of the Senate for a vote. Congress needs to act now so that we 
may begin achieving emissions reductions and their related health 
benefits sooner rather then later. I look forward to working with you 
Mr. Chairman to pass Clear Skies, and improve our nation's air quality. 
Thank you.

    Senator Voinovich. Thank the members of the Senate that are 
here today and we will now call our first witness panel, Bob 
Young, John Paul and Beverly Gard.
    Before we get started, I would like to let everyone know 
that we had a change in the witness list. Mayor Don Plusquellic 
from the city of Akron in my home State of Ohio, also President 
of the U.S. Conference of Mayors, is not able to be here today 
due to illness. I would really like to thank Augusta, Georgia 
Mayor Bob Young who is also chairman of the Conference Energy 
Committee, for coming here on such short notice to testify 
before this committee. I understand Senator Isakson, you would 
like to introduce Mayor Young?
    Senator Isakson. With your permission, I would.
    Senator Voinovich. Without objection.
    Senator Isakson. It is really a privilege for me to 
introduce an old friend, a former TV personality, news 
anchorman as you can tell from the face and the hair, he looks 
the part, but now the mayor in his second term of the great 
city of Augusta, GA and Richmond County and the mayor of that 
consolidated government which is among other things the home of 
the Augusta National Golf Club and the Masters Golf Tournament.
    Mayor Young is a member of the Advisory Council of the U.S. 
Conference of Mayors and chairs the Conference's Energy 
Committee and is a past chair of the Standing Committee on the 
Environment.
    He is a very active mayor, he is a very progressive mayor. 
In my years in the State Legislature where I worked with Bob 
and my years since I have been in Congress on the 
Transportation Committee in the House where I worked with Bob, 
I have known him to be a very conscientious and very hard-
working person, particularly interested with regard to the 
environment and its impact. Although I may be reaching here 
because nobody has told me this, I would imagine the 
transitional areas provision in terms of the Savannah River 
area would be of a positive impact in terms of Clear Skies.
    It is a real pleasure for me to have the opportunity to 
introduce a great mayor and a great citizen of the State of 
Georgia, Bob Young.
    Thank you, Mr. Chairman.
    Senator Voinovich. Mayor Young, Mr. Paul and Senator Gard, 
I would like to make clear that your testimony is limited to 5 
minutes and that you should understand that your statement will 
be made a part of this record.

  STATEMENT OF HON. BOB YOUNG, MAYOR, CITY OF AUGUSTA, GA, ON 
              BEHALF OF U.S. CONFERENCE OF MAYORS

    Mayor Young. Thank you, Mr. Chairman. Senator Isakson, 
thank you for that generous introduction.
    On behalf of the U.S. Conference of Mayors' President, 
Akron Mayor Don Plusquellic, I offer his apologies for not 
being with you today. As you know, he was supposed to be here 
to testify but he fell ill yesterday of a severe respiratory 
ailment. I offer his sincerest apologies to you for his not 
being able to make it to this hearing. I was described earlier 
today as his stunt double for this hearing.
    The U.S. Conference of Mayors is the official, non-partisan 
organization that represents cities throughout the United 
States through their chief elected official, the mayor. First 
of all, I would like to thank Senator Voinovich not only for 
his invitation to speak before you today but also for joining 
with us last week during the Conference of Mayors' winter 
meeting here in Washington. Your commitment, Senator, to issues 
such as community development block grant funding and unfunded 
mandates is greatly appreciated by the mayors of this Nation.
    I come before you today not as an expert on clean air 
policy, not as a scientist, but as a mayor. This means that I 
am responsible for a wide variety of activities including 
keeping my citizens safe, keeping their surrounding environment 
clean and attractive, making sure the roads are maintained and 
every once in a while in Augusta, GA, even seeing that snow 
gets ploughed. It also means doing what I can to keep and 
attract new jobs to our community. When my job is boiled down, 
I guess you can say that I am responsible for making my city a 
place that is desirable for both people and business to 
flourish. Every mayor strives to create a community that has 
healthy citizens with a healthy economy. I think with some 
common sense, you can have both. That is why I am here today.
    In order to remain competitive, this Nation needs a steady, 
reliable and inexpensive source of energy. However, we also 
need clean and healthy air. Depending upon the type of 
business, a number of conditions influence their decision to 
locate or expand in a community. Issues such as work force 
availability, access to transportation hubs and of course the 
cost of electricity are factors in their decisionmaking 
process.
    Besides the cost and reliability of electricity, another 
factor that goes into a business location or expansion decision 
is a community's attainment status. Many communities throughout 
the Nation have been designated as nonattainment areas for 
either ozone or particulate matter. Augusta was originally 
supposed to be designated in nonattainment for ozone but when 
the final numbers came out, we were fortunately not included. 
Many of my other mayoral colleagues though were not as lucky.
    When it appeared that my city was going to be designated as 
nonattainment for ozone, we volunteered for EPA's early action 
compact. This program allows cities, counties and States to go 
through a series of voluntary measures to reduce air pollution 
that causes nonattainment. I want you to know that even though 
we were fortunate not to get designated, we are still going 
through this voluntary program to demonstrate our commitment to 
clean air. This is what we are doing in Augusta.
    The reason we are committed to clean air is not only 
because of the health of our citizens but it is a good business 
decision as well. Many businesses won't outright admit it but 
privately they have said that when making a decision to locate 
or expand in an area, one of the things they do is find out 
that community's attainment status. If a community is not in 
attainment, businesses know to get the necessary air permits 
might be difficult and sometimes it just makes sense to seek 
out another community to build in.
    Both the cost of electricity and a city's attainment status 
put many communities at a competitive disadvantage to attract 
businesses from other parts of the United States or even from 
elsewhere in the world. These factors can have a major impact 
on jobs and job creation. However, the mayors of this Nation 
don't want to sacrifice public health for cheap electricity. We 
are looking for a fair and balanced approach that keeps our air 
clean while keeping electric costs down, and also keeps our 
citizens working. We are looking for common sense solutions to 
help us meet our attainment requirements.
    As I mentioned before, many communities have been 
designated in nonattainment for particulate matter or ozone or 
even both. These communities and States they are located in are 
required by the Environmental Protection Agency to meet 
attainment standards between 2008 and 2015. Programs such as 
CMAQ, the Congestion Mitigation Air Quality Program, as well as 
the off-road diesel rules have been developed to assist us with 
our efforts. These programs should be maintained or in the case 
of CMAQ, increased to further those efforts.
    However, these programs are not enough. For many 
nonattainment communities, 40 percent of their air pollution 
comes from coal-fired utilities. That is a major source of 
pollution. We need a common sense solution that requires these 
utilities to install pollution control equipment in a manner 
that is timely and cost efficient. The Conference of Mayors 
passed a policy resolution in 2003 calling on the Federal 
Government to address this problem. Our policy asks that the 
Federal Government set national air emission caps under a 
multi-pollutant plan at levels strong enough to protect public 
health and the environment by substantively assisting cities in 
our efforts to attain the national ambient air quality 
standards.
    We support a comprehensive and synchronized multi-
pollutant, market-based program to reduce regulatory costs to 
maintain reliable energy at a reasonable cost for consumers and 
to provide regulatory certainty to the electric power sector. 
We encourage the Congress to pass national legislation which 
will meet the Conference of Mayors' goals by requiring power 
plants to reduce their emissions of sulfur dioxide, nitrogen 
oxides and mercury by an average of 70 percent from 2000 levels 
by 2020 under a proven, market-based cap and trade program.
    It is my understanding, Senator, that you have introduced 
legislation that reflects many of the concerns of the mayors. 
We appreciate the opportunity to present before you today and I 
will be available to answer any questions the panel may have 
later in this hearing.
    Thank you.
    Senator Voinovich. Thank you, Mayor Young.
    Our next panelist is Mr. Paul, supervisor of the Regional 
Air Pollution Control Agency in the Montgomery County, Dayton 
area. We are glad to have you here with us today.

 STATEMENT OF JOHN A. PAUL, SUPERVISOR, REGIONAL AIR POLLUTION 
           CONTROL AGENCY, ON BEHALF OF STAPPA/ALAPCO

    Mr. Paul. Thank you. Good morning.
    My name is John Paul and I am the supervisor of the 
Regional Air Pollution Control Agency, a six county, local 
agency located in Dayton, OH. I am testifying today on behalf 
of STAPPA and ALAPCO, the National Associations of air quality 
agencies in 53 States and territories in more than 165 
metropolitan areas across the country. I currently serve as the 
vice president of ALAPCO and co-chair of the STAPPA/ALAPCO 
Energy Committee. We are pleased to have this opportunity to 
provide our perspectives on the need for legislation to control 
multiple emissions from electric utilities.
    Over the past 30 years, our country has made substantial 
progress in reducing air pollution while at the same time 
experiencing strong economic growth. However, our Nation 
continues to face significant public health and environmental 
problems as a result of emissions into the air. Each year, air 
pollution causes tens of thousands of premature deaths and 
innumerable health consequences. In the past year, EPA 
designated as nonattainment nearly 500 counties for the 8-hour 
ozone standard and 225 counties for the fine particulate 
standard. In addition, mercury emissions have resulted in the 
issuance of fish consumption advisories in 45 States. Air 
pollution also contributes to visibility impairment, 
eutrophication of waterways and acid rain.
    Electric utilities are by far the largest remaining 
stationary source of air pollution in the United States. They 
are on the order of magnitude greater than the second largest 
source which is refineries which is an order of magnitude 
greater than anything else. According to EPA and others, power 
plant emissions each year are responsible for over 20,000 
premature deaths. Additionally, according to a recent study by 
the Clean Air Task Force, Power plant emissions annually cause 
over 38,000 heart attacks, more than 3 million lost work days 
and in excess of half a million asthma attacks.
    The magnitude of emissions from power plants and the 
serious public health and welfare implications these emissions 
have make controlling utilities a top priority. This is 
especially important in light of the fact that today, nearly 
three-quarters of all utility boilers are over 30 years old and 
continue to operate without modern pollution control 
technology.
    STAPPA and ALAPCO endorse the concept of a comprehensive, 
national strategy for reducing emissions of multiple pollutants 
from electric utilities and have adopted a set of principles 
which I have attached to my written statement outlining what we 
believe should serve as the foundation of a viable strategy for 
power plants.
    We call for expeditious schedules that will allow us to 
reduce emissions consistent with the deadlines by which States 
and localities are required to meet health-based air quality 
standards. We firmly believe that such an approach should 
supplement but not supplant the existing Clean Air Act. In 
addition, we recommend that the most protective national 
emission caps feasible be set at levels that reflect 
installation of the best available controls on all existing 
units nationwide with each existing power plant required to 
meet a minimum level of control by the final compliance 
deadline. Very significantly, States and localities must retain 
their authority to adopt and implement measures that are more 
stringent than those of the Federal Government.
    We used our adopted principles to evaluate S. 1844, 
introduced as the chairman's mark in November 2003. After 
careful study, we concluded that the proposal fails on every 
one of our association's core principles. The utility 
compliance deadlines are too protracted. It will prevent the 
expeditious attainment of air quality based standards. The caps 
are simply not protective enough and there is no minimal level 
of control required by each existing power plant.
    Additionally, we have very serious concerns with the fact 
that this proposal strips away many of our most essential Clean 
Air Act tools and authorities. In fact, that is probably our 
most significant concern. Accordingly, STAPPA and ALAPCO cannot 
support this proposal. Further, based on our preliminary review 
of S. 131, the Clear Skies Act of 2005 introduced just this 
week, it appears that our concerns have not been resolved.
    Although we would prefer that a multi-pollutant approach be 
established through legislation rather than regulation, given 
the serious deficiencies of this legislative proposal and S. 
131, we believe that continued implementation of the Clean Air 
Act will provide far greater and more certain and more timely 
protection of public health and the environment.
    In my written testimony, I have elaborated on each of our 
key concerns and will be happy to address them in more detail.
    On behalf of STAPPA and ALAPCO, I want to thank you for 
this opportunity to present our associations' views on this 
very important issue. We look forward to working with you in 
the days to come.
    Thank you.
    Senator Voinovich. Thank you, Mr. Paul.
    Our next witness is Senator Beverly Gard. Senator, we are 
very happy to hear you. Senator Gard is chairman of the Energy 
and Environment Affairs Committee, Indiana State Senate.

 STATEMENT OF HON. BEVERLY GARD, CHAIR, ENERGY AND ENVIRONMENT 
            AFFAIRS COMMITTEE, INDIANA STATE SENATE

    Ms. Gard. Thank you.
    Mr. Chairman and members of the subcommittee, thank you for 
the opportunity to testify. My name is Beverly Gard and I have 
served as a member of the Indiana State Senate for 16 years. I 
am chairman of the Senate Energy and Environmental Affairs 
Committee and the Public Health Subcommittee. I serve on the 
Environment Committee of the National Conference of State 
Legislators and previously served as the committee chairman. 
Previously I worked as a biochemist in the health care 
industry.
    My approach has been to balance the need for a cleaner 
environment with our responsibility to promote economic growth 
and jobs. Adoption of multi-emission legislation promotes that 
balance. In Indiana, approximately 95 percent of the 
electricity generated comes from coal-fired power plants 
burning over 48 million tons of coal a year. Since the Clean 
Air Act amendments of 1990, sulfur dioxide emissions are down 
45 percent, NOx emissions have been reduced by roughly 70 
percent. Over $3 billion has been spent to reduce emissions 
since 1990 and it is estimated and additional $3 billion will 
be spent to comply with new pending EPA regulations.
    If the Clean Air has worked, why do we need multi-emissions 
legislation? The answer is litigation and uncertainty. Current 
law now includes multiple regulatory approaches to reduce the 
same emissions, despite the development of new regulations by 
EPA to control NOx, sulfur dioxide and mercury, we anticipate a 
protracted court battle before any final implementation. This 
creates uncertainty for the States and utilities with States 
increasingly tempted to point up fingers when the secure 
emissions reductions from outside their economic and geographic 
boundaries.
    Using the NOx cap set in Clear Skies, Indiana utility NOx 
emissions would be reduced by 60 percent in Phase 1 and 70 
percent in Phase 2 based on actual 2003 levels. Using EPA's 
projections, all 24 counties in Indiana out of attainment now 
should be in attainment for ozone by the first phase in 2010. 
Under the new fine particle nonattainment designation of 
January 2005, 14 full counties and 5 partial counties in 
Indiana were labeled as nonattainment. With the sulfur dioxide 
cap set in Clear Skies, Indiana utilities' sulfur dioxide 
emissions would be reduced by 69 percent in Phase 1 and 79 
percent in Phase 2, again based on actual 2003 levels. Using 
EPA's projections for the impact of Clear Skies, all counties 
in Indiana should be in attainment for fine particles by the 
first phase in 2010.
    Another benefit that a multi-emissions bill will provide is 
mercury reductions enabling utilities to integrate all three 
emission reductions required under Clear Skies and can achieve 
even more significant reductions in cost savings than we 
experienced from the acid rain title in the 1990 Clean Air Act 
amendments which minimizes the financial impact to consumers. 
Much of the debate around multi-emissions focuses on how much 
and how fast. Reducing mercury is important, but there is also 
considerable debate about the role of utility emissions in 
reducing mercury levels in fish. Mercury is transported far and 
wide in counties burning coal with no controls and also 
contributes significantly to mercury levels in the United 
States. A phased-in reduction over reasonable time periods will 
provide the appropriate time needed to build scrubbers, SCRs 
and particulate controls which will help to achieve a large 
portion of mercury reductions. This approach also provides the 
time needed to test new mercury specific controls that are 
necessary to meet the more stringent Phase 2 cap. These 
reductions are not cost free. We need to ensure that caps are 
achievable without breaking the bank.
    I ask you today to work to make multi-emissions legislation 
achievable and balanced. Do not disadvantage Indiana coal or 
the economies that thrive on that industry but I also urge you 
to enact legislation now. Even today, States must begin the 
rigorous and time consuming process of crafting State 
implementation plans even without a final EPA rule. Only 
Congress can take the guesswork out of this public policy issue 
by passing legislation that sets us on a schedule which will 
result in steep reductions in power plant emissions while 
minimizing the cost to the consumer. Clear Skies meets that 
goal. Delay only brings with it continued emissions and 
escalating costs.
    I will close by asking that you work together irrespective 
of political party or geography to pass this vitally important 
piece of legislation. I look forward to working with you to 
help make this legislation a reality.
    Thank you.
    Senator Voinovich. Thank you, Senator Gard.
    We appreciate our witnesses being here this morning. Our 
first round will be 5 minutes for each Senator.
    Mayor Young, one of the complaints about Clear Skies is 
that it simplifies and modernizes the Clean Air Act, especially 
some of its highly litigated and uncertain provisions. In your 
recent State of the City address, you noted the importance of 
brownfields redevelopment to Augusta. The Conference of Mayors 
reported in a 2001 study, some cities have found that the NSR 
permit process burdens industry with additional costs, 
uncertain project approval time lines and therefore may not 
have an effect on business decisions concerning expansion or 
location in urban areas are designated nonattainment. This 
situation, in conjunction with the costs involved in cleaning 
up brownfield sites makes it potentially difficult to attract 
manufacturing industries to cities seeking to incorporate them 
in the redevelopment mix.
    I know that urban development remains an important 
objective for both the economy and ecology of our cities. Does 
it then make sense to replace our current litigate first, ask 
questions later approach with a workable multi-emissions 
trading program that provides certainty to businesses and 
reduces environmental costs?
    Mayor Young. Mr. Chairman, you are absolutely right. The 
Conference of Mayors supports the multi-pollutant approach as 
embodied in the bill. One thing that we have to consider is it 
is not all about bringing new jobs and new businesses to your 
community because 85 percent of the new jobs are going to be 
created by businesses already in your community. They have to 
be able to expand, be able to grow, be able to get the permits 
they need to produce more. We believe this legislation will get 
us there.
    Senator Voinovich. I am glad you raised that issue because 
I know one of the problems I had when I became Governor was 
there were a lot of businesses that were talking about 
expanding and basically said to me, no way, Jose, am I going to 
do it in nonattainment because I don't know what the costs are 
going to be to my business. If you looked at the chart I put on 
the board, there are a lot of communities in this country today 
that without legislation at this time that are going to have 
wait until their States come up with a State implementation 
plan which will be 2008. So we have this long period of 
uncertainty where everybody is going to be in limbo in terms of 
what they should not do.
    Senator Gard, as we heard today, some claim that the 
existing Clean Air Act does more than Clear Skies. Some argue 
that the rules proposed by the Administration, the Clean Air 
Interstate Rule and the Mercury Rule are better than Clear 
Skies. How do you respond to that? I know in his testimony, Mr. 
Paul said, Any multi-pollutant strategy must ensure that 
regions, States and locations retain their authority to adopt 
or implement measures that are more stringent than those of the 
Federal Government. I agree with Mr. Paul on that point. I want 
to underscore that in the bill nothing in this section shall 
preclude or deny the right of any State or political 
subdivision to adopt or to enforce any regulation, requirement, 
limitation. How do you react to Mr. Paul's claim that this 
doesn't do more than what we already have on the books?
    Ms. Gard. Right now the legislation we have on the books 
certainly served the purpose during the early years of the Act, 
but as demographs change, as States' priorities change and 
technology changes, I think we need to have the regulatory 
certainty that we would see in Clear Skies. Over the last few 
years, there has been protracted litigation as you well know 
dealing with implementation of clean air regulations.
    We need to move on with actually doing something that will 
provide for cleaner air without going through protracted 
litigation. In Indiana we have a significant loss of 
manufacturing jobs, over 150,000 manufacturing jobs in the last 
3 years. We need to be competitive in attracting those new jobs 
to Indiana. We need to make sure that the coal industry remains 
a vital part of our economy in Indiana while having the 
certainty of regulation and meeting those goals that Clear 
Skies lays out which I think will provide for cleaner air and 
preserve the economies in our State.
    Senator Voinovich. Mr. Paul, you work for an organization 
that is a regional enforcement agency. One of the things that 
perplexes me is that the U.S. Conference of Mayors, the 
National Association of Counties, the National Conference of 
Black Mayors and many Governors have all passed resolutions 
supporting the reduction goals and timelines in Clear Skies. It 
seems to me that your organization's point of view on this 
legislation is contrary to the elected political officials in 
your respective regions. How do you respond to that?
    Mr. Paul. Mr. Chairman, because we represent all the States 
and all the local air pollution control agencies, the directors 
of those agencies, we recognized early on when different 
proposals were coming out that it would be difficult for us to 
respond to each proposal and take positions, so we decided to 
adopt principles and then we could compare those principles to 
any piece of legislation that comes out. That is what we did. I 
personally am very high on accountability and I recognize the 
accountability that we have to the legislature. I see that our 
goal is to let you know what we feel would be the implications 
of any legislation and that is what we have tried to do here.
    Senator Voinovich. Senator Carper?
    Senator Carper. It is difficult for one air regulator or 
one mayor or a Governor or a member of the Democratic Caucus or 
the Republican Caucus to speak for all of us. We have different 
views and I really applaud the idea of trying to lay out the 
principles. In fact, that is probably good advice for us, to 
say what are the principles we should subscribe to as we 
attempt to put together a bipartisan clean air bill.
    You mentioned the principles that the organizations had 
developed and felt we should consider as we craft legislation. 
I understood you to say that Clear Skies fell short on most if 
not all of those principles. Senator Jeffords has legislation 
that is an alternative to Clear Skies. I, along with several of 
my colleagues, alternative legislation. I have no idea if you 
are familiar with either of our proposals but first of all, can 
you sort of quickly summarize the basic principles that you 
think should underlie the work we do in this area and two, if 
Clear Skies falls short on most or all of those, can you give 
us any thoughts as to whether or not Senator Jeffords or our 
bipartisan proposal might come closer to the mark?
    Mr. Paul. Attached to my testimony are our principles. Also 
attached to my testimony is a chart labeled Attachment No. 3 
where we took each of the principles that we are aware of right 
now, put the caps, put in deadlines and compared those to how 
our principles would play out. The big concept that we are 
after here is that we have these 1,166 coal-fired power plants 
operating in the United States; 70 percent are 30 years old or 
older. They are facing decision points of where they either 
need to phase these out and build newer, more efficient, better 
controlled boilers or they need to renovate those boilers and 
we think at the same time add air pollution control.
    It has always been our position that when you spend money 
on a source, when you install it or when you modify it, that is 
the time to put on the best available control technology. We 
believe this can be done in an expeditious manner. We believe 
that the deadlines in the Clean Air Act for meeting the health-
based standards are important, that there are lives lost every 
year those are delayed. So our principles call for stringent 
caps based on best available control technology and stringent 
timelines to meet those.
    Senator Carper. Any early thoughts on how Senator Jeffords' 
proposal or my bipartisan proposal might fare when matched to 
those principles?
    Mr. Paul. Senator Jeffords' proposal comes the closest to 
ours. Yours also comes very close. It is interesting, in some 
the deadlines fit better with ours and some of the caps fit 
better with ours. Certainly one of the big concerns we have 
that both of you address, you address it some Senator Jeffords 
completely, is the stripping away of the new source review 
regulations, the 126 petitions, the tools that we have if this 
legislation doesn't go far enough for a particular State or 
locality. It is a mixture. Obviously both of yours are much 
closer to ours.
    Senator Carper. Thank you. I want to quote an esteemed 
climatologist whose name is Steven Stills. He once wrote, 
``Something is happening here. Just what it is ain't exactly 
clear. I said earlier in my opening statement there was a time 
when I didn't put much credence to this notion of global 
warming. As time goes by, I am more convinced that something is 
happening here and we need to do something about it.
    In my old job dealing with businesses, I talked to them 
about things they didn't like. I did a lot of customer calls. I 
still do them with major employers in our State and smaller 
ones as well. They told me among the things they didn't like 
were high taxes, elected or appointed officials who wouldn't 
listen to them, didn't like rigid regulations, didn't like 
uncertainty. They really didn't like uncertainty. One of the 
virtues of our developing a bill that not only addresses sulfur 
dioxide, nitrogen oxide, mercury and carbon is it provides a 
measure of certainty. If you look at the utilities and the 
folks in the energy business supporting the approach some of us 
have embraced, one of the reasons they like it is because of 
the certainty that it provides.
    Let me ask each of you to comment on that certainty and 
whether you think that is a virtue as well. Mayor Young?
    Mayor Young. From the standpoint of the U.S. Conference of 
Mayors, a bipartisan organization, we reached our resolution by 
consensus of Democratic and Republican mayors, I would say that 
we have not taken a position with respect to carbon-based 
pollution. Although the mayors themselves have expressed 
concern about the change in the climate as a result and many 
mayors have established for themselves 10 percent goals of 
reducing greenhouse emissions in their communities, we would 
say from our perspective by addressing the NOx, the SOx and the 
mercury in a comprehensive way, that is a great step forward 
for our communities.
    One issue we always have to look at is affordability. Those 
of us who are mayors in urban centers typically represent 
populations of high poverty, 28 percent of the people who live 
in the city of Augusta, 28 percent of the 200,000 people who 
live there are categorized at the poverty level or below. We 
have to be sensitive as we look at policy as to what cost is 
something going to have to them. We provide them with indigent 
health care, so we are dealing with the health effects on one 
side. Likewise many we are subsidizing through public housing 
or in other ways and they have energy costs they have to deal 
with.
    With respect to what is on the table today, it works for 
us. You add carbon to the mix, we haven't taken a position on 
that.
    Senator Voinovich. Senator Carper, I think we should move 
on and if these witnesses want to comment later on about your 
question, we can do that.
    Senator Inhofe.
    Senator Inhofe. I often say to my colleagues in the Senate, 
if you want a tough job, be a mayor. Senator Voinovich and I, 
25 years ago, were both mayors and we know when you are a 
mayor, there is no place to hide, you are closer to the people. 
I appreciate what you have done.
    We had an excellent witness from Ohio, the Catholic 
Charities, Tom Mullen. He testified before us and the chairman 
mentioned him in his opening remarks. He said, ``The conversion 
to natural gas from coal would have a devastating effect on the 
people of Ohio and our country, particularly the poor and the 
elderly,'' which he is in the business of protecting. ``The 
most vulnerable of our people economically would see their 
electric costs in Ohio soar to $494 million by 2010 and to $1.5 
billion in 2020.'' That is in Ohio. Have you done any 
calculation as to the economic damage done to the poor in your 
State?
    Mayor Young. Senator, not in our community specifically and 
I haven't seen any national figures as it relates to cities but 
I think when we look at the cost of what our social programs, 
what percentage of our local budgets, our city budgets we are 
paying to support social services to our citizens, we can see 
that any tick anywhere in any service we are providing is going 
to one, hurt us and it is going to hurt those consumers at the 
lowest rung of the ladder. That is something we have to be 
sensitive to in every policy decision we make.
    Senator Inhofe. Senator Gard, what about your State? It is 
pretty close by and has a lot of things in common with Ohio?
    Ms. Gard. I hear from constituents on a regular basis about 
concern over the rising natural gas prices. As you know, 95 
percent of Indiana's electricity is generated through coal-
fired generating facilities. We have the ninth lowest electric 
rates in the country. Those people using natural gas would very 
much like to be able to see the economic advantage we would 
have I think approaching a multi-emissions legislation such as 
you propose in Clear Skies. It would have economic value, 
certainly have regulatory certainty and provide our industries 
could remain competitive.
    Senator Inhofe. Mr. Paul, in your written testimony, saying 
this in a very friendly way because I don't have the background 
that would enable me to determine whether or not this is 
possible, you say you would propose an interim emissions cap of 
15 to 20 tons per year of mercury to be achieved by 2008. We 
are talking about 3 years out, close to a 60 to 70 percent 
reduction in that short period of time. Do you really believe 
this is sufficient time when you consider you would have to 
enact legislation and regulations, obtain financial approval 
such as bond approvals, required State permits, design and 
install equipment, go through all these steps. You mentioned 
over 1,100 coal-fired power plants that would be affected by 
this and all of that in 3 years. How can it be done
    Mr. Paul. We put in interim caps to make sure that progress 
is encouraged and progress is made toward the ultimate caps. We 
recognize that the current MAC rule, the current regulations in 
the Clean Air Act there are provisions for extensions should 
they be necessary. Our goal is to make sure there is good 
progress.
    Senator Inhofe. So these are not hard and fast goals that 
must be achieved or you are out of business, it closes down?
    Mr. Paul. That is correct.
    Senator Inhofe. Give me a general idea on what type of 
option they would have at the time they find it is impossible 
for them to comply? You said there are some provisions that 
allow an exemption from these deadlines?
    Mr. Paul. There are provisions within the Act that allow 
for an extension. The Administrator can issue an extension for 
1 year. Then there are provisions in the Act for the President 
of the United States also to provide 2-year extensions under 
the MAC rules, under Section 112 of the Clean Air Act.
    Senator Inhofe. I wonder if people, given impossible goals, 
which I would believe they would be and I think probably most 
would agree, if that would be as effective as having an 
achievable goal that is further out. That doesn't require a 
response.
    Senator Gard, one of the fundamental aspects of Clear Skies 
is not simply that it caps emissions at 70 percent but that it 
establishes a trading system of allowances based on the Acid 
Rain Program. My understanding is that there are virtually no 
violations of this program. I would ask has that been your 
experience in Indiana and do you believe Clear Skies would work 
the same way for SOx and NOx and mercury as it did in the Acid 
Rain Program?
    Ms. Gard. Yes, I do. I think the Acid Rain Program has 
certainly shown, the cap and trade program has shown that it 
works. There are quantifiable results. I think the cap and 
trade program would provide the kind of incentives that 
industry and utilities need to make those sorts of financial 
commitments to reduce their emissions and provide economic 
incentives to do so.
    Senator Inhofe. The last question would be for each one of 
you to respond. The Clear Skies initiative as we said before is 
the most aggressive that any President has ever come forth with 
in reducing pollutants. There are many who want to get into the 
debate which we have been in many times before on 
CO2. I would ask the question, would we be better 
off to pass nothing and not have the caps and not have the 
aggressive reduction in pollutants on NOx, SOx and mercury if 
we did not include CO2 as a pollutant? Just yes or 
no, do you think we would be better off to pass nothing at all 
or to pass the Clear Skies bill as it is written?
    Mayor Young. Again, the U.S. Conference of Mayors has not 
taken a position with respect to CO2.
    Senator Inhofe. Have they taken a position as far as Clear 
Skies is concerned?
    Mayor Young. We have taken a position with respect to the 
principles embodied in Clear Skies but not to that specific 
piece of legislation. We support the multi-pollutant, market-
based approach with cap and trade.
    Senator Inhofe. Mr. Paul.
    Mr. Paul. STAPPA and ALAPCO also have not taken a position 
with regard to CO2, but we do believe that 
enforcement of the Clean Air Act as written now with CARE, the 
Utility MAC, would be preferable to Clear Skies.
    Senator Inhofe. Senator Gard.
    Ms. Gard. Clear Skies provides the kind of guidance that we 
need to meet those attainment standards that many of our 
counties are under. With respect to carbon, carbon is not a 
pollutant that has quantifiable health standards such as the 
pollutants that are addressed in Clear Skies and Clear Skies 
needs to focus on the three pollutants.
    Senator Voinovich. Senator Jeffords.
    Senator Jeffords. As you know, the Clean Air Act has 
specific deadlines for areas to achieve attainment of the 
national health-based air quality standards. For every year we 
delay that attainment, it causes or contributes to an 
additional 25,000 premature deaths from fine particles, more 
than 4,000 premature deaths from ozone exposure, thousands of 
heart attacks, hundreds of thousands of asthma attacks and 
millions of lost work days. Do you believe that we should amend 
the Clean Air Act, delay the attainment deadlines in existing 
law and suffer these consequences?
    Mayor Young. First, let me thank you for your leadership on 
this issue. You have been a very active player and from the 
perspective of the mayors, we appreciate your engagement. That 
is a loaded question, there is no doubt. From our point of 
view, I don't see that things are going to be delayed from the 
information presented to us, particularly people from the 
industry tell me that with a bill like Clear Skies they feel 
they can meet their attainment levels or compliance levels 
fairly early, fairly quickly, not waiting until 2018 to do the 
work.
    Probably the best answer I could give you would be we don't 
feel, from our perspective, that anything is being sacrificed 
in meeting the clean air standards under the Clean Air Act with 
the implementation of a bill that embodies the principles of 
Clear Skies.
    Senator Jeffords. Mr. Paul?
    Mr. Paul. I think it is a fair question and I think one 
that you need to consider. Certainly there will be costs to 
more timely implementation and more timely compliance but there 
are also costs to delayed compliance and I am glad it is you, 
the Senate, that has to weigh those and not necessarily us. We 
feel our obligation is to tell you what we think is achievable 
and what we think are the implications of that. I think you are 
correct when you identify the health implications of delay and 
that is why we advise tighter caps and more timely caps.
    Ms. Gard. I think now that litigation is delaying 
compliance with clean air standards, we need to make sure that 
we have goals that are achievable and also goals that are 
affordable. It is not going to make a whole lot of sense to 
clean up our environment and not have jobs and health care 
insurance for our citizens. I think Clear Skies provides the 
kind of timeframe that is achievable, has quantifiable results 
and is the kind of tool that we, as States, need to achieve 
those goals. I think you will see the results are going to be 
far greater than we have seen under some of the current 
policies.
    Senator Jeffords. I would note all the versions of the 
Clean Air Act allows areas to delay attainment.
    A couple of years ago, we had a prestigious panel of 
scientists tell this committee that increasing greenhouse gas 
emissions increases the risk associated with global warming. 
According to EPA modeling, the Clear Skies approach will result 
in a 13 percent increase of an additional 425 million tons in 
carbon dioxide emissions as compared with the base case. Do you 
think it makes sense for Congress to ignore the contribution of 
power plants to global warming?
    Mayor Young. Here again I am not trying to dodge your 
question but the Conference has not taken any position with 
respect to legislation that would include CO2 as a 
pollutant. Here again the mayors are concerned about the 
addition of CO2 and its effect on the environment, 
global warming and we would welcome engagement in any 
discussion with respect to dealing with CO2 
emissions.
    Mr. Paul. We do feel it should be addressed. Certainly if I 
were a CEO of a utility, going back to the issue of certainty, 
I would want it addressed. To the extent that one of the 
purposes of this bill is to provide certainty, it should 
address CO2 emissions.
    Ms. Gard. I think the science of global warming continues 
to be debatable with a number of questions. Greenhouse gases do 
need to be addressed, but I would suggest they need to be 
addressed in a different forum and move forward with three 
pollutant legislation which addresses emissions that have 
quantifiable health problems, address the carbon issue in 
another forum.
    Senator Jeffords. How would you advise this committee to 
determine whether the value of existing provisions of the Clean 
Air Act are worth more in health and environmental benefits 
than any possible replacement provisions? What kind of 
information would you use? For example, the National Academy of 
Sciences told us about 2 weeks ago that it is unlikely that 
Clear Skies would result in emission limits at individual 
sources that are tighter than those achieved when NSR is 
triggered at the same source.
    Mayor Young. As a policymaker, I would have to weigh the 
benefits to health, weigh the costs to the consumer in the end, 
weigh what effect it would have on the attainment, my 
community's ability to get into attainment as quickly as 
possible and in a manner reasonable for the community. I would 
also have to look at the effect of jobs in my community, would 
it have a positive or negative effect on the economy. If we are 
in an environment where we have different States making 
different decisions that affect communities across the border 
which is the situation we are in, our environmental issues stem 
from a coal-fired plant across the Savannah River in South 
Carolina. Even though we have our early action plan, there is 
nothing we can do as a community or the State environmental 
regulators in Georgia can do to impact what goes on at a coal-
fired plant in South Carolina. So to us, from my perspective as 
the Mayor of Augusta and as the energy chairman representing 
the U.S. Conference of Mayors here today, it appears the multi-
pollutant approach under Clear Skies that gives us that 70 
percent reduction in the three pollutants at the same time 
keeping energy affordable, jobs in the community and improving 
the health benefits to us is the way to go at this time.
    Senator Voinovich. I would appreciate it if the witnesses 
would try and make it as quick as you possibly can. We have 
exceeded our time.
    Mr. Paul. I would remind myself if I were you that a clean 
economy is a healthy economy and I would look for the best 
controls, I would look at the National Academy of Science 
report and use that as evidence that indeed we can do better.
    Ms. Gard. The health and environmental benefits cannot be 
separated from the economic and the cost benefits as well. As 
long as we continue to debate and litigate and not move forward 
with well defined standards, the breathing public is going to 
continue to be at risk. I suggest we move forward with three 
pollutant legislation with achievable, affordable goals.
    Senator Voinovich. Senator Lautenberg?
    Senator Lautenberg. Thank you all for your testimony 
because one thing happens as this Senator listens, it is very 
clear that there are those of us who are concerned about the 
health effects, about what happens with global warming and are 
so concerned about it only because we read about what is 
happening in Antarctica. I have been to the South Pole 5 years 
ago and the diminution of the ice caps there, the reduction of 
the availability of fresh water, 70 percent of the fresh water 
available in this world was stored in the ice in Antarctica. 
Therefore, Mayor and each one of you, I say this with all due 
respect, you say the organization you are representing here 
today doesn't take a position on carbon dioxide, how do you 
feel about it personally? You are a mayor, you are concerned 
about the well being of your citizens. Do you think it is 
something we can turn a blind eye to and let it go?
    Mayor Young. No, and when I say we don't take a position 
with respect to it, I mean in the context of this legislation, 
we have not taken a position. Certainly mayors across this 
country are concerned about the effects of greenhouse emissions 
on our environment. We are very concerned about it and I think 
at the appropriate time perhaps Congress will address it not 
just as it pertains to one segment of our economy, not just the 
energy industry, but our country as a whole.
    Senator Lautenberg. But since the energy industry is the 
biggest supplier of toxic emission, wouldn't this be an 
appropriate time to say, this is what my organization says but 
I really think it is a poor idea not to include it in these 
discussions that we are having because again, the threats are 
enormous. Do we want to wind up like Australia where children 
who go to the beach have to wear full bathing suits, hats and 
the incidence of melanoma is the highest among the developed 
countries in the world. To me it seems we should be vitally 
concerned about it and moving to at least acknowledge that 
maybe this ought to be included as soon as we can. I think it 
would be encouraging.
    You come with a perspective, you know the business very 
well and you serve a good community but maybe it is hard to 
break ranks. We have seen that around here sometimes.
    Mr. Paul, one of the things we hear about, and I note in 
Senator Gard's testimony the fact that we wind up with more 
litigation if we don't move on with this legislation but I 
think if we do, it allows existing Clean Air Act programs to be 
abandoned and compliance deadlines extended far into the 
future. Won't this generate more litigation than simply 
implementing our current law?
    Mr. Paul. I would personally agree with you. The 
uncertainty that is out there right now is caused by 
litigation. Most of the litigation is from the utility 
industry. There is certainty there. If they want to meet the 
current laws, they could simply meet the current laws and there 
would go the uncertainty. I heard earlier today that within 
Clear Skies there are 27 different points that this person who 
was talking to me feels will be litigated.
    Senator Lautenberg. So we are looking at more, not less. 
Senator Gard in your testimony, you say the answer, referring 
to the 15 years after passage of the 1990 Clean Air Act, so if 
the Act has worked, why do we need new multi-emission bills? 
The answer is litigation and uncertainty. Mr. Paul just said 30 
of the lawsuits in the last 15 years against EPA have been from 
industry, not from the environmental community. Are the 
litigants people we ought to be listening to or do they want to 
improve the regulation of these emissions?
    Ms. Gard. Yes, the people that I represent want to improve 
regulation of emissions. I think we feel it can be done in a 
much more consistent fashion by doing a three-p legislation. 
The Clean Air Act met the goals that were intended when it was 
passed a number of years ago. Economies change, technology 
changes, demographics change which I think means we have to go 
back and revisit those issues which I think Clear Skies does 
and provides that degree of certainty that is achievable and is 
affordable and will improve health standards far greater than 
we have seen ever before.
    Senator Voinovich. We have a vote coming up now. We have 
about 7 minutes left. I don't want to keep the panel. I would 
like to go on and let Senator Obama ask questions and have you 
respond and we will recess.
    Senator Lautenberg. And you will keep the record open?
    Senator Voinovich. Yes, we will. Then we will excuse this 
panel and tell the other panel we will get back as soon as 
possible so we can get started.
    Senator Obama.
    Senator Obama. I will be brief.
    Senator Voinovich. I want to thank you for sticking around.
    Senator Obama. That is how you learn, I hear, by listening.
    I think I just want to clarify a couple points. One, a 
point I think Senator Lautenberg was alluding to, that when we 
talk about the desire for consistency and predictability, a 
goal I think all of us share, that does not in and of itself 
answer the question of what kind of regulatory regime we set 
up. You could be very consistent with a very high standard of 
emission controls or you could be very consistent with no 
enforcement of any emissions controls. I will start with you, 
Mr. Mayor, is that a fair statement, that consistency and 
predictability in and of itself doesn't really tell us what to 
do, it is a good goal for us to achieve but it doesn't tell us 
where we set the bar?
    Mayor Young. You are absolutely right, Senator, but we feel 
through our resolution, the goals that we have asked to be met 
are achievable are reasonable and are going to give us cleaner 
air and a healthier population and it is going to give us that 
70 percent reduction.
    Senator Obama. Fair enough but I think it is important for 
us to recognize that the real argument is not whether anybody 
wants consistency and predictability, the real argument is what 
are the standards when we set these things and the argument I 
think that State Senator Gard, and as a former State Senator, I 
am pleased to see you, I think the argument you are making is 
you feel the current clean air standards are sufficiently harsh 
and/or inflexible, that they compel litigation on the part of 
utilities and if we had a more flexible and perhaps less 
Draconian regime, then we'd have less litigation and the 
utilities would be happier. Is that a fair characterization of 
your point?
    Mayor Young. I would say what you have now are 50 different 
regimes enforcing it. This legislation gives you a national 
standard.
    Senator Obama. My understanding from Mr. Paul is we are all 
in agreement, Senator Jeffords, Senator Carper, and people 
agree with the idea of having a national standard. The question 
is, what is the standard. So for me who is new to this 
committee, I am very mindful of the local economic concerns. I 
guess part of what I have to figure out is not whether I want 
to achieve consistency and uniformity and predictability all of 
which I think are good things, I want to achieve those things, 
but rather what kind of national standard do we set and would 
the national standard presented by this bill be an improvement 
over the system we have established under the Clean Air Act.
    Mr. Paul, I am not a scientist and my understanding when I 
read your statement was, too protracted, not tough enough, 
strips away tools like new source review. That is the essence 
of why your organization is opposed to this bill. Is it your 
position that if we did nothing and kept the Clean Air Act 
regimen currently in place that we would see better air 
quality, more improvements over the next 15, 20 years than we 
would under this new bill or are you saying the new bill simply 
is not as good as what you would like to see or others in the 
environmental community would like to see?
    Mr. Paul. We believe that enforcement of the current Clean 
Air Act is preferable.
    Senator Obama. When you say preferable, you are saying our 
environmental quality will be better?
    Mr. Paul. Yes. Certainty is important. The public wants 
certainty that the air they breathe is safe, the fish they eat 
are safe. Companies want certainty that when we go to them and 
say we want you to control to this extent that is sufficient to 
provide certainty, that we are not back at them 10 years from 
now. I think legislatures want certainty that when we say if 
you pass this bill, this will provide for clean air and we 
won't be back to you in 10 years. Those are the elements I 
would look for in a bill if I were you.
    Senator Obama. Obviously I have just scratched the surface 
but I know we have a vote. I appreciate your giving me that 
time despite the fact we are rushed.
    Senator Voinovich. The question period for these three 
witnesses is going to be over so we can submit questions and 
get answers from you. Thank you for being here today.
    We will recess this hearing for the next panel. I think 
your group did a good job of analyzing Clear Skies. Without 
objection, I am going to insert in the record some memorandum 
that deals with some of the positions you have taken in terms 
of this legislation and counteract some of the things you have 
had to say and perhaps you might have a chance to see it in the 
record. I would be interested in your getting back to me about 
your reaction to the reaction this memo has.
    Mr. Paul. I would be very happy to do that.
    [The referenced document follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Voinovich. Thank you very much. I appreciate you 
being here.
    [Recess.]
    Senator Voinovich. Senator Carper is on his way so let us 
get started.
    Our first witness is Ronald Harper, CEO and general manager 
of Basin Electric Power Cooperative. Our second witness is 
Conrad Schneider, advocacy director, Clean Air Task Force. Our 
third witness is Fred Parady, manager, Environmental Services, 
OCI Wyoming L.P. We will start with you, Mr. Harper.

          STATEMENT OF RONALD HARPER, CHIEF EXECUTIVE
 OFFICER AND GENERAL MANAGER, BASIN ELECTRIC POWER COOPERATIVE

    Mr. Harper. Thank you for the opportunity provided to us to 
participate in this hearing.
    Basin Electric is a member-owned, generation and 
transmission cooperative located in Bismarck North Dakota. We 
serve the energy needs of a 120-member distribution cooperative 
throughout a 9-State region. Member-owned simply means we 
provide electricity needs to those who own us. As a 
cooperative, they own us.
    They gave us a mission back in 1961 when Basin Electric was 
formed and that was to provide low cost energy and make it 
reliable. The visionary leaders back then selected coal to be 
utilized as the fuel that would fuel the generating stations we 
have with us today. That was 44 years ago and today we utilize 
not only lignite coal but also subbituminous.
    When we look at the Nation's energy supply, 50 percent of 
the Nation's energy is supplied by coal and we think that is 
very important. It is important with respect that we have the 
continued ability to burn coal in this country, not only from 
Basin's perspective, but the economy as a whole. We think it is 
critically important. It not only enhances our energy 
independence which I know is a great focus of this Congress as 
well as providing security for that energy independence.
    I want to talk about three points. I heard the chairman say 
earlier that our testimonies would be included in the record, 
so I am not going to go through those. Environmentally 
sensitive, we think S. 131 will provide reductions greater than 
under the current law and we think it will provide them sooner. 
We look at that from the respect of the studies done by other 
agencies as a part of this.
    We have heard a lot of talk about certainty throughout the 
earlier discussions. I would tell you we believe by having 
targets out there on SOx, NOx and mercury, does provide those 
targets and gives us something to shoot for, if you will. I 
heard a lot of discussion about legislation versus regulation 
and we believe if it becomes legislation, that it will remove a 
lot of the litigation that is currently underpinning some of 
the issues going on.
    Senator Voinovich. In other words, you believe that passing 
legislation will remove some of the litigation in that the 
litigation is based on regulations?
    Mr. Harper. Yes, sir. I think as we look at the litigation 
currently, it is really coming about because there are 
questions as to how regulations are being applied. Again, it 
provides us with certainty and will help in our planning 
efforts.
    Last, flexibility gives us options on how to meet the goals 
with a target set forth under this legislation. It will allow 
us to look at all forms of technology and to install the 
appropriate technology or in this case, take advantage of the 
cap and trade program that has been utilized for many years 
under the Acid Rain Program and I think is a good tool that 
could be reviewed. Common sense decisionmaking will also help 
us to meet that end game.
    I want to close by saying that when Basin Electric looks at 
the proposal of Clear Skies, we support it, we think it gives 
us that certainty and that flexibility. We also recognize it 
will be expensive. As I take you back to our mission of 
providing low cost and reliable energy, that will not come 
without its challenges but we think it is in the long term the 
best thing for us to do as an organization as well as the best 
thing for us to do as a Nation.
    Again, thank you for allowing us to come forward and offer 
testimony. We look forward to working with you and the 
subcommittee as this process moves forward.
    Senator Voinovich. Thank you, Mr. Harper.
    Mr. Schneider.

STATEMENT OF CONRAD G. SCHNEIDER, ADVOCACY DIRECTOR, CLEAN AIR 
                           TASK FORCE

    Mr. Schneider. Thank you. My name is Conrad Schneider. I am 
the Advocacy Director of the Clean Air Task Force. The Task 
Force has supported multi-pollutant legislation since we were 
founded in 1996. We appreciate the opportunity to testify here 
on the Clear Skies bill.
    In our advocacy we represent a host of national, State and 
local environmental groups including ones in your State and 
today in addition to our own, I am representing the views of 
Clear the Air, the National Environmental Trust and also the 
U.S. Public Interest Research Group.
    Why are we here? We are here because power plant pollution 
is the single greatest contributor to our Nation's air 
pollution problems, whether death and disease from soot and 
smog, acid rain, mercury contamination in fish, hazy vistas in 
our national parks or the threat of global warming. No other 
source rivals power plants as the cause of a variety of so many 
serious problems.
    We have principals too with respect to how we judge this 
legislation. Our first principle is do no harm. We should 
strengthen and not weaken the Clean Air Act. Second, we should 
begin to address global warming through mandatory emission 
limits. The so-called Clear Skies Act does neither. We are here 
to urge that you oppose it. Clear Skies will lock us into a 
path that guarantees that we will never solve these problems. 
That is because Clear Skies trades weak, delayed pollution caps 
in exchange for the repeal of most of our current clean air 
safeguards and misses a crucial opportunity to begin to deal 
with global warming.
    First, the Clear Skies bill offers only half measures 
compared to the requirements of current law. It offers 
pollution reductions that are too little, too late to meet our 
Nation's clean air objectives. EPA's own analysis demonstrates 
that the reductions are not fully effective until 2025 or 
later. At the same time, Clear Skies would jettison most of the 
current clean air requirements for power plants, thereby making 
further progress with this sector impossible.
    Specifically, Clear Skies repeals or undercuts title limits 
on new power plants, requirements that plants meet modern 
pollution standards when they upgrade their facilities and 
protections from air toxic risk. With the introduction 
yesterday of the latest version of the bill, we can see it 
seems to be a Trojan horse for a broader dismantling of the 
Clean Air Act. Clear Skies, in our view, would function much as 
a computer worm sabotaging the inner workings of the Act and 
nullifying its effectiveness. Most insidiously, Clear Skies 
would delay from 2010 to 2015 the date by which most areas have 
to meet health-based air quality standards. EPA has calculated 
that attainment of the fine particle standard alone would save 
an estimated 15,000 lives per year. That 5-year delay would 
mean 75,000 unnecessary premature deaths.
    Clear Skies fails to address the threat posed by global 
warming from the world's single largest source of carbon 
dioxide, the U.S. power industry which was responsible for 10 
percent of the world's CO2. In fact, Clear Skies 
locks the power sector into a path of increasing carbon dioxide 
emissions for the foreseeable future.
    It need not be that way. American Electric Power and 
Synergy very recently described workable programs that could 
begin to manage carbon pollution without economic dislocation, 
shifting energy mix from coal to gas or excessive increases in 
electricity bills for consumers. Similarly, the bipartisan 
National Commission on Energy Policy recommended mandatory 
limits on carbon and this was endorsed by the United Mine 
Workers. Congress should not pass multi-pollutant legislation 
unless carbon dioxide is part of it.
    Fortunately, we are not stuck with a choice between Clear 
Skies on the one hand and no progress on power plant pollution 
on the other. The EPA Administrator has on his desk right now 
three rules that could yield substantial progress in cleaning 
the air without damaging the underlying Clean Air Act. First, 
the Clean Air Interstate Rule that addresses soot and smog in 
the east could if strengthened represent a major step forward. 
The Pending Clean Air in the Parks rule could address these 
pollutants in the West. Likewise, EPA has pending before it a 
regulation to control hazardous air pollutants from power 
plants including mercury. The weight of the evidence supports a 
90 percent reduction.
    Legislating on this issue at this time would be premature 
when the Administrator with the stroke of a pen could finalize 
strong power plant rules which together would provide a multi-
pollutant approach. Right now the caps in Clear Skies and those 
regulations mirror each other. Given this, one must conclude 
that the major impetus for this legislation at this time is to 
ensure that those caps are coupled with the statutory rollbacks 
in this bill. In fact, the biggest selling point today for 
Clear Skies is its offer of regulatory certainty for polluters. 
It is hard to imagine how we could have certainty without 
CO2 but even with respect to litigation, here is the 
bill. It is 250 pages long and although it was released 
yesterday, a preliminary read does find they would require the 
EPA Administrator to make no fewer than 27 separate findings 
and regulations, most or all of which could be challenged by 
litigation.
    What certainty does that offer for breathers, people who 
want to eat fish without fear of contamination from mercury or 
want to see the view when they go to the national parks? Clear 
Skies offers only the certainty of failure because it fails to 
achieve sufficient cuts in pollution to solve these problems on 
the one hand but eliminates the Clean Air Act's tools to solve 
them on the other.
    Let me walk you through a few slides to demonstrate this 
last point with respect to the certainty of failure. The first 
map is the risk of mortality from power plants in the United 
States. According to EPA's own methodology, 24,000 peoples' 
lives are cut short every year because of power plant 
pollution. This slide is under the Clean Power Act where 22,000 
of those lives could be saved. This is Clear Skies. Take a look 
at that picture because that is all we will ever get from power 
plants. That level of mortality risk will remain because Clear 
Skies puts the power industry in the safe harbor. We can't get 
additional reductions from the power sector if Clear Skies 
passes.
    Similarly this is the map of nonattainment areas in the 
United States, in 2010, the data by which States have to reach 
attainment under Clear Skies. The only way to get this red out 
because we can't touch the power plants, is to go after other 
sources, local businesses, drivers, diesels, et cetera, sources 
that are less cost effective. Power plant pollution is the low 
hanging fruit.
    Senator Voinovich. Mr. Schneider, could you move on, we are 
over your time.
    Mr. Schneider. Clear Skies precludes us from being able to 
go after further cuts.
    Similarly for mercury, only 20 percent of the watersheds in 
the United States would see any improvement under Clear Skies, 
80 percent new improvement. Acid rain, Hubbard, Brook and 
researchers at Syracuse University have found nothing short of 
an 80 percent reduction would allow biological recovery in the 
Adirondacks and New Hampshire's damaged ecosystems before mid-
century. Because Clear Skies doesn't get you there, that 
problem isn't solved because you can't go back after power 
plants.
    Look at these two slides. This is Acadia National Park in 
my home State of Maine. This is the great Smokey Mountains. In 
the upper right hand corner of each chart is the improvement 
under Clear Skies. It is almost no different from a current 
polluted day. Whereas when we go to a national park, it is the 
bottom picture that we are there to see. This picture can't get 
any better because even though further reductions would be 
required to clear the air there, you can't get them under Clear 
Skies.
    Last, Clear Skies locks in a path of every increasing 
CO2 emissions because if it passes, it is going to 
be very difficult to go back and address the fourth P after the 
first three P's have been addressed.
    Senator Voinovich. Thank you very much.
    Mr. Schneider. In conclusion, let me say we would urge 
members to oppose Clear Skies. Thank you for the opportunity.
    Senator Voinovich. Thank you.
    Mr. Parady.

STATEMENT OF FRED PARADY, MANAGER, ENVIRONMENTAL SERVICES, OCI 
    WYOMING, L.P., ON BEHALF OF THE NATIONAL ASSOCIATION OF 
                         MANUFACTURERS

    Mr. Parady. My name is Fred Parady and I am manager of 
Environmental Services for OCI Wyoming. Since 1962, we have 
operated a 4 million ton per year underground trona mine and a 
2.3 million ton per year soda ash refinery located near Green 
River, Wyoming. Two of our customers are a glass plant in 
Toledo, OH and a television tube manufacturer in Columbus, OH, 
so we are connected to your State as well.
    As you are undoubtedly aware, I speak today on behalf of 
the National Association of Manufacturers in support of the 
Clear Skies Act of 2005. As I am sure you know, NAM is the 
Nation's largest industrial trade association representing 
small and large manufacturers in every industrial sector in all 
50 States. Virtually all the members of NAM use electricity as 
a major source of energy and for the vast majority of them, 
electricity is their largest energy cost. In fact, the 
manufacturing sector excluding electric generation uses about 
one-quarter of the Nation's energy including almost one-third 
of its natural gas and 30 percent of its electricity.
    According to a recent NAM study, external overhead costs 
including regulation and rising energy prices add approximately 
22 percent to United States manufacturers' unit labor costs, 
nearly $5 per work hour relative to their major foreign 
competitors. Therefore NAM member companies' ability to compete 
in the highly competitive international marketplace is directly 
affected by any legislation that would have a major impact on 
such a broadly used and insignificant input cost as 
electricity.
    The year 2003 marked a milestone for my industry as China 
overtook the United States for world leadership in soda ash 
production for the first time in history. China has quadrupled 
their soda ash capacity in the last decade from less than 3 
million tons per year to more than 11 million tons per year. 
The plain fact is you can't pass increased energy costs on to 
the marketplace when you face international competition.
    I would like to further address energy costs for the soda 
ash industry. Energy price volatility for both electricity and 
natural gas are causing the soda ash industry to lose its 
ability to reinvest. Natural gas price volatility and annual 
rate increases from our electrical utility are forcing our site 
to consider retrofitting our calsigners to coal. The Clear 
Skies initiative would strengthen our ability to pursue this 
project thus assuring both investment and long term energy 
price stability.
    Returning to the general energy picture in the United 
States, should the maze of current clean air requirements and 
the litigation that inevitably results add uncertainty and 
delay, they have the effect of forcing electric utilities to 
switch from coal to natural gas. The consequences to industry 
and to the general public are devastating and they have already 
had a significant impact. The 66 percent increase in natural 
gas volume used to generate electricity since 1990 has 
contributed to the high cost of natural gas which has had an 
adverse impact on the manufacturing sector since mid-2000.
    Senator, my own company in January 2001 when gas prices 
spiked, our small plant lost $4 million in 4 weeks. That is 
hard to bear with a 400-employee operation.
    Senator Voinovich. When was that again?
    Mr. Parady. In January 2001 when natural gas prices spiked, 
our small plant lost $4 million in 4 weeks. That is hard to 
bear with a 400-employee operation.
    The chemical industry has gone from the lead net export 
industry of the United States to a net importer of chemicals. 
Other industries including plastics, aluminum, steel, soda ash, 
metal, heat treating glass and paper are struggling to stay 
afloat in the current natural gas cost environment. Unless 
there is a rational investment future for coal fuel electrical 
generation, crude and electricity providers will continue to 
build units using natural gas or restart many of the idled 
natural gas units currently not operating because of high 
natural gas prices.
    Business as usual under the current archaeological pile of 
Clean Air Act provisions and regulations which are almost 35 
years old is an unacceptable alternative. These overlapping, 
conflicting, burdensome single emission provisions of the 
existing Clean Air Act will continue to result in significant 
uncertainty, delays for legal challenges, short planning and 
construction time periods and ultimately higher electric costs 
and unstable natural gas markets.
    Specifically, NAM believes that the Clear Skies Act that is 
consistent with the following principles provides the best 
opportunity to make further progress. First, the Clear Skies 
Act must remain a three emission bill, sulfur dioxide, nitrogen 
oxide and mercury. NAM does not believe it is appropriate to 
include carbon dioxide provisions in the legislation since 
CO2 is not a pollutant, is not regulated, nor 
required to be regulated under the Clean Air Act. More 
importantly, NAM strongly opposes any legislative proposal that 
would establish CO2 mandates. We urge the committee 
to avoid encumbering this vital legislation with such 
controversy.
    Second, the Clear Skies Act should not extend its mandates 
to either current or future industrial boilers or non-utility 
combined heat and power systems, CHP systems, but should 
provide such industrial units the opportunity to voluntarily 
opt into the benefits and obligations of the cap and trade 
program.
    Finally, the Clear Skies Act must support the continued and 
increased use of coal for electric power generation.
    Mr. Chairman, NAM is particularly concerned about mercury 
emission levels that would be part of final Clear Skies 
legislation. Significant reductions of mercury will occur under 
the bill's current Phase I caps for SOx and NOx. Going beyond 
this level control to soon would force the premature closing of 
many existing coal-fired power plants in favor of new natural 
gas facilities further straining already limited natural gas 
supplies.
    In summary, NAM strongly supports the Clear Skies Act as a 
way to avoid excessive energy costs while mandating future 
dramatic reductions in SO2, NOx and mercury.
    Senator Voinovich. Thank you very much.
    I will begin the round of questions. It will be 5 minutes 
for each of the Senators.
    Mr. Harper, we heard today some claims that Clear Skies 
requires no more reductions in the existing Clean Air Act. You 
state it will have significant financial impact. Can you go 
into greater detail on this point? If that truly is the case, 
why do you support the bill? I think a lot of people feel if 
this passes, somehow people are going to get a break. I would 
like you to go into that because that is not my understanding 
from our utilities who have indicated they are willing to make 
investments but also point out it is going to cost the 
ratepayers more money.
    Mr. Harper. As I have had to step back and take a look at 
it, I listen to my staff debate the issues. I have people at 
the plants that know how to run plants who come up with new 
ideas and thoughts about how to improve efficiencies and then 
we go to our environmental and legal people and say who can't 
do it because of concern over NSR, not because that is a bad 
thing but the clarity is what I am seeing. I am advised the 70 
percent reduction in NOx, SOx and mercury is going to be a 
tremendous benefit to this country. That will give us targets 
to shoot at. Looking at the history, when given targets we have 
proven the fact that we can obtain those. Again, all I am 
asking for in this whole process is certainty.
    The expense of, for instance, a scrubber in today's 
technology I am advised is roughly $230 million. You don't put 
that thing on overnight. My engineers tell me that it takes 3 
to 4 years once you make the decision to go with that 
installation. On top of that, you also then have the funding 
issues. For instance, the cooperatives are able to get funding 
through the Rural Utility Service and in some cases that can 
take as much as 1 to 2 years to get that. So when you start 
looking at things, time is money and we could be looking at 
anywhere from four to 5 to 6 years before you could ever get a 
scrubber installed. That is really what I am talking about. 
Give us the targets and enough time to go out there and develop 
the technology and so on to achieve them and we will go from 
there.
    Senator Voinovich. You described the Clean Air Act as 
actually preventing you from making improvement that would 
reduce energy emissions?
    Mr. Harper. That is the example that I was explaining.
    Senator Voinovich. It is the uncertainty of what this is 
all about.
    Mr. Harper. Yes.
    Senator Voinovich. Mr. Schneider, contrary to your 
testimony the Energy Information Administration has found 
because of their CO2 emission cap levels, the shifts 
away from coal toward natural gas are projected to be much 
larger under the Carper-Jeffords bills. ``Natural gas 
generation is projected to be from 4.4 to 6.3 and 22.4 to 22.7 
percent higher in 2010 and 2025 respectively in Senator 
Carper's legislation. Electricity prices under Senator Carper's 
bill are expected to increase twice as much as prices estimated 
under Clear Skies in 2025.'' The Jeffords bill is much worse. 
These facts lead me to believe that you want to get rid of 
coal. On September 17, 2004, Albert Kohl, staff lawyer with the 
Sierra Legal Defense Fund, said in general, ``Our long term 
objective is to make sure that coal-fired plants get closed. 
Eventually with enough attacks against coal-fired plants, there 
will be action to shut them down.'' Do you agree with the 
Sierra Club's lawyer on this issue, that we ought to get rid of 
coal?
    Mr. Schneider. Getting rid of coal is not the Clean Air 
Task Force's long term goal. Cleaning up the air and protecting 
the climate is our goal. That is the principle that we follow 
and we think it is a false choice to pose the notion that coal 
and clean air or coal and a healthy climate are incompatible. 
We have provided briefings to this body and on the Hill to try 
to demonstrate there are clean coal technologies so-called that 
allow for coal to be gasified, burned and the CO2 
sequestered in such ways that would allow coal to meet our 
energy needs going forward but also being compatible with the 
Clean Air objectives that we have enunciated.
    Senator Voinovich. You mentioned American Electric Power 
and Synergy is going forward with integrated gas combined cycle 
facilities but they both are very, very strongly in favor of 
our Clear Skies legislation because they say the current 
situation today is unwieldy. We don't know where we are, we 
have new source review, we have 126 petitions, we feel we are 
flying in a plane with all kinds of flak up there and we don't 
know when we are going to get hit and we want some clarity on 
this and we are willing to go forward with it.
    Mr. Schneider. I understand they said to their shareholders 
part of that clarity could include from their perspective 
reasonable carbon dioxide controls and their analysis showed 
they could meet reasonable goals without economic dislocation 
to their companies, their shareholders, their ratepayers or 
without the impact as you described. I think, Senator 
Voinovich, you ordered a look at what it would cost and the 
energy mix ramifications from a 2008 cap along with Senator 
Smith at that time and Brombeck and determined the same thing 
that it is possible to meet the President's objections about 
CO2 with respect to fuel shifting and cost but 
nevertheless get started on CO2 controls.
    Senator Voinovich. Senator Carper.
    Senator Carper. Thanks to our witnesses for joining us.
    EPA year or two ago actually looked at the Jeffords bill, 
the Administration's bill and a bipartisan proposal and looked 
at the amount of shifting you would find under either bill, 
shifting from coal to natural gas. I think they found there 
would be reduction under our proposal of maybe 50 to 48 percent 
in terms of coal being used for electricity generation.
    In terms of cost, I think they estimated the cost per 
kilowatt hour of our bill fully implemented of about a cent and 
a half per kilowatt hour. I think they said the cost in our 
utility bills each month would be less than $1.50 a month.
    I was born in West Virginia. My family are generations of 
coal miners if you go back far enough and I don't want to do 
anything to hurt the coal industry and am very much interested 
in what Mr. Schneider said about coal gasification. Why don't 
we have more utility companies investing the money for coal 
gasification operations? Why is that? It has been around for a 
long time, the technology is there.
    Mr. Schneider. The fastest way to get them to invest would 
be to set hard limits on carbon dioxide especially when we are 
on the verge in this country of building a lot of new coal 
plants. We track the proposed coal plants around the country. 
Our feeling is if we are going to begin to turn the great 
freighter of CO2 emissions increases, the last thing 
we need to do is build more conventional coal plants that are 
going to continue to emit CO2 into the air when we 
have the opportunity to build coal plants that don't. Probably 
one of the things standing in the way of IGCC development, one 
of the major signals that could help that would be to send a 
signal that carbon has a value. It is a negative value with 
respect to the health of the planet but a positive value with 
respect to the dollars. If we did that, I think you would start 
to see depending on the levels, more development in that 
direction. That probably should be part of the consideration of 
any bill of this type.
    Senator Carper. Let me turn to new source review. Critics 
of the Administration's proposal say that the Administration 
would largely gut or eliminate new source review. Critics of 
Senator Jeffords' proposal say it makes almost no changes in 
new source review. Senators Alexander and Gregg and Chafee and 
I have sought to see if there is a third way, somewhere in 
between basically status quo and find a third way. What might 
be that third way with respect to new source review even if you 
are wedded to one of the other approaches?
    Mr. Schneider. As I said, we judge these proposals based on 
principles but the two principles are we would seek to 
strengthen not weaken the Clean Air Act and seek to make sure 
that we begin the process of regulating carbon. We look to what 
the Clean Air Act would achieve, we are one of those 
organizations that tries to make sure the letter of the law is 
followed because we believe that was the intent of Congress 
when it passed legislation.
    In my spare time I teach a course at Boden College in 
environmental law and policy. I explain to my students that 
there are different regimes of environmental regulation 
including one called command and control, one called market 
mechanisms but sometimes known as cap and trade. The proponents 
of using market mechanisms or cap and trade generally defend 
that view by saying they can do more faster, cheaper than under 
a command and control situation which I think is the way many 
would characterize the patch work of regulations we have 
currently under the Clean Air Act.
    The starting place for the debate should be what we are 
getting now, what does the letter of the law require and how 
can we use the cap and trade to go further faster, cheaper, not 
half as far or not three quarters as far. When we see the 
different proposals, we judge them first and foremost on the 
basis of the stringency of the reduction requirements. We find 
that the Clean Air Planning Act does not go as far as current 
law and therefore are reluctant to want to give up a tool such 
as the new source review provisions that allow us to drive 
continuous progress in clean air.
    Senator Carper. My question is whether you like the status 
quo or like the Administration's proposal, if you had to help 
us craft a third way, a middle ground, what might that be?
    Mr. Harper. I would like to give that one some more 
thought.
    Senator Carper. Come back to us in writing.
    Mr. Harper. I heard a lot of discussion this morning as 
each of you were giving your overviews about collaborative 
processes and I think that would be one of those.
    Senator Carper. Mr. Parady, briefly if you could respond?
    Mr. Parady. I think NSR is a flat concept and it compares 
current actual emissions to potential emissions and would be a 
more sound public policy basis to either compare actual to 
actual or permit to permit.
    Senator Carper. Thank you. I would look forward to your 
written response. Mr. Schneider, if you want to add to what you 
said, I would welcome that as well.
    Senator Voinovich. Senator Jeffords.
    Senator Jeffords. I ask unanimous consent to enter into the 
record some statements, articles and written materials from the 
League of Women Voters, the National Conference of State 
Legislatures, the CNN, the Northeast States Air Quality 
Managers, the American Academy of Pediatrics, the American Lung 
Association, a chart comparing the various multi-pollutant 
approaches, the Guardian Newspaper and the Maryland House of 
Delegates.
    [The referenced document from the Maryland House of 
Delegates follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
      Statements of the National Conference of State Legislatures*
---------------------------------------------------------------------------
    * Statements taken from National Conference of State Legislatures' 
Web site
http://www.ncsl.org/statefed/environ.htm
---------------------------------------------------------------------------
                    new source review (nsr) program
(Joint policy with Energy and Electric Utilities)
    The National Conference of State Legislatures (NCSL) urges the 
Environmental Protection Agency (EPA) to reform the NSR program to 
achieve improvements that enhance the environment and increase 
production capacity, while encouraging efficiency, fuel diversity and 
the use of resources without weakening the requirements intended to 
reduce emissions from new or modified sources of air pollution. Routine 
maintenance, repair or replacement activities which are not major 
modifications should not trigger NSR requirements.

July 2005
                                 ______
                                 
                              air quality
The Clean Air Act Implementation
    The National Conference of State Legislatures (NCSL) supports the 
goals embodied in the Clean Air Act Amendments of 1990 (CAAA). The CAAA 
represent a major step toward addressing important environmental, air 
quality, and public health issues. NCSL fully supports CAAA goals and 
urges the U.S. Environmental Protection Agency (EPA) to proceed 
diligently with full implementation of the law to achieve clean air for 
our citizens. It is essential that Congress and the EPA fulfill their 
responsibilities to facilitate implementation by the states.
    NCSL makes the following recommendations:

     Implementation of the CAAA is the responsibility of the states, 
who have a wealth of experience in implementing control programs. NCSL 
encourages Congress and the EPA to pay particular attention to the 
voices of that state expertise and experience.
     Communication with state legislators is of utmost importance 
because only state legislators can enact enabling legislation for state 
programs and appropriate state funds. Congress and the EPA should 
regularly and directly work with state legislators during federal 
action on air quality issues.
     EPA should work closely with states to ensure states have all 
regulations, technical assistance and funding necessary for compliance.
     Federal grants authorized under the CAAA provide financial 
resources to the states for development and implementation of air 
quality programs and other clean air responsibilities. Congress and the 
EPA must ensure that states continue to receive adequate funding to 
cover all costs of program management including monitoring.
     Because the states have existing air pollution control programs 
to administer with current federal funding, any new air quality 
programs or responsibilities mandated by Congress or EPA should be 
accompanied by additional federal funding.
     The CAAA contain many sweeping and general mandates which will 
involve the exercise of broad discretion and interpretation by the EPA 
for their implementation. NCSL urges EPA to provide as much 
administrative flexibility as the law allows in order to achieve clean 
air goals in the most cost effective and efficient manner.
     Cost-effectiveness should be permitted as a factor in state 
selection of transportation control measures and emissions control 
strategies.
     Numerous sections of the CAAA require the EPA to develop 
regulations and technical guidance for the states to follow in their 
implementation process. The regulations and guidance are essential to 
state efforts to implement complete and adequate state programs that 
fully comply with the CAAA. Often the EPA is very late in publishing 
regulations and technical guidance for state programs and 
responsibilities. Such delays leave little or no time between the 
publication of the documents and the statutory deadlines for state 
compliance. NCSL urges EPA to meet all deadlines for publication of 
documents required under the CAAA. NCSL urges Congress to amend the law 
to replace statutory deadlines for state action with language that 
provides a specific time period for state compliance after document 
publication.
     EPA should provide training opportunities for states to help 
develop the skills and understanding needed to properly implement the 
CAAA. In addition, EPA should provide informational resources to help 
the public understand its role in achieving CAAA goals.
     To address ozone nonattainment problems, the CAAA require 
significant nitrogen oxide (NOx) and volatile organic compound (VOC) 
emission reductions to be obtained from both stationary and mobile 
sources. Since any reductions that are not obtained from mobile sources 
must be obtained from stationary sources, Congress and EPA should take 
maximum advantage of tools and strategies to reduce emissions from 
mobile sources including but not limited to promoting alternative fuels 
and encouraging strict exhaust standards for light duty vehicles.
     Federal highway legislation should be made consistent with CAAA 
objectives. The EPA and the Department of Transportation (DOT) should 
work together to ensure coordination of federal policy.
     NCSL urges the adoption of national energy, transportation and 
other policy that emphasizes energy conservation in order to help 
achieve the goals of the CAAA. This should include strengthening of 
emission standards for automobiles as technologies improve, more 
energy-efficient lighting, buildings, and transportation, and more 
research and use of alternative forms of energy.
     NCSL urges the federal government to expeditiously apply the same 
CAAA requirements to federal facilities and motor vehicle fleets that 
are required for state facilities and fleets.
                               sanctions
     States should not be sanctioned for non-compliance if state's 
failure to comply was the result of EPA's failure to adhere to CAAA 
deadlines for promulgation of regulations or technical guidance that 
provide details and requirements of state programs.
     EPA should have the authority to waive sanctions on states that 
EPA determines are making reasonable good faith efforts to comply with 
CAAA requirements and deadlines.
                motor vehicle inspection and maintenance
     States should be granted flexibility to design inspection and 
maintenance (I/M) programs that achieve air quality targets and should 
receive full credit for emissions reductions those programs achieve.
     Congress and EPA should not require the states to use specific I/
M technologies. Such rigid federal requirements may fail to account for 
technological advances in emissions testing programs and equipment.
            low emission vehicles and zero emission vehicles
     EPA should maintain national Low Emission Vehicle (LEV) 
standards, referred to as the 49-state car, that are stricter than the 
law requires. States should be allowed, but not required, to adopt Zero 
Emission Vehicles (ZEV) requirements.
         transportation conformity with state air quality plans
     NCSL supports the principles underlying transportation conformity 
provisions of the Clean Air Act that requires new or revised state 
transportation implementation plans (TIPs) to conform to the purpose of 
state air quality plans, also referred to as state implementation plans 
(SIPs).
     Adequate funding should be made available to cover the cost of 
the resource-intensive requirements for development, revision and 
implementation of conforming TIPs.
     In evaluating the emissions budgets submitted by states, EPA 
should ensure state flexibility in balancing the burden of reduction 
among all air pollution sources.
     Conformity requirements should be limited to nonattainment areas 
and areas at risk of becoming nonattainment.

July 2006

    Senator Voinovich. The guardian from London or from where?
    Senator Jeffords. London.
    Do you believe that the Administration has a legal 
authority under the current Clean Air Act to issue the Clean 
Air Interstate Rule?
    Mr. Harper. I am not an attorney and I truly have not paid 
a great deal of attention if you will to the CARE rule because 
it does not have a direct impact upon our organization. So I 
really could not answer that question.
    Mr. Schneider. EPA has the legal authority to issue the 
CARE rule and they have said most recently that they plan to 
sign it on March 15 along with the mercury rule and the parks 
protection rule. They are intimately related to each other and 
earlier I suggested it would be premature for this body to 
legislate before we have seen the results of those rules.
    Mr. Parady. Yes, I think the Administration has that 
authority. However, I believe it would lead to quite a 
substantial cycle of litigation and I prefer legislation to 
litigation.
    Senator Jeffords. A couple years ago, we had a prestigious 
panel of scientists tell this committee that increasing 
greenhouse gas emissions increases the risk associated with 
global warming. According to EPA modeling, the Clear Skies 
approach will result in a 13 percent increase or an additional 
425 million tons of carbon dioxide emissions compared to the 
base case. Do you think it makes sense for Congress to ignore 
the contribution of power plants to global warming?
    Mr. Harper. As I look at this bill, it is a utility bill 
and it is addressing three important issues, SOx, NOx and 
mercury. If you want to bring in the issue of CO2 
and we are truly as a Nation interested in looking at that, I 
think you have to broaden the scope. I would encourage us as 
you heard earlier this morning to move forward and take an 
opportunity we have before us and getting the 70 percent 
reduction in those three areas and at a later date, let us talk 
about CO2.
    Mr. Schneider. The U.S. power industry is the single 
largest contributor to CO2 emissions in the world, 
it makes 10 percent of the world's CO2 emissions. 
The global warming issue cannot be addressed without addressing 
the emissions from this industry. You have an opportunity here 
when you are discussing multi-pollutant legislation to change 
the law to be able to include all of the potential regulatory 
decisions that an industry is going to face at once rather than 
making them piecemeal and one at a time. That is why I think we 
all in general support the idea of a multi-pollutant approach. 
Why would it make sense if you are going to legislate to do 
three and then one where investment decisions are going to be 
made to comply with the three which may be inconsistent with a 
policy that includes the fourth pollutant, CO2.
    We would very much support and believe any multi-pollutant 
legislation passed in Congress should include CO2 
provisions.
    Mr. Parady. I would like to flip Mr. Schneider's argument. 
If power plants represent 10 percent, United States power 
plants represent 10 percent of the world emissions, that means 
that 90 percent of those emissions aren't affected by this 
legislation so the core of the matter, you are putting at risk 
the core of America's industrial infrastructure and backbone 
and yet you only have the tiniest portion of the tail of the 
dog. We all know there are strongly held views on global 
warming, what causes it and what should be done about it.
    I am deeply concerned that regulating CO2 
emissions because of multi-pollutant legislation would lead to 
greater use of natural gas to generate electricity which is 
going to drive up energy prices in the United States, drive up 
manufacturing costs and drive jobs offshore. It is that 
straightforward and that is exactly what has happened in our 
operation.
    I also believe that regulating CO2 in multi-
pollutant legislation will lead to a political impasse that 
will jeopardize passage of this bill which directly addresses 
three key pollutants I think every person on your committee and 
every testifier you have had before you supports the reduction 
in those three major pollutants.
    Senator Voinovich. Your time is up.
    It is interesting that we have had 23 hearings on multi-
emissions legislation. I wonder are we in the real world. We 
are in the fourth world war, we are fighting extreme Muslim 
fundamentalists which is a whole new deal for us and how we 
deal with that when it is different from what we have ever done 
before. I think Americans including all of us don't understand 
we are in a global marketplace. If you come from a State like 
Ohio where you have seen the crap kicked out of manufacturing 
and look at the litigation, look at health care costs and 
energy costs and see what has happened. The answer is why have 
we built more energy plants? Eighty-eight percent are natural 
gas fired. Stupid. Why are they doing it. Why are we doing it? 
Drive up natural gas costs, twice what they were a couple years 
ago, driving jobs offshore. Four manufacturers have come to my 
office saying we are pulling our manufacturing out of the 
United States, we are going overseas, the chemical industry 
where we were exporters and now we are importers. It seems to 
me the environmental and business groups ought to sit down and 
talk or we are not going to have anything.
    The environmental groups have to understand if we don't 
have the manufacturing, we are not going to have the money to 
invest in dealing with this. If you walk about 10 percent in 
the United States, do you know they are building a lot more 
coal-fired plants in China today. They are eating our lunch. If 
we don't get our act together in the next several weeks, we are 
going to do nothing.
    For those of you in the environmental, Mr. Schneider, fine, 
lawsuit after lawsuit, we do nothing. For those in the business 
community, you don't know what you are doing so you just 
flounder around and we on both counts don't get anywhere. What 
about nothing? Say we can't come to an agreement and we can do 
nothing, I guarantee you as chairman of this committee, we are 
finished with this. We do something in the next 6 months or it 
is over. We will stick with what we have and let it go and you 
live with it, both of you.
    What is your reaction? Do you want nothing, something? 
What?
    Mr. Harper. What I want as the CEO of my organization is 
ability to meet the demands and requirements of the customers 
that I serve. I can't do that if it takes 8 to 10 years to get 
a new plant online. A lot of the reasons why gas was viewed 
with a great deal of interest is because by the regulations you 
can get one online quicker. Unfortunately most of the locations 
that the gas turbines went in was near good transmission. They 
didn't have to worry about some of the transmissions issues we 
face. It all wraps itself around one issue, clarity, on what we 
are trying to get accomplished. Basin Electric owns the only 
commercial-scale gasification company in this Nation. We 
understand gasification, we are looking at gasification, trying 
to find all the different options out there available to us, 
not being driven there but we think it is the right thing to 
do. We have to meet the demands of our customers. When you take 
the nine States our members serve, it goes from the largest 
surface coal mine in the United States all the way to the 
cattle rancher, they all need low cost energy. That is what we 
are trying to get them. Again, time is money. We are very 
interested in getting something accomplished.
    Mr. Schneider. The dialog on this issue has been choked off 
for several years. I remember the last best chance that we had 
to get it together was when we were in this room 4 years ago. 
It was
9/11. The chairman had pulled together the stakeholders from 
the utility industry, governmental parties and the 
environmental community to try to work out something to meet 
all the different needs. That is the right type of process to 
get anywhere.
    The wrong process is to come in with a bill and tell 
everybody it is my way or the highway. All those stakeholders 
drifted in Washington, DC to hunker down for the next few days 
and were never reassembled and never had another start at 
dialog. It is a very important issue. My organization was 
founded to deal with this issue. If people are willing to come 
and talk about real reductions that improve the Clean Air Act, 
that address climate change in a way that meets all the 
objections and concerns you have, that is great.
    We are not interested in a conversation about a bill that 
rolls back the Clean Air halfway and doubles the time by which 
we would get clean air in this country. We are willing today 
any time, any place about a serious effort.
    Senator Voinovich. I can tell you the disagreement over 
climate change if it is part of this legislation means it is 
going nowhere. If there is some compromise that could be made 
on climate that wouldn't cap it or do something else as an 
alternative to get started down the road and do some practical 
stuff, I think there are some people willing to look at that, 
even some members of the utilities. If the game is emissions or 
nothing, it is nothing. That ain't going to help the Adirondack 
Council or any of the others you talk about. The Council today 
supports the legislation. They say we have to get going. A 
couple years ago they supported it and the Clean Air Trust gave 
them the villain of the month award because they didn't stick 
to the game and go for the four pollutants. This has become 
politicized to beat the band. In the meantime we are not doing 
very much on either account, economy or in terms of the 
environment.
    Mr. Parady. I just wanted to note I just finished 10 years 
of service in the Wyoming House of Representatives finishing up 
as Speaker. One of the things I use in talks on this topic is 
that the root of the words economic and ecology is the Greek 
word eco or home and you have to have a prosperous economy in 
order to have a healthy environment. Compare our environment to 
conditions in China and recognize you have to be able to have 
people at work and generate taxes and revenue and generate 
investment funds necessary to achieve pollution control. That 
takes a balance and I think this bill represents that balance.
    Senator Voinovich. I want to thank you for being here 
today. I don't think, Mr. Schneider, you should believe this is 
take it or leave it. Senator Carper and I have known each other 
a long time and we are going to struggle to see if we can't 
come up with something where we can get something done and move 
forward, get some certainty and will work at it. To all of you, 
I have spent hours and hours and hours and so have a lot of us 
and if we can't come up with some kind of compromise on this, 
as far as I am concerned as chairman of the committee, it is 
over. We will just let you fend for yourselves. I think that is 
a good message to you, Mr. Schneider as a representative of the 
environmental groups and the National Manufacturers 
Association. There may have to be some changes here and there 
between now and then. It is either nothing or we do something. 
You have to decide is something better than nothing.
    Thank you.
    [Whereupon, at 1 o'clock p.m., the subcommittee was 
adjourned, to reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
 Statement of Hon. Bob Young, Mayor, City of Augusta, GA, on Behalf of 
                       U.S. Conference of Mayors
    I am pleased to be with you today. My name is Bob Young; I am the 
Mayor of Augusta, Georgia. I currently serve as the Chair of the 
Conference of Mayor's Energy Committee and last year, I served as Chair 
of the Environment Committee. These positions make me at least somewhat 
familiar with the topic area of today's important discussion--energy 
and clean air.
    On behalf of the Conference's President, Akron Mayor Don 
Plusquellic, I offer you his apologies in not being with you today. As 
you know, he was suppose to be here testifying but fell ill yesterday 
with a severe respiratory ailment. I offer his sincerest apologies in 
not being able to make this hearing.
    The U.S. Conference of Mayors is the official, nonpartisan 
organization that represents cities throughout the nation through their 
chief elected official, the mayor.
    First of all I would like to thank Senator Voinovich for not only 
his invitation to speak before you today but also for joining us last 
week during the Conference of Mayor's Winter Meeting. Your commitment, 
Senator, to issues such as Community Development Block Grants and 
unfunded mandates is greatly appreciated by the mayors of this nation.
    I come before you today not as an expert in clean air policy, but 
as a mayor. This means that I am responsible for a wide variety of 
activities including: keeping my citizens safe, keeping their 
surrounding environment clean and attractive, making sure the roads are 
maintained and that the snow gets plowed. It also means doing what I 
can to keep and attract new jobs to the area.
    When my job is boiled down, I guess that you can say that I am 
responsible for making my city a place that is desirable for both 
people and businesses to flourish. Every mayor strives to create a 
community that has healthy citizens with a healthy economy. And I think 
with some common sense, you can have both.
    That is why I am here today. In order to remain competitive, this 
nation needs a steady, reliable, and inexpensive source of energy. 
However, we also need clean and healthy air.
                           outline of problem
    Depending upon the type of business, a number of conditions 
influence their decision to locate or expand in a community. Issues 
such as workforce availability, access to transportation hubs, and of 
course the costs of electricity are factors in their decisionmaking 
process.
    Besides the cost and reliability of electricity, another factor 
that goes into a business location or expansion decision is a 
communities' attainment status.
    Many communities throughout the nation have been designated as non-
attainment areas for either ozone or particulate matter. I was 
originally suppose to be designated in nonattainment for ozone but when 
the final numbers came out, I was fortunately not included. Many of my 
other mayoral colleagues were not as lucky.
    When it appeared that my city was going to be designated as 
nonattainment for ozone, my city volunteered for EPA's Early Action 
Compact. This program allows cities, counties and states to go through 
a series of voluntary measures to reduce air pollution that causes 
nonattainment. I want you to know that even though we were fortunate to 
not get designated, we are still going through this voluntary program 
to demonstrate our commitment to clean air.
    And the reasons why we are committed to clean air is not only 
because of the health of our citizens but it is a good business 
decision as well.
    Many businesses won't outright admit it but privately they have 
said that when making a decision to locate or expand in an area, one of 
the things they do is to find out that community's attainment status.
    If a community is in nonattainment, businesses know that to get the 
necessary air permits might be difficult and sometimes it just makes 
sense to seek out another area to build.
    Both the cost of electricity and a city's attainment status puts 
many communities at a competitive disadvantage to attract businesses 
from other parts of the United States or even the world.
    These factors can have a major impact on jobs and job creation. 
However, the mayors of this nation don't want to sacrifice public 
health for cheap electricity. We are looking for a fair and balanced 
approach that cleans our air while keeping costs down.
    We are looking for common sense solutions to help us meet our 
attainment requirements.
    As I mentioned before, many communities have been designated as 
nonattainment for particulate matter or ozone or both.
    These communities and the states they are located in are required 
by the environmental protection agency to meet attainment standards 
between 2008 and 2015.
    Programs such as CMAQ, the Congestion Mitigation Air Quality 
program, as well as the off-road diesel rules have been developed to 
assist us with our efforts. And these programs should be maintained or 
in the case of CMAQ, increased to further our efforts.
    However, these programs are not enough. For many nonattainment 
communities, 40 percent of their air pollution comes from coal-fired 
utilities. That is a major source of pollution. We need a common-sense 
solution that requires these utilities to install pollution control 
equipment in a manner that is timely and cost-efficient.
                               our policy
    The Conference of Mayors passed a policy resolution in 2003 calling 
on the federal government to address this problem.
    Our policy asks that the federal government set national air 
emission caps under a multi-pollutant plan at levels strong enough to 
protect public health and the environment by substantively assisting 
cities in our efforts to attain the national ambient air quality 
standards.
    We support a comprehensive and synchronized multi-pollutant, 
market-based program to reduce regulatory costs, maintain reliable 
energy at a reasonable cost for consumers, and to provide regulatory 
certainty to the electric power sector.
    We encourage Congress to pass national legislation, which will meet 
the Conference of Mayors' goals by requiring power plants to reduce air 
emissions of sulfur dioxide, nitrogen oxides, and mercury by an average 
of 70 percent from 2000 levels by 2020 under a proven market-based cap 
and trade program.
    It is my understanding, Senator that you have introduced 
legislation that reflects many of the concerns of Mayors. We support 
many of the goals of your legislation. We do need national policy to 
encourage utilities to reduce NOx, SO2, and mercury by 70 
percent and the utilities do need certainty to know what regulations to 
expect and when to expect them by.
    Also, given the success of the acid rain program, we think that a 
multi-pollutant cap and trade program is potentially the best means of 
achieving success.
                               conclusion
    I want to applaud you Senator and the members of this committee for 
holding this hearing on this important issue. The Mayors are pleased 
that Congress recognizes that power plant emissions are a major source 
of pollution in our nation, often preventing cities from reaching clean 
air goals.
    The Mayors look forward to working with the committee on 
legislation that will improve air quality for our nation's cities.
    For the nation's mayors, we need as many tools as possible to 
assist us with our efforts to have reliable and inexpensive energy 
while meeting our attainment standards and providing our citizens with 
healthy air.
    A national policy is needed to deal with air pollution from 
utilities. We are asking Congress to address this issue at the national 
level while at the same time asking them not take away our ability at 
the state and local level to implement what may be needed on a more 
localized basis.
    Thank you again for your efforts. I look forward to working with 
you and the other members of this committee on this important topic.
                                 ______
                                 
         Response by Mayor Bob Young to Additional Question by 
                           Senator Voinovich
    Question. Several members of the Committee have proposed multi-
emissions bills. The Energy Information Administration analyzed the 
bills proposed by Senators Jeffords, Carper, and Inhofe and found that 
electricity and natural gas costs are substantially higher in the 
Jeffords and Carper bills compared to the Inhofe Clear Skies bill. In 
terms of your city--and cities across the country--what would be the 
impact of increased electricity and gas costs on businesses? What about 
those on fixed incomes?
    Response. The impact of increased electricity and natural gas costs 
on businesses as well as those with fixed incomes would have far-
reaching consequences. The United States needs a reliable, inexpensive 
source of energy for both businesses and for people with fixed incomes. 
Energy costs are just one of the factors that cities and counties need 
to keep in mind in order to remain competitive for jobs. High energy 
costs also have the possibility of driving businesses away from a 
community in favor of other markets throughout the nation or in other 
parts of the world. However, as I mentioned in the testimony, there 
needs to be a delicate balance between inexpensive energy and public 
health and the subsequent costs. It is important to keep energy 
affordable and clean so that there doesn't need to be a choice between 
jobs and public health.
                                 ______
                                 
       Responses by Mayor Bob Young to Additional Questions from 
                            Senator Jeffords
    Question 1. According to the U.S. Conference of Mayors 2002 
resolution, which has not been revised or reversed, the Mayors' 
position is that until any new programs have been proven over time to 
be as protective as current Clean Air Act programs, they encourage EPA 
and Congress to keep those programs in place, with multi-pollutant 
legislation as an addition to current clean air law. Obviously, S. 131, 
the Clear Skies Act of 2005, as well as its predecessors, S. 1844 and 
S. 485 in the 108th Congress, and S. 2815 from the 107th Congress, 
eliminate many of the current Clean Air Act Programs without providing 
time to prove that replacement programs are protective. Is the 2002 
resolution still operative, and, if so, do the Mayors support 
legislation that violates the principles in that resolution?
    Response. Please note that your question needs to be corrected--the 
Conference does have a 2002 resolution but another resolution was 
passed in 2003 that dealt with the same topic. Irregardless, the 
Conference of Mayors has never officially endorsed the Clear Skies Act. 
According to the testimony, based on the 2003 resolution, Mayors 
support some of the goals of Clear Skies; specifically a 70 percent 
reduction for NOx, SO2 and mercury, using a proven market-
based program. Our 2003 resolution also states that these goals should 
be achieved by 2020.

    Question 2. S. 131 allows ``transitional areas'' to be exempt from 
the requirements of the Clean Air Act. What requirements should these 
``transitional'' areas have to ensure that they are not causing or 
contributing to non-attainment downwind from them?
    Response. We are not able to answer that question at this time 
without further internal discussion.

    Question 3. Should downwind states retain their existing ability 
under the Clean Air Act, with EPA enforcement of that ability, to seek 
reductions in pollution from all sources in upwind states that are 
causing or contributing to violations of the ambient air quality 
standards in parts of the downwind state?
    Response. The Conference of Mayors believes it would be prudent for 
states to retain their existing ability to seek reductions from sources 
in other states. We also are hopeful that this would not be necessary 
given the cap and trade program proposed by all of the multi-pollutant 
legislation.

    Question 4. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein? If so, why?
    Response. The Conference of Mayors is not looking to amend the 
Clean Air Act as much as looking for the necessary flexibility so that 
cities can meet their attainment deadlines. If, for example, a city is 
able to meet their attainment deadline once the utilities finish their 
pollution-control upgrades, we believe that this factor should be taken 
into consideration.

    Question 5. Do the Mayors believe that it is prudent to increase 
greenhouse gas emissions?
    Response. Given the fact that Mayors have called for cities 
throughout the United States to voluntary reduce their own greenhouse 
gas emissions by 10 percent, it is probably not prudent to increase 
greenhouse gas emissions.

    Question 6. The Energy Information Administration has produced an 
analysis which demonstrates that Clear Skies (S. 1844) does not achieve 
the ``magic'' 70 percent reduction in any of the pollutants that you 
mentioned before 2025, if then. In any event, what good will a 70 
percent reduction in 2020 do for cities that need to achieve attainment 
about 10 years earlier?
    Response. The Conference of Mayors is assuming and hoping that the 
utilities will act sooner than the 2020 deadline and there will be 
overall reductions. We are also looking for the flexibility that may 
come with the section on ``transitional communities'' which will allow 
cities that are awaiting their utilities to retrofit their facilities 
the additional time to come under compliance. However, if the utilities 
do not act sooner than their 2020 deadline and no flexibility is given 
to those transitional communities, the reduction may not prove useful.

    Question 7. Since power plants and all the other major industrial 
facilities emitting NOx, SOx or mercury can ``opt-in'' to the 
regulatory shield in S. 131 and therefore cannot be effectively or 
easily controlled by states or local governments, what sources of 
emissions will states and local governments be going after to achieve 
healthy air?
    Response. Our policy only calls for power plants to be included in 
legislation that reduces NOx, SO2 and mercury. It does not 
address other major industrial sources from being included. If, 
however, they were included, the reduction would obviously depend on 
state by state and what sources are emitting NOx, SO2, and 
mercury. Of course our jobs will be much more difficult since many of 
these sources have already been controlled which leaves us very few 
options.

    Question 8. Do the Mayors support the exemption of major sources of 
toxic air pollutants from the existing MACT requirements of the Clean 
Air Act? Do the Mayors support the exemptions for such sources, other 
than power plants, included in S. 131?
    Response. No we do not support the exemption of major sources of 
toxic air pollutants from the existing MACT requirements nor do Mayors 
support the exemptions for other sources other than power plants.

    Question 9. What would be the change in the City of Augusta's 
budget for indigent health care if Congress passed legislation, such as 
S. 131, to delay the attainment of health-based air quality standards, 
to exempt major sources of pollution from current requirements, and to 
allow the designation of ``transitional areas'' that would have no 
responsibility to reduce their own pollution even if it were affecting 
downwind sources?
    Response. Given the time and resource constraints that are needed 
for this question, we can not possibly answer that question at this 
time.

    Question 10. You indicated that ``. . . there is nothing we can do 
as a community or the State environmental regulators in Georgia can do 
to impact what goes on at a coal-fired plant in South Carolina.'' That 
statement is not accurate under current law, since the State of Georgia 
has the right to petition the EPA under section 126 of the Clean Air 
Act to control that source of pollution, even if it's a power plant, if 
it is causing or contributing to nonattainment in the City of Augusta. 
That right would be severely limited by S. 131 if not completely 
crippled for many years, and EPA would not have the authority that it 
has now to stop that pollution. Do you think that states should 
continue to have the rights they have now, including Federal 
enforceability, under the Clean Air Act to prevent interstate 
pollution?
    Response. What I meant by my statement is that there is nothing the 
City of Augusta can do to impact South Carolina's coal-fired plant. I 
am aware that the State of Georgia can petition South Carolina to 
reduce their pollution. It is our hope that with a national cap and 
trade policy that there would be overall reductions in NOx, 
SO2 and mercury and that more utilities would be motivated 
to install pollution control systems. However, if this does not work, 
we think states should still have the right to petition to prevent 
interstate pollution.
                                 ______
                                 
       Responses by Mayor Bob Young to Additional Questions from 
                           Senator Lautenberg
    (Please note that the questions were addressed to the Mayor of 
Akron, Don Plusquellic. He, however, did not testify due to illness and 
Augusta Mayor Bob Young took his place.)
    Question 1. The U.S. Conference of Mayors policy states that multi-
pollutant legislation should be an addition to current law, why do you 
support Clear Skies which eliminates key Clean Air Act programs?
    Response. The Conference of Mayors has never officially endorsed 
the Clear Skies Act. We support some of the goals of Clear Skies 
including a 70 percent reduction in NOx, SO2 and mercury by 
2020 using a cap and trade program.

    Question 2. Wouldn't it be prudent to enact multi-pollutant 
legislation as an add-on to existing law as a way of bolstering EPA's 
authority?
    Response. As long as there is no conflicting policy or confusion 
that will result with adding on existing law that would delay utilities 
from installing pollution control equipment, it would probably be 
prudent to add-on to existing law.

    Question 3. The Clear Skies Initiative would extend attainment 
deadlines for meeting PM2.5 and ozone health standards to 
2015 and as late as 2022. Why should we allow this?
    Response. We do need to allow for adequate time for pollution 
control equipment to be manufactured and installed. The Mayors' policy 
simply reflects the understanding that it might take some time for this 
to happen. If it can be done sooner or if incentives could be provided 
to encourage utilities to not delay, the Mayors would welcome quicker 
results.

    Question 4. If we can reduce air pollution faster and reduce 
premature death and hospitalization sooner shouldn't we do so?
    Response. As mentioned in the testimony, it is a delicate balance 
between public health and the economy. Mayors believe that policymakers 
can and have to balance both. We need a policy that reduces air 
pollution but not one that drastically increases the costs of 
electricity that causes jobs to move out or for citizens to have to 
choose between heat and food, for example. One needs to ask the health 
impact of a loss of a job and health insurance to a citizen's overall 
health as well. The reverse is also true. Mayors believe that you do 
not need to sacrifice public health for inexpensive electricity.

    Question 5. The Akron Beacon Journal asserts implementing the CAIR 
rule is a better strategy for protecting public health than enacting 
controversial new legislation. Do you agree?
    Response. Mayor Plusquellic did not testify. As far as the CAIR 
rule being a better strategy for protecting public health, it has been 
said that it will do a good job in reducing NOx, SO2, and 
mercury. However, we believe that it is better for legislation to be 
passed as opposed to a rule since it is developed by Congress and less 
subject to judicial scrutiny.

    Question 6. Clear Skies, as introduced by Senator Inhofe (S. 131), 
repeals Maximum Available Control Technology standards to control 189 
hazardous air pollutants from power plants and possibly a broad variety 
of industrial boilers simply because they reduce mercury emissions. 
Knowing the lifelong health problems exposures to toxic chemicals can 
cause--especially in children--why should Congress support this?
    Response. The Conference of Mayors does not support the repeal of 
the MACT standards.

    Question 7. If Congress passes legislation as controversial as the 
Clear Skies Act that allows existing Clean Air Act programs to be 
abandoned and deadlines to meet health standards to be extended to 
2022, won't this generate more litigation than implementing the 
existing law?
    Response. It is definitely possible that more litigation will 
result as is typical whenever new laws and rules are passed.
                               __________
 Statement of John A. Paul, Supervisor, Regional Air Pollution Control 
                   Agency, on Behalf of STAPPA/ALAPCO
    Good morning, Mr. Chairman and Members of the Subcommittee. My name 
is John Paul, and I am the Supervisor of the Regional Air Pollution 
Control Agency, a six-county local agency centered in Dayton, Ohio. I 
am pleased to testify today on behalf of STAPPA--the State and 
Territorial Air Pollution Program Administrators--and ALAPCO--the 
Association of Local Air Pollution Control Officials, the national 
associations of air quality agencies in 53 states and territories and 
more than 165 metropolitan areas across the country. I currently serve 
as Vice President of ALAPCO and Co-Chair of the STAPPA/ALAPCO Energy 
Committee. The members of our associations have primary responsibility 
under the Clean Air Act for implementing our nation's air pollution 
control laws and regulations and, moreover, for providing clean, 
healthful air for our citizens. Accordingly, we are pleased to have 
this opportunity to provide our perspectives on the need for 
legislation to control multiple emissions from electric utilities.
     we have made substantial progress in cleaning up our air, but
                     significant challenges remain
    Over the past three and a half decades, since authorization of the 
first federal Clean Air Act, the United States has made substantial 
progress in reducing air pollution, while, at the same time, 
experiencing strong economic growth. In fact, since 1970, aggregate 
emissions of the six criteria pollutants have decreased by 51 percent. 
During this same time, Gross Domestic Product has increased by 176 
percent, energy consumption by 45 percent, vehicle miles traveled by 
155 percent and the U.S. population by 39 percent. However, our nation 
continues to face significant public health and environmental problems 
as a result of emissions into our air.
    Last year, all or part of nearly 500 counties were designated as 
nonattainment for the 8-hour ozone standard and earlier this month the 
U.S. Environmental Protection Agency (EPA) published a notice in the 
Federal Register designating 225 counties, in whole or in part, as 
nonattainment for the fine particulate matter (PM2.5) 
standard. Further, fish consumption advisories have been issued for 
some or all of the water bodies in at least 45 states due to elevated 
concentrations of the persistent and bioaccumulative pollutant mercury, 
which can contaminate aquatic life and pose a serious threat to humans 
who consume the contaminated species. In addition to contributing to 
tens of thousands of premature deaths and innumerable adverse health 
consequences, emissions into our air also cause such damage to our 
environment as visibility impairment, eutrophication of waterways and 
acid rain.
Emissions From Electric Utilities Are a Key Contributor to Air 
        Pollution
    Electric utilities are the largest remaining stationary source of 
air pollution in the United States, an order of magnitude greater than 
the second largest category, refineries. According to EPA and others, 
power plant emissions each year are responsible for over 20,000 
premature deaths. Additionally, according to a recent study by the 
Clean Air Task Force, power plant emissions cause over 38,000 heart 
attacks, more than 3 million lost work days and in excess of half a 
million asthma attacks.
    Nationally, utilities are responsible for 68 percent of annual 
sulfur dioxide (SO2) emissions and 23 percent of nitrogen 
oxide (NOx) emissions. Further, it is important to note that in some 
areas of the country, power plant contributions to SO2 and 
NOx levels are considerably higher. Add to these no fewer than 67 
hazardous air pollutants (HAPs), which power plants also emit in 
substantial quantities, including mercury, for which electric utilities 
account for 41 percent of the nation's emissions. In addition, electric 
utilities are responsible for 39 percent of U.S. carbon dioxide 
emissions, which contribute to global warming.
    The magnitude of emissions from power plants, and the serious 
public health and welfare implications these emissions have, make 
controlling electric utilities a top priority. In fact, broad, rigorous 
control of this sector is crucial to the success of state and local 
efforts not only to attain health-based air quality standards in a 
timely manner, but also to ensure maintenance of these standards into 
the future.
    An additional concern is the age of the coal-fired boilers 
operating across the country. Today, nearly three-quarters of all 
utility boilers are over 30 years old and most continue to operate 
without modern pollution control technology; in 10 years, almost 90 
percent of all boilers will exceed 30 years of age. Among the most 
important steps we, as a nation, can take to address air pollution and 
protect public health is to establish a comprehensive national multi-
pollutant approach for cleaning up these outdated power plants and 
ensuring that new plants are dramatically cleaner.
    stappa and alapco strongly support an effective multi-pollutant
                       approach for power plants
    STAPPA and ALAPCO endorse the concept of a comprehensive national 
strategy for reducing emissions of multiple pollutants from electric 
utilities. Such an approach could enhance opportunities for pollution 
prevention and sustainability and promote more expeditious compliance. 
A comprehensive, integrated approach would also offer important 
advantages to the regulated community in the form of increased 
certainty and cost efficiencies. Further, it would increase certainty 
and efficiency for state and local air quality regulators, both in 
terms of the development of our programs and in fulfilling our 
obligation to ensure clean, healthful air to our citizens.
    In May 2002, as various multi-pollutant proposals were emerging, 
STAPPA and ALAPCO adopted a set of principles (copy attached) outlining 
what we believe should serve as the foundation of a viable national 
multi-pollutant strategy for power plants.
    In our principles we call for an integrated approach based on an 
expeditious schedule, including interim compliance dates, that will 
allow us to reduce emissions as quickly as we can and consistent with 
the deadlines by which states and localities are required to meet 
health-based air quality standards. We believe firmly that such an 
approach--which should address all significant emissions from electric 
power generation--should supplement, not supplant, the existing Clean 
Air Act. Programs such as New Source Review (NSR), Maximum Achievable 
Control Technology (MACT) standards and regional haze, as well as other 
important statutory tools and requirements for achieving and sustaining 
clean air, must be retained.
    In addition, a viable multi-pollutant approach should establish the 
most stringent enforceable national emission reduction goals feasible. 
In particular, we recommend that national emissions caps be set at 
levels that reflect the installation of technology no less stringent 
than the best available controls on all existing units nationwide, with 
each existing plant required to meet a minimum level of control by the 
final compliance deadline. We further believe that in meeting these 
emission goals, the regulated community should be afforded flexibility, 
including an emissions trading mechanism for NOx and SO2, 
with appropriate limitations and protections against local adverse 
health or environmental impacts. And, very significantly, any multi-
pollutant strategy must ensure that regions, states and localities 
retain their authority to adopt and/or implement measures--including 
local offset and technology requirements--that are more stringent than 
those of the federal government.
    STAPPA and ALAPCO used the associations' adopted principles to 
evaluate S. 1844, the Chairman's Mark of the Administration's Clear 
Skies proposal, introduced on November 10, 2003. After careful study, 
we have concluded that the proposal fails on every one of our 
associations' core principles. The deadlines are too protracted, and 
well beyond those by which we must, and should, meet health-based air 
quality standards. The caps are simply not protective enough, and there 
is no minimum level of control required of each existing power plant. 
And we have tremendous concerns with the fact that this proposal strips 
away many of our most essential Clean Air Act tools and authorities. 
Accordingly, STAPPA and ALAPCO can not support this proposal.
    Although we would prefer that a multi-pollutant approach be 
established through legislation rather than regulation, given the 
serious deficiencies of this legislative proposal, we believe that 
continued implementation of the Clean Air Act will provide far greater, 
and more certain and timelier protection of public health and the 
environment. Toward this end, we have availed ourselves of every 
opportunity to provide EPA with our comments and recommendations to 
improve the two rules it has proposed--the Clean Air Interstate Rule 
and Utility MACT Rule--using its authorities under the existing Clean 
Air Act to address NOx, SO2 and mercury.
        stappa and alapco have significant concerns with s. 1844
    I would like to elaborate in a bit more detail on some of our key 
concerns with the multi-pollutant approach established in S. 1844.
Deadlines
    S. 1844 would postpone until 2018 the final date for industry 
compliance with the NOx, SO2 and mercury caps. Moreover, 
compliance will be deferred even further--to the mid-2020s--due to the 
impacts of the bill's credit banking and trading program. For mercury, 
this protracted compliance schedule is about 15 years later than 
Congress allowed under the Clean Air Act for utilities and other 
sources to comply with MACT. And for NOx and SO2, it is not 
only nearly a decade later than state and local attainment deadlines, 
it is also clearly counter to the Clean Air Act requirement for 
attainment as expeditiously as practicable. Since each year of delay 
will take an additional and unwarranted toll on public health and 
welfare, the solution is not to defer public health deadlines but, 
rather, to accelerate industry compliance dates. For this reason, we 
are also concerned with the bill's transitional area provisions, which 
could impede timely implementation of state and local regulatory 
initiatives and interfere with EPA's recent 8-hour ozone and 
PM2.5 nonattainment designations. In an analysis conducted 
last year, which I will discuss further in a moment, our associations 
concluded that an interim compliance date of 2008 and a final 
compliance date of 2013 are appropriate and feasible deadlines for the 
type of national multi-pollutant approach we envision.
Caps
    As I have already noted, we believe the caps in S. 1844 are far too 
lenient and do not reflect what is necessary and achievable for this 
source sector. Last spring, our associations completed a deliberative 
analysis (copy attached) of our multi-pollutant principles--
specifically, estimating what national caps could result from 
application of those principles, which call for installation of best 
available controls on electric utilities. What we found is that 
application of air pollution control technologies consistent with what 
various states across the country have committed or proposed to 
implement over the next decade (i.e., through state permits, court-
ordered settlements agreements or state regulations) would achieve NOx, 
SO2 and mercury caps that are significantly more protective 
than those in S. 1844, remain cost effective and still provide a 
reasonable margin of flexibility and opportunities for increased power 
generation.
    With respect to NOx, our analysis identifies an interim cap of 
1.51-1.87 million tons per year (tpy) by 2008 and a final cap of 0.88-
1.26 million tpy by 2013, compared to S. 1844's NOx caps of 2.1 million 
tpy by 2008 and 1.7 tpy by 2018. For SO2, our analysis 
identifies an interim cap of 3.0-4.5 million tpy by 2008 and a final 
cap of 1.26-1.89 million tpy by 2013, compared to S. 1844's 
SO2 caps of 4.5 million tpy by 2010 and 3.0 million tpy by 
2018. A regional SO2 cap for Western States should not 
interfere with the regional haze rule's SO2 annex. And for 
mercury, our analysis identifies an interim cap of 15-20 tpy by 2008 
and a final cap of 5-10 tpy by 2013, compared to S. 1844's caps of 34 
tpy (which is even weaker than the already-too-weak 26-tpy cap 
originally included in Clear Skies) in 2010 and 15 tpy in 2018.
    Our concerns regarding S. 1844's weak caps are further compounded 
by the inclusion in the bill of provisions for early reduction credits. 
Although we favor early reductions and encouraging sources to reduce 
emissions as soon as possible, we firmly believe that if early 
reduction credits are provided, the use of such credits must be 
appropriately limited. However, because S. 1844 would provide credits 
for early reductions above the cap without limit, the already weak 
emission caps will be further diminished. The bill exacerbates this 
concern by granting early reduction credits above the cap and without 
limit to so-called ``opt-in'' units--non-utility industrial units that 
may elect to be designated as affected units--thereby ensuring that the 
bill will not achieve even its own claims regarding the levels of 
required reductions from the utility sector. This opt-in feature also 
appears likely to push back achievement of the 70 percent reduction 
targets even past mid-2020.
    EPA has estimated the benefits of Clear Skies to be $110 billion at 
a cost of $6 billion--a benefit-to-cost ratio of about 20:1. Clearly, 
then, more rigorous and timely caps would not only yield substantially 
increased benefits, but could do so while still remaining very cost 
effective. In contrast, leaving such a significant level of feasible, 
cost-effective emission reductions behind--as S. 1844 does--comes at a 
very high cost. It will be difficult to return to the utilities to seek 
further reductions once the program is put into place, and because air 
pollution control is a zero-sum calculation, we will be forced to seek 
those reductions from other sources--including ones that are already 
well regulated and/or for which controlling emissions is far more 
costly and less cost effective, such as small businesses--and through 
strategies that may be publicly unpopular. Such an alternative is not 
only unfair to those sources doing their fair share to clean up our 
air, it may well not result in sufficient emission reductions, leaving 
our nation with a serious environmental and public health problem and 
few tools to adequately address it.
Statutory Rollbacks
    As troubling as these problems are, of even greater concern to us 
is the fact that S. 1844 abolishes some of the most important statutory 
tools and requirements for achieving and sustaining clean air.
    Contrary to STAPPA and ALAPCO's firm belief that new and existing 
power plants must continue to be subject to NSR, S. 1844 repeals this 
important program for affected sources, including requirements for new 
units to install state-of-the-art Lowest Achievable Emission Rate 
control technology and acquire emission offsets in nonattainment areas, 
and install Best Available Control Technology and protect air quality 
increments to guard against adverse local air quality impacts in 
attainment areas. Existing sources making major modifications should be 
required to install the best available controls on affected units at 
the time of modification, acquire any emission allowances required to 
address emission increases and ensure against adverse local health or 
environmental impacts. However, in place of all this, S. 1844 regresses 
to seriously outmoded New Source Performance Standards (NSPS) and, 
further, rescinds requirements to update the NSPS on a periodic basis. 
Further, this bill would allow non-utility units from other industries 
to qualify for this same regulatory relief, as well.
    S. 1844 also eliminates all the requirements of sections 169(A) and 
(B) of the Clean Air Act, including not only Best Available Retrofit 
Technology (BART) requirements, which the original Clear Skies bill 
repealed, but all visibility requirements and regional haze rules. 
Further, it revokes many Prevention of Significant Deterioration (PSD) 
requirements and relaxes protections for Class I areas. Moreover, the 
bill also includes provisions that prevent states from taking credit in 
their State Implementation Plans for any NSR or PSD requirements they 
seek to apply to affected units. Opt-in units would also be able to 
take advantage of these relaxations.
    With respect to toxic air pollutants, S. 1844 repeals the utility 
MACT rule, including the regulation of non-mercury HAPs, and rescinds 
residual risk requirements for HAPs, which, under current law, protect 
the public with an additional margin of safety following application of 
stringent technology requirements. Once again, the bill would allow 
non-utility opt-in units to escape these requirements.
    The bill also seriously undermines states' abilities to protect air 
quality in their jurisdictions by prohibiting compliance with any 
petition under section 126 until 2014. Further, it impedes potential 
use of this important authority by requiring a downwind area to first 
demonstrate that all more cost-effective measures have been 
implemented--a process that will surely result in delay and lead to 
litigation. In addition, EPA is prevented from exercising its authority 
to issue a SIP call under section 110 until 2014.
                               conclusion
    Once again, I would like to reiterate that STAPPA and ALAPCO 
endorse a national multi-pollutant approach for power plants. Such a 
program should institute appropriately rigorous emission reductions on 
a timely schedule and compel use of state-of-the-art technology. We are 
disappointed that S. 1844 not only falls far short of our associations' 
adopted principles, but also strips states and localities of our 
critical tools and authorities for providing clean, healthful air. On 
behalf of STAPPA and ALAPCO, I thank you for this opportunity to 
present our associations' views on this very important issue. We look 
forward to working with you in the weeks ahead.


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     Responses by John A. Paul to Questions from Senator Voinovich
    Question 1. Your testimony states that ``. . . continued 
implementation of the Clean Air Act will provide far greater and more 
certain and more timely protection of public health and the environment 
[than S. 131].'' Has litigation ever delayed implementation of any 
Clean Air Act requirements? Please explain how your statement takes 
into account the possibility of implementation delays due to 
litigation. Do you expect litigation over EPA's final regulations in 
the Clean Air Interstate Rule, Clean Air Mercury Rule, and Regional 
Haze Rule? Do you think litigation could delay the implementation of 
these rules?
    Response. STAPPA and ALAPCO are concerned about any delays that 
would impede successful achievement of our primary goal of attaining, 
as expeditiously as practicable, and maintaining health-based air 
quality standards. Delays due to protracted compliance dates are of key 
concern relative to S. 131. Litigation can also cause delay and, with 
respect to S. 131, is likely, given the controversial nature of this 
program and its complexity. Further, under S. 131, EPA is required to 
make a number of ``determinations'' over the next 15 years; each of 
these determinations will he subject to judicial challenge at the time 
they are made, with the possibility for delay each time.
    Question 2. Your testimony states that ``. . . mercury emissions 
have resulted in the issuance of fish consumption advisories in 45 
States.'' Please provide a detailed comparison of the number of fish 
consumption advisories expected under the bills proposed by Senators 
Jeffords and Carper with the number of advisories under Clear Skies.
    Response. The reference in STAPPA and ALAPCO's testimony to the 
number of fish consumption advisories due to mercury contamination was 
obtained from EPA's National Listing of Fish Advisories (please refer 
to http://epa.aov/waterscience/fish/advisories/index.html for 
additional information). We have not analyzed the impact of proposed 
legislation on the number of fish advisories expected nor are we able 
to make such a projection.

    Question 3. Your testimony states that ``most of the litigation is 
from the utility industry.'' Would you please provide detailed 
information to support your statement, including a list of non-utility 
litigants in each of those cases?
    Response. My comment regarding litigation and the utility industry, 
which was part of my response to a question from Senator Lautenberg 
during the question and answer session, was in reference to the level 
of litigation involving utilities, particularly related to New Source 
Review.

    Question 4. In a 2004 report (``Air Quality Management in the 
United States'') the National Research Council--part of the National 
Academy of Sciences--stated: ``The implementation of air quality 
regulations should be less bureaucratic--with more emphasis on results 
than process . . .'' Do you disagree with Council?
    Response. No, we do not disagree with the National Research 
Council's statement--the ultimate success of state and local air 
pollution control agencies' efforts to achieve as expeditiously as 
practicable and sustain clean air will be determined by results. 
However, the process in which we engage as we work toward our goals 
will have a significant bearing on our ultimate success. We note that 
much of the bureaucracy that frustrates implementation efforts is due 
to the complexity of regulations that seek to provide the regulated 
community with flexibility.
                                 ______
                                 
 Responses by John A. Paul to Additional Questions from Senator Inhofe
    Question 1. In previous appropriations measures, members of both 
the House and Senate Appropriations Committees have expressed concerns 
over the U.S. Environmental Protection Agency's misappropriation of 
Clean Air Act 105 grant funds to ``activities and national 
associations'' taking away from grant funds statutorily designed to be 
awarded to state and local governmental air agencies. Prior concerns 
have been expressed in at least the following two reports.

        ``The Subcommittee is concerned that EPA has been 
        inappropriately setting aside and spending portions of Section 
        105 air grants to support activities that were historically 
        funded and should continue to be funded through EPA's own 
        budget (i.e., not federal grant funds intended for state and 
        local air agencies). In the fiscal 2001 budget, EPA was 
        intending to use Section 105 grants to support training 
        activities, an emission inventory improvement program and a 
        heavy-duty truck and bus idling study, for example. These are 
        very important activities that should be funded; however, the 
        resources to support them should not be taken from state and 
        local air grants.
        EPA's practice of setting aside and spending Section 105 
        grants, rather than distributing them to state and local air 
        agencies, is particularly troublesome because the Agency has 
        decided to make these expenditures unilaterally. There are 
        certainly instances in which it is expeditious for EPA to 
        withhold grant funds from state and local agencies to be spent 
        at the national level, including making equipment purchases on 
        behalf of state and local air agencies or to pay for projects 
        or activities that state and local agencies have decided to 
        support collectively and for which it is administratively more 
        advantageous to have EPA fund directly. However, the decision 
        to withhold state and local grant funds for expenditure 
        directly by EPA should only be made after conferring with state 
        and local air agencies and obtaining their concurrence. This 
        should be done only for activities that are the responsibility 
        of state and local air agencies.
        In this fiscal year and in the future, the Committee directs 
        EPA to fund activities such as those identified above (i.e., 
        training, the emission inventory project, the heavy-duty bus 
        and truck idling study), and similar activities that are 
        federal responsibilities, from within the agency's own budget 
        and to allow state and local agencies to use the funds that 
        Congress has earmarked for the many important responsibilities 
        facing them. Additionally, in fiscal 2001 and in the future, 
        EPA should withhold state and local grant funds at the national 
        level to pay for activities or programs only if such activities 
        are efforts that will benefit state and local air agencies, if 
        the activities are the responsibility of state and local air 
        agencies and if state and local air agencies have provided 
        their concurrence.'' (Emphasis added).
h.r. rep. no. 106-674, departments of veterans affairs and housing and 
urban development, and independent agencies appropriations bill, at 61-
                               62 (2001).
        ``In addition, the Committee directs the EPA not to use any of 
        the funds appropriated or otherwise made available in this Act 
        to make a direct assistance grant to a national association or 
        group of associations whose membership includes State program 
        administrators without such association or group of 
        associations first obtaining written approval from each member 
        State. If one or more member States do not give their advance 
        approval, EPA may make the direct assistance grants to the 
        association with an amount deducted from the total available 
        direct assistance grant amount based on the States' population 
        as a percentage of the total membership's population times the 
        available amount and direct those deducted funds to the 
        individual States.'' (Emphasis added).
 s. rep. no. 108-353, departments of veterans affairs and housing and 
urban development, and independent agencies appropriations bill, at 111 
                                (2005).
    Question 1a. Please provide copies of all written approvals from 
each member state and local governmental agencies indicating permission 
to withhold financial assistance under any environmental statute to be 
directly provided to STAPPA-ALAPCO.
    Response. STAPPA and ALAPCO are familiar with the House and Senate 
Appropriations Committee language that was quoted in the question. The 
excerpt from H. Rept. 106-674 (2001) was not related specifically to 
funding for national associations, but, rather, was in response to the 
fact that EPA was setting aside and spending portions of Section 105 
air grants on activities that the state and local air agencies did not 
wish EPA to fund through federal air grants and that EPA should have 
been using its own budget to support. These included certain training 
activities, an emission inventory project and a mobile source study, as 
identified in the report language. The language was designed to ensure 
that EPA obtained the concurrence of state and local air agencies prior 
to setting aside funds for those types of activities.
    The second excerpt, from S. Rept. 108-353, pertained to fiscal year 
2005 appropriations. However, the Conference Committee subsequently 
superseded that passage in its report, stating ``The conferees have not 
included language that directed EPA to deduct from grants to state 
associations for a state that does not wish to participate in the 
association, as proposed by the Senate. The conferees believe that 
current recipients of such grants have administratively addressed this 
issue.'' (H. Rept. 108-792).

    Question 1b. Please provide copies of all documentation from 
STAPPA-ALAPCO to member agencies disclosing their rights in providing 
funding and dues to STAPPA/ALAPCO.
    Response. On August 24, 2000 (and updated on December 15, 2003) 
STAPPA, ALAPCO and EPA jointly developed a comprehensive document 
explaining how the STAPPA/ALAPCO headquarters is funded and providing 
details on how contributions from individual agencies are determined 
and handled. This document, entitled ``Policy Statement on Funding the 
Secretariat of the State and Territorial Air Pollution Program 
Administrators and the Association of Local Air Pollution Control 
Officials,'' which was shared with the Senate Environment and Public 
Works Committee last summer, is enclosed for your convenience. This 
document has been provided to the members of STAPPA and ALAPCO on 
several occasions, most recently in November 2004.
    Additionally, in May 1999, the members of STAPPA and ALAPCO adopted 
a resolution instructing EPA to provide federal grants each year to 
help support and operate the STAPPA/ALAPCO Secretariat and specifying 
that the funds should be reserved from the national grant total, prior 
to allocation to the EPA regions. This resolution is also enclosed for 
your information.

    Question 1c. Please disclose a listing of all STAPPA/ALAPCO member 
agencies and the dues paid by each member agency to STAPPA/ALAPCO.
    Response. The membership of STAPPA includes 48 states (Colorado and 
South Dakota are not members), the District of Columbia and four U.S. 
territories. Their financial support of STAPPA varies based on their 
respective populations. ALAPCO includes more than 165 local air 
agencies around the country. EPA maintains a listing of each state and 
local agency's individual financial contribution to STAPPA and ALAPCO.

    Question 2. Please disclose information regarding all federal 
funding and assistance agreements including grants, cooperative 
agreements, and contracts (herein after simply referred to as 
assistance agreements) provided from any federal agency to STAPPA/
ALAPCO for the present fiscal year and five prior fiscal years. Such 
information shall include copies of the assistance agreements, the 
terms of the assistance agreements, the amounts of the assistance 
agreements, documentation of expected deliverables, all documentation 
indicating compliance with the terms of each assistance agreement, and 
all documentation indicating whether each assistance agreement was 
subject to competition prior to award.
    Response. Please see enclosures.

    Question 3. Please disclose all annual filings with the Internal 
Revenue Service including annual Form 990 filings for STAPPA-ALAPCO and 
the State and Territorial Air Pollution Program Administrators and 
Association of Local Air Pollution Control Officials individually for 
the most recent tax period and previous five tax periods. Such 
disclosure shall include annual schedules of contributors and grants.
    Response. Please see enclosures.

    Question 4. Please disclose all annual financial statements for 
STAPPA-ALAPCO and State and Territorial Air Pollution Program 
Administrators and Association of Local Air Pollution Control Officials 
individually for the previous five years.
    Response. Please see enclosures.

    Question 5. Please disclose copies of all STAPPA-ALAPCO by-laws 
governing the ``rights of member agencies and explain the process by 
which STAPPA-ALAPCO involves its member agencies in developing 
organization positions and policy statements.
    Response. Please see enclosures.

    Question 6. Does STAPPA-ALAPCO have a position on regulating 
CO2?
    Response. STAPPA and ALAPCO do not have a position on regulating 
CO2. One of STAPPA/ALAPCO's Principles for a Multi-Pollutant 
Strategy for Power Plants, adopted in May 2002, is to ``address all 
significant emissions from electric power generation.'' STAPPA and 
ALAPCO have two resolutions related to greenhouse gas emissions: a 
Resolution on Early Reduction of Greenhouse Gas Emissions, adopted in 
October 1998, and a Resolution on Global Climate Change, adopted in 
October 1997. These principles and resolutions are enclosed.
                                 ______
                                 
Responses by John A. Paul to Additional Questions from Senator Jeffords
    Question 1. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein? If so, why?
    Response. No.

    Question 2. Based on the States' experience and data, what are the 
lowest cost control options available to achieve attainment with the 
ozone and fine particulate matter air quality standards by the 
deadlines in the Clean Air Act?
    Response. As noted in our testimony, utilities are responsible for 
68 percent of annual SO2 emissions and 23 percent of NOx 
emissions. By an order of magnitude, they are the most cost-effective 
category of sources to control because of their contribution to 
pollution, their size and the ready availability of control 
technologies. Local control measures are not as cost-effective--nor 
will they be sufficient to attain the health-based ozone and fine 
particulate matter air quality standards by the deadlines in the Clean 
Air Act. As EPA explained in its analysis for the Clean Air Interstate 
Rule, ``a substantial part of local emissions is attributable to mobile 
sources, small business, and household activities for which practical, 
large-reduction, and quick-acting emissions reductions measures could 
not be identified at this time'' (69 Federal Register 4599, January 30, 
2004). A strong national program to control electric utility steam 
generating unit emissions is needed for states and localities to attain 
the ozone and fine particulate matter air quality standards by the 
deadlines in the Clean Air Act.

    Question 3. EPA estimates that the 1990 Clean Air Act Amendments 
may have already reduced some 70 million tons of pollution. Could you 
compare the pollution that would be reduced by application of the 
STAPPA principles and the amount reduced by S. 131 (or S. 1844) over 
the course of the next 20 years?
    Response. The difference in annual emissions between application of 
the STAPPA/ALAPCO principle of best available controls and Clear Skies 
can be estimated using the associations' analysis dated March 15, 2004, 
which was attached to my written testimony and enclosed with this 
response. Attachment 3 of that analysis summarizes the caps proposed in 
key legislative proposals and EPA's 2001 straw proposal, and caps 
achievable with today's best available controls as estimated in STAPPA/
ALAPCO's analysis. These technology-based cap ranges were calculated by 
the associations using a range of reasonable best available control 
technology determinations for retrofits of existing units. Focusing on 
the final caps, following is the relevant comparison requested. In 
general, today's air pollution control technology can achieve caps that 
are about one-half the final caps in Clear Skies.


------------------------------------------------------------------------
                                   Clear Skies Final    Best Technology
            Pollutant                     Cap              Cap Range
------------------------------------------------------------------------
NOx.............................  1.7...............  0.88-1.26 million
                                                       tons/yr
SO2.............................  3.0...............  1.26-1.89 million
                                                       tons/yr
Hg..............................  15*...............  5-10 tons/yr
------------------------------------------------------------------------
*Note that if the new Clear Skies de minimis exemption of 50 lbs of
  mercury per year per unit is adopted, the resultant cap would be
  greater than 27.5 tpy since there are about 1,100 coal-fired electric
  generating units.


    Following is the annual difference between Clear Skies and the 
average of today's best retrofit technology range and what would be the 
cumulative difference over a 20-year period:


------------------------------------------------------------------------
                                   Annual Difference  20-Year Difference
                                        in Caps             in Caps
------------------------------------------------------------------------
NOx.............................  0.63 million tons/  12.6 million tons
                                   yr.
SO2.............................  1.43 million tons/  28.6 million tons
                                   yr.
Hg..............................  7.5 tons/yr.......  150 tons
Hg*.............................  over 20 tons/yr...  over 400 tons
------------------------------------------------------------------------
* Difference in mercury emissions with the 50 lb/yr/unit Clear Skies
  exemption.


    Question 4. What impact is S. 131 likely to have on visibility and 
regional haze?
    Response. S. 131 dramatically weakens current provisions in the 
Clean Air Act designed to improve visibility and reduce regional haze. 
It would repeal not only the current Clean Air Act requirement that 
affected facilities apply the Best Available Retrofit Technology to 
protect visibility in national parks (retaining it only for sources 
within 50 kilometers of a Class I park area), but all the requirements 
of sections 169(A) and (B), pertaining to visibility and regional haze. 
Congress in the Clean Air Act recognized that sources all over the 
country--not just near Class I park areas--contribute to regional haze 
and affect park visibility. Thus, the Clean Air Act requires, among 
other things, that 26 categories of major sources put on control 
technology if they emit any air pollutant which may reasonably be 
anticipated to cause or contribute to any impairment of visibility in a 
Class I area.

    Question 5. Do you think it's appropriate for the EPA to go back in 
time to reverse regulatory determinations, like they are proposing to 
do on the mercury finding from 2000?
    Response. No, we do not believe it is appropriate. The regulatory 
determination was based on, among other things, the Mercury Study 
Report to Congress (December 1997) and the Utility Air Toxics Study 
(February 1998). These studies and other information the agency 
gathered confirmed that it was ``appropriate and necessary'' for EPA to 
establish regulations under Section 112 to control emissions of 
hazardous air pollution from electric utility steam generating units. 
Nothing has changed since December 2000 to make the establishment of 
standards under Section 112 no longer ``appropriate and necessary.''

    Question 6. What impact will S. 131 have on the States ability to 
protect their citizens from transported pollution and unhealthy air 
quality?
    Response. S. 131 expressly rescinds important tools states and 
localities have to address unhealthy air quality and transported 
pollution. All sources participating in the emissions trading scheme 
are exempted from NSR requirements until 2015, regardless of whether or 
not these sources impact air quality in the area or downwind. States 
are also prohibited from applying NSR to modified sources under their 
EPA-approved SIPs, and even if they are able to retain a program as a 
matter of state-law only, they cannot take credit for it in their 
attainment or maintenance plans. This preempts more stringent state 
programs. Section 3(a)(3) bars the application of any 126 interstate 
air pollution remedy to affected facilities before 2014, thus 
preventing states and localities from addressing transported air 
pollution in sufficient time for attainment deadlines. More 
importantly, it requires EPA to make a nearly impossible showing before 
it can apply such a remedy--the remedy would only be available if EPA 
determined that there were no other possible cost-effective measures to 
apply to any other source category. S. 131 also prohibits states from 
restricting electric steam generating units (EGUs) in their 
jurisdiction from selling their allowances out-of-state. Accordingly, 
if a state adopted more stringent emission caps instate, there is 
nothing to prevent the EGUs from selling allowances to upwind EGUs, 
thereby exacerbating transported air pollution.

    Question 7. What impact could or would the ``transitional'' area 
classification have on the existing system aimed at achieving the 
health-based NAAQS?
    Response. The ``transitional'' area classification will delay 
achievement of the health based NAAQS. The Clean Air Act requires 
attainment as expeditiously as practicable, with an outer date of 2010 
(with the possibility of a five-year extension) for PM2.5 
and with dates between 2007 and 2014 for most areas under the 8-hour 
ozone standard. S. 131 provides that an area can be labeled 
``transitional'' rather than ``nonattainment'' if it can use modeling 
to show that it will attain these standards by 2015. Therefore, S. 131 
automatically delays achievement of the NAAQS for several years at the 
outset. In addition, labeling these areas ``transitional'' rather than 
``nonattainment'' has the following implications: (1) these areas are 
exempted from the statutory requirement to attain as expeditiously as 
practicable; (2) these areas will have less stringent NSR requirements, 
exempting all sources in the area--not just those participating in the 
cap-and-trade scheme--from more stringent control and offset 
requirements; and (3) there is no meaningful remedy for nonattainment--
if a state fails to attain by 2015, it merely needs to submit a SIP 
showing it will attain by 2020 and is given until 2022 to attain. 
Furthermore, to the extent these ``transitional'' areas are 
transporting pollution downwind, less stringent cleanup requirements in 
these areas and longer attainment deadlines will impede downwind areas' 
ability to achieve the health-based NAAQS on a timely basis.

    Question 8. What changes to the Clean Air Act would you recommend 
to enhance the ability of areas to achieve attainment of the NAAQS more 
quickly than the current path?
    Response. STAPPA and ALAPCO's Principles for a Multi-Pollutant 
Strategy for Power Plants (enclosed), adopted by our associations on 
May 7, 2002, outline what we believe should serve as the foundation of 
a viable integrated national approach for regulating air emissions from 
electric power plants on an expeditious schedule with synchronized 
deadlines.
                                 ______
                                 
         Responses by John A. Paul to Additional Questions from
                           Senator Lautenberg
    Question 1. Can you explain why it is so important that a multi-
pollutant program for power plants be enacted that supplements existing 
law and not as a substitute?
    Response. A number of tools and requirements provided for by the 
Clean Air Act--including those related to New Source Review, 
visibility, the control of hazardous air pollutants from utilities and 
states' abilities to protect air quality in their jurisdictions--have 
proven to be essential to state and local air agencies in their efforts 
to achieve and sustain clean air; these tools and requirements must be 
retained. In addition, we believe that, given the deficiencies of the 
multi-pollutant control program established under the proposed Clear 
Skies legislation, a program based instead on the existing law will 
provide far greater, and more certain and timelier protection of public 
health and the environment.

    Question 2. S. 1844 would repeal many provisions of the existing 
Clean Air Act in order to ``simplify'' it. Isn't this essentially 
returning to the failed approaches of the past before 1990?
    Response. We do not believe it is necessary to repeal provisions of 
the Clean Air Act in order to ``simplify'' it for the purposes of 
controlling emissions from utilities, particularly if repealing 
provisions will compromise our ability to protect public health and the 
environment, which we believe the rescissions in S. 1844 will do. 
Instead, as the Acid Rain Program established in the 1990 Clean Air Act 
Amendments demonstrates, it is possible to establish and implement a 
viable new pollution control strategy within the framework of the 
existing law.

    Question 3. All of New Jersey's counties are currently out of 
attainment for PM2.5. EPA is claiming all these counties 
will be brought into attainment under Clear Skies--do you agree? If so, 
by what date would they reach attainment?
    Response. All of New Jersey's counties are out of attainment for 
the 8-hour ozone National Ambient Air Quality Standard (NAAQS) and 13 
of New Jersey's 21 counties are out of attainment for the 
PM2.5 NAAQS.
    Ozone--Clear Skies will not bring any additional New Jersey's 
counties into attainment for ozone. This is because Clear Skies 
achieves little, if any, further NOx reductions during the ozone season 
than is being achieved with existing rules (the NOx SIP call). Also, 
there is the possibility that NOx emissions could increase during the 
summer ozone period, because the Clear Skies cap is annual, and non-
ozone season decreases in NOx could be used to increase NOx emissions 
during the ozone season.
    PM2.5--While Clear Skies would improve air quality in 
New Jersey, it is not clear whether these improvements will be 
sufficient to attain the NAAQS. It is clear that Clear Skies would not 
result in New Jersey's attainment of the PM2.5 NAAQS by the 
deadlines established in the Clean Air Act: 2010, with the possibility 
of an extension to 2015. We understand that New Jersey is reluctant to 
seek an extension to 2015, because of the adverse health effects of 
PM2.5. Further, attainment by even the 2015 extension date 
is unlikely because trading allowed for under Clear Skies will push 
compliance with the Clear Skies' 2015 cap well beyond 2015. Since 
sulfates from coal-fired power plants are the largest category of 
PM2.5 emissions and reductions of SO2 emissions 
from power plants are the most cost-effective way of reducing 
PM2.5 emissions, it is economically efficient and 
environmentally appropriate that all reasonable emission reductions 
(not just the least expensive) be achieved from coal-fired power 
plants.
                               __________
   Statement of Senator Beverly Gard, Chair, Energy and Environment 
                Affairs Committee, Indiana State Senate
    Mr. Chairman and members of the subcommittee: Thank you for the 
opportunity to testify. My name is Beverly Gard and I have served as a 
member of the Indiana State Senate for 16 years. I am chairman of the 
Senate Energy and Environmental Affairs Committee, and the Public 
Health Subcommittee. I serve on the Environment Committee of the 
National Conference of State Legislators and previously served as the 
committee chairman. Previously, I worked as a biochemist in the 
healthcare industry.
    My approach has been to balance the need for cleaner air and water 
with our responsibility to promote economic growth, jobs and 
opportunity for the citizens of my state. I believe very strongly that 
such a balance can be found. It is possible to both promote a cleaner 
environment and ensure a healthy economy. I'm pleased to testify today 
on legislation that I believe strikes that appropriate balance and I 
appreciate the opportunity to share my views.
    I am pleased to see that the committee is, again, considering a 
multi-emissions approach which, if properly crafted, would result in 
the largest power plant emissions reduction program in history. Multi-
emissions legislation enjoys the support of a diverse group of 
organizations such as the National Governors Association, the National 
Association of Counties and the Environmental Council of States. It has 
also garnered support from labor organizations such as the 
International Brotherhood of Electrical Workers and the United 
Mineworkers of America and business groups such as the U.S. Chamber and 
the National Association of Manufacturers.
    This range of support indicates to me that the multi-emissions 
approach hits that ``sweet spot''--it's both good for the environment 
and the economy. That's critical to a state like Indiana where our 
opportunity to grow economically is directly linked to the ability of 
our state's electricity providers to keep costs competitive.
    In Indiana, approximately 95 percent of the electricity generated 
comes from coal-fired power plants, second only to West Virginia. This 
compares to 70 percent for all upper Midwest States and 52 percent for 
the national average. Indiana has the 9th lowest retail electricity 
prices in the nation and 24 percent below the national average. Indiana 
utilities consume over 48 million tons of coal a year with over 32 
million tons of that coal coming directly from Indiana mines.
    Yet, since the Clean Air Act was last amended in 1990, 
SO2 emissions are down over 45 percent, and NOx, have been 
reduced by roughly 70 percent. The state's utilities have spent in 
excess of $3 billion to reduce emissions since 1990 and the utilities 
in the state have recently estimated that they may have to spend $3 
billion more to comply with new pending EPA regulations.
    Today, nearly 15 years after the passage of the 1990 Clean Air Act, 
Americans are enjoying significantly better air quality, not at an 
insignificant cost, but at a price our economy has been able to bear. 
So, if the Act has worked why do we need a new multiemissions bill?
    The answer is litigation and uncertainty. The Act includes multiple 
regulatory approaches to reduce the same emissions. In addition, 
despite the onset of regulations, those regulations will be in court--
creating uncertainty for the states that must comply with nonattainment 
designations already made and for the utilities that must comply with 
whatever the final outcome might be. There is even a question in the 
regulations as to whether certain coal types will gain favored status 
over others.
    But let me tell you what else is at risk. The longer rules are 
fought over in court, the longer the breathing public remains at risk. 
And, the longer the rules are in court, the more difficult the task of 
meeting new EPA air attainment guidelines will be--with states battling 
each other to secure emission reductions from sources outside their 
region.
    However, with legislation, states are provided the roadmap to 
reaching these reductions. In fact, using the NOx caps set in Clear 
Skies Indiana utility NOx emissions would be reduced from 262,260 tons 
annually to 106,000 tons in Phase I and less than 79,000 tons in Phase 
II. This represents a 60 percent reduction in Phase I and a 70 percent 
reduction in Phase II from actual 2003 levels. Using EPA's projections 
for the impact of Clear Skies all counties in Indiana should be in 
attainment for ozone by the first phase in 2010.
    And, under the new fine particles nonattainment designations of 
January 2005, 14 full counties and five partial counties in Indiana 
were labeled as nonattainment. Using 2001 to 2003 data from fine 
particle monitors in the state most counties were no more than 10 
percent above the standard. With the SO2 caps set in Clear 
Skies Indiana Utility SO2 emissions would be reduced from 
805,000 tons annually to 253,000 tons in Phase I and less than 171,000 
tons in Phase II. This represents a 69 percent reduction in phase I and 
a 79 percent reduction in Phase II from actual 2003 levels. Using EPA's 
projections for the impact of Clear Skies all counties in Indiana 
should be in attainment for fine particles by the first phase in 2010.
    I would also like to spend a couple of minutes talking about 
another benefit that a multiple pollutant bill will provide in the form 
of mercury reductions. As presented, the emissions reductions required 
under the Clear Skies initiative will provide companies with a clearly 
defined and efficient market based trading program for all three 
pollutants. This creates planning certainty for utilities as they 
integrate all pollution control retrofits for all three pollutants. 
More importantly, from my perspective, it minimizes the financial 
impact to consumers. In addition, it allows mercury emissions to be 
addressed on a national basis, providing uniformity and consistency 
among the many states under a trading program run by EPA.
    Multi-emissions legislation saves States environmental agencies 
large personnel and budget resources which would otherwise be required 
to develop 48 individual state programs which could be more efficiently 
implemented by EPA. I have heard that it takes less than 20 people at 
EPA to run the entire SO2 and NOx trading program. That 
level of efficiency could not be duplicated by a piecemeal approach to 
emissions reductions.
    I realize that much of the debate around multi-emissions focuses on 
how much and how fast. I have already outlined the significant emission 
reductions that will be achieved through this bill in a key coal 
burning state. And, while I believe that reducing mercury is extremely 
important, it is also imperative for Congress to recognize that there 
remains a debate about the role of utility emissions in reducing 
mercury levels in fish. Mercury as you know is transported far and wide 
and counties burning coal with no controls also contributes 
significantly to the mercury levels in the United States.
    Therefore, I am convinced that a phased in reduction over a 
reasonable time period will provide the impacted utilities to get the 
reductions they can from SO2 and NOx controls while 
providing the time needed to test new mercury specific controls. The 
adoption of the SO2 and NOx caps in Clear Skies will help 
Indiana remove the stigma of nonattainment and help Indiana businesses 
remain competitive and encourage new economic development.
    Again, let me emphasize that these reductions do not come cost-
free. Indiana has already experienced significant economic losses as 
many of you on this committee have felt in your own states. I want to 
emphasize that we need to ensure that caps which are enacted, are 
achievable without breaking the bank. I live in this state, my family 
lives in this state. I plead with you today that approaches to set in 
motion all of these controls be fair, be balanced, do not disadvantage 
Indiana coal or the economies that thrive on that industry, and are 
enacted sooner rather then later.
    The planning certainty provided by a 3P legislation also sends the 
signal to power companies and coal companies that coal will be an 
important and reliable long term source of energy for our country. We 
have over a 250-year supply of useable coal reserves in our state 
alone. A manageable implementation of emissions reductions gives new 
clean coal technology, like IGCC and other new and clean ways to burn 
coal a chance to develop and mature. This will help reduce the 
country's reliance of foreign energy sources, improves our energy 
security and has the added benefit of keeping natural gas prices down.
    Only Congress can take the guess work out of this public policy 
issue by passing legislation that sets a long-term emissions reduction 
schedule to make the deepest reductions in power plant emissions at the 
lowest possible cost to the consumer.
    I would hope that the irony of arguing over specific cap levels 
beyond 70 percent reductions is not lost on the members of this 
committee nor Congress as a whole. Delay only brings with it, continued 
emissions and escalating costs. Those are not things that I want to 
bring home to Indiana citizens. I close by asking that you work 
together, irrespective of political party or geography, to pass this 
vitally important piece of legislation.
    I look forward to working with the Committee, the Administration 
and other key members of Congress to help make this legislation a 
reality.
    Thank you.


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                 ______
                                 
      Responses by Beverly Gard to Questions from Senator Jeffords
    Question 1. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein? If so, why?
    Response. I don't have evidence that Clear Skies would delay 
implementation of the Act. Even under the existing CAA structure, both 
the 8-hour ozone and PM2.5 standards are new health 
standards that present new challenges to the EPA as it develops new 
guidance documents for the states to use in developing attainment 
strategies. The EPA has been slow in getting guidance documents out and 
more time will be needed before the states know what the final guidance 
will require. In the case of PM2.5 in particular the states 
must start from scratch in developing the analytical tools and data 
needed to evaluate the large number of sources of fine particles, how 
much of the problem is local versus from regional sources, and then how 
to control those sources that ultimately will bring their states into 
attainment.
    As the states, EPA and Congress learned with the one-hour ozone 
standard it took decades of hard work and scientific research to 
understand how best to control ozone pollution for the varying mixes of 
sources in different regions of the country. All the while the states 
continued to develop and modify attainment SIPs and sources installed 
controls as expeditiously as they could. It is possible that we are 
facing a similar situation with the new PM2.5 standard. Many 
believe that solving the PM2.5 health standard around the 
country will be more difficult than the ozone experience.
    Protecting the public's health is important to all of us but states 
and affected sources would be burdened with an immensely complicated 
process and there is no way to predict if deadlines will or can be met. 
This would all be simplified under a multi-emissions approach.

    Question 2. Do you think that it is prudent to increase gas 
emissions?
    Response. No, it is important to continue the long term trend since 
1990 of steadily reducing SO2 and NOx emissions which is 
precisely what would happen under Clear Skies legislation. I know that 
Senator Jeffords voted for the 1990 Clean Air Act amendments which 
called for only a 50 percent reduction in emissions and included the 
very popular Acid Rain provision on which Clear Skies is modeled. As I 
noted in my testimony, since the Clean Air Act was last amended in 
1990, SO2 emissions are down 45 percent, and NOx have been 
reduced by roughly 70 percent. The state's utilities have spent in 
excess of $3 billion to reduce emissions since 1990 and the utilities 
in the state have recently estimated that they may have to spend $3 
billion more to comply with new pending EPA regulations.
    With the SO2 caps set in Clear Skies Indiana utility 
SO2 emissions would be reduced from 805,000 tons annually to 
253,000 tons in Phase I and less than 171,000 tons in Phase II. This 
represents a 69 percent reduction in phase I and a 79 percent reduction 
in Phase II from actual 2003 levels (and almost 90 percent below 1990 
levels). Using the NOx caps set in Clear Skies Indiana utility NOx 
emissions would be reduced from 262,260 tons annually to 106,000 tons 
in Phase I and less than 79,000 tons in Phase II. This represents a 60 
percent reduction in Phase I and a 70 percent reduction in Phase II 
from actual 2003 levels.

    Question 3. How would you advise this Committee to determine 
whether the value of the existing provisions of the Clean Air Act are 
worth more in health and environmental benefits than any possible 
replacement provisions? What kind of information would you use?
    Response. As I noted above, my written testimony provided estimates 
the emission reductions that would be achieved in my state alone if S. 
131 is enacted. Beyond the 70 percent reduction in utility NOx 
emissions already achieved since 1990, another 60 percent reduction 
will occur by 2010. And beyond the 45 percent reduction in utility 
SO2 emissions achieved since 1990, another 69 percent 
reduction will occur by 2010. These percentages are the equivalent of 
nearly 700,000 tons of NOx and over 1.2 million tons of SO2. 
The cap-and-trade systems in S. 131 are modeled on the Acid Rain 
Program, which produced the largest and most cost-effective emission 
reductions ever achieved under any Clean Air Act program. The benefits 
are easily calculable because of the statutory emissions caps, and will 
extend far beyond Indiana's borders.
    In contrast, the recent interim report from the National Research 
Council demonstrates the difficulty of attempting to quantify the 
relative benefits of just one Clean Air Act program--the New Source 
Review program--when the statutory prerequisites are not clear 
emissions goals, but regulatory consequences that are triggered by 
periodic investment decisions and other independent factors. The 
benefits of the proposed legislation are certain in both quantity and 
timing, and deserve careful consideration by this Congress so that 
further progress is not unduly delayed.

    Question 4. What are the lowest cost control options available to 
achieve attainment with the ozone and fine particulate matter air 
quality standards on the existing schedule in the Clean Air Act?
    Response. The EPA and the states have been working on these 
problems for many years and will continue to work to find the best 
balance between achieving air quality goals and minimizing the cost of 
compliance on its businesses and citizens. Since the sources of 
precursor emissions for both the ozone and fine particulate standard 
are comprised of a local and a regional source component the lowest 
cost controls will vary in different regions of the country. There is 
no silver bullet that will solve all air quality problems in all areas 
of the country.
    Large reductions from the electric power sector as contained in 
Clear Skies will help lower the regional component of ozone and fine 
particulate and will likely bring the vast majority of the American 
heartland into attainment with ozone and fine particulates. But 
reductions in the Midwest will have little or no affect on achieving 
attainment in the heavily urbanized areas in the Northeast. Pollution 
reductions targeting local sources in large urban areas will be needed 
if these areas are ever expected to reach attainment.

    Question 5. You used the phrase ``. . . as demographics change, as 
states' priorities change and technology changes . . .'' to suggest 
that the Clean Air Act needs to be modernized. What exactly does that 
phrase mean?
    Response. In response to a question regarding my opinion of the 
power industry's support for improving air quality, I referred to 
changes in economies, demographics and technology, subsequent to the 
enactment of the Clean Air Act. I believe that the power industry wants 
to improve air quality. But from my perspective as a legislator 
interested in achieving environmental improvements at costs that are 
affordable to the citizens of my state, S. 131 is a policy that will 
employ economic and technological efficiencies far better than the 
current approach we are using. Much progress has been made to improve 
air quality, but it will be increasingly costly to improve it even 
more. I trust that all of the committee members are as concerned as I 
am about increases in the price of energy and the real impact this has 
on particular demographic groups. According to the U.S. Department of 
Energy, families with annual incomes under $10,000 spend 29 percent of 
their income on energy while families with incomes over $50,000 spend 
just 4 percent. Emission reductions that are faster and deeper than S. 
131 requires will disproportionately affect lower income families.

    Question 6. According to EPA modeling of the Clear Skies approach, 
there are ten coal-fired power plants in Indiana that EPA believes will 
not put on advanced NOx or SOx controls before 2020. These represent 
one-third of the electric plants in Indiana. They generate about 5,000 
megawatts, have an average age of 49 years, and in 2001 about 70,000 
children with pediatric asthma lived within 30 miles of them. Since 
Clear Skies will not clean them up any time soon, what should we do?
    Response. There are two answers to this question. First, what is 
important for Indiana and the country as a whole, are the levels of air 
emissions and emission reductions attained overall, not the specific 
levels of controls at each specific power plant unit. As I have noted 
above, Clear Skies will reduce emissions substantially and continue the 
long-term emission reduction trend for SO2 and NOx in our 
state.
    Second, it is anticipated that by 2020 the vast majority of coal-
fired generation will be scrubbed in the state. Consider that the 
average allowance emissions rate assuming no growth in demand in coal 
use in Indiana is less than 0.3 lbs. SO2 per million Btu by 
2018 and about 0.4 lbs. in 2010. These rates simply cannot be achieved 
without the vast majority of coal fired power plant capacity being 
scrubbed. A similar picture emerges regarding the installation of SCRs 
given the large NOx reductions required under Clear Skies.

    Question 7. Should downwind states retain all of their existing 
rights under the federally enforceable Clean Air Act to ensure that 
upwind sources of pollution are not significantly contributing to or 
causing nonattainment in the downwind states? If not, why not?
    Response. Federalism is at the very foundation of the Clean Air 
Act. The Act expressly preserves the right of States to make decisions 
regarding the nature, extent and scope of the emissions reductions and 
controls necessary to achieve and maintain the national ambient air 
quality standards within their states and in downwind areas. States 
should be free to develop and implement a suite of emission reductions 
and control measures that are based on the specific factors and 
criteria set forth in the state legislation authorizing the development 
of their state implementation plans. Each State has a unique inventory 
of emissions sources, particular geographic features, and specific 
economic and energy concerns that must be accommodated in the design 
and implementation of a successful air pollution control program.
    The existing Clean Air Act authorities for addressing interstate 
air quality problems were initially utilized to deal with multi-state 
urban areas or large sources whose downwind impacts were direct and 
quantifiable. More recently, these authorities have been utilized to 
deal with smaller and smaller increments of ``regional contributions,'' 
whose total elimination would have no impact on the attainment status 
of the downwind area. The massive reductions required by the proposed 
legislation should be accompanied by a period of repose, to allow an 
opportunity to determine in fact whether these reductions and other 
existing Clean Air Act programs will be sufficient to eliminate any 
``contribution'' from identifiable utility sources to a downwind 
nonattainment area.

    Question 8. How many major sources of toxic air pollution in 
Indiana would be exempt, for any period, from the current requirement 
in the Clean Air Act to use maximum achievable control technology, if 
S. 131 were signed into law?
    Response. S. 131 establishes a mercury cap-and-trade program that 
includes an emissions cap for all coal-fired electric utility units 
that goes far beyond the levels proposed by EPA as the maximum 
achievable control technology (MACT) standard. Consistent with the 
effective cap-and-trade programs developed for the Acid Rain Program 
and the NOx SIP Call, very low emitting units (under 50 pounds per 
year) are not included in the program. Discussions with electric 
company representatives in the state indicate that several dozen 
electric facilities emit below this level, and make up a small 
percentage of total mercury emissions. The only other hazardous air 
pollutant that EPA considers to be a health concern at present for 
electric power generators is nickel from oil-based plants. Such plants 
are a very small percentage of the electric generation in Indiana, and 
EPA is working on a regulation for this source.
    In addition, some non-electric sources could ``opt-in'' and, while 
reducing mercury to a required level, could be exempted from reducing 
emissions of other hazardous air pollutants. It is not possible to 
estimate the number of ``opt-in'' facilities or how this might affect 
their emissions of hazardous air pollutants.

    Question 9. The cap-and-trade program for SOx emissions created in 
1990 handed out permits to pollute, also known as allowances, to coal-
fired power plants for free or at zero cost to them. A 2004 report from 
the national Academy of Science said that the social cost of an 
allowance auction is expected to be dramatically less than allocation 
at zero cost. So, an auction results in greater value to society and 
the consumer, but it obviously costs power generators more. Which 
system do you favor, or would a hybrid system be best?
    Response. Under the current Clean Air Act Amendments of 1990, 
SO2 allowances are for the most part allocated directly to 
power plants as opposed to being auctioned. This system has worked very 
well and has achieved significant reductions at a relatively low cost 
to customers. It is the most equitable system with electric power 
companies and their customers that are incurring the added costs to 
comply with the emission reduction requirements receive the emission 
allowances in order to continue running their plants at significantly 
reduced emission levels. I support the continuation of this type of 
allocation system in the future as embodied in Clear Skies legislation.
    Some have noted that auctions provide lower costs to society than 
allocation to generators. However, this is usually predicated on how 
the proceeds from the auctions are redistributed by the federal 
government and assumes that the government would redistribute the 
proceeds ``efficiently'' in economic terms. (One method of reallocating 
proceeds that would increase economic efficiency would be cutting 
marginal income tax rates, for example.) Unfortunately, I am not very 
convinced that this would happen based on past Congressional actions 
and would be concerned that we would be creating another federal agency 
and another set of federal costs to collect and redistribute the 
auction proceeds and these proceeds could total in the tens of billions 
of dollars.
    Most importantly, I am concerned how this system would affect 
electricity customers in Indiana. We continue to have regulated 
electricity rates, so the higher costs to electric companies to buy the 
auctioned allowances would result in still higher costs to Indiana 
customers.

    Question 10. What effect has the 29 or more legal actions filed by 
the utility industry against EPA Clean Air Act standards and 
regulations since 1990 had on certainty?
    While your question refers to legal actions filed by the utility 
industry, I am also aware that many (perhaps more) legal actions 
challenging Clean Air Act standards and regulations have been filed by 
environmental organizations, states, and others. As you are doubtless 
aware, such litigation is brought to resolve uncertainties created by 
ambiguous or conflicting statutory directives, or to challenge new or 
innovative methodologies developed by EPA in the exercise of its 
administrative discretion, and generally involves questions about the 
nature and scope of EPA's regulatory authority. The proposed 
legislation would address the proliferation of Clean Air Act litigation 
by providing clearer statutory directives and resolving conflicts among 
overlapping statutory programs.

    Question 11. You suggest that 3P legislation sounds a signal to 
invest in IGCC and cleaner ways of burning coal. Please explain that, 
referencing any supporting economic data or analyses.
    Response. Properly designed multi-pollutant legislation can help 
play a role in promoting the continued use of the nation's abundant and 
low-cost coal resources which will alleviate pressure on the US natural 
gas demand. Over the past decade most new power plants have relied on 
natural gas to produce electricity. This has helped to drive up natural 
gas prices for all customers and lead to many companies making 
decisions to leave the country and take those jobs with them.
    As utility companies plan their approach on how to comply with the 
significant SO2, NOx and mercury reductions over the 
upcoming decade they must also meet the ever increasing demand for more 
power. This means that new base load coal fired power plants that are 
inexpensive to operate as well as having the lowest possible emissions 
profile will need to be available to fill the gap otherwise utilities 
will have to pick more expensive power generation options meaning more 
natural gas units.

    Question 12. You indicated that you would support the deepest 
reductions at the lowest possible cost to the consumer. The Clear Skies 
bill is designed to be the lowest cost to the producers, not the 
consumers. If we can make deeper cuts in emissions without appreciably 
increasing the costs to consumers, would you support it?
    Response. First of all, I don't agree that Clear Skies is designed 
to be lowest cost to producers and not consumers. In fact, producer 
costs are typically passed through to consumers through regulated rates 
such as in Indiana or indirectly in fully deregulated states through 
power market prices. This means that lower costs to producers is 
generally synonymous with lower rate impacts for consumers.
    Second, I don't believe we can make significantly deeper cuts in 
emissions without appreciably increasing the costs to consumers. In the 
near term (the next five years), there are already massive pollution 
control construction plans for scrubbers, SCRs and other equipment 
ongoing. (For scrubbers alone, some 50 to 60 thousand megawatts have 
already been announced for completion by the end of the decade. 
Already, there are shortages in raw materials, equipment, and workers. 
Further, the lead time for constructing a scrubber is three to five 
years given permitting needs as well as engineering and construction 
schedules. Longer term in Phase II of Clear Skies, as I noted the 
reduction requirements would already require that the vast majority of 
coal fired generation in Indiana would be installing scrubbers and 
SCRs. Significantly greater reductions would require that coal units be 
retired or mothballed and replaced with much more expensive natural gas 
in many cases leading to significantly higher consumer costs.
    As I indicated in my answer to Question 5, higher energy costs 
disproportionately impact low and lower income families. Every dollar 
spent on emission reductions is an appreciable increase in cost that 
especially harms these families.

    Question 13. Do you think it's appropriate for the EPA to go back 
in time to reverse regulatory determinations, like they are proposing 
to do on the mercury finding from 2000?
    Response. As I understand it, the determination made by EPA in 2000 
was merely the first step in a detailed investigation into utility 
emissions and control technologies--and that detailed investigation has 
not yet been concluded. I believe it is both necessary and appropriate 
for regulatory agencies to continue their investigations and re-
evaluate preliminary decisions as additional information becomes 
available, so that all relevant information is included in the final 
determination.

    Question 14. Would you support a binding global treaty that 
required all nations to reduce their mercury use and emissions?
    Response. I could support an international treaty that implements 
U.S. law but goes no further. First ever regulations to significantly 
reduce electric power company mercury emissions are due to be finalized 
by March 15, 2005. Other sources such as municipal solid waste 
incinerators have already been regulated. I have been briefed that the 
United States is already complying with the existing international 
``Long Range Transport of Air Pollutants'' treaty, which requires 
mercury reductions. Regardless of what we do here at home, sources 
outside our borders will continue to be the dominant source of mercury 
deposition in the United States. Recent research indicates that up to 
75 percent of the mercury deposited over most of the United States 
comes from outside our country (almost 700 tons of mercury from China 
is annually transported through the atmospheric across the Pacific 
Ocean towards the US according to EPRI scientists who have taken the 
measurements); U.S. emissions of mercury are only 1 percent of the 
total global pool; and the Americas (North Central and South) 
contribute only 11 percent of the total anthropogenic emissions of 
mercury in the Northern Hemisphere (compared to 34 percent from China 
and 14 percent from Central Asia). The United States is a leader in 
global efforts to control mercury use and emissions.

    Question 15. A recent Florida study showed that when power plant 
emissions were stopped the deposition of mercury in waterways radically 
dropped. Are you at all concerned that toxic hot-spots might develop if 
we use a cap-and-trade system for toxics like mercury and don't require 
at least some minimal reductions at each unit?
    Response. It is my understanding that the Florida study you are 
referring to tried to link reduced mercury emissions from local 
municipal and medical waste incinerators to reduced mercury levels in 
fish in the Everglades. It did not pertain to power plants. Significant 
scientific questions have been raised regarding the validity of the 
study's conclusions According to EPA, mercury emissions from these 
incinerators are different from emissions form power plants. 
Incinerators release mercury in short bursts from much shorter stacks 
whenever material containing mercury is combusted. The Everglades is a 
unique water body, with distinctive water chemistry and ecological 
processes. The atmospheric transport model used by the state of Florida 
does not account for chemical reactions in the atmosphere and global 
sources of mercury outside the state. Studies show that the amount of 
mercury being deposited in Florida has changed very little, despite 
emissions reductions from in-state incinerators. The attached comments 
from EPRI discuss more of the study's errors and misconceptions.
    From what I've read and heard, no one can agree as to what a ``hot-
spot'' is. It seems like anyone can describe a lake or water body as a 
``hot-spot'' if it has a state fish advisory. I do not believe that a 
cap-and-trade program for mercury like the one proposed in the Clear 
Skies Act or in EPA's proposed mercury rule would cause so-called ``hot 
spots.'' Studies of the acid rain allowance trading program and many 
years of real-world experience show that trading does not significantly 
affect where decreases in sulfur deposition actually occur. The overall 
success of the acid rain SO2 trading program leads me to 
believe that localized effects will not occur with a mercury cap-and-
trade program. Also, I understand that cap-and-trade programs promote 
economically efficient decisions to reduce emissions from power plants, 
so that plants with higher mercury emission rates will find it more 
cost-effective to control mercury right away. No matter what, Clear 
Skies would dramatically reduce power plant mercury emissions (to a 
level well below the estimated 40 percent reduction in mercury 
emissions from power plants due to the installation of conventional 
control technologies to reduce sulfur dioxide, nitrogen oxide and 
particulate matter).

    Question 16. How much will Indiana's utility NOx emissions be 
reduced by the NOx SIP Call in 2010? How does this compare to the 
reduction required by S. 131 in the same year?
    Response. Based on readily available information from EPA all 
electric utility sources in the state of Indiana emitted 334,100 tons 
of NOx in calendar year 2000. Under the NOx SIP call utilities are 
projected to emit approximately 236,000 tons annually in the year 2010. 
With the implementation of Clear Skies Act utilities are projected to 
emit approximately 97,400 tons annually in the year 2010. These 
reductions work out to be a 29 percent reduction in 2010 with just the 
SIP Call and a 71 percent reduction by 2010 with Clear Skies, with 
additional reductions continuing to occur after 2010.

    Question 17. How would Indiana coal production be disadvantaged by 
a mercury reduction requirement of 70-90 percent to be achieved by 
2010?
    Response. Indiana electric rates are some of the lowest in the 
nation. A primary driver for the low rates that are enjoyed by our 
customers, businesses, and industries is that 95 percent of our 
generation is produced from an abundant, reliable resource--coal. In 
fact, it is estimated that Indiana has a 300 year supply of coal.
    Any mercury regulation that would require a 70-90 percent reduction 
by 2010 presents two major issues. First, I am unaware of any mercury 
specific commercially available technology that has been proven to be 
available at this time. There have been a number of pilot projects that 
have provided promising results, but, once again, have not been proven 
on large coal-fired units. Therefore, it is not technologically 
feasible to meet this reduction requirement at this time without 
significant disruptions to the electric power system. This is 
documented in the January 2005 study by the Energy Information 
Administration study entitled ``Analysis of Alternative Mercury Control 
Strategies'' where they projected over a 30 percent increase in 
electricity prices in the Midwest if a 90 percent reduction was 
required.
    Second, even if the technology were generally available, not every 
power plant may be able to reduce mercury emissions by 90 percent and 
continue to afford to operate. Such a sudden and major requirement to 
reduce mercury emissions may force specific power plants to seek 
alternative fuels. One option for alternative fuels could be a further 
push toward an already strained gas supply option. This increased 
pressure on gas utilization could lead to higher gas prices that would 
negatively impact all sectors of the economy including those on fixed 
incomes.
    It should be pointed out that a major mercury reduction requirement 
that is not reasonably phased in would not only disadvantage Indiana 
but the fuel diversity for the nation. It is imperative that any future 
environmental regulation, including mercury regulations, must allow 
regulated entities the opportunity to plan for the required reductions 
so as to not unduly impact the fuel diversity of the nation.

    Question 18. You suggested that greenhouse gases should be 
addressed in a different forum, not in multi-pollutant legislation 
regarding power plants. What would be a more appropriate forum?
    Response. Greenhouse gas issues are complex and they are not easily 
resolved. However, I have observed that the power industry already has 
voluntarily taken substantive actions to address emissions and is 
committed to doing more while the science continues to evolve. Indiana 
is rich in coal and Cinergy and American Electric Power are national, 
perhaps world leaders in pushing the design envelope for gasifying coal 
and commercializing large scale IGCC plants by the end of this decade. 
It should be easier and less costly to remove CO2 from the 
flue gas of these new plants compared to pulverized coal units once the 
removal technology is perfected. AEP is supporting research to dispose 
of the gas underground at its Mountaineer Plant in West Virginia.
    As a legislator dedicated to improving the welfare of the citizen 
of my state, I prioritize my work to bring results to my constituents 
on issues that are having an immediate and real impact on them. I'm 
urging you and your colleagues to pass S. 131 now because I believe 
that the emission reductions for NOx, SO2 will address 
nonattainment areas for fine particulates and ozone and substantial 
emissions reductions for Hg will be made very cost effectively as a co-
benefit of the harmonized NOx, SO2 and Hg reduction 
programs. I don't believe that there is such urgency on the greenhouse 
gas issue. In my experience trying to pass legislation, loading bills 
with too many provisions usually causes them to die or be terminally 
delayed. I fear that trying to force the greenhouse gas issue into this 
bill will deny all of us healthier air to breathe when this bill dies.
    In my opinion, the proper place to debate this issue is in a global 
forum. But all of the countries that emit greenhouse gases should be 
required to participate and not be exempted. My understanding is that 
China, for instance, emits more CO2 than the United States, 
but isn't required to make reductions under the Kyoto Protocol.
                                 ______
                                 
         Responses by Beverly Gard to Additional Questions from
                           Senator Lautenberg
    Question 1. Senator Gard, we have made good progress in reducing 
air pollution under the Clean Air Act Amendments of 1990, why not 
implement the existing law?
    Response. As noted in my testimony, the primary advantage of the 
proposed legislation is the certainty associated with statutorily 
establishing a clear timetable and emissions cap for utility sources of 
SO2 and NOx. The unparalleled success of the Acid Rain 
Program provides assurance that the proposed reductions will be 
achieved in a timely fashion at the lowest cost for energy providers 
and their customers.

    Question 2. I understand that Indiana has higher rates of cancer, 
relative to the national average. So you think CSI should repeal the 
application of Maximum Achievable Control Technology requirements that 
apply to cancer-causing pollutants for those facilities that reduce 
mercury?
    Response. I do not believe that experts in the health field would 
agree that mercury causes cancer. My understanding is that mercury is a 
potential neurotoxin and women who eat fish containing large amounts of 
methylmercury during pregnancy can put their fetuses at risk for the 
brain and nervous system damage it can cause. The FDA has issued 
guidelines regarding fish consumption by pregnant women and young 
children. On average, less than 10 percent of the fish eaten in the 
United States comes from freshwater sources.
    The mercury cap and trade program in S. 131 is appropriate to 
reduce this risk.
    In the short time available to respond to the questions, my limited 
investigation suggests that Indiana's cancer rate is lower than the 
national average. As a cancer survivor myself I am very sensitive this 
issue.

    Question 3. According to the Energy information Administration 
(EIA) CSI would not reach the SO2 reduction goals of the 
bill until after 2025 because of ``early reduction'' banking. Isn't 
this too long to wait?
    Response. In ``From Obstacle to Opportunity: How acid rain 
emissions trading is delivering cleaner air'', a 2000 report by 
Environmental Defense, a leading national, New York-based nonprofit 
organization, represents 300,000 members, states that it has been 
``widely credited for advancing the cap and trade proposal to reduce 
acid rain.'' The report discusses the basics of emissions trading and 
also the concept of ``early reduction'' banking. It explains the 
environmental benefits of early reductions in detail. On page 8, ED 
states:
    ``The common understanding of the adverse ecological effects of 
acid deposition strongly suggested both that reducing cumulative 
SO2 emissions should be the goal of the program, and that 
early reductions were of significant environmental value. The earlier 
the reductions, the sooner the ecosystems affected by acid deposition 
could begin to recover their acid-neutralizing capacity. As a result, 
the economic dynamic created by an emissions cap with banking favored 
the environmental benefit of early, extra emissions reductions.

    Question 4. Don't we need to reach health standards sooner than 
2025?
    Response. As explained in the response to question 3, substantial 
environmental benefits will accrue due to early reduction banking. The 
principle of market based trading programs is that sources are given 
economic incentives to reduce emissions early and this encourages 
companies to install and operate control equipment earlier. In contrast 
a command and control program provides no such incentives because 
companies just have to have to equipment operating by the compliance 
deadline and not before since it will cost them money to operate the 
controls before the requirement actually starts with no corresponding 
economic benefit for the reductions.
    In fact, in Indiana the early reduction program included in the 
recent NOx SIP call resulted in the states power plants reducing their 
NOx emissions by thousands of tons prior to the May 2004 deadline. Thus 
a large part of the emissions reductions from the trading programs in 
Clear Skies will occur early than they would otherwise and thus provide 
better air quality earlier as well. And as my written testimony cited, 
the EPA's Clear Skies results showed that the nonattainment areas in 
the state would be achieved by 2010.
                               __________
  Statement of Ronald R. Harper, Chief Executive Officer and General 
               Manager, Basin Electric Power Cooperative
    My name is Ron Harper and I serve as the CEO and General Manager of 
Basin Electric Power Cooperative. I appreciate the invitation to 
testify today, and I am here to provide you with Basin Electric's views 
concerning the Clean Air Act's current regulatory framework, how that 
framework impacts decision making within the energy industry and how 
that process might be improved upon. Specifically, I am here to support 
the passage of the Clear Skies Act.
    Basin Electric is an electrical generation and transmission 
cooperative with 120 member cooperatives located in nine states. Our 
generation sources include approximately 3,400 megawatts of coal, gas, 
oil and wind, but we are primarily a coal-based utility. The three 
base-load coal plants we own or manage are located in North Dakota and 
Wyoming and use both lignite and subbituminous coal.
    Basin Electric is growing and we are looking at developing new 
base-load generation. After reviewing all of our options, it became 
clear to us that to meet our needs for low cost base-load power, the 
best choice was coal. Both North Dakota and Wyoming have ample supplies 
of coal and we have considerable knowledge of building and operating 
coal-based generation plants. We have built gas generation for peaking 
purposes and will build more. However, we do not believe it is prudent 
to build base-load gas generation and expose our membership to the 
rapid fluctuations in natural gas prices. Further, we hope to grow our 
wind portfolio but due to the intermittent nature of wind generation, 
it is not base-load generation.
    To provide base-load power, Basin Electric is developing two coal-
based facilities, one to be developed in Wyoming and the other located 
either in North Dakota, South Dakota or Iowa. Planning is proceeding. 
However, building a coal plant takes long-term commitment. It takes 8 
to 10 years to build a coal generation plant. The confusion surrounding 
the current regulatory programs makes any business decision made today 
risky. The planning horizons of the regulations and the regulated 
industry simply do not match.
    The development of any facility is predicated on the new plant 
meeting the necessary emission levels required to be compliant with the 
regulation of the Clean Air Act. Industry must know what the emission 
level targets are going to be once the plant is commissioned to make 
the correct choices today. I believe that Clear Skies will give us 
those targets and give industry the regulatory certainty that is 
missing today.
                        elements of clear skies
    That being said, I would like to discuss Clear Skies and its impact 
to industry. The current patchwork of regulations is duplicative and 
inconsistent, often with conflicting compliance objectives and 
deadlines. Clear Skies would improve this situation by providing a 
clear program to improve our nation's air quality. Even so, it should 
be noted that this legislation would have a significant financial 
impact on Basin Electric. As I mentioned, Basin Electric runs three 
base-load coal facilities. Two of them have advanced environmental 
controls while the other, Leland Olds Station, meets all current 
regulatory requirements but is not scrubbed.
    Under Clear Skies, we would need to substantially upgrade our 
Leland Olds facility. Further, because of the structure of the 
emissions allocations under Clear Skies, it is likely that we would 
also need to buy allocations for our units that are already scrubbed. 
This is an expensive prospect for our members that will be paying the 
bill. We are willing to take that risk because it allows us to be more 
flexible in addressing future power needs. However, we believe that 
coal-based units having emission controls as required under the present 
New Source Review (NSR) and Prevention of Significant Deterioration 
(PSD) provisions of the Clean Air Act should not be subject to new and 
onerous emissions reductions.
    The current regulations also prevent us from making prudent 
business decisions. We have the opportunity to upgrade two currently 
scrubbed facilities with new steam turbines. These new turbines would 
be capable of producing up to 45 megawatts more energy at our Wyoming 
plant and 30 megawatts more at one of our North Dakota plants with no 
additional fuel requirement or added emissions. We have not upgraded 
these turbines because of our concerns over the NSR program. Due to the 
present structure of NSR, reasonable decisions to maintain and upgrade 
facilities with no adverse impact to the environment are not being 
made. We believe the ability to upgrade these units should be clearly 
allowed under the Clear Skies Act without further emission reduction 
penalties.
    The issue of protecting clean units from further reductions is 
something that is important to Basin Electric. One way to address this 
issue is to recognize some of the proactive and long-term planning that 
has already taken place on this issue. For example, the Western States, 
through the Western Regional Air Partnership (WRAP), have developed 
their own goals for a viable process. This effort should be recognized 
and kept intact through Clear Skies.
    Another issue of importance is coal sub-categorization for mercury. 
As the committee is aware, the various types of coal have properties 
that make regulating them with absolute uniformity very difficult. 
Applying regulations in blanket form without sub-categorization by coal 
classification would adversely impact the use of coal across the 
country for future energy development.
    The development of new units is also of concern. The current 
legislation creates a small pool of allocations for new units, and we 
appreciate that improvement upon the original legislation. This will 
lessen the barriers facing new units and encourage newer, cleaner 
plants to come on-line.
    In short, Mr. Chairman and members of the committee, for Basin 
Electric, Clear Skies provides the opportunity to make difficult 
decisions with a higher degree of certainty, whereas the current 
regulatory process is extremely cumbersome and uncertain for us to plan 
with the knowledge and foresight necessary to make an informed 
decision. The passage of the Clear Skies Act is important to Basin 
Electric and I look forward to working toward its passage with the help 
of the committee.
    I want to thank Chairman Voinovich for taking the time to hold this 
hearing and the Committee members for their attention to this issue.
                                 ______
                                 
      Responses by Ron Harper to Questions from Senator Voinovich
    Question 1a. The Energy Information Administration estimates that 
the bills proposed by Senators Jeffords and Carper would reduce coal 
production and generation much more than Clear Skies. In your opinion, 
is that an impact that the coal industry, specifically miners, can 
withstand?
    Response. Basin Electric does not own or operate any coal mines; 
therefore we do not have specific knowledge regarding the impact of the 
Clear Skies Act, Senator Jeffords or Senator Carper's bills on the coal 
industry, specifically miners.
    I would suggest that information be solicited from the National 
Mining Association or a coal mining company who would be better able to 
provide both quantitative and qualitative responses to your question.

    Question 1b. What would be the impact of decreased coal use on the 
consumers you serve--businesses and those on fixed incomes?
    Response. We would anticipate that the decrease of coal as the fuel 
source for our electrical generating units would result in the increase 
of other fuel sources, such as natural gas--a fuel that is much more 
volatile in price than coal. Coal reserves are normally dedicated for a 
specific project and for the life of the project. This results in very 
long-term source and price stability for fuel supply. Natural gas 
prices experience a great deal of volatility depending on the time of 
year, the month and even the week of the sale. Natural gas prices are 
simply not as predictable as coal. Therefore, we would anticipate the 
decreased use of coal would (1) result in greater volatility and (2) 
greater cost of electricity to our consumers.

    Question 2a. Some of the Members on the Committee and witnesses 
argue that every power plant should be required to reduce mercury 
emissions by 90 percent in the next several years. Is this possible?
    Response. No, 90 percent reductions in mercury emissions from 
lignite and subbituminous coals are not possible with today's available 
technology.

    Question 2b. What would happen to your existing coal-fired plants 
and to the consumers that rely on it for electricity?
    Response. The result would be less generation from coal, more 
generation from natural gas and increased cost to our consumers.
                                 ______
                                 
 Responses by Ron Harper to Additional Questions from Senator Jeffords
    Question 1. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein?
    Response. No

    Question 2. Do you think it is prudent to increase gas emissions?
    Response. No

    Question 3. Would you support a binding global treaty that required 
all nations to reduce their mercury use and emissions?
    Response. I do not think it is possible to have a ``binding'' 
global treaty regarding mercury emissions. Many countries would not be 
able to undertake this type of obligation given their current economic 
status.

    Question 4. A recent Florida study showed that when power plant 
emissions were stopped the deposition of mercury in downwind waterways 
radically dropped. This should give us serious concern about trading 
toxics. Are you at all concerned that toxic hot-spots might develop if 
we use a cap-and-trade system for toxics like mercury and don't require 
at least some minimal reductions at each unit?
    Response. Although I am not familiar with this report, I have seen 
other reports that have a different conclusion on deposition of mercury 
and hot spots. I understand that there is considerable research being 
conducted by government agencies and private research institutes that 
addresses this issue over a broad region. I would defer any opinion on 
this issue until the research is completed and conclusive.

    Question 5. If S. 131 were to become law, how would that change 
your organizations' pattern of investment over the following time 
frames: 1 year, 3 years, 5 years?
    Response. If S. 131 became law and we were certain of New Source 
Review reform, our cooperative would upgrade the turbines in two of our 
existing plants resulting in greater generation without the creation of 
increased emissions. I would expect these upgrades to occur within 5 
years.

    Question 6. You indicated that Clear Skies will be expensive. How 
expensive will it be for your organization and your ratepayers?
    Response. It is our projected estimate that to comply with the 
Clear Skies Act, Basin Electric would need to invest approximately $270 
million at our existing generation stations. In addition our annual 
operating costs would increase by approximately $55 million. 
Significant rate increase to our membership would be required.
                                 ______
                                 
Responses by Ron Harper to Additional Questions from Senator Lautenberg
    Question 1. Your testimony stresses the importance of regulatory 
certainly. But S. 1844 significantly re-writes the Clean Air Act which 
is likely to provoke litigation over the interpretation of the new law. 
Won't this create greater uncertainty than implementing current law?
    Response. If S. 131 is enacted and incorporated into the Clean Air 
Act with greater clarity and greater certainty than current rules and 
regulations, I would expect less litigation to occur. After 20 years 
the current law is still producing litigation not only with respect to 
what constitutes ``a major modification'' under the New Source Review 
provisions, but also constantly producing questions regarding what 
constitutes Best Available Control Technology. It is not likely that 
greater uncertainty would occur with new legislation.

    Question 2. According to Mr. Schneider's testimony, if the existing 
Clean Air Act were fully enforced, we would obtain greater reductions 
in air pollution sooner than under S. 1844 and save thousands of 
additional lives each year. Why shouldn't we do this?
    Response. I do not agree with Mr. Schneider that greater reduction 
in air pollution will occur with the existing Clean Air Act. In my 
opinion, I believe that S. 131 would achieve greater reductions in a 
shorter time frame.

    Question 3. Senator Inhofe's bill repeals existing Maximum 
Available Control Technology standards applicable to facilities in 
several major industries, if they cap and trade any pollutants under 
the bill, and requires only an EPA study instead. Is this wise public 
policy? Does it make more sense to study the effects of removing these 
controls for toxic chemicals before they are enacted?
    Response. I can only respond as a coal-based generation 
cooperative, there is no relief from MACT for us in the Clear Skies 
Act.
                               __________
          Statement of Conrad G. Schneider, Advocacy Director,
                          Clean Air Task Force
    Mr. Chairman and distinguished members of the Subcommittee, my name 
is Conrad Schneider, and I am the Advocacy Director of the Clean Air 
Task Force, a nonprofit organization dedicated to restoring clean air 
and health environments through scientific research, public education 
and legal advocacy. The Task Force appreciates the opportunity to 
appear before you today and offer our views on the President's proposed 
Clean Skies Act (referred to hereafter as ``CSA'').\1\ Today, I am also 
representing three other organizations: Clear the Air, the National 
Environmental Trust and the United States Public Interest Research 
Group.
---------------------------------------------------------------------------
    \1\ Two versions of the ``Clear Skies Act of 2003,'' the Bush 
Administration's multi-pollutant legislative language, were introduced 
in Congress in 2003. The first set of bills, S. 485 and H.R. 999, 
appeared on February 27, 2003. The bills were then revised and 
reintroduced as S. 1844 on November 10, 2003.
    The two Clear Skies bills introduced in 2003 are collectively 
referred to in this testimony as ``CSA.'' In instances where it is 
necessary to distinguish between the February and November versions of 
Clear Skies, the bills will be referenced by their Senate designations, 
S. 485 (February) and S. 1844 (November).
---------------------------------------------------------------------------
                                overview
    We strongly urge you to oppose CSA for the following reasons:
    1. CSA offers pollution reductions of sulfur, nitrogen and mercury 
that are too little and too late to adequately protect human health and 
the environment in a timely way. Faster and deeper cuts are necessary, 
feasible, and cost effective, as the Administration's own models and 
methodologies--and in some cases its own written analysis--demonstrate.
    2. CSA is inadequate even as a ``down payment'' towards attainment 
of the nation's soot and smog standards. By EPA's own models, CSA 
leaves 33 million people in 27 counties in Georgia, Ohio and Illinois 
and other states breathing air that flunks those standards at the 
attainment date of 2010.
    3. CSA fails to address global warming pollution from the nation's 
and the world's biggest single source of that pollution--U.S. power 
plants--despite the opportunity to take action at what the 
Administration's own analysis demonstrates is in some cases a very 
modest to negligible cost.
    4. Finally, in addition to setting targets that fail to adequately 
protect human health and the environment, CSA would strip away 
virtually all existing provisions of the Clean Air Act that could 
potentially require future emission reductions beyond these weak 
targets. These include provisions to protect local air quality, clean 
air in our national parks, apply maximum available control technology 
to reduce hazardous air pollutants from power plants, and abate 
interstate pollution that prevents downwind states from assuring their 
own attainment of clean air standards. Even worse, CSA would 
effectively move back the attainment deadlines for national clean air 
standards themselves--in effect, delaying the standards to accommodate 
the weak emissions requirements of CSA. In short, CSA trades nearly all 
the protections of the current Clean Air Act and its promise of 
continuous progress in cleaning the air for a set of half-measures that 
will not achieve the Act's air quality objectives.
    Speaking for the Clean Air Task Force, I should note that I do not 
come to this hearing room today opposing in principle the concept of 
multi-pollutant power plant legislation. To the contrary, my 
organization was one of the earliest and most vocal proponents of such 
legislation and has twice testified before this subcommittee that such 
legislation, if it provides the maximum available and cost-effective 
protection of health and the environment, is worthy of consideration.
    However, CSA does not meet that standard. (And, unfortunately, 
despite bipartisan criticism of CSA, it is highly unlikely that multi-
pollutant legislation that meets that standard will see approval in the 
current Congress or be signed into law by this President.)
    Fortunately, this subcommittee, and America's citizens, are not 
stuck with a choice between flawed multi-pollutant legislation such as 
CSA and no progress on cleaning up power plant pollution. For example,
     The EPA has proposed the Clean Air Interstate Rule, or CAIR, that 
would address soot and smog pollution from power plants in two dozen 
Eastern and Central States. My organization and many states and others 
have urged EPA to tighten that rule and move forward its effective 
dates.\2\ If EPA does so, this will be a major step forward for clean 
air.
---------------------------------------------------------------------------
    \2\ Comments on Proposed Rule to Reduce Interstate Transport of 
Fine Particulate Matter and Ozone (Interstate Air Quality Rule), 69 
Fed. Reg. 4566 (January 30, 2004). Docket No. OAR-2003-0053.
---------------------------------------------------------------------------
     In addition, EPA has before it a remand from the courts to issue 
a new rule to protect clean air in the nation's parks; if EPA does its 
job properly, we can substantially reduce power plant pollution in the 
West as well as the East.
     The EPA has pending before it a rulemaking concerning Maximum 
Achievable Control Technology to control the hazardous pollutant 
mercury, in which the weight of evidence supports a 90 percent 
reduction in the nation's power plant mercury emissions, as well as 
other hazardous air pollutants from power plants.\3\ As with the CAIR 
rule and the national parks rule, the Administration could, with the 
stroke of a pen, embrace the evidence of technical feasibility, as it 
recently did with diesel emissions from new on and off-road diesel 
engines, and effectively take this mercury issue off the table for the 
foreseeable future.
---------------------------------------------------------------------------
    \3\ Comments on Proposed Emission Standards for Hazardous Air 
Pollutants; and in the Alternative, ``Proposed Standards of Performance 
for New and Existing Sources: Electric Utility Steam Generating 
Units,'' 69 Fed. Reg. 4652 (January 30, 2004) and Supplemental Notice, 
69 Fed. Reg. 12398 (March 16, 2004), Docket No. OAR-2002-0056.
---------------------------------------------------------------------------
     Finally, the EPA and Department of Justice have brought cases for 
New Source Review violations affecting more than one-quarter of the 
nation's coal-fired generating capacity. Several of these cases have 
been settled in a way that significantly improves regional and local 
air quality. Diligent prosecution of the remaining cases, and others 
that can likely be brought--rather than undercutting the regulations 
themselves, equivocation on the existing cases, and failure to 
prosecute new ones--would further improve air quality.
    With real and tangible clean air opportunities like these pending, 
one could conclude that it is effectively a waste of time for this 
subcommittee--and even more so the Senate--to even consider such a 
flawed and controversial piece of legislation such as CSA.
    Accordingly, I first urge you to reject CSA. And, second, because 
EPA has all the authority it needs to make major strides forward on 
power plant pollution, and the prospects are dim for legislation that 
will achieve greater, faster gains, I urge you to use your energy and 
influence to secure a tightening and swift issuance of the CAIR, clean 
air in the parks, and mercury rules.
    Let me now turn to the evidence in support of each of my major 
criticisms of CSA.
1. CSA Offers Too Little, Too Late And Feasible and Cost-Effective 
        Alternatives Are Available
    First, let me address the evidence that the Clear Skies offers too 
little, too late as compared with feasible and cost effective 
alternatives. To do so, let us compare several multi-emission proposals 
against Clear Skies for costs and benefits.
    Below is a chart outlining the major legislative proposals and 
their major cap and deadline features. This chart includes CSA, as 
proposed to date; the Jeffords/Lieberman/Collins Clean Power Act; the 
Carper/Gregg/Chafee Clean Air Planning Act; and the EPA's own ``Straw'' 
proposal of 2001.
    (Let me note at the outset that I do not intend to get into a 
discussion of whether certain presentations of EPA's position in the 
past represented the agency's view of current regulatory requirements 
under the Clean Air Act or, as some EPA staff now claim, were instead 
simply a tactic to ``scare'' industry into accepting multi-pollutant 
legislation. The undeniable fact is that, in a very deliberate 
interagency review process, EPA submitted a ``Straw'' proposal for 
legislation on power plant emission reduction targets and timetables 
that presumably represented its best view of what was necessary and 
achievable to protect human health and the environment. The ``Straw'' 
proposal is thus surely at least one appropriate benchmark against 
which to compare CSA, as we have done.)


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    CATF has commissioned a comparison of these proposals using EPA's 
own traditional power system cost modeling, emission dispersion 
modeling and cost-benefit methods, and employing consultants routinely 
retained by EPA to do this work. In all cases, the model assumptions 
were calibrated to run ``apples to apples'' comparisons with EPA's 2003 
modeling of CSA.
    The results are instructive: Each one of the competing proposals 
provides significantly greater health benefits than CSA and those 
additional benefits far outweigh the additional costs. This analysis is 
very conservative because it completely ignores the added environmental 
benefits from the added acid rain reduction, added visibility gains, 
reduced nitrogen saturation, additional reduced mercury deposition and 
constraint of global warming pollution that CSA lacks.
    For example, each of the alternative proposals results in 
significantly fewer deaths per year in 2020 as compared with CSA--
roughly 2,000 fewer in the case of the Clean Air Planning Act and 
nearly 8,000 fewer in the case of the Clean Power Act:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    These data can be seen geographically in the following maps 
illustrating mortality shrinking in the central United States with each 
more stringent proposal:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    On the cost side, the analysis shows that the alternative, tighter 
caps and timetables result in very little additional retail cost of 
electricity, essentially in the ``noise'' level of the models. This 
result is especially notable since the Clean Air Planning Act and Clean 
Power Act also include carbon caps that CSA and the ``Straw'' proposal 
do not:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Finally, putting both costs and benefits together, and comparing 
the alternative proposals to CSA, it is clear that the additional 
benefits in human health and life from the alternative proposals 
substantially outweigh their additional costs (including the carbon cap 
and added mercury control costs, for which no benefits are counted), by 
anywhere from $14 billion to $34 billion annually. Put another way, the 
health benefits of additional improvements beyond CSA exceed the 
additional costs by as much as 8-to-1:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    These results are quite consistent with EPA's own analysis 
comparing CSA to the Clean Air Planning Act, which found roughly $50 
billion in additional annual health benefits in 2020 from the latter as 
compared with CSA, with a little bit over $2 billion in added annual 
costs:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    CSA fails to deliver adequate ecological and aesthetic protection 
to natural resources as well. For mercury, CSA will result in 284 more 
tons of mercury emitted into the environment than the 90 percent 
reduction required by a faithful reading of the Maximum Achievable 
Control Technology (MACT) requirements of the Clean Air Act (See graph 
below):

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    According to EPA's Mercury MAPS tool which predicts how watersheds 
will respond to changes in mercury deposition, CSA by 2020 would result 
in measurable improvement in only 18 percent of modeled watersheds.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    With respect to Acid Rain, CSA's nitrogen and sulfur caps are too 
weak and late to allow recovery of damaged ecosystems even to begin by 
2050! At the Hubbard Brook Experimental Forest in New Hampshire, 
reductions in sulfur and nitrogen emissions from electric utilities 
comparable to those in CSA have been evaluated. These results show 
improvements in the pH and acid neutralizing capacity of surface water, 
as well as soil percent base saturation and aluminum. However, given 
the acid-sensitivity of this site, these emissions reductions would not 
achieve full recovery even 50 years after their implementation. The 
graph below shows the results for acid-neutralizing capacity relative 
to a target of 50 micro-equivalents per liter. These results suggest 
that additional reductions in atmospheric deposition of nitrogen and 
sulfur would be required to mitigate ecosystem stress due to acid 
inputs at the Hubbard Brook Experimental Forest by 2050. A similar 
analysis was conducted looking at the current 1990 Clean Air Act, 
moderate, and aggressive emission reductions. As shown in the second 
graph below, these results also show that chemical recovery would not 
be fully achieved under these scenarios at the Hubbard Brook 
Experimental Forest.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Likewise, the CSA caps are too lax to yield any noticeable 
improvement in visibility in our nation's national parks. The images 
below demonstrate the lack of improvement in polluted vistas at two of 
our most visited parks: Acadia National Park in Maine and Great Smoky 
Mountains National Park between North Carolina and Tennessee.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    In sum, it clearly cannot be said that CSA provides as much human 
health preservation of life and environmental protection as can be 
cost-benefit justified. To the contrary, on this score, CSA well 
underperforms all the other proposals.
    But what of feasibility? Critics of more stringent proposals do not 
contend that technology to reduce sulfur dioxide emissions (flue gas 
desulfurization) or nitrogen oxide emissions (selective catalytic 
reduction) are not available to meet the more stringent caps associated 
with the ``Straw'' proposal. These are proven, off-the-shelf 
technologies. Instead, they contend a bottleneck of labor will prevent 
meeting the deadlines of tighter legislation such as the straw proposal 
due to a bottleneck of labor availability--chiefly of skilled 
boilermakers.
    As shown in Appendix 1 to my testimony, and as summarized in the 
chart below, this claim does not withstand scrutiny. Using EPA's own 
estimates and analysis, the available labor supply is more than 
sufficient to meet the deadlines outlined in the ``Straw'' proposal 
(which is similar in timing and levels to the Clean Power Act and more 
stringent than the Clean Air Planning Act):

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    In sum, CSA offers far too little, too late by way of human health 
and environmental protections, while much better alternatives are 
available and cost effective. On this ground alone, the subcommittee 
should reject CSA.
2. CSA Provides Too Little, Too Late to States Seeking Attainment of 
        National Soot and Smog Standards
    There is another measure by which we can judge the adequacy of CSA: 
how well it assists states and cities in meeting their legal 
obligations to comply with the 2010 deadlines for attainment of 
national soot and smog standards. By this measure, CSA also fares 
poorly in comparison to alternative proposals.
    Clean Air Act soot and smog attainment is not a theoretical issue 
for Governors and Mayors in the South and Midwest. It is one with 
important and immediate economic implications. When a region does not 
meet clean air standards, it must additional clean-up burdens on new 
and existing industrial facilities and can be denied federal highway 
funds. At a minimum, nonattainment can--rightly--stigmatize a region 
for people who would live or establish businesses there.
    Because of CSA's looser caps, and delayed implementation, however, 
CSA offers the least help to states and regions seeking attainment, as 
shown by the charts below, again from analysis commission by CATF using 
EPA's models and methodologies:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    As the charts demonstrate, CSA leaves 27 counties and 33 million 
people breathing unlawfully dirty air in 2010, double the number of 
people and a 60 percent increase in counties and left with dirty air by 
even the next least stringent bill, the Clean Air Planning Act. Worse, 
even in 2020, CSA leaves some 25 million people still in non-attainment 
areas--their health and economies unnecessarily threatened. The 
adjacent maps below, comparing non-attainment counties (in red) under 
CSA and the ``Straw'' proposal in 2010, show that Ohio, Georgia, and 
Illinois are among the states that face a noticeably bleaker attainment 
situation due to CSA's laxer, slower power plant emission curbs:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


3. CSA Fails to Address Global Warming, Despite the Availability of a 
        Variety of Policy Approaches That Address the President's 
        Concerns
    This is not the place to debate the details of global warming 
science. This subcommittee has heard extensively from a range of 
scientists on this issue. I only note in passing that the National 
Academy of Sciences, at President Bush's request, has reviewed the 
available science and concluded that the Intergovernmental Panel on 
Climate Change had ample evidence for its conclusion that we may see a 
warming of as much as 5 degrees Fahrenheit by 2100 due substantially to 
human influence.\4\ I also note that the recent Arctic Climate Impact 
Assessment, of which the United States was a co-sponsor, concluded that 
the Arctic is already showing real evidence of ecological distress due 
to human-induced warming.\5\ We can debate the degree of warming likely 
to occur, and its ultimate impacts, but the evidence is surely stronger 
even than when President Bush first took office in 2001 that human 
activity, including fossil fuel combustion from power generation, is 
warming the planet.
---------------------------------------------------------------------------
    \4\ ``Climate Change Science: An Analysis of Some Key Questions,'' 
Committee on the Science of Climate Change, Division on Earth and Life 
Studies, National Research Council National Academy Press (2001).
    \5\ See Arctic Climate Impact Assessment, Impacts of Warming 
Arctic, Cambridge University Press, 2004. p. 8.
---------------------------------------------------------------------------
    America's power plant fleet accounts for roughly 40 percent of the 
nation's anthropogenic CO2 emissions, and 10 percent of the 
world's total anthropogenic CO2 emissions. Clearly, 
addressing global warming will require the US power sector to do its 
share.
    In his 2000 election campaign, President Bush acknowledged this 
evidence and called for capping of CO2 from U.S. power 
plants. In March 2001, the President reneged on that pledge. His stated 
reasons were that capping of power sector carbon dioxide would ``lead 
to an even more dramatic shift from coal to natural gas for electric 
power generation'' and ``significantly higher electricity prices 
compared to scenarios in which only sulfur dioxide and nitrogen oxides 
were reduced.'' \6\ Presumably reflecting those concerns, CSA contains 
no CO2 limits.
---------------------------------------------------------------------------
    \6\ Letter March 13, 2001 from President George W. Bush to Senators 
Craig, Roberts, and Hagel.
---------------------------------------------------------------------------
    This omission is not only inexcusable as a matter of environmental 
policy; it is also unexplainable by the President's own logic. By the 
President's own rationale, the authors of CSA should have been open to 
discussing power sector CO2 policies which do not lead to a 
``dramatic shift'' from coal to natural gas, or ``significantly higher 
electricity prices.''
    Several such policies have been proposed, either in legislation or 
in public debate, whose effects would not include appreciably greater 
gas use or higher electricity prices. For example:

     EPA concluded that the price effects of the CO2 limits 
contained in the Clean Air Planning Act were likely to be 
``negligible'' assuming availability of worldwide carbon offsets, and 
the combined effect of all the Act's requirements, including 
CO2, would be a mere 6 percent increase in the country's 
natural gas-fired generation by 2020 with coal retaining a 45 percent 
market share.\7\
---------------------------------------------------------------------------
    \7\ As EPA stated, ``Offline analysis showed that the costs of 
compliance for the CO2 constraint would be low due to the 
wide availability of inexpensive GHG offsets. The net cost of the 
CO2 cap is negligible.'' EPA Powerpoint Presentation, ``S. 
3135, The Clean Air Planning Act of 2002 Presentation for Jeff 
Holmstead,'' November 2002, p. 8. For generation figures, see page 13.
---------------------------------------------------------------------------
     The McCain-Lieberman bill and other CO2 constraint 
policies were recently evaluated by American Electric Power, the 
largest user of coal in the Western hemisphere, and Cinergy 
Corporation, the fourth largest. While neither utility endorsed a 
specific bill, Cinergy stated its view ``that under a "moderate' 
scenario for GHG emission reductions, the necessary rate increases 
would not place our region at a competitive disadvantage within the 
United States or among most industrialized countries.'' \8\ And AEP 
concluded from a similar review that CO2 curbs in the range 
of the McCain-Lieberman bill would not uneconomically strand investment 
in existing coal plants.\9\ Both utilities have begun to undertake 
voluntary CO2 reduction programs in the range of those 
required by the Clean Air Planning Act and the McCain-Lieberman 
bill.\10\
---------------------------------------------------------------------------
    \8\ Cinergy Corp. ``Air Issues: An Analysis of the Potential Impact 
of Greenhouse Gas and other Air Emissions Regulations on Cinergy 
Corp.'' (December 2004) at p. 41.
    \9\ American Electric Power Inc., ``An Assessment of AEP's Actions 
to Mitigate the Economic Impacts of Emissions Policies,'' (August 31, 
2004).
    \10\ Bruce H. Braine, ``AEP's Strategy for Managing Climate Change 
Risks: The Value of GHG Reductions, EPA's SF6 and the Environment 
Conference'', December 1, 2004, p. 10; The Cincinnati Enquirer, 
Wednesday, September 10, 2003, ``Cinergy to reduce airborne emissions: 
Voluntary effort aims at greenhouse gases''.
---------------------------------------------------------------------------
     In a response to a request from Senators Voinovich and others, 
EIA estimated the cost of a 2008 power sector carbon cap at roughly 
$630 million annually in 2020--a small fraction of 1 percent of power 
sector revenues in that year.\11\
---------------------------------------------------------------------------
    \11\ Energy Information Administration, ``Reducing Emissions of 
Sulfur Dioxide, Nitrogen Oxides, and Mercury from Electric Power 
Plants,'' Office of Integrated Analysis and Forecasting U.S. Department 
of Energy (September 2001) SR/OIAF/2001-04.
---------------------------------------------------------------------------
     In December 2004, the National Commission on Energy Policy, an 
expert panel representing the electric, oil, labor, academic, 
government and environmental sectors recommended a gradually 
implemented economy-wide CO2 cap, reflecting a reduction in 
carbon intensity, with a safety valve and future parameters depending 
on developing country measures.\12\ The United Mine Workers 
International President welcomed the proposal as ``responsive to the 
prior objections of the UMWA and other labor groups concerning the 
Kyoto Protocol and other recent climate change legislation circulating 
in Congress.'' \13\
---------------------------------------------------------------------------
    \12\ National Commission on Energy Policy, ``Ending the Energy 
Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges,'' 
(December 2004).
    \13\ United Mine Workers International Press Release, ``United Mine 
Workers of America Commends Newly Released Report by The National 
Commission On Energy Policy,'' December 8, 2004.

    I do not mean specifically to endorse these alternative 
CO2 proposals or analyses. I cite them merely to illustrate 
how inexcusable it is that CSA's proponents have not even engaged in a 
discussion of potential CO2 policies based on the 
President's own articulated principles. In this respect, CSA reflects a 
stance on this important issue well outside the policy and even 
electric industry mainstream. For this reason alone, CSA should not be 
even seriously considered as a starting point for debating reformed 
power sector emissions law.
4. CSA Would Repeal or Undercut Key Protections and Policies in the 
        Clean Air Act Without Adequate Substitute Safeguards
    In general, CSA repeals or significantly weakens many provisions of 
existing law that have protected health and the environment since the 
enactment of the 1970, 1977, and 1990 Clean Air Act (CAA) amendments, 
including:

     Interstate air pollution protections;
     New Source Review requirements;
     Air Toxics controls applicable to the electric power industry;
     Provisions designed to bring air quality into attainment with 
national standards and to protect areas from air quality degradation;
     The deadlines by which states must attain national air quality 
standards; and
     Visibility protections for National Parks.

    For example:

     CSA would effectively repeal New Source Review (NSR) for power 
plants by:

         Changing the definition of the term ``modification'' to mean 
        a change that ``increases hourly emissions at the unit's 
        maximum capacity.'' (483(d)(3)) The Clean Air Act currently 
        applies NSR to a facility if it undergoes a physical or 
        operational change that causes its annual emissions to increase 
        significantly. The approach taken in CSA would allow power 
        plant operators to keep plants operating for a 100 years 
        without applying modern emission controls. This is a regulatory 
        immortality provision.
         Prohibiting states from applying NSR to modified sources 
        under their EPA-approved State Implementation Plans. Even if 
        they are able to retain a program as a matter of state-law 
        only, see the Savings Clause of 483(e), they cannot take 
        credit for it in their attainment or maintenance plans. This 
        preempts more stringent state programs. (483(a) (``An affected 
        unit shall not be considered a major emitting facility or major 
        stationary source . . . for purposes of compliance with Part C 
        and Part D of Title I.'')
         Effectively ignoring the effect of emissions from new 
        facilities on non-attainment areas. Under language inserted 
        into S. 1844, regulators must ``deem'' that a new facility will 
        not interfere with attainment efforts in areas with dirty air, 
        regardless of the data, as long as those areas have been in 
        ``full compliance'' with the Clean Air Act for the preceding 
        three years (non-attainment designations notwithstanding). 
        (483(c)(2))
         Requiring only ``reconstructed units''--and not ``modified 
        units''--to ``comply with the either the performance standards 
        of Section 481 or best available control technology as defined 
        in Part C of title I for the pollutants whose hourly emissions 
        will increases at the unit's maximum capacity.'' Compare 
        483(c) of S. 1844 (preconstruction review requirements 
        applicable only to ``reconstructed units'') with 483(c) of S. 
        485 (preconstruction review requirements applicable to 
        ``modified units'').

     CSA would repeal the requirements that certain power plants apply 
Best Available Retrofit technology (BART) to protect visibility in 
National Parks. The requirement is only retained for sources within 50 
kilometers of a Class I park area.\14\ (483(a) and (b))
---------------------------------------------------------------------------
    \14\ The language of S. 485 would have indirectly repealed the 
current case-by-case BART performance standards for new power plant 
units. See 483(a) and (b) (new sources located within 50 km of a Class 
I area are subject only ``to those provisions under part C of title I 
pertaining to the review of a new or modified stationary source's 
impact on a Class I area''). The repeal of BART is made clear in S. 
1844. See 483(a) (``nor shall [an affected unit] otherwise be subject 
to the requirements of [Clean Air Act] section 169A or 169B'').
---------------------------------------------------------------------------
     CSA would repeal the requirement that EPA establish a Maximum 
Achievable Control Technology (MACT) standard for air toxics emission 
from power plants. EPA is left with establishing controls for non-
mercury toxic pollutants with the residual risk provisions of CAA 
112(f) in the period 2010-2018. See Section 3(a)(5) of CSA. The effect 
is to delay power plant MACT for at least 10 years. Furthermore, new 
language inserted into Section 3(a)(5) of S. 1844 establishes 
additional criteria that EPA must meet before it can determine whether 
it should regulate the emission of non-mercury toxics from power 
plants.
     Section 3(a)(3) of CSA would eliminate protections against 
interstate air pollution by barring the application of any CAA 126 
interstate air pollution remedy to power plants before 2012. More 
importantly, it creates an impossible showing--the remedy would only be 
available after all more cost-effective measures have been applied by 
the petitioning state.
     CSA would repeal the existing New Source Performance Standard 
(NSPS) program (which is designed to evolve with technology) for new 
power plants and replace it with a one-shot statutory standard 
(essentially foregoing benefits of advances in pollution control 
technology) 481. EPA would have no mandatory duty to review and 
upgrade the standard to reflect technological advances in pollution 
control. CSA would also exempt modified units from NSPS. This section 
can be read to exempt new power plants from current NSPS even if EPA 
misses deadline for promulgating 481 standards.\15\
---------------------------------------------------------------------------
    \15\ 481(c) of CSA would establish the following emissions 
standards for new power plants (in lieu of NSPS):
    (A) sulfur dioxide in excess of 2.0 lb/MWh;
    (B) nitrogen oxides in excess of 1.0 lb/MWh;
    (C) particulate matter in excess of 0.20 lb/MWh;
    (D) if the unit is coal-fired, mercury in excess of 0.015 lb/GWh, 
unless:
    (i) mercury emissions from the unit are reduced by 80 percent;
    (ii) flue gas desulfurization (FGD) and selective catalytic 
reduction (SCR) are applied to the unit; or
    (iii) a technology is applied to the unit and the permitting 
authority determines that the technology is equivalent in terms of 
mercury capture to the application of FGD and SCR.
    The performance standards for mercury set forth in the bills were 
weakened when the requirements in S. 485 that controls be ``operated so 
as to optimize capture of mercury'' were deleted from S. 1844.
---------------------------------------------------------------------------
     Section 3(a) of CSA would relax the deadlines by which areas must 
attain the revised ozone and PM2.5 standards by providing 
non-complying areas with an automatic extension of their attainment 
date to 2015. Current law (CAA 172) requires attainment as 
expeditiously as practicable but not later than 5 years after 
designation (subject to another 5-year extension, again conditioned on 
passing the ``expeditious as practicable test''). Because designations 
for the new 8-hour ozone and PM2.5 standards were made in 
2004 and 2005, respectively, the Clean Air Act currently allows 
citizens to compel their states to adopt measures that will ensure 
attainment no later than 2009 (for ozone) or 2010 (for 
PM2.5). The current law also allows downwind states to use 
CAA 126 to petition for more timely pollution abatement and attainment 
planning in upwind states. In contrast, CSA would in effect insulate 
states from having to attain before 2015. This is a change made 
``necessary'' by the Administration's acceptance of the electric 
industry's preferred weak targets and timetables for SO2 and 
NOx controls. By choosing weak cleanup requirements, the Administration 
would set in motion a guaranteed delay in meeting health standards from 
what would otherwise be feasible (resulting in thousands more premature 
deaths, asthma attacks, etc.).
     CSA would weaken requirements in existing law designed to bring 
areas into attainment with national standards. Section 3(a)(3)(B) 
repeals the requirement for application of Lowest Achievable Emission 
Rate (LAER) and offset requirements for all sources in areas that get a 
new ``transitional'' designation. Under CSA, a nonattainment area can 
qualify for the ``transitional'' designation by submitting modeling 
that purports to demonstrate that the area will come into attainment by 
2015. Facilities in ``transitional'' areas would be subject to the 
requirements of the Prevention of Significant Deterioration program 
(e.g., BACT), rather than the requirements of the more stringent 
nonattainment NSR program (e.g., LAER). In addition:

         Under CSA there is no meaningful remedy for continued 
        nonattainment--if an area is still violating a NAAQS in 2015, 
        the area is merely required to submit another attainment plan 
        in 2019. (Section 3(a)(3)(B))
         The bills would also weaken requirements that keep clean air 
        areas from being degraded by repealing the PSD Class II program 
        as it relates to power plants. Class II PSD areas today protect 
        the entire country (outside nonattainment and Class I areas). 
        Instead of having to show protection of Class II PSD increments 
        (in the law since 1977), a new or modified plant would only 
        have to show noninterference with NAAQS. As a result, a new or 
        modified power plant could increase emissions that degrade air 
        quality all the way up to the level of the NAAQS health 
        standards.

    It would be hard to imagine a more thorough evisceration of 
existing Clean Air Act protections than would be performed by CSA.
                               conclusion
    CSA is the wrong policy at the wrong time. It offers too little, 
too late in emission reductions to meet key environmental and health 
concerns. It strands too much of the country in violation of clean air 
standards. It ignores global warming entirely without even attempting 
to find a cost effective way forward. And it strips away the procedural 
heart of the Clean Air Act while offering only weak and unacceptably 
delayed emission caps in return.
    Despite the inevitable bureaucratic and legal implementation 
challenges of the current Clean Air Act, America would be far better 
served by tightening and finalizing the current power sector emission 
rules currently in progress than by enacting CSA. We urge the 
subcommittee to support that task, and refrain from serious 
consideration of CSA as a basis for future power sector policy.
    Thank you for your kind attention. I would be happy to answer any 
questions the subcommittee may have.
                                 ______
                                 
                               APPENDIX 1
    availability of boilermaker labor to retrofit power plants with 
   emission control equipment to meet the requirements of the straw 
                                proposal
David Schoengold
MSB Energy Associates, Inc.
January 17, 2005

    Analysis of the available labor pool suggests that under reasonable 
assumptions, sufficient boilermaker labor should be available to 
implement these scenarios.
    The main source of data on labor availability and requirements is 
the EPA's ``Final Report--Engineering and Economic Factors Affecting 
the Installation of Control Technologies for Multi-Pollutant 
Strategies,'' October 2002 (EPA-600/R-02/073). This report analyzes the 
need for boilermaker labor to install FGD, SCR, and ACI on a per MW 
basis. It also analyzes the availability of boilermaker labor, 
including those currently in the work force, the projected increases in 
availability of boilermaker labor, and other needs for this resource. 
EPA also reported on labor availability and requirements in its 
materials in support of the Clear Skies Initiative--specifically in 
``Section F--Engineering and Economic Factors Affecting the 
Installation of Control Technologies''--however, Section F is less 
detailed than the October 2002 report.
    According to the EPA report, building an SO2 scrubber 
requires approximately 304 boilermaker man-hours per MW\16\, building 
an SCR for NOx removal requires approximately 350 boilermaker man-hours 
per MW\17\, and building an ACI for mercury control requires about 5 
boilermaker man-hours per MW\18\. Thus, a total of 664 boilermaker man-
hours per MW will provide SO2, NOx, and mercury control.
---------------------------------------------------------------------------
    \16\ A total of 760 man-hours per MW are required, of which 40 
percent are boilermakers (page 41 of EPA-600/R-02/073).
    \17\ A total of 700 man-hours per MW are required, of which 50 
percent are boilermakers (page 41 of the EPA report).
    \18\ A total of 10 man-hours per MW are required, of which 50 
percent are boilermakers (page 41 of the EPA report).
---------------------------------------------------------------------------
    The EPA report also goes through a calculation of the number of 
boilermaker man-hours available for the addition of emission controls 
(after adjusting for the availability of boilermakers, and the other 
needs for boilermaker labor). According to EPA, there were 17,587 
boilermakers in 2000 of which 60 percent are available for utility 
projects. This number is projected to grow at 5.3 percent per year. To 
quote the EPA report,

        ``Since boilermakers earn more money than most other craft 
        trades and the demand for boilermakers should be steady and 
        increasing, it is reasonable to expect that the growth in 
        boilermaker numbers experienced these last few years should 
        continue for many more years. To assess the impact of this, it 
        was assumed that the boilermakers in the United States 
        continued to grow at the 5.3 percent pace that the 
        International Brotherhood of Boilermakers, Iron Ship Builders, 
        Blacksmiths, Forgers, and Helpers have set as a minimum growth 
        target.'' \19\
---------------------------------------------------------------------------
    \19\ EPA Report at page 45.

    The EPA report assumes that there will be other requirements in the 
utility industry for boilermakers (for maintenance and other 
construction) of approximately 13.5 million man-hours per year.\20\
---------------------------------------------------------------------------
    \20\ EPA Report at page 44-45.
---------------------------------------------------------------------------
    Based on the current and projected availability of boilermaker 
labor and the other demands for that labor, the projected availability 
of boilermaker labor for the purpose of constructing emission control 
equipment is 13.8 million man-hours in 2005 growing to 21.9 million 
man-hours in 2010 and continuing to grow from there. This is enough 
boilermaker labor to build add FGD, SCR and ACI to 160 GW by 2010 and 
375 GW by 2015. This is shown in Figure 1 below.


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    In contrast, the requirements of the Straw Proposal would mean the 
installation of 94 GW of FGD and 123 GW of SCR by 2010, and 133 GW of 
FGD and 158 GW of SCR by 2015. By 2020, the Straw Proposal would 
require the installation of 145 GW of FGD and 164 GW of SCR.\21\ This 
is far less than the projected capability of boiler maker labor to 
install control equipment.
---------------------------------------------------------------------------
    \21\ Requirements for new FGD and SCR equipment to meet the 
emission limits of the Straw Proposal and Clear Skies come from the 
outputs to the EPA's Integrated Planning Model (IPM) which is used for 
analyzing different emissions standards. Modeling of Clear Skies was 
done by the EPA, while modeling of the Straw Proposal was done for the 
Clean Air Task Force by ICF using the EPA's IPM model.
---------------------------------------------------------------------------
    Figure 2 below shows the comparative availability of boilermaker 
labor for adding emission control equipment with the need for this 
equipment under both the Straw Proposal and Clear Skies.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Figure 3 below shows the equivalent data expressed in boilermaker 
man-hours.


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    In conclusion, Figures 2 and 3 show clearly that there is expected 
to be sufficient boilermaker labor available to meet the requirements 
of either the Clear Skies Initiative or the Straw Proposal.



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


     Responses by Conrad G. Schneider to Additional Questions from
                           Senator Voinovich
    Question 1. You claim in your testimony that Clear Skies would not 
sufficiently improve watersheds with regard to mercury. We know that 
the exposure pathway of concerts is the amount of mercury contained its 
fish consumed by women of child-bearing age. Studies such as that 
conducted by the Energy Information Administration indicate that 
mercury reductions from U.S. power plants will not significantly 
decrease the amount of mercury found in fish, given that the amount of 
mercury emitted by U.S. power plants is a very small percentage of 
total global mercury emissions from man-made and natural sources. 
Please provide a list of studies that lead you to conclude that 
reductions from U.S. power plants would significantly lower the amount 
of mercury contained in fish consumed by woven in the United States of 
child-bearing age.
    Response. The Clean Air Task Force performed an analysis of the 
impact Clear Skies would have on fish mercury concentrations. We 
utilized EPA's REMSAD model to estimate mercury deposition under Clear 
Skies in 2010 and 2020. The REMSAD results were then used in 
conjunction with EPA's Mercury Maps tool to estimate how fish 
concentrations would decrease in response to decreases in deposition. 
We found that even under the 15-ton cap in 2020, 80 percent of the 
modeled watersheds had a reduction in fish mercury concentration of 10 
percent or less. This implies that deeper cuts in mercury emissions, 
beyond those required by Clear Skies will be needed.
    We are aware that the Electric Power Research Institute (EPRI) has 
conducted an analysis that concludes that a 70 percent reduction in 
power plant mercury emissions would not significantly decrease human 
exposure to mercury in the United States. We disagree with many of the 
assumptions EPRI uses in this modeling analysis as described below, but 
even EPRI's analysis illustrates that for the Midwest and Mid-Atlantic 
States, the primary source of mercury deposition is from U.S. sources.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    The primary driver for EPRI's modeling results which indicate 
reducing U.S. power plant emissions would not result in decreases in 
U.S. deposition, are EPRI's assumptions concerning the magnitude, 
atmospheric transport and ultimate deposition of global emissions in 
the United States. Basically, EPRI's analysis is driven by assumptions 
concerning the contribution of mercury emissions from China. These 
assumptions have not been vetted by the broader scientific community 
and others, using different assumptions have come to different 
conclusions. For example, as shown below, Cohen, et al. in conducting a 
similar analysis concluded that the impact of local and regional 
sources to mercury deposition in the Great Lakes is far greater than 
those of global sources--in contrast to EPRI's findings that global 
sources play a larger role in this region.\1\
---------------------------------------------------------------------------
    \1\ Cohen et al., in press. Seigneur et al., 2004. As summarized in 
Mercury Science Briefing for U.S. EPA, June 23, 2004. Briefing 
coordinated by Hubbard Brook Research Foundation.

----------------------------------------------------------------------------------------------------------------
                                                          Model 1: Cohen et al.
                        Lake                              Regional Component to       Model 2: Seigneur et al.
                                                               Deposition               (EPRI) % USA Sources
----------------------------------------------------------------------------------------------------------------
Superior............................................                           51%                           26%
Michigan............................................                           60%                           33%
Erie................................................                           93%                           60%
----------------------------------------------------------------------------------------------------------------

    Similarly, Nelson, et al. have concluded in a recent analysis that 
sources within the U.S. play a far greater role than global sources in 
U.S. deposition than EPRI estimates.\2\ The fact is that the use of 
global models is highly dependent on the assumptions within those 
models and there remains considerable scientific uncertainty as to the 
validity of those assumptions.
---------------------------------------------------------------------------
    \2\ Nelson, S. Mercury Transport and Deposition: Alternate Data 
Sets. Presented at the 2005 Electric Utility Environmental Conference. 
Tucson, Arizona.
---------------------------------------------------------------------------
    In addition, the use of national scale models to assess fish 
consumption patterns in the U.S. population and mercury exposure masks 
the impact of decreased deposition at the local level. This discrepancy 
in predicted impacts is readily apparent when studies using measured 
data are consulted. These extensive studies have shown that the primary 
source of mercury to aquatic ecosystems is atmospheric deposition. 
Reducing mercury emissions will reduce mercury deposition, which in 
turn reduces fish concentrations. Two recent studies support a 
quantitative link between decreases in mercury deposition and mercury 
levels in fish.

     In South Florida, incinerator mercury emissions have declined 
more than 90 percent since the mid-1980s as a result of pollution 
prevention and the issuance of stringent State emission limits. As a 
result, mercury in the fish and wildlife of the Everglades has declined 
by more than 75 percent since the mid-1990s--a recovery that the 
researchers called ``remarkable'' (for both the extent of the recovery 
and how quickly it occurred).\3\
---------------------------------------------------------------------------
    \3\ Florida Department of Environmental Protection, 2003. 
Integrating atmospheric mercury deposition and aquatic cycling in the 
Florida Everglades: An approach for conducting a Total Maximum Daily 
Load analysis for an atmospherically derived pollutant. Integrated 
Summary: Final Report. October.
---------------------------------------------------------------------------
     In Wisconsin, researchers found that changes in atmospheric 
mercury deposition can have rapid effects on fish mercury 
concentrations. A 10 percent decline in mercury deposition correlated 
with a 5 percent decline in fish mercury concentration over a period of 
1 year.\4\ A 30 percent decline in fish mercury concentration was 
measured over a 6-year period. In addition, a concurrent reduction in 
acid rain deposition contributed to an additional 30 percent decline in 
fish mercury concentrations over the same time period.
---------------------------------------------------------------------------
    \4\ Hrabik, T.R. and C.J. Watras, 2002. Recent declines in mercury 
concentration in a freshwater fishery: isolating the effects of de-
acidification and decreased mercury deposition in Little Rock Lake. The 
Science of the Total Environment, 2002.

    As we note in our response to Senator Jeffords' question infra 
concerning hotspots, we agree that different mercury species deposit 
locally to varying degrees. However, as explained below we disagree 
with the assertion that the elemental mercury emissions emitted by U.S. 
power plants do not affect waterways in the continental U.S. The fact 
is that coal-fired power plants are the largest source of mercury 
emissions in the U.S. They are a significant part of the mercury 
contamination problem and therefore must be part of any solution. To 
reduce fish contamination in U.S. waters, it is evident that mercury 
reductions from domestic sources--and power plants in particular--are 
---------------------------------------------------------------------------
required.

    Question 2. You indicated in your testimony that you prefer EPA's 
rules under the existing Clean Air Act to the requirements in Clear 
Skies. However, your preference for EPA rules appears to be predicated 
on those rules being ``strengthened'' before they are finalized. If 
EPA's proposed Clean Air Interstate Rule, Clean Air Mercury Rule, and 
Regional Haze Rule are finalized without changes that you believe are 
necessary, will you or other environmental groups litigate the rules? 
Do you think litigation could delay the implementation of those rules?
    Response. The Clean Air Task Force represents a number of 
environmental organizations in each of the three pending regulatory 
proceedings relating to the power sector: the Clean Air Interstate 
Rule, Clean Air Mercury Rule, and Regional Haze Rule. Because no final 
rules have yet been issued in any of these proceedings, no decision has 
been made to challenge them if, and when, they become final. However, 
if the rules are finalized in a form that fails to meet the 
requirements of the Clean Air Act, as the current proposals fail to do, 
we are confident they will be challenged.
    Our position is that under the law, a Maximum Achievable Control 
Technology (MACT) rule for utility air toxics must be fully implemented 
by 2008 and that the Clean Air Interstate Rule (CAIR) must be fully 
implemented by 2010. It is possible that challenges to any final rules 
could delay implementation beyond those dates. But the real question 
being asked here is whether Clear Skies will deliver superior 
environmental performance compared to enforcement of the current Clean 
Air Act? In our view, passage of the proposed ``Clear Skies'' 
legislation would guarantee that the power sector achieves much less 
pollution reduction than required under current law much later in time, 
even assuming any reasonable delay due to litigation. In fact, Clear 
Skies' weak emission targets are not fully achieved until after 2025 
(see answer to Senator Lautenberg's Question 1 infra). So, the question 
for the environmental community boils down to whether we: (a) fight in 
court to achieve pollution cuts twice as deep as those in Clear Skies 
achievable potentially by 2010; or (b) lock-in pollution levels twice 
as high as allowed under current law and not fully effective until 
after 2025? Not surprisingly, our answer is that we will take our 
chances in court to achieve the pollution reductions necessary to 
protect human health and the environment rather than guarantee failure 
by agreeing to Clear Skies' weak and delayed caps.
                                 ______
                                 
     Responses by Conrad G. Schneider to Additional Questions from
                            Senator Jeffords
    Question 1. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein? If so, why?
    Response. No. Clear Skies would delay the dates by which areas must 
attain the national ambient air quality standards for PM2.5 
and 8-hour ozone from 2010 to 2015. Additional flaws in the legislation 
could allow the delayed 2015 deadline to be pushed back to 2022. 
According to U.S. EPA, attainment of the annual PM2.5 
standard nationally could save the lives of 15,000 people each year.\5\ 
Thus, Clear Skies 5-year delay in attainment of the PM2.5 
standard could mean up to 75,000 unnecessary premature deaths. Add an 
additional 7 years of delay and the toll could be over 150,000 
preventable premature deaths.
---------------------------------------------------------------------------
    \5\ U.S. Environmental Protection Agency, Office of Air Quality 
Planning and Standards, 1996 Staff Papers on Smog and Soot Pollution: 
``Review of the National Ambient Air Quality Standards for Ozone and 
Particulate Matter.'' (1996).

    Question 2. Do we have a natural gas crisis and will a multi-
pollutant bill that includes carbon dioxide cause it to continue or 
start anew?
    Response. There is no natural gas ``crisis''. Instead of a crisis, 
we have a supply/demand imbalance that needs to be resolved by the 
natural gas industry over the next decade.
    Natural gas prices today are much higher than prices over the 15-
year period through 2000. The roots of this change have been quite 
visible in the last few years and reflect the end of the ``gas bubble'' 
of the 1990s or more precisely the fact that the balance of supply and 
demand for natural gas has been growing tighter in recent years. A 
tighter balance between supply and demand results in higher prices and 
increased volatility. This does not mean that we are in crisis or are 
``running out'' of natural gas; it does mean that gas producers need to 
look further afield and spend more money to meet the demand for gas, 
and that is reflected in the price.
    Resolving our current supply/demand imbalance will require 
realistic, though challenging period of growth. It will require large 
investments of capital, though not more than has been invested in the 
past. It also requires a variety of positive policy decisions such as 
support for an Alaskan gas pipeline, development of LNG terminals, 
construction of other new pipelines, etc.
    More extensive discussion of how our natural gas supply/demand 
imbalance evolved and steps the natural gas industry needs to take to 
address this imbalance are provided in the following attachments:

    A. ``Natural Gas Update'', Energy and Environment Analysis, Inc., 
September, 2003.
    B. Testimony of Joel Bluestein, before the Committee on Environment 
and Public Works, United States Senate Subcommittee on Clean Air, 
Climate Change and Nuclear Safety, Hearings on Power Plant Multi-
pollutant Legislation, May 8, 2003.

    Moreover, a multi-pollutant bill should have little or no impact on 
natural gas prices and availability. Analyses by the EIA and analyses 
by EPA and the Clean Air Task Force (using EPA's IPM model as set up 
for EPA's analysis of Clear Skies) show that several proposed power 
plant multi-pollutant proposals have little or no impact on natural gas 
consumption and prices, as shown in the tables below:

 Table A.--Selected results from EIA's ``Analysis of S. 485, the Clear Skies Act of 2003, and  S. 843, the Clean
          Air Planning Act of 2003 September 2003 Energy Information Administration, September 2003.''
----------------------------------------------------------------------------------------------------------------
               Category                    Base Year (2001)             CSI 2025               Carper 2025
----------------------------------------------------------------------------------------------------------------
Natural gas prices...................  $4.12/mmbtu              $4.14/mmbtu              $4.16/mmbtu
Gas-fired power generation...........  411 billion kwh          1452 billion kwh         1637 billion kwh
National natural gas consumption.....  23.26 TCF                35.55 TCF                36.64 TCF
----------------------------------------------------------------------------------------------------------------


Table B.--Projected natural gas generation in 2020 from IPM model analyses of S. 485, S. 843 and the EPA ``Straw
                                                 Proposals'' \6\
----------------------------------------------------------------------------------------------------------------
                                                 CSI                     Carper                 EPA Straw
----------------------------------------------------------------------------------------------------------------
Natural gas and oil power generation.  1531 billion kwh         1560 billion kwh         1590 billion kwh
Natural gas consumption for power      11617 TBTU               11836 TBTU               11617 TBTU
 generation.
----------------------------------------------------------------------------------------------------------------
Joel Bluestein's testimony (Attachment A) provides an explanation of why power plant multi-pollutant policies
  will have little impact on natural gas prices.


    Question 3. Would you support a binding global treaty that required 
all nations to reduce their mercury use and emissions?
---------------------------------------------------------------------------
    \6\ Clear Skies results are from EPA's IPM analyses; results for 
the EPA Straw Proposal and the Carper Bill are from IPM runs conducted 
by ICF, Inc for CATF using the same model ``set-up'' assumptions as 
used by EPA for their analysis of the Clear Skies Initiative.
---------------------------------------------------------------------------
    Response. Yes. Such a global treaty must complement--not replace--
our national efforts to reduce mercury emissions in this country as 
required by the Clean Air Act. The U.S. is currently party to such a 
treaty, albeit one that needs to be strengthened, as discussed below.
    The U.S. is one of 49 members of the 1979 Geneva Convention on 
Long-range Transboundary Air Pollution, and one of 24 countries 
currently party to the 1998 Aarhus Heavy Metals Protocol to the 
Convention. That Protocol, which became effective in December 2003, 
initially targets emissions of mercury, lead and cadmium. Among other 
things, it requires each party to reduce its national mercury emissions 
to 1990 levels, and to set emission limits reflecting best available 
control techniques on new sources by 2005 and existing sources by 2011. 
The Executive Body for the Convention has recently established a Task 
Force to review the effectiveness and adequacy of the Protocol. Metals 
may be added and existing requirements strengthened by amendment to the 
Protocol.
    We support the work of the Convention (although we note that the 
U.S. is not a party to a majority of the Convention's substantive 
protocols). We believe, however, that the application of best available 
control techniques can produce substantially greater reductions in 
mercury emissions than presently required under the Heavy Metals 
Protocol. Therefore, we believe that the Protocol must be strengthened, 
and we would urge the U.S. to propose, or at the least support, an 
amendment to accomplish that. We would also urge the U.S. to ratify 
those protocols that it has not yet ratified.
    We strongly also believe, however, that the Heavy Metals Protocol 
should not serve as an excuse to avoid reducing mercury from U.S. power 
plants and other sources to the maximum level of achievable reduction 
as required by the CAA.

    Question 4. A recent Florida study showed that when power plant 
emissions were stopped the deposition of mercury in downwind waterways 
radically dropped. This should give us serious concern about trading 
toxics. Are you at all concerned that toxic hot spots might develop if 
we use a cap-and-trade system for toxics like mercury and don't require 
at least some minimal reductions at each unit?
    Response. Yes. We are concerned about toxic hotspots in the context 
of a cap and trade system for mercury. First of all, many regions of 
the U.S., particularly the eastern seaboard, are already experiencing 
high levels of mercury contamination as evidenced by widespread fish 
consumption advisories. At this point in time we are already faced with 
``hot regions'' of mercury contamination, not isolated hotspots. The 
cleanup of these regions is dependent on reducing the deposition of 
mercury.
    The local deposition of mercury is highly influenced by the mixture 
of different chemical species of mercury emitted by the power plant 
because each of these chemical species are deposited locally to a 
varying degree.\7\ It is well established that mercury emitted by coal-
fired power plants is a mixture of 3 chemical species: elemental 
(Hg0) oxidized (Hg2+) and a very small fraction 
of particulate-bound mercury. The types of mercury most likely to 
deposit close to the source are oxidized mercury and particulatebound 
mercury. Elemental mercury is more likely to circulate in the global 
atmosphere, however, at some point even elemental mercury is oxidized 
(e.g., by ozone) and deposits. Some argue that the elemental mercury 
emitted by coal-fired power do not contribute to mercury deposition in 
the U.S. However, significant conversion between mercury species may 
occur during atmospheric transport, and elemental mercury emitted in 
the Western U.S. could well deposit in the eastern U.S. The notion that 
elemental mercury emissions simply disappear into the global atmosphere 
and never affect the U.S. is incorrect.\8\
---------------------------------------------------------------------------
    \7\ EPA, 1997. Mercury Study Report to Congress. Volume III: Fate 
and Transport of Mercury in the Environment. 452/R-97-005. December.
    \8\ See Mercury Science Briefing for U.S. EPA, June 23, 2004. 
Briefing coordinated by Hubbard Brook Research Foundation.
---------------------------------------------------------------------------
    In addition, other factors besides mercury species also influence 
deposition including the physical characteristics of the power plant 
and its location. Characteristics of the boiler, such as the quantity 
of coal burned, stack height and the type of air pollution control 
device in place, all influence the amount and type of mercury emitted, 
and when and where it is deposited. The location of the boiler is 
important for a number of reasons:

     The climate will affect the wet deposition of air toxics with a 
wet climate generally having higher deposition than a dry climate. Also 
the predominant wind direction and surrounding terrain influence where 
pollutants are deposited.
     Watershed characteristics such as erosion potential affect how 
much mercury enters the aquatic environment. Erosion potential is 
influenced by topography, extent of plant cover, soil erodibility, etc.
     The air quality in a region can affect mercury deposition. Ozone 
and acid gases (e.g., hydrogen chloride (HCl)) can promote mercury 
oxidation, which increases local deposition. High particulate 
concentrations could increase dry deposition of mercury.
     The health or environmental impact of the emissions will depend 
on where people or sensitive ecosystems are located relative to the 
power plant, how many people or sensitive organisms are in that 
location and whether they are exposed (e.g., to contaminated fish).

    The following table summarizes how each of these different 
variables may increase or decrease local deposition.


    Effect of Various Factors on Local Deposition and Human Exposure
------------------------------------------------------------------------
                                             Effect on Local Mercury
                 Factor                    Deposition or Human Exposure
------------------------------------------------------------------------
Air pollution control device...........  Generally decrease; more likely
                                          to decrease oxidized Hg
                                          emissions.
High stack height......................  Decrease.
Terrain................................  Variable. Increase where air
                                          dispersion is minimal.
Climate................................  Increase in humid climate;
                                          decrease in arid climate.
High ambient ozone concentration.......  Potential increase.
High HCl concentration.................  Potential increase.
Reduction reactions in clouds or plume.  Potential decrease.
Coal type
Bituminous.............................  Increase.
Subbituminous..........................  Decrease.
Lignite................................  Decrease.
Proximity to water body................  Increase.
Consumption of locally caught fish.....  Increase.
Poorly buffered or acidic water body...  Increase.
------------------------------------------------------------------------


    The point is that there are multiple factors that influence when 
and where mercury deposits and the subsequent impacts on public health 
and wildlife. EPA simply cannot model with certainty whether or where 
hotspots will occur. EPA can only predict with a high degree of 
uncertainty the likelihood of hotspots and this, in our view is 
insufficient for the protection of public health and welfare. 
Furthermore, it is particularly troubling that the Clear Skies 
legislation effectively removes the authority a state may have to 
address local issues with a tighter cap or reduced allowances. The only 
way to ensure that deposition is reduced in the most sensitive areas is 
to require, as the current CAA does, emission reductions at every 
plant. At a bare minimum, any cap and trade legislation should have a 
requirement that ensures there are no emission increases at any power 
plant from the current year's emissions.

    Question 5. What are the costs of not attaining the health-based 
NAAQS on the schedule in the current Clean Air Act?
    Response. U.S. EPA in its regulatory impact analyses and cost 
benefit analysis of Clear Skies values each premature death at roughly 
$6 million.\9\ As described above in answer to your first question, 
Clear Skies would entail a minimum 5-year delay in attainment of the 
annual PM2.5 ambient air quality standard. EPA calculates 
that attainment of that standard would result in 15,000 fewer premature 
deaths per year. Thus, the 5-year delay could result in as many as 
75,000 unnecessary premature deaths. Failure to meet the attainment 
date on time will lead to costs of tens of billions of dollars for each 
year of delay.
---------------------------------------------------------------------------
    \9\ Source of $6 million figure--EPA Technical Addendum: 
Methodologies for the Benefit Analysis of the Clear Skies Act of 2003, 
September 2003, page 35.
---------------------------------------------------------------------------
                                 ______
                                 
     Responses by Conrad G. Schneider to Additional Questions from
                           Senator Lautenberg
    Question 1. I understand that under the Clear Skies Act the 
reduction goals for SO2, NOx, and mercury which are set out 
for 2018 aren't actually achieved until after 2025. Can you explain how 
power plant operators can delay compliance for such a long time?
    Response. The Clear Skies Act allows power plant operators who 
reduce their emissions (below the limits set forth in the current Acid 
Rain law) ahead of the deadlines in the Clear Skies Act to ``bank'' 
(i.e., collect) additional emission allowances for those reductions. 
Then, they can use those additional allowances after 2018 to cover 
emissions which are above the levels set forth in the Act. Only when 
the additional emission allowances are used up will the plant operators 
actually have to reduce their emissions to the levels set forth in the 
Clear Skies Act. The computer models used by the EPA to analyze the 
Clear Skies Act (and other approaches to emission reductions) keep 
track of the accumulation of allowances for early reductions and show 
the expected delay in meeting the preliminary and final goals 
accordingly. EPA's own modeling analysis of the Clear Skies bill 
predicts that the bill's nominal caps will not be reached until after 
2025. See EPA's graphic of sulfur dioxide emissions vs. the cap under 
Clear Skies below:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Question 2. Your testimony discusses a wide variety of weakening 
changes found in Senator Inhofe's bill. S. 1844. Do these apply to 
industries and pollution sources besides the electric utility industry?
    Response. Yes. A wide range of industrial facilities other than 
power plants can opt into Clear Skies under 407 of the bill. According 
to the bill, ``any unit''--that is, any stationary source of 
SO2, NOx, or mercury emissions--can opt into Clear Skies 
through 407 as long as: (a) it is not an ``affected EGU'' and (b) its 
SO2 and/or NOx emissions are discharged ``through a stack or 
duct.'' \10\ If an industrial facility meets those criteria, its 
application to opt into Clear Skies cannot be denied by the EPA 
Administrator, even if the Administrator determines that approving the 
application would be harmful to public health.\11\ In return for their 
compliance with Clear Skies' caps on SO2, NOx, and mercury 
(if applicable), industrial sources that opt in will be exempt from 
critical Clean Air Act provisions that limit toxic air emissions, 
require new and modified sources to install modem pollution controls, 
and reduce the pollution that contributes to visibility-impairing haze 
in national parks and wilderness areas.
---------------------------------------------------------------------------
    \10\ See S. 131 407(a), 402(30), 402(32). Industrial facilities 
that opt in under 407 would be subject to Clear Skies' mercury limits 
if they burn solid fuel and vent mercury emissions through a stack or 
duct. S. 131 407(a)(2).
    \11\ S. 131 407(c).
---------------------------------------------------------------------------
    Specifically, Clear Skies could substantially reduce the number of 
industrial facilities that are subject to the following pollution 
programs:

    MACT. Toxic air pollution is addressed under the Clean Air Act 
through the establishment of industry-specific pollution control 
standards that require facilities to install the ``maximum achievable 
control technology'' (MACT).\12\ Under Clear Skies, MACT standards that 
regulate toxic emissions from four major industries\13\ would no longer 
apply to facilities that opt into the bill's emissions program for 
SO2, NOx, or mercury. Indeed, even if an opt-in facility 
emits only one of the three pollutants regulated under Clear Skies, 
that facility would be exempt from MACT requirements that apply to 
numerous toxic pollutants. Facilities that are currently subject to 
those regulations would not have to control their emissions of any 
toxic air pollutant other than mercury.\14\ The list of pollutants for 
which this provision of Clear Skies would eliminate existing 
regulations includes many that cause cancer and birth defects.
---------------------------------------------------------------------------
    \12\ CAA 112.
    \13\ If an industrial facility opts into Clear Skies, it will be 
exempt from MACT standards that apply to the following industries: 
industrial, commercial, and institutional boilers and process heaters; 
plywood and composite wood panel manufacturers; reciprocating internal 
combustion engines; and stationary combustion turbines. S. 131 
407(j)(1)(A).
    \14\ S. 131 407(j)(1)(A).
---------------------------------------------------------------------------
    NSR. The Clean Air Act's New Source Review (NSR) and Prevention of 
Significant Deterioration (PSD) programs currently requires existing 
industrial facilities to install modern pollution controls when they 
make a physical or operational change that causes their actual annual 
emissions to increase significantly.\15\ Under Clear Skies, however, 
industrial facilities that take advantage of the bill's opt in 
provision are exempt from NSR and PSD until 2025, as long as they limit 
their emissions of particulate matter.\16\ In effect, these facilities 
are given a 20-year grace period during which they can make any number 
of changes that cause significant amounts of new pollution, all without 
having to update their pollution control systems.
---------------------------------------------------------------------------
    \15\ CAA 111(a)(4), 165(a), 173(a).
    \16\ S. 131 407(k)(1).
---------------------------------------------------------------------------
    VISIBILITY IMPROVEMENT. Additionally, the Clean Air Act requires a 
broad range of industrial facilities to install the ``best available 
retrofit technology'' (BART) if such a facility emits pollution ``which 
may reasonably be anticipated to cause or contribute to any impairment 
of visibility'' in national parks and other specially protected Class I 
areas.\17\ That requirement would no longer apply to the vast majority 
of industrial facilities opting into Clear Skies. Instead, these 
facilities will be exempt from the Clean Air Act's BART requirement 
until 2025, provided they limit their particulate matter emissions.\18\ 
The only visibility improvement provision that would apply to 
industrial facilities that opt into Clear Skies is a requirement that 
new or modified facilities comply with PSD if they are located within 
50km of a Class I area.
---------------------------------------------------------------------------
    \17\ CAA 169A.
    \18\ S. 131 407(k)(1).

    Question 3. Aren't there available technologies that can reduce 
mercury from coal-fired power plants to a far greater degree than 
required by S. 1844?
    Response. Yes. There are several approaches\19\ available to reduce 
mercury emissions to a greater degree that the 70 percent national 
reduction required by S. 1844, including:
---------------------------------------------------------------------------
    \19\ U.S. EPA, 2002. Control of mercury emissions from coal-fired 
electric utility boilers: Interim report including errata dated 3-21-
02. Office of Research and Development. EPA-600/R-01-109. April.

     Coal cleaning as a pre-combustion alternative,
     Installing conventional controls,
     Optimizing the mercury capture of existing control devices,
     Adding mercury-specific controls, and
     Multipollutant approaches (e.g., strategies to simultaneously 
reduce mercury, NOx, SOx and particulate matter (PM)).

    Coal cleaning removes about 23 percent of the mercury in the coal 
and is currently used for about 77 percent of eastern coals.\20\ Coal 
cleaning can thus offer additional mercury reduction for units not 
already burning cleaned coal and a new precombustion cleaning 
technology is now available for subbituminous coals that remocs on 
average 70 percent of the mercury.\21\
---------------------------------------------------------------------------
    \20\ U.S. EPA, 2002. Control of mercury emissions from coal-fired 
electric utility boilers: Interim report including errata dated 3-21-
02. Office of Research and Development. EPA-600/R-01- 109. April
    \21\ See http://www.kfx.com.
---------------------------------------------------------------------------
    Conventional NOx and SO2 controls on existing boilers 
already capture on average about 36 percent of the mercury--with some 
configurations capturing well in excess of this amount. In addition, we 
have seen from EPA's own analysis that adding conventional controls to 
existing boilers will capture an additional 29 percent of the 
mercury.\22\ For boilers that already have controls, optimizing the 
performance of these devices for mercury removal (e.g., adding a bag to 
an existing fabric filter) has the potential would increase mercury 
capture by these controls at least 10 percent.
---------------------------------------------------------------------------
    \22\ U.S. EPA, 2003. Performance and cost of mercury and 
multipollutant emission control technology applications on electric 
utility boilers. Prepared for Office of Research and Development. EPA-
600/R-03-110. October.
---------------------------------------------------------------------------
    Technologies designed to specifically capture mercury, or that 
offer Multipollutant benefits are in various stages of development 
ranging from commercially available to bench-scale testing. The mercury 
capture efficiency of several of these technologies is summarized in 
Table 1.
---------------------------------------------------------------------------
    \23\ NESCAUM, 2003. Mercury emissions from coal-fired power plants: 
the case for regulatory action.
    \24\ U.S. EPA, 2003. Performance and cost of mercury and 
multipollutant emission control technology applications on electric 
utility boilers. Prepared for Office of Research and Development. EPA-
600/R-03-110. October.
    \25\ Environmental Energy Insights. M.J. Bradley and Associates. 
Volume VII, Issue 1, January/February 2004.
    \26\ ADA-ES, Inc. Presented at PowerGen, December 2004.

  Table 1.--Mercury-Specific or Multipollutant Control Technologies 23,
                               24, 25, 26
------------------------------------------------------------------------
                                   Percent Mercury
    Mercury Control Approach           Capture             Comments
------------------------------------------------------------------------
Conventional coal cleaning.....  23%................  Average removal
                                                       for eastern
                                                       bituminous coals.
Optimization of existing         Variable...........  Incremental
 controls.                                             increase in
                                                       performance.
Installation of conventional     29%................  National reduction
 controls.                                             achievable
                                                       through
                                                       implementation of
                                                       proposed CAIR
                                                       rules.
Activated carbon injection with  60%................  Addition of a
 ESP for PM control.                                   small fabric
                                                       filter would
                                                       increase the
                                                       capture
                                                       efficiency to
                                                       90%. Saving in
                                                       sorbent costs
                                                       would payback the
                                                       cost of the
                                                       fabric filter in
                                                       3 to 4 years.
Halogenated activated carbon     90+%...............  Month-long test
 injection with ESP for PM                             achieved average
 control.                                              94% control
                                                       efficiency.
Activated carbon injection with  90%................  For subbituminous
 existing fabric filter for PM                         and lignite
 control.                                              coals, an
                                                       activated carbon
                                                       that is treated
                                                       with iodide,
                                                       sulfur or bromine
                                                       would probably be
                                                       needed to achieve
                                                       this high level
                                                       of reduction.
COHPAC-TOXECON.................  90+%...............  This configuration
                                                       is a small fabric
                                                       filter in
                                                       combination with
                                                       activated carbon
                                                       injection. High
                                                       capture
                                                       efficiency for
                                                       all coal types.
Enhanced wet scrubbing.........  50-80%.............  Control
                                                       efficiencies vary
                                                       with scrubber
                                                       chemistry. Avoids
                                                       excess carbon in
                                                       the fly ash.
K-Fuel........................  70%................  Advanced coal
                                                       cleaning
                                                       techniques for
                                                       subbituminous
                                                       coals.
Powerspan--ECO................  80-90%.............  Multipollutant
                                                       control. Also
                                                       removes 98% of
                                                       SO2, 90% of NOx,
                                                       and 99.5% of
                                                       PM2.5.
Advanced Hybrid FilterTM.......  >90%...............  Used in
                                                       conjunction with
                                                       activated carbon
                                                       injection.
Airborne Process...............  Up to 75%..........  Multipollutant
                                                       control. Also
                                                       removes >95
                                                       percent of SO2,
                                                       60 to 79% of NOx.
LoToxTM Process................  >90%...............  Multipollutant
                                                       control. Also
                                                       removes >90% NOx.
MerCAPTM.......................  >80%...............
------------------------------------------------------------------------
ESP = electrostatic precipitator, PM = particulate matter

    To address the question of control technology availability, in 2003 
Senator Jeffords requested information concerning the availability and 
performance of mercury control technologies.\27\ In response, five 
pollution control equipment vendors reported the following regarding 
commercial availability of mercury controls:
---------------------------------------------------------------------------
    \27\ The Real Status of Mercury Control Technology--December 3, 
2003. Statement of James M. Jeffords, Ranking Member, Senate 
Environment and Public Works Committee Pending EPA Proposal to 
Deregulate Mercury. December 3, 2003.

     Two companies were confident their technologies can reduce 
mercury emissions from power plants by at least 80-90 percent from all 
types of coal combustion.
     One of these two technologies can achieve even greater than 90 
percent capture of mercury from the harder-to-control western 
subbituminous and lignite coals.
     Three out of the five companies responding indicated that their 
technologies are currently available commercially.
     The remaining two planned to enter the market in 2004 and 2005.

    In addition, options for optimizing criteria pollutant controls for 
mercury capture are immediately available, as is the option for adding 
additional conventional controls (e.g., NOx and SO2 
controls) to existing units. Table 2 summarizes the current state of 
development of some mercury controls. There are numerous other 
variations of these technologies under development (e.g., different 
activated carbon-based sorbents) that are too numerous to list here.
---------------------------------------------------------------------------
    \28\ NESCAUM, 2003. Mercury emissions from coal-fired power plants: 
the case for regulatory action.
    \29\ U.S. EPA, 2003. Performance and cost of mercury and 
multipollutant emission control technology applications on electric 
utility boilers. Prepared for Office of Research and Development. EPA-
600/R-03-110. October.
    \30\ Environmental Energy Insights. M.J. Bradley and Associates. 
Volume VII, Issue 1, January/February 2004.

                          Table 2.--State of Development of Mercury Controls 28, 29, 30
----------------------------------------------------------------------------------------------------------------
                                                                 Projected Availability
       Mercury Control Approach           Commercial Status               Date                   Comments
----------------------------------------------------------------------------------------------------------------
Conventional coal cleaning...........  Available..............  Currently available....  An option for 23
                                                                                          percent of eastern
                                                                                          coals. See K-Fuel for
                                                                                          western coals.
Optimization of existing controls....  Available..............  Currently available....  Additional 10% control
                                                                                          achievable on existing
                                                                                          units.
Installation of conventional controls  Available..............  Currently available....  30% reduction projected
                                                                                          to meet other emission
                                                                                          limits for PM2.5.
Activated carbon injection...........  Available..............  Currently available....  Systems for power
                                                                                          plants now being
                                                                                          offered by ADA-ES a
                                                                                          and Sorbent
                                                                                          Technologies.
COHPAC-TOXECON.......................  Available..............  Currently available....  Both components now
                                                                                          commercially
                                                                                          available. Full-scale
                                                                                          tests complete on
                                                                                          integrated system. 5-
                                                                                          year full-scale test
                                                                                          will finish in 2007.
Enhanced wet scrubbing...............  Near commercial........  2005...................
K-Fuel..............................  Near commercial........  Early 2005.............
Powerspan--ECO......................  Near commercial........  3rd qtr 2004...........
Advanced Hybrid FilterTM.............  Emerging...............  .......................  Pilot-scale tests.
Airborne Process.....................  Emerging...............  .......................  Pilot-scale tests.
LoToxTM Process......................  Under Development......  .......................  Bench-scale tests.
MerCAPTM.............................  Under Development......  .......................  Bench-scale tests.
MB Felt Filter.......................  Under Development......  .......................  Bench-scale tests.
----------------------------------------------------------------------------------------------------------------
aSee http://www.adaes.com

    More recently, on January 31, 2005, the Institute of Clean Air 
Companies (ICAC) presented a briefing to Senate staffers entitled 
``Advances in Mercury Control Technology to Meet Future Needs.'' In 
this briefing, ICAC states that primary mercury capture technologies 
are available. These include activated carbon injection (with several 
different types of sorbent), flue gas desulfurization, advanced 
precombustion coal cleaning, particulate matter collection devices and 
multipollutant controls. In addition, continuous mercury monitors are 
now on the market from at least 6 suppliers. There is currently 
sufficient supply of activated carbon to supply the needs of States 
with new mercury rules with additional needed to meet the needs of a 
Federal standard.
    In response to EPA's Notice of Data Availability, Sorbent 
Technologies Corporation states that activated carbon injection (ACI) 
systems are simple and easily commercially available. Full-scale ACI 
systems have already been installed on at least 20 U.S. coal-fired 
boilers in temporary ACI trials and about another 20 systems will be 
installed over the next 2 years in additional full-scale ACI 
demonstrations. According to Sorbent Technologies, little distinguishes 
these temporary full-scale installations from permanent ACI systems 
except, perhaps, permanent piping rather than flexible hoses, more 
permanent foundations, or larger activated carbon storage silos. 
Sorbent Technologies Corporation's first B-PACTTM mercury-
sorbent manufacturing plant became available for continuous power plant 
use in September of 2004. Sorbent Technologies states:

        Consequently, all EPA utility mercury policymaking 
        deliberations, including modeling analyses, should consider 
        brominated ACI technology available for full-scale retrofit 
        implementation with every coal type, on every coal-fired 
        utility boiler, in 2005.\31\
---------------------------------------------------------------------------
    \31\ Sid Nelson, Jr., President, Sorbent Technologies Corporation 
to William Maxwell, U.S. EPA. Part I of comments filed by Sorbent 
Technologies in response to the Notice of Data Availability. December 
30, 2004.

    Despite statements by the manufacturers of pollution control 
equipment that mercury control technology is available and there is 
sufficient labor to install it, industry has and will argue that the 
availability of control technology means more than simply having the 
equipment on hand. In industry's view, there must be adequate testing 
and long-term demonstrations before a technology is really 
``available'' to reliably meet emission controls requirements. Taking 
that view, can we really say that mercury control technology is 
currently available? We believe the answer is yes. ADA-ES, Inc. has 
explored the issue of new technology acceptance in the electric power 
sector and their analysis lends valuable insight into where mercury 
control technology is today in terms of commercialization and 
adoption.\32\ Basically, the development and acceptance of new 
technology has followed 6 steps. They are:
---------------------------------------------------------------------------
    \32\ Bustard, J. and Durham, M., 2004. Air Pollution Control 
Equipment New Technology Acceptance Process. Presented at: AWMA 97Th 
Annual Conference and Exhibition, Indianapolis, IN. June 22-25, 2004.

    1. Laboratory testing,
    2. Pilot-scale testing,
    3. Full-scale field tests,
    4. Full-scale tests at multiple sites,
    5. Long-term demonstration at several sites, and
    6. Widespread implementation.

    Regarding the first 2 steps, laboratory and pilot-scale testing of 
mercury control technologies took place in the early to mid-90s. Full-
scale field tests, including full-scale tests at multiple sites were 
completed during 2001-2003 as Table 3 illustrates. In Table 3, the 
facilities are listed by coal type and within each coal type by roughly 
a chronological order. Thus, it is apparent that during the later 
tests, as the technology has rapidly advanced, the mercury capture 
efficiency has increased to the 90 percent range across all coal types. 
In addition, it can be seen that the earlier tests required 
considerably more carbon to achieve the same results as the later tests 
with halogenated sorbents. The need for less carbon will considerably 
reduce control costs.
    Step 5 entails long-term demonstrations at multiple sites. A year-
long test has already been completed at the Gaston plant (average 
reduction 86 percent with an average-performing sorbent) and 3 other 
month-long tests have also been completed with success.\33\ \34\ As 
shown in Table 4, numerous other full-scale tests at a variety of 
plants are either ongoing or scheduled in the 2004-2005 timeframe.
---------------------------------------------------------------------------
    \33\ ADA-ES, Inc. Presented at PowerGen, December 2004.
    \34\ Sid Nelson, Jr., President, Sorbent Technologies Corporation 
to William Maxwell, U.S. EPA. Part I of comments filed by Sorbent 
Technologies in response to the Notice of Data Availability. December 
30, 2004.
---------------------------------------------------------------------------
    We also note that state mercury rules will be going into effect by 
2008, which will provide additional long-term commercial experience 
with mercury controls. Compliance with some of the state rules begins 
in 2008; consequently these facilities will have installed, tested and 
operated ACI systems long before the compliance date. By 2008, 15 
boilers in Massachusetts, Connecticut and New Jersey will be 
controlling mercury by more than 90 percent. These bituminous-fired 
boilers have control configurations that are similar to 60 percent of 
the fleet and will provide the early proving ground that industry 
maintains is needed prior to widespread implementation of this 
technology.
    Given this systematic evolution of the adaptation of activated 
carbon technology to the power sector, we are confident that this 
technology will be available prior to 2010. We also note once again for 
the record that not all plants will need to use ACI to achieve a 
stringent standard. Conventional controls will achieve a stringent 
emissions level for many plants and precombustion controls and other 
technologies (e.g., oxidizing catalysts and multipollutant controls) 
will also be options.

                      Table 1.--Full-Scale Tests of Sorbent Injection Completed: 2001-2003
----------------------------------------------------------------------------------------------------------------
                                                         Existing Control     Injection Rate    Percent Mercury
              Site                        Coal              Equipment          (lbs/mmacf)          Capture
----------------------------------------------------------------------------------------------------------------
Brayton Point...................  Low Sulfur           ESP (2)                             10              94.5%
                                   Bituminous.
PGE.............................  Low Sulfur           ESP                                 10                90%
                                   Bituminous.
Cliffside.......................  Low Sulfur           HS-ESP                             6.4               >80%
                                   Bituminous.
Gaston..........................  Low Sulfur           HS-ESP/COHPAC                     0.55                86%
                                   Bituminous.
Lausche.........................  High Sulfur          ESP                                  4                70%
                                   Bituminous.
St. Clair.......................  Bit./Sub. Blend....  ESP                                  3                90%
Pleasant Prairie................  Subbituminous......  ESP                               11.3                66%
St. Clair.......................  Subbituminous......  ESP                                  3               94+%
Holcomb.........................  Subbituminous......  SDA/FF                             1.2                93%
Meramac.........................  Subbituminous......  ESP                                  3                90%
Stanton 10......................  Lignite............  SDA/FF                             1.5                95%
Stanton 10......................  Lignite............  SDA/FF                             1.5                90%
----------------------------------------------------------------------------------------------------------------
ESP(c) = cold-side electrostatic precipitator, HS-ESP = hot-side electrostatic precipitator, FF = fabric filter,
  SDA = spray dryer adsorber
Source. ADA-ES, Inc. Presented at PowerGen, December 2004.


                Table 2.--Full-Scale Tests of Sorbent Injection Ongoing and Scheduled: 2004-2005
----------------------------------------------------------------------------------------------------------------
                                                                   Existing Control
                Site                         Coal Type                 Equipment             Testing Company
----------------------------------------------------------------------------------------------------------------
Gaston..............................  Low Sulfur Bituminous..  FF                        ADA-ES
Holcomb.............................  Powder River Basin.....  SDA/FF                    ADA-ES
Arapahoe............................  Powder River Basin.....  FF                        ADA Tech
Stanton 10..........................  ND Lignite.............  SDA/FF                    Apogee
Yates 1.............................  Low Sulfur Bituminous..  ESP/FGD                   URS
Yates 2.............................  Low Sulfur Bituminous..  ESP                       URS
Leland Olds.........................  ND Lignite.............  C-ESP                     EERC
Meramec.............................  Powder River Basin.....  C-ESP                     ADA-ES
Buck................................  Low Sulfur Bituminous..  H-ESP, C-ESP              Sorbent Tech
St. Clair...........................  PRB/Bituminous.........  C-ESP                     Sorbent Tech
Miami Fort..........................  High Sulfur Bituminous.  C-ESP                     ADA Tech
Conesville..........................  High Sulfur Bituminous.  ESP/FGD                   ADA-ES
Nanticoke...........................  PRB/Bituminous.........  ESP                       ADA-ES
Arapahoe............................  Powder River Basin.....  FF                        ADA Tech
Antelope Valley.....................  ND Lignite.............  SDA/FF                    EERC
Stanton 1...........................  ND Lignite.............  C-ESP                     Apogee
M.R. Young..........................  ND Lignite.............  FGD                       EERC
Monticello..........................  TX Lignite.............  FGD                       EERC
----------------------------------------------------------------------------------------------------------------
C-ESP = cold-side electrostatic precipitator, HS-ESP = hot-side electrostatic precipitator, FF = fabric filter,
  SDA = spray dryer adsorber
Source. ADA-ES, Inc. Presented at PowerGen, December 2004


    Question 4. The U.S. PIRG report, ``Pollution on the Rise'' found 
that more than half of the nation's dirtiest power plants increased 
their SO2 emissions in spite of existing air pollution 
control regulations. Could this continue to happen under S. 1844?
    Response. Yes. Because the Clear Skies Act allows for the trading 
of emission allowances between power plant operators (subject only to a 
very broad Eastern U.S. versus Western U.S. limitation on trading), 
there is nothing in the Act that will prevent any power plant from 
increasing its emissions. That determination will involve each plant 
operator comparing the cost of reducing his own emissions to the cost 
of buying emission allowances from another plant operator.
    In general, the more a plant emits, the less it costs (per ton) to 
reduce emissions, so it is likely that the highest polluters will 
reduce their emissions rather than buy large amounts of emission 
allowances. This cannot, however, be assured. Many large polluters 
chose to meet the requirements of the Acid Rain law by buying 
allowances rather than cleaning up emissions. The same thing could 
happen under Clear Skies.
                               __________
Statement of Fred Parady, Manager, Environmental Services, OCI Wyoming, 
      L.P., on Behalf of the National Association of Manufacturers
    Good morning, Mr. Chairman and members of the committee. I am Fred 
Parady, Manager of Environmental Services for OCI Wyoming, L.P. Since 
1962, we have operated a 400-employee, 4-million-ton-per-year 
underground trona mine and 2.3-million-ton-per-year soda ash refinery 
located near Green River, Wyo. Today, I am pleased to testify on behalf 
of the National Association of Manufacturers (NAM) in support of the 
Clear Skies Act of 2005, which you, Mr. Chairman, and full committee 
Chairman Jim Inhofe have just introduced.
    As you undoubtedly are aware, the NAM is the nation's largest 
industrial trade association representing small and large manufacturers 
in every industrial sector and in all 50 states. The NAM's mission is 
to enhance the competitiveness of manufacturers and improve American 
living standards by shaping a legislative and regulatory environment 
conducive to U.S. economic growth. In light of our dedication to that 
mission, the NAM commends the subcommittee chairman and Chairman Inhofe 
for preparing legislation intended to provide increased emissions 
reductions in a way that will also provide greater regulatory certainty 
and flexibility.
    A number of the NAM's members are electric generators and coal 
producers, and they would be directly affected by this legislation. 
Other NAM members have large industrial boilers and would be eligible 
for the ``opt in'' provisions in your legislation. However, virtually 
all the members of NAM members use electricity as a major source of 
energy, and for the vast majority of them electricity is the largest 
energy cost. In fact, the manufacturing sector (excluding electric 
generation) uses about one-quarter of the nation's energy, including 
almost one-third of its natural gas and 30 percent of its electricity. 
According to a recent NAM study, external overhead costs, including 
regulation and rising energy prices, add approximately 22 percent to 
U.S. manufacturers' unit labor costs (nearly $5.00 per hour worked) 
relative to their major foreign competitors. More specifically, as a 
percentage of output, American manufacturers spend considerably more on 
pollution abatement than do their competitors in Germany, Japan, 
France, the United Kingdom, Canada, Mexico, China, South Korea and 
Taiwan. Therefore, NAM member companies' ability to compete in the 
highly competitive international marketplace is directly affected by 
any legislation that would have a major impact on such a broadly used 
and a significant input cost as electricity.
    I would like to briefly address specifics germane to the soda ash 
industry in southwest Wyoming. For more than 50 years, Sweetwater 
County has been home to the domestic soda ash industry. The industry is 
predicated on three fundamentals: affordable energy, the availability 
of trona ore and water supply. The world's largest natural deposits of 
trona ore are found in our county, with an estimated 600 years of 
reserves at current economics and consumption rates. Soda ash is the 
fifth largest bulk commodity chemical in the world, used in all types 
of glass manufacturing (container, consumer, etc.) pollution controls, 
and as a chemical feedstock. Mr. Chairman, soda ash is the most costly 
raw material for glass plants operating in your home state of Ohio, 
such as Libby Glass in Columbus and Thompson Electric, a television 
manufacturer near Columbus.
    Four operations currently mine approximately 16 million tons of 
trona ore and refine it into more than 10 million tons of soda ash, 
employing more than 2,300 people in the process with solid jobs that 
build retirements, support kids in college and pay the bills. The 
industry is Wyoming's leading international export, accounting for 85 
percent of Wyoming's export trade. Soda ash is shipped from Sweetwater 
County to more than 30 countries, contributing more than $500 million 
as a surplus to the overall U.S. balance of trade. The domestic market 
for soda ash, however, has been stagnant for nearly 20 years (increased 
use in some markets has been offset by the increased use of plastic 
bottles and other factors). The prospects for growth in our industry 
hinge on growing our markets offshore, and therefore, hinge on stable 
energy prices at home.
    To put things in perspective, in the 15 years between 1982 and 
1997, this industry enjoyed a steady and significant growth in exports. 
Just in the five years from 1992 to 1997, export growth volume grew 100 
percent. Since then, export growth has been marginal, with exports in 
2003 only 4 percent above their 1997 levels. The natural soda ash 
industry is the cleanest in the world, yet faces intense competition 
from China. Chinese soda ash operations do not meet our environmental 
or labor standards, yet compete voraciously on the world market for our 
customers. As recently as 1989, China imported more than 1 million tons 
per year of soda ash. Next year, we expect them to be a 1.5-million-ton 
exporter. I should note that the Chinese produce soda ash 
synthetically, using salt, coal and limestone, which are readily 
available but also produce substantial environmental problems in their 
system.
    The year 2003 marked a milestone for our industry, as China 
overtook the United States for world leadership in soda ash production 
for the first time in history. China has quadrupled their soda ash 
capacity in the last decade, from less than 3 million tons per year to 
more than 11 million tons. China's undervalued currency, unregulated 
environment and unfair labor practices are undermining this core 
Wyoming--and U.S.--industry.
    Finally, I would like to briefly address energy costs directly for 
our industry. Energy price volatility, for both electricity and natural 
gas, are causing the soda ash industry to lose its ability to reinvest 
in the industry. Natural gas price volatility and annual rate increases 
from our electrical utility are forcing our site to consider 
retrofitting our calciners to coal. The Clear Skies initiative would 
strengthen our ability to pursue this project, thus assuring both 
investment and long-term energy price stability.
    Returning to the general energy picture in the United States, 
should the maze of current clean air requirements and the litigation 
that inevitably adds uncertainty and delay have the effect of forcing 
electric utilities to switch from coal to natural gas, the consequences 
to industry--and to the general public--could be devastating, and 
already has had a significant impact. Already, the 66 percent increase 
in natural gas used to generate electricity since 1990 has contributed 
to the high cost of natural gas, which has had an adverse impact on the 
manufacturing sector since mid-2000.
    The chemical industry alone estimates that 100,000 jobs were lost 
since 2000 as a direct result of the high natural gas prices due to the 
gas supply and demand imbalance. More than half of the fertilizer 
capacity in the United States is shut in or closed permanently. The 
chemical industry has gone from the lead net export industry in the 
United States to a net importer of chemicals. Other industries, 
including plastics, aluminum, steel, metal heat treating, glass and 
paper are struggling to stay afloat in the current natural gas cost 
environment. Unless there is a rational investment future for coal-
burning electricity generation, prudent electricity providers will be 
continuing to build units using natural gas or restart the many natural 
gas electricity units that are currently not operating because of the 
high costs of natural gas. Clearly, more generation of electricity with 
natural gas will create even more upward pressure on natural gas prices 
and electricity prices, which would impede the manufacturing recovery 
now fully underway after a loss of almost three million manufacturing 
jobs between 2000 and early 2004. The NAM certainly supports nuclear 
power as another form of electricity generation to meet our future 
energy needs, but the long lead times and required changes in the 
public attitude make it difficult to significantly expand nuclear power 
for the next decade or so.
    The National Association of Manufacturers supports the concept of 
multi-emissions legislation, and supports the changes that you, Mr. 
Chairman and Chairman Inhofe, have made to the Administration's 
original legislative proposal. The goal of effective multi-emissions 
legislation must be to reduce pollution while replacing conflicting and 
problematic regulations for the electric utility industry with one 
clear set of rules that will improve upon the gauntlet of current 
requirements and litigation. The U.S. economy must have adequate, 
reliable and affordable supplies of electricity. Clear Skies 
legislation would provide electricity generators with the regulatory 
certainty and flexibility that is essential for rational investment 
decisions needed to meet both objectives of cleaner air and affordable 
power from coal.
    Your legislation, the Clear Skies Act of 2005, represents the most 
rational and realistic multi-emissions proposal introduced in more than 
a decade. Other bills that were proposed in the last Congress, such as 
S. 366, The Clean Power Act, and S. 843, The Clean Air Planning Act, 
represent unacceptable approaches. They included carbon dioxide 
(CO2) mandates and set unreasonable emissions targets and 
timetables superimposed on top of existing Clean Air Act regulations, 
which would result in the loss of more valuable U.S. manufacturing 
jobs. Such oppressive versions of multi-emissions legislation would 
unnecessarily raise energy costs while providing no compelling benefits 
to human health, the environment or national security beyond the 
benefits that the Clear Skies Act would provide. Unreasonably stringent 
emission-reduction targets would waste capital dollars that otherwise 
can be dedicated to increasing productivity, energy efficiency and 
employment and raise energy costs for all consumers. In addition, 
mandatory CO2 cuts would limit the use of fossil fuels--
particularly the use of abundant and affordable domestic coal, which 
has severely damaged our economy while yielding infinitesimal, if any, 
benefits to the global climate system.
    ``Business-as-usual'' under the current archeological pile of Clean 
Air Act provisions and regulations, some almost 35 years old, is also 
an unacceptable alternative. The overlapping, conflicting, burdensome, 
single-emission provisions of the existing Clean Air Act will continue 
to result in significant uncertainty, delays for legal challenges, 
short planning and construction time periods and, ultimately, higher 
electricity costs and unstable natural gas markets. In general, the 
Clear Skies Act balances the various needs we have detailed above in a 
more effective manner than other multi-emissions proposals or current 
law.
    Importantly, the chairman's legislation would enact reforms that 
expressly replace many of the current Clean Air Act requirements for 
electric generators. The current regulatory structure of the Clean Air 
Act encourages litigation, discourages innovation and reduces 
utilities' flexibility to effectively plan to reduce air emissions in 
the most cost-effective manner. In addition, numerous ongoing and 
anticipated future rulemakings further jeopardize the viability of coal 
by injecting uncertainty in the future use of coal for electricity 
generation. As it phases in increasingly strict emissions requirements, 
the Clear Skies Act must replace--not just be added onto--current Clean 
Air Act regulation. Simply imposing additional reduction requirements 
as overlays to the current regulatory structure will further complicate 
the regulatory maze now governing power plants. Specifically, the Clear 
Skies Act supports the use of cap and trade for mercury controls, 
rather than a unit-by-unit ``maximum achievable control technology'' 
(MACT) requirement; coordinates the Section 126 petition process with 
the reductions and schedule in the bill; reforms new source review 
(NSR) for new and existing electric generators; and also addresses the 
redundant control requirements established under the ``best available 
retrofit technology'' (BART) and the regional haze program.
    The NAM believes that a Clear Skies Act that is consistent with the 
following principles provides the best opportunity to make further 
progress on emission reductions in an economically and environmentally 
sound manner.
    The Clear Skies Act must remain a three-emission bill--sulfur 
dioxide (SO2), nitrogen oxides (NOx) and mercury. The NAM 
does not believe it is appropriate to include carbon dioxide 
(CO2) provisions in this legislation, since CO2 
is not a pollutant and is not regulated, nor required to be regulated, 
under the Clean Air Act. More importantly, the NAM strongly opposes any 
legislative proposal that would establish CO2 mandates. 
Creating any new regulatory scheme for CO2 emissions would 
severely depress the U.S. economy. Instead, the NAM believes that the 
best way to develop and implement the goals of climate change policy is 
through a strong economy with incentives coupled with removal of 
disincentives for energy efficiency and environmental improvements. For 
the record, the NAM notes that the majorities in the Congress and this 
Administration are on record as opposing regulation of carbon 
emissions. We urge the committee to avoid encumbering this vitally 
important legislation with such controversial provisions.
    The Clear Skies Act should not extend its mandates to either 
current or future industrial boilers or non-utility combined-heat-and-
power systems (CHP), but should provide such industrial units with the 
opportunity to voluntarily opt in to the benefits and obligations of 
the cap-and-trade program. In virtually all cases, CHP units are a 
source of highly efficient power with correspondingly low emissions. 
Hundreds of industrial facilities depend on the economic efficiencies 
of CHP. In fact, the President's National Energy Policy recommends the 
increased use of CHP systems to improve energy efficiency and decrease 
air emissions. Also, the President's global climate change initiative 
relies on more energy-efficient technologies, like CHP, to achieve its 
goals. The ability of CHP units to receive an allocation incentive and 
opt in to meet the rigors of multi-emissions limitations without 
infringing on the otherwise available pool of emissions credits would 
not only encourage additional investments in CHP emission controls, but 
also meet the energy security goals of the United States.
    The Clear Skies Act must support the continued and increased use of 
coal for electric power generation. The NAM in the strongest terms 
urges the Congress to ensure that any emissions caps and timetables 
mandated in final Clear Skies legislation avoid causing investors in 
electricity generation to choose scarce natural gas over abundant and 
more affordable coal for the preferred energy source to power America's 
ever-growing energy needs.
    In this context, Mr. Chairman, the NAM is particularly concerned 
about the mercury emission levels that would be part of final Clear 
Skies legislation. Significant reductions of mercury will occur under 
the current bill's Phase I caps for SO2 and NOx. Going 
beyond this level of control too soon could force the premature closing 
of many existing coal-fired power plants in favor of new natural gas 
facilities, further straining already limited natural gas supplies. In 
addition to control technology concerns, emerging scientific research 
suggests that reducing mercury emissions from the U.S. power generating 
sector does little to reduce the amount of mercury deposition in the 
United States and has even less effect on the levels of methylmercury 
in fish that is consumed by Americans. For these reasons, we support 
the Phase I mercury reduction objective in the Clear Skies Act that is 
set at the level achieved as a cobenefit from sulfur dioxide and 
nitrogen oxides controls, without establishing a ``hard-cap'' reduction 
requirement. Phase II mercury reductions should be based on the 
progress in developing affordable mercury emission control technology 
and on a public, peer-reviewed investigation and determination into 
whether additional mercury regulation will produce net public health 
benefits. Further, the Clear Skies act must recognize that the various 
grades of coal (lignite, subbituminous and bituminous coals) contain 
different levels and species of mercury. The legislation currently 
recognizes these differences and any efforts to eliminate the mercury 
allocation adjustment factors must be resisted. My company operates in 
the Western United States, an area that contains these various grades 
of coal. We want to ensure that we have the ability to select an 
appropriate coal and have certainty that we can meet the emission 
limits.
    Being from the West, we are also aware of the Western Regional Air 
Partnership (WRAP) SO2 reduction plan that is included in 
the proposed legislation. Unfortunately, several additional states have 
been added to the WRAP plan in the proposed legislation, without a 
corresponding adjustment in the SO2 reduction milestones. 
This problem needs to be corrected.
    For the Record, Mr. Chairman, the NAM is greatly concerned about 
the barrage of misinformation being put forth regarding the 
contribution of U.S. coal-burning power plants to the levels of 
methylmercury in fish, as well as the misinformation regarding the net 
benefits to the American public of eating fish. The NAM urges the 
committee to ensure that any final Clear Skies legislation direct the 
HHS, in coordination with the EPA and other health organizations, to 
review in an open and peer-reviewed process the most recent scientific 
evidence regarding the sources of methylmercury in fish--including 
natural sources, foreign sources and U.S. electricity generation 
sources--to evaluate the net beneficial health benefits of eating fish 
for Americans, including pregnant women. The NAM is on record with the 
EPA to urge that the agency reanalyze its increasingly suspect 
conclusions regarding an appropriate methylmercury reference dose, 
which is many times lower than the reference dose determined to be 
appropriate by the FDA and at least four other national and 
international health organizations. Most importantly, the critical 
question that must be asked is whether reducing elemental mercury 
emissions from U.S. power plants will have any measurable impact on the 
methylmercury levels in fish broadly consumed by the American public.
    The business community has been a good steward of our environment, 
investing hundreds of billions of dollars over the past three decades 
to help our nation achieve its unprecedented and unparalleled clean air 
progress. As a trip through Ohio would document, however, some 
manufacturers have closed or moved elsewhere because the high costs of 
environmental progress cannot always be absorbed in this era of intense 
international competition. The NAM strongly supports the Clear Skies 
Act as a way to avoid excessive energy costs while mandating dramatic 
future reductions in SO2, NOx and mercury. We believe the 
Clear Skies Act successfully employs market forces to achieve these 
reductions; ensures the expanded use of coal, which provides reliable 
and affordable energy to the nation; provides certainty for ratepayers 
and business and utility planners; and, redirects precious resources 
from fighting the regulatory and legal battles of the current confused 
and duplicative system to investments that ensure real air pollution 
reductions.
    Mr. Chairman, the NAM and the workers and the prosperity that we 
represent, urge your attention to these concerns. Thank you, I would 
appreciate an opportunity to respond to any questions that the 
committee may have.
                                 ______
                                 
 Responses by Fred Parady to Follow-Up Questions from Senator Jeffords
    Question 1. You suggested that ``the maze of current clean air 
requirements and the litigation that inevitably results add uncertainty 
and delay.'' How many legal actions has the National Association of 
Manufacturers initiated or joined with respect to Clean Air Act 
standards, regulations or guidance, issued by the U.S. Environmental 
Protection Agency or by a state using delegated authority, since 1991? 
Please describe the basic thrust of each action, including the subject 
standard or regulation, and the date of filing.
    Response. Since 1991, the NAM has been involved in the following 
legal actions pursuant to the Clean Air Act:

    Engine Mfrs. Assn. v. South Coast Air Quality Mgt. Dist. (S. Ct., 
No. 02-1343)--Whether the Clean Air Act pre-empts state motor vehicle 
emission requirements restricting new fleet vehicles to natural gas 
engines only. We urged the Supreme Court to rule that local fleet 
regulations are pre-empted. We argued that the fleet rules were not 
submitted to or approved by EPA as required by law, and they conflict 
with the technology and fuel-neutral emissions regulation developed by 
the EPA under the Clean Air Act. The Supreme Court ruled that the fleet 
rules were pre-empted. Joint brief with Alliance of American Auto. 
Mfrs., American Petroleum Inst., Assn. of Internat'l Auto. Mfrs., 
Calif. Motor Car Dealers Assn., Nat'l Auto. Dealers Assn., Nat'l 
Petrochemical and Refiners Assn. and Truck Mfrs. Assn. filed 8/29/03; 
vacated and remanded 4/28/04.
    U.S. v. Hoechst Celanese Corp. (Nos. 96-2003, 96-2051, 4th Cir.)--
This case involves an enforcement action against Hoechst Celanese for 
alleged violations of the federal regulations pertaining to equipment 
in facilities that produce or use benzene. The NAM filed a brief 
supporting arguments concerning the government's refusal to comply with 
Admin. Procedure Act and Clean Air Act provisions mandating that prior 
notice be given of agency regulatory requirements, thus, attempting to 
make a significant change in the meaning of a rule without first going 
through notice and comment. Joint brief filed 11/4/96 with Chem. Mfrs. 
Ass'n, Corp. Environmental Enforcement Council and Pharmaceutical 
Research and Mfrs. of America. Affirmed 10/27/97.
    Clean Air Implementation Project v. EPA (Docket No. 97-1117, DC 
Cir.)--The NAM petitioned the district court to review the EPA's 2/24/
97 promulgation of credible evidence rule. Rule allows use of non-
reference test to prove or disprove Clean Air Act (CAA) violations. It 
permits use of any valid evidence in CAA enforcement actions. The NAM 
contends EPA does not have authority to issue the rule under the CAA, 
nor can the EPA legally implement it via state implementation plans. 
The EPA also failed to follow proper administrative procedures in 
issuing the rule. Petition for review filed 4/18/97. Dismissed as 
unripe 8/14/98.
    Arizona Public Serv. Co. v. EPA (No. 98-1196 (DC Cir.)--Challenging 
the EPA rule granting Indian tribes Clean Air Act authority. Affects 
permitting for any industrial source located or seeking to locate 
within tribal territories or trust lands. Could also affect discharges 
from upstream sources. Tribal decisions are not subject to judicial 
review. Industry is prohibited from commenting or objecting to tribal 
applications for permitting authority. Filed 4/10/98 with AFPA, Mich. 
Chem. Council, Timber Producers Assn. of Mich. & Wisc., Rhinelander 
Area Chamber of Commerce. Court upheld the EPA rule granting Indian 
tribes Clean Air Act authority. Brief filed 7/6/99; decided 5/5/00.
    American Trucking Assns. v. EPA (Nos. 97-1440, 1441 and 1556 (D.C. 
Cir.) (consolidated with API, NAM v. EPA, Nos. 1502 and 1555)--
Reviewing the final EPA rules on new air quality standards for ozone, 
particulate matter, and Federal Reference Method for NAAQS. All 
companies that emit ozone or that must comply with EPA's air quality 
regulations; case sets first precedent for challenging federal 
regulations under SBREFA. Twenty-six suits challenge the ozone and 
other standards, thirty-three challenge the PM standard, six involve 
the federal reference method. Petitioners include mining, autos, power 
companies, chemicals, paint, equipment manufacturers, oil, steel and 
trucking. The Court rejected the rules implemented by the EPA 
concerning ozone pollution. The ruling has stripped the EPA from 
assuming arbitrary authority and requires the EPA to say why the ozone 
pollution levels it has set are reasonable in terms of health effects. 
Filed 8/14/97, 9/12/97; cases consolidated 10/1/97; main briefs on 
ozone and SBREFA claim filed 3/98. Reversed and remanded 5/14/99.
    Subsequently, the Supreme Court heard the appeal under the caption 
Whitman v. American Trucking Assns., Inc. The Court upheld the EPA's 
authority under the Clean Air Act. The EPA may not use cost factors 
when issuing air regulations, and the CAA does not violate non-
delegation doctrine. Cross-petition and reply brief filed 2/28/00; 
cert. granted 5/22/00; decided 2/27/01. Reply brief by the NAM and 
others filed 10/26/01. The D.C. Cir. upheld the rules on 3/26/02.
    New York v. EPA (Equipment Replacement Project) (D.C. Cir.)--
Supporting the EPA's final rule on replacement of pollution control 
equipment under the Clean Air Act. The rule, issued 10/27/03, is being 
challenged by numerous state attorneys general and several 
environmental organizations. Joint motion to intervene filed 11/7/03 by 
Equipment Replacement Rule Coalition, which includes the NAM; joint 
briefing schedule proposed 11/24/03; opposition to motion for stay 
filed 12/5/03.
    Massachusetts v. EPA (D.C. Cir.)--Supporting the EPA's decision not 
to regulate greenhouse gases (CO2, methane, nitrous oxide 
and hydro-fluorocarbons). Various states and organizations have sued to 
force the EPA to regulate GHGs as a pollutant. Joint motion to 
intervene filed 11/24/03 by the CO2 Litigation Group, which 
includes the NAM.
    United States v. Duke Energy Corp. (4th Cir.)--The NAM and other 
business organizations filed a brief asking the U.S. Court of Appeals 
for the Fourth Circuit to affirm a district court's ruling that routine 
maintenance, repair and replacement, without change in emissions, do 
not trigger the EPA's New Source Review (NSR) permit requirements. The 
NAM argues that NSR is only statutorily triggered, according to the 
Clean Air Act, when facilities are physically changed or modified to 
create an increase in emissions over the level approved in the original 
permit process. However, the EPA wants a broader reading of the act 
that would require manufacturers to obtain permits prior to any 
physical modifications, including any necessary repairs. Congressional 
intent, plain meaning of the statutory definition of ``modification'' 
and common sense all support the NAM's position that repairs do not 
constitute changes triggering a need for an NSR permit. This case is of 
high importance to all manufacturers as American industry would grind 
to a halt if it were required to scrutinize for potential NSR 
applicability for thousands of activities each year. For instance, if 
the activity is a necessary repair or replacement project, the result 
could be an extended shutdown of the facility until it could be 
undertaken. Reversing the district court's ruling would cause a 
fundamental, drastic change in how industry operates. Joint amicus 
brief filed 10/15/04.
    American Lung Assn. v. EPA (D.C. Cir.) (consolidated with South 
Coast Air Quality Mgt. Dist. v. EPA)--The NAM on 7/29/04 joined with 
the American Chemistry Council, the American Forest & Paper Association 
and the American Petroleum Institute to try to intervene in this case 
to support the EPA's final rule to implement the 8-Hour Ozone Phase I 
Implementation Rule. The Phase I rule addresses classification of areas 
that are in nonattainment, attainment and emission-reduction states, 
transition from the 1-hour to the 8-hour ozone standard, and the date 
on which the 1-hour standard will be revoked. Motion to intervene 
granted 8/19/04.
    In Re Final Rule To Implement the 8-Hour Ozone National Ambient Air 
Quality Standard--Phase 1 (EPA)--The National Petrochemical & Refiners 
Association (NPRA) and the NAM submitted to the EPA 6/29/04 a Petition 
for Reconsideration of the final rule to implement the 8-hour ozone 
national ambient air quality standard (NAAQS) and the designations and 
classifications for the ozone standard. Industry is concerned that the 
timetable for certain facilities in nonattainment areas to come into 
compliance is too short. At least 15 regions of the country will need 
more time to come into compliance than is provided by the EPA.
    New York v. EPA (D.C. Cir.) (Equipment Replacement Rule case)--The 
NAM is a member of the Equipment Replacement Rule Coalition, which 
filed a motion 11/12/03 to intervene in a suit brought by the State of 
New York against the EPA over the agency's 10/27/03 final rule titled 
``Prevention of Significant Deterioration (PSD) and Non-Attainment New 
Source Review (NSR): Equipment Replacement Provision of the Routine 
Maintenance, Repair and Replacement Exclusion.'' This rule governs the 
factors that determine whether companies must obtain EPA permits before 
replacing broken or deteriorating equipment at their industrial 
facilities. New York is challenging the rule as too lenient. The 
Equipment Replacement Rule Coalition, comprising various trade 
associations, manufacturers and utilities, generally support the EPA's 
new rule.
    New York v. EPA (D.C. Cir.) (New Source Review regulations)--The 
NAM is one member of a coalition of associations known as the NSR 
Manufacturers Roundtable, which filed a motion 1/15/03 to intervene in 
a suit brought by NY, CT, ME, MD, MA, NH, NJ, RI and VT against the 
EPA's final regulation governing the procedures for companies to 
install stringent emission controls at their facilities under the 
Prevention of Significant Deterioration (PSD) and nonattainment New 
Source Review (NSR) provisions of the Clean Air Act. These states have 
challenged the legality of EPA's rule, and the NSR Manufacturers 
Roundtable intervened to insure that the court considers the views of 
manufacturers and the effects of the rule on industry. On 4/7/03, we 
filed a statement of issues, including (1) whether the EPA's preamble 
statements regarding an ``actual-to-potential'' methodology to 
determine whether a change at an existing emissions unit results in an 
``increase in actual emissions'' conflict with the language of the 
regulations, other interpretations and case law, (2) whether similar 
preamble statements constitute an unlawful attempt to revise the 
regulations without notice and comment, (3) whether EPA's failure to 
provide that the first step in assessing if the rule applies is a 
determination of whether there is an increase in the maximum emissions 
rate of the unit involved is contrary to the Clean Air Act, and (4) 
whether the final rule is unlawful in that it provides that emission 
reductions achieved by a source that relies on the pollution control 
project exclusion cannot be used as netting credits or offsets.

    On 7/25/03, the EPA agreed to reconsider its rule with respect to 
six issues raised by parties seeking reconsideration. On 9/30/03, the 
D.C. Circuit ordered that the court appeal be held in abeyance pending 
completion of EPA's reconsideration process.
    The NSR Manufacturers Roundtable filed a joint opening brief with 
the Clean Air Implementation Project, the American Chemistry Council, 
the Utility Air Regulatory Group, Alabama Power Co., and the National 
Environmental Development Association's Clean Air Regulatory Project, 
on 5/11/04. The EPA's 2002 rule changes the definition of plant 
modifications to include virtually all changes as covered by the Clean 
Air Act. The first brief of the NAM and other industry petitioners 
challenges only this EPA action. We argue that the statutory language 
itself, as well as the history of its enforcement, make clear that the 
first step of the analysis of whether there is a change to an existing 
emissions unit at a stationary source is the requirement that the 
emitting capacity of the existing unit must be increased (i.e., that 
``new pollution'' be created) by the change.

    Question 2. You referenced a recent NAM study on ``external 
overhead costs including regulation . . .'' What is NAM's estimate of 
the cost of environmental-only regulations as it relates to 
manufacturers' labor costs?
    Response. In December 2003, the NAM released a study entitled ``How 
Structural Costs Imposed on U.S. Manufacturers Harm Workers and 
Threaten Competitiveness.'' Although the study does not specifically 
assign a dollar amount to labor costs as they relate to pollution 
abatement rules, it does cite statistics generated by the Organization 
for Economic Cooperation and Development (OECD) that show that the U.S. 
spent 1.6 percent of its GDP on pollution reduction compliance schemes, 
surpassed only by South Korea, at 1.7 percent of GDP, among the nine 
other major U.S. trading partners listed on the table. Other countries 
cited in the study include Japan (1.4 percent), Germany (1.5 percent), 
Great Britain (1 percent), Canada (1.1 percent), Mexico (0.8 percent), 
and France (1.4 percent).
    The study further states that environmental compliance is the only 
regulatory area for which reliable comparative data from other 
countries is available. According to NAM economists, the compliance 
costs of environmental regulations, or pollution abatement rules, 
``reduces U.S. cost competitiveness by at least 3.5 percent points.'' A 
cursory geographical analysis demonstrates the relative ease with which 
manufacturers may be lured to nearby countries where pollution 
abatement is significantly less costly than in the U.S.: Canada (1.1 
percent); and Mexico (0.8 percent).

    Question 3. You indicated that in a highly competitive 
international marketplace any legislation that would have a major 
impact on electricity costs could disadvantage NAM member companies. On 
average, or by major sector, what portion of NAM member companies' 
annual operating costs is electricity and how does that compare with 
the electricity costs in the countries of NAM competitors?
    Response. The NAM does not keep energy data on its membership, but 
instead we rely on data published by the Energy Information 
Administration. The EIA data indicate that electricity is the 
manufacturing sector's largest energy input and that industry (a 
category that also includes construction and agriculture) uses about 30 
percent of the nation's electricity. In 2003, industry spent almost $52 
billion on retail electricity, and it looks like 2004 will be almost 
the same. Some manufacturing sectors use electricity only for lighting 
and electric motors, while other sectors use electricity for process 
energy. The largest electricity users would be the aluminum sector, 
which has lost more than 30 percent of their primary aluminum 
production capacity since 2000 due primarily to high electricity costs 
and tight supplies of electricity in the Northwest. The U.S. 
manufacturers' historic advantage in low electricity costs compared to 
the EU has already almost disappeared--with these reforms to current 
law, electricity could be added to natural gas as structural energy 
cost disadvantages for manufacturing in the United States. EIA's most 
recent international electricity cost data is for 2001, or in a few 
cases 2002, before the high natural gas prices and revitalized economy 
began influencing domestic electricity rates.

    Question 4. Should we amend the Clean Air Act to delay the existing 
attainment deadlines therein? If so, why?
    Response. Congress should amend the Clean Air Act to establish 
uniformity and certainty to a piece of legislation that has 
deteriorated to a morass of contradictory and overlapping regulatory 
requirements. Since Congress adopted the CAA in 1970, and amended the 
law in 1990, the EPA has issued numerous regulations which different 
parties have litigated in the federal court system on different 
grounds. The Agency has reacted to this litigation onslaught, over the 
course of three different Administrations, by interpreting and drafting 
rules to comply with the numerous court decisions being handed down by 
federal judges from across the country. Passage of the Clear Skies Act 
of 2005 will pre-empt ambiguous and contradictory regulatory standards, 
and reduce the number of lawsuits filed pursuant to the CAA.

    Question 5. Would you support a binding global treaty that required 
all nations to reduce their mercury use and emissions?
    Response. The NAM does not support ratification of any global 
treaty that would bind the U.S. to reduce mercury emissions. The most 
recent debate surrounding international emissions abatement targets has 
centered on the Kyoto Protocol, which the U.S. Senate overwhelmingly 
rejected by a vote of 95 to zero in July 1997. International 
environmental treaties that specifically target air emissions often do 
not require participation by underdeveloped countries, which does 
nothing to reduce the global inventory of a given, targeted pollutant. 
Also, the soundness of the science on which policy decisions are made 
must be clearly established before national governments, and 
international non-governmental organizations (NGOs), impose regulatory 
mandates that may ultimately stifle job creation and technological 
advancement without accomplishing clear environmental objectives. The 
NAM has formally requested the EPA to participate in an interagency 
panel to thoroughly review the most recent science regarding elemental 
mercury, methylmercury and the net health benefits of eating fish. (See 
NAM comments to the mercury NODA filed with the EPA on January 3, 
2005).

    Question 6. Mr. Parady, your company's parent company Oriental 
Chemical Industries of the Republic of Korea operates in a country that 
is a party to the Kyoto Protocol. Though they are not an Annex One 
company with specific reduction requirements, Korea is actively 
participating in a binding global process to reduce greenhouse gas 
emissions. Do you think the United States should be part of such a 
global process?
    Response. The NAM is strongly opposed to multilateral mandatory 
carbon quotas such as the Kyoto Protocol or unilateral carbon quotas 
such as the Climate Stewardship Act being pursued by Senators McCain 
and Lieberman. I understand that the United States is already heavily 
involved in bilateral discussions with a number of nations to increase 
the quality of the climate data and the efficiency of fossil fuel 
combustion. I am not aware that Korea has agreed to any binding 
reductions of its own greenhouse gas emissions.

    Question 7. How many NAM member companies would or could opt-in to 
the relief of current hazardous air pollutant requirements provided by 
S. 131?
    Response. The NAM membership includes a number of electric 
generators (utilities) as well as many companies that operate large 
combined heat and power units. The EIA data indicate that in 2004, 
industrial combined heat and power units produced a total of 128 
billion kilowatts out of the U.S. net electricity generation total of 
3,314 billion kilowatts. I do not know how much of this CHP produced 
electricity is from power plants large enough to meet the threshold in 
the bill, or how many facilities would be able to make the investments 
to meet the pollution reduction thresholds provided in the bill.
            Statement of the American Farm Bureau Federation
    On behalf of hundreds of thousands of farming and ranching members, 
the American Farm Bureau Federation respectfully submits this testimony 
to the Subcommittee as it considers Clear Skies legislation.
    The American Farm Bureau Federation supports the Clear Skies 
initiative as a viable, proactive plan for much-needed reform of the 
Clean Air Act. Most significantly, our support for Clear Skies is based 
on farmers' and ranchers' growing concerns about the increasing demands 
on natural gas, as well as our opposition to any attempt to regulate 
carbon as a pollutant.
    Natural gas is considered by many to be the most important energy 
source for production agriculture and for the manufacturers who supply 
us with products and inputs that keep our farms and ranches running. It 
is relied on to produce inputs including nitrogen fertilizers, farm 
chemicals and, in many areas, electricity for lighting, heating, 
irrigation, and grain drying. Based on USDA statistics, Farm Bureau 
estimates that increased energy costs reflected in the price of inputs 
during the 2003 and 2004 growing seasons added over $6 billion to the 
cost of production for food and fiber in the United States. Plainly 
put, the increasing price of natural gas is the single most significant 
factor adding to energy costs for American farmers and ranchers.
    Over the last three years, the United States has experienced 
prolonged natural gas price volatility which has led to a significant 
overall price increase. The current natural gas situation is a product 
of under-supply and over-demand. Existing burdensome, out-of-date air 
quality regulations exert constant pressure on natural gas supplies by 
artificially driving up demand and encouraging ``fuel switching'' from 
other energy sources by manufacturers and power suppliers.
    The challenges facing the fertilizer industry perfectly demonstrate 
how critical a stable, affordable natural gas supply is to domestic 
food and fiber production. Natural gas is the primary feedstock used to 
produce virtually all commercial nitrogen fertilizers in the United 
States. For example, the price of natural gas accounts for 90 percent 
of a farmer's total cost of anhydrous ammonia fertilizer. According to 
The Fertilizer Institute, this nitrogen-based fertilizer cost producers 
about $100 per ton during the 2000 planting season. By the 2003 and 
2004 growing seasons, however, farmers faced anhydrous ammonia prices 
of $350 or more per ton--over a three-fold increase.
    Equally alarming is the fact that over the last four years the 
United States has permanently lost at least 25 percent of our domestic 
production capacity of fertilizers. An additional 20 percent of 
production is temporarily shut down due to high natural gas prices. 
Currently, U.S. sources are domestically supplying just over half of 
the fertilizer once produced for American agriculture.
    The unavoidable fact facing U.S. farmers and ranchers is that price 
volatility of natural gas threatens the very existence of what remains 
of our domestic fertilizer industry. Loosing that domestic production 
would cause America to be dependant yet again on foreign sources for a 
vital economic need--in this case, fertilizers.
    Additionally, Farm Bureau supports Clear Skies as much for what it 
does not do as for what it does do. In contrast to other reform 
proposals, the Clean Air Act initiatives will drastically improve air 
quality without the need to federally regulate carbon as a pollutant.
    According to EPA estimates, Clear Skies will help reduce air 
pollution faster, cheaper and sooner than the current regulatory 
structure. Clear Skies will reduce emissions of sulfur dioxide, 
nitrogen oxides and mercury by as much as 70 percent without choking 
our economy with another layer of regulation for carbon, or 
exacerbating the demand on natural gas.
    In conclusion, we believe that the Clear Skies initiative 
complements our support for a comprehensive energy policy and will help 
achieve the objectives of our grassroots members. American Farm Bureau 
clearly supports updating and reforming current federal air quality 
laws to allow for the following:

     Use of new, cleaner energy production technologies;
     Stabilizing the demand for natural gas;
     Reducing dependence on foreign energy sources;
     And, improving air quality without sacrificing economic 
productivity.

    American Farm Bureau Federation appreciates the opportunity to 
provide the Subcommittee with input and for your consideration of our 
position.
                                 ______
                                 
           Statement of the American Public Power Association
    We appreciate the opportunity to submit this statement for the 
record related to the Committee's hearing on the Clear Skies Act, S. 
131. The American Public Power Association (APPA)\1\ supports sensible 
multi-emission control legislation, as represented by the Clear Skies 
Act, S. 131. The passage of S. 131 will achieve a 70 percent reduction 
in three power plant emissions, improve air quality more quickly than 
current law, and provide regulatory and environmental certainty while 
promoting the use of more cost-effective, pollution control strategies.
---------------------------------------------------------------------------
    \1\ APPA is the national service organization representing the 
interests of the more than 2,000 state, municipal and other local 
government-owned electric utilities in the United States. Publicly 
owned electric utilities are among the most diverse of the three 
electric utility sectors, representing utilities in small, medium and 
large communities in 49 states, all but Hawaii. Seventy-five percent of 
public power utilities are located in cities with populations of 10,000 
or less. Overall, public power utilities provide approximately 16.6 
percent of all kilowatt-hour sales to ultimate consumers in the United 
States.
---------------------------------------------------------------------------
    The emissions reductions proposed in S. 131 are significant and 
will come with a cost to electric utility generators and the consumers 
they serve. However, APPA recognizes the importance of protecting and 
improving air quality and believes that the Clear Skies Act provides a 
reasonable means to achieving this important goal.
    While the Clean Air Act has resulted in notable improvements in air 
quality, additional improvements are needed to achieve further air 
quality objectives in a more timely and cost-effective manner. There is 
widespread agreement that the existing Act is complex, duplicative and 
uncertain--in particular as it relates to controlling emissions from 
the electric utility sector. For that reason APPA supports an 
integrated multi-pollutant approach that employs market-based trading 
mechanisms to achieve reductions of nitrogen oxides (NOx), sulfur 
dioxide (SO2) and mercury (Hg). Such an approach is embodied 
in S. 131.
    S. 131 would build upon the successful aspects of the current acid 
rain program, and in doing so, would result in the reduction of 
SO2 emissions by 73 percent (from 11.2 to 3 million tons), 
NOx emissions by 67 percent (from 5.1 to 1.7 million tons) and mercury 
emissions by 69 percent (from 48 to 15 tons) from 2000 levels. If 
designed and implemented correctly, the regulatory certainty, utility 
flexibility, and appropriate reforms afforded by such an approach will 
yield equal or superior environmental protection in a cost-effective 
manner.
    When the Clear Skies Initiative and subsequently proposed Clear 
Skies Act (H.R. 5266 and S. 2815) were introduced in 2002, APPA 
presented a package of technical comments and recommendations to 
congressional and Administration staff. Our recommendations included 
three ``core'' issues: (1) the level of the phase I mercury cap; (2) 
the phased-in auction; and (3) the allowances penalty that would be 
imposed in the event that the U.S. Environmental Protection Agency 
(EPA) failed to implement the program. Many of our comments and 
recommendations were accepted and incorporated in the subsequent 
version introduced in early 2003 (S. 485 and H.R. 999). We appreciate 
that those issues that were first addressed to our satisfaction in 2003 
and were maintained in the current version, S. 131.
    The proposed Clear Skies Act also comes at a time that will benefit 
states and localities facing CAA criteria pollutant attainment 
problems. Affected communities and states have been looking for 
effective ways to achieve emissions reductions to meet the newest and 
more stringent CAA ambient air quality standards for ground level ozone 
and for fine particles. Currently, more than 300 counties fail to meet 
one or more of these ambient standards. Clear Skies also addresses 
declining visibility and regional haze improvement in many of our 
nation's national parks and wilderness areas. Clear Skies, through a 
combination of certainty and flexibility, will help enable these 
affected communities, states, and regions achieve significant 
improvements in air quality and meet national air quality goals. In 
contrast, the current CAA regime of complex and overlapping 
regulations, which often is characterized by conflict, litigation, and 
delay, will not provide the level of reductions necessary to reduce 
emissions in affected regions, nor the certainty that is needed. 
Regulatory certainty is needed in our sector in order to continue to 
provide the low-cost electricity that has underpinned our nation's 
economic development and allowed us to address crucial environmental 
issues.
    An area of growing concern for the electricity sector in general 
and the public power community specifically, is how Clear Skies may 
impact the planning and construction of new electricity generating 
facilities, including new coal-fired power plants to meet increasing 
energy demands. An important feature of S. 131 is its requirement to 
set permanent caps on emissions from the power generation sector. The 
cap and trade system will give power suppliers a defined regulatory 
platform upon which to make critical decisions including: siting, fuel 
choice, and generation technology decisions. S. 131 will help power 
suppliers site and construct new generation in locations where they can 
deliver the best value to local consumers while protecting and 
improving air quality.
    The bill's benefits to the environment are very significant and 
enduring. S. 131 provides absolute environmental certainty because once 
enacted into law, the emissions reductions are statutorily mandated. 
Emissions caps guaranteeing that power plants will not exceed the total 
allotted levels for each air pollutant will be solidified in law. These 
caps and compliance deadlines, also described in statute, cannot be 
disputed or legally challenged in court as they are under the current 
maze of regulations.
    As S. 131 proceeds through committee mark-up, floor consideration 
and final conference review, it is important that other considerations 
be recognized and addressed. We would greatly appreciate Members' 
attention to the following issues:
  planning for new electricity generating units, including coal-fired 
                                 units
    As previously stated, there are many public power systems serving 
towns and cities with growing populations and local economies, and as a 
result, increasing energy demands. These utilities and communities will 
need to plan and build new energy resources, including the construction 
of new coal-fired units, to meet this growing demand. These new coal 
units will be cleaner and more efficient than older units. It is 
imperative that the allocation methodologies that determine and allot 
allowances for existing and new units be done on a fair basis. We will 
be reviewing the new source set-aside sections to determine if the 
approach is done on a basis that is fair and not detrimental to our 
members planning new, clean units. We also believe that the expected 
improvement in visibility impacts in Class I areas due to the 
significant reductions in SO2 and NOx with S. 131 should be 
reflected in siting requirements for new clean coal units.
                       small unit considerations
    In developing Clean Air Act reform legislation, it is important 
that Congress continue to recognize the role played by small (25MW or 
less) generating units in public power communities. Because they are 
usually located inside the utility's distribution service territory, 
these small units often provide relief from transmission congestion and 
increase local system reliability. Appropriately, multi-pollutant 
control legislation should continue to exempt such small units from 
most of the Clear Skies emission reduction programs.
    With respect to controlling mercury, we ask that Congress take into 
consideration that many units operated by municipally owned electric 
utilities are small, including many that are no larger than 50MW. There 
are many municipal utilities where there is only one boiler of 50MW 
size at the utility with no ability to ``bubble'' as larger facilities 
with multiple units do in order to reduce regulatory costs. This is 
unique to public power. The capital costs associated with installation 
of controls on these smaller units are disproportionately high. Often, 
mercury removal efficiencies are unrelated to plant size. Smaller 
emitting plants will remove far fewer pounds of mercury through the use 
of control technology from larger plants. APPA wrote extensive comments 
regarding these concerns in response to EPA's Proposed National 
Emission Standards for Hazardous Air Pollutants. In these comments we 
described the unique difficulties municipal utilities with small 
generating units face with respect to control technology retrofits. 
Among these issues, we described how many municipally-owned generation 
facilities are located in the heart of small towns. These plants often 
have substantial space constraints that inhibit significant new 
construction projects and may make new control technology installations 
infeasible. We also stated that for such small units, the technology to 
control mercury is not currently available. In fact, it is very unclear 
at this point when control technologies will ever be developed that 
will enable small units (<100MW) to make appropriate mercury emission 
reductions. We encourage your consideration of possible alternative 
compliance options for small (100MW or less) units. (Comments are found 
on APPA's website:
http://appanet.org/pressroom/
index.cfm?ItemNumber=10561&sn.ItemNumber=12041#QL3)
                           mercury monitoring
    While S. 131 has improved in the area of mercury monitoring, we 
urge the Committee to acknowledge that smaller emitters need to have 
other options other than Continuous Emissions Monitoring (CEMS) for 
monitoring mercury. Our experience shows that CEMS work sensibly for 
SO2 and NOx, but not yet for mercury. Our concern is 
primarily focused on the lack of availability for CEMS systems and the 
cost (capitol expenditures and annual operating expenses) of such 
systems. Installing a CEMS system on a 25-100MW unit would cost 
approximately the same as on a 500-1000MW unit. For some municipal 
utilities, the cost of monitoring mercury might exceed the cost of 
controlling it. The initial installation costs, along with the 
extensive operating and maintenance expenses, become an overwhelming 
and impossible burden on the 25-100MW facilities. We urge Members to 
clarify that smaller units (25-100MW) should be allowed by the EPA in 
rulemaking to take advantage of alternative monitoring options to 
determine mercury emission.
    Related to this small unit/system concern is a provision in the 
bill that would exclude a category of coal-fired units from S. 131's 
mercury cap-and-trade program because of financial burdens overwhelming 
a unit's ability to participate. APPA supports a de minimis exclusion 
because, as we discussed above, most of these very low emitting units 
are too small to allow economical retrofitting of more emissions 
controls. Often these utilities physically do not have the space at the 
utility for a second coal pile or to accommodate retrofitting. At the 
very least, we urge the Committee to consider the option of using 
creative alternative mercury reduction strategies for this unique 
category of low emitting facilities
                               conclusion
    APPA supports the Clear Skies proposal largely because it provides 
regulatory certainty, flexibility and reforms while ensuring 
improvements in air quality through statutorily dictated emissions 
limits. We also strongly believe that the Clear Skies Act, without the 
auction provision and with some additional consideration of the mercury 
Phase I cap, will achieve significant emission reductions in a cost-
effective manner, while assuring that the nation's electricity supply 
is reliable, secure, well balanced and reasonably priced. For these 
reasons, APPA supports passage of multi-pollutant control legislation 
based on the Clear Skies Act framework and we urge Congress to make 
passage of the bill a high priority.

  

                                  
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